By using alternative ways to bring in funds, you don’t have to eat ramen and you can maintain control of your company during its formative stage. Being a WMBE gives you more leverage. By Catheryne Nicholson (Co-Founder & CEO, MommaZoo)
Hey women founders, do you know that if you own and control 51% or more of your company, you can qualify as a woman-owned business? And if you are also a small-business owner, you should consider getting certified as a woman-owned small business (WOSB).
Why does a certification matter? Because it can be profitable.
Many U.S. federal government agencies, large enterprises and utilities have revenue set aside for diverse small businesses. For example, the California Public Utilities Commission (CPUC) issued GO156 which mandates the utilities under their jurisdiction with gross annual revenues over $25M award at least 21.5% to diverse businesses. If you are wondering why these target revenue goals matter, keep in mind that these agencies procure everything from toilet paper to IT to software and consulting services. It’s highly likely you have something they need.
What are the advantages of being certified? The primary advantage is that being certified as a WOSB opens opportunities to win business. It differentiates you from the playing field and large agencies are incentivized and mandated to help you.
A secondary advantage is it can be an alternate way of providing money to get a business off the ground. I’m registered as a Women-owned Minority Business Enterprise (WMBE). I’m an engineer and I’ve built enterprise software systems for 15+ years. I provide consulting services on a part-time basis and it pays well enough to not only provide for my family but to also bootstrap my startup, MommaZoo. Being a WMBE makes me more valuable as a contractor and in turns allows me to transfer some of that value to bootstrap.
Look at it this way: if you fundraise, you will be spending a lot time - a heck of a lot of time - trying to raise money. If successful, you will likely give away quite a bit of equity and board seats to investors whose goals may, or may not, align with yours. By using alternative ways to bring in funds, you don’t have to eat ramen and you can maintain control of your company during its formative stage. Being a WMBE gives you more leverage.
If you think there’s no way you can do both, it’s easier than you think. In the last year, MommaZoo has built a closed pilot, released an open beta version, managed 250+ beta testers, and we are about to roll-out a public release. Did I mention I’m also the mother of two young kids? It’s for this reason that I don’t have the luxury of wasting time for the possibility of raising money. I need it guaranteed.
What’s the process to get certified as a WOSB? At a minimum, you’ll need financial records, business bank account statements, tax records, proof of gender and/or minority and/or veteran status (e.g. birth certificate or military discharge papers) and the application for the certification.
Some certifications are almost immediate and some, such as the 8(a) set-aside, require that you be in business for two years. For me, the certification process took about 1.5 months from the time I started my business.
The processing time can vary depending on whether you are a sole proprietorship, general partnership, or corporation as well as how long the verification process queue is for the certifying agency.
Depending on what your business and objectives are, there are different certifying agencies. Most government, enterprise, and utilities publish which certifying agencies they accept on their websites as well as on their requests for contracts.
To find out more, here are some resources to get started:
Editor’s note: Got a question for our guest bloggers? Leave a message in the comments below. About the guest blogger: Catheryne Nicholson is Co-Founder and CEO at MommaZoo. She has two young kids and has built energy and emissions management, CRM, and defense software for companies such as C3, Siebel Systems, and Northrop-Grumman. She is a former Naval Officer and studied engineering at the U.S Naval Academy and Stanford University. She holds a BS in Aerospace Engineering, a MS in Environmental Engineering, a MBA, and is a PE in Mechanical Engineering.