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11 ISSUES NEW BUSINESSES FACE
Jul 17, 2018
What exactly is MWBE?
MWBE stands for Minority and Women Owned Business Enterprise. MWBE firms are firms at least 51% owned by either a Woman or a Minority.
In states such as New York, there have been laws put into place that help establish equal playing fields for disadvantaged businesses (businesses that would not necessarily get the same opportunities as larger, more established firms – usually based on social and economic standing). One such program in New York City is the MWBE program. Article 15-A of the Executive Law, signed into law in 1988, created the Office of Minority and Women’s Business Development (currently the office is a division). The objective of Article 15-A is to promote a percentage of work on government/state contracts that are to be divvied out to able Minority or Women owned businesses. Share the wealth, for a simpler term. What this means for you is that if you are a state-certified MWBE firm, you have a leg up on possibly landing yourself a long term government contract.
So are you guaranteeing that I’ll land a client and a contract if I register as an MWBE firm?
No – as an MWBE firm you are not handed a contract because you register as an MWBE. You must apply for a contract like anyone else does (whether as a prime or a sub), however, as most contracts have established MWBE goals on them, you may stand out a little more since contractors are required to meet these MWBE goals, thus, distinguishing you from your competition. How you use your certificate will determine what jobs you get! In other words, having an MWBE certification increases your opportunities of winning a project.
How do you qualify to be a MWBE firm?
To be a MWBE firm in New York you must meet the following criteria:
- You must either be a woman or a minority who owns at least 51% of your business. (we really mean you have to own it too. No showcase owners who don’t actually do anything for the company or make any profits – a.k.a. you can’t just get a leading lady in your life or your ethnic brother-in-law and put their name on your business ownership and that’s it. They must actually BE a part of the business and WORK.)
- You must be in business for at least 1 year
- You must be a small business and have no more than 300 employees within your company to qualify.
- You cannot have a personal net worth of over $3.5 Million.
What qualifies as a Minority?
Minorities are described by ESD as the following:
- “Black – Persons having origins from any of the Black African racial groups.
- Hispanic – Persons of Mexican, Puerto Rican, Dominican, Cuban, Central or South American descent of either Native American or Latin American origin, regardless of race.
- Asian-Pacific – Persons having origins from the Far East, Southeast Asia or the Pacific Islands.
- Asian-Indian Subcontinent – Persons having origins from the Indian subcontinent.
- Native American or Alaskan Native – Persons having origins in any of the original peoples of North America.”
I am both a Minority and a Woman can I certify as both or do I have to pick one?
Yes, you can become certified as both MBE and WBE. You do have to submit applications for both though.
What other kinds of Business Programs are there?
To name a few:
- MWBE – Minority Women Owned Business Enterprise
- MBE – Minority Owned Business Enterprise
- WBE – Women Owned Business Enterprise
- DBE – Disadvantaged Business Enterprise
- DVBE – Disabled Veteran Owned Business Enterprise
- SDB – Small Disadvantaged Business
- SBE – Small Business Enterprises
- LBE – Locally-based Business Enterprises
- EBE – Emerging Business Enterprises
What is Commercially Useful Function (CUF)?
Commercially Useful Function (CUF) is a way to determine whether work is properly being distributed to MWBE companies on the job. This helps compliance officers ensure that a contractor isn’t just putting an MWBE’s name on the pay roster without giving them work. All MWBEs much be determined as CUF to participate on a contract.
What determines a company’s CUF status?
The work performed by a company should be able to be performed by both non-MWBE and MWBE companies alike. The four things that determine a company’s CUF are:
- Amount of Work performed.
- Industry Standards
- Payment is equal to work performed
- The work performed is necessary and not extraneously completed to meet required goals.
Should all Woman or Minority Owned businesses get certified?
That really depends on what you’re offering, or rather who you’re offering to. Business to Consumer type businesses (a.k.a. retail stores, hair salons, etc.) aren’t necessary to certify, but Business to Business firms should.
Why get certified as a MWBE?
New business prospects – exactly what every company wants! Agencies are getting VERY serious about giving work to MWBE firms nowadays and having your certification gives you a leg up over your competition whether that be for priming a contract or acting as a subcontractor/ consultant. Think of it as an extra qualification to put on your resume; sometimes being great at what you do isn’t enough, that’s why when you meet any additional criteria over your competition you get the job! Whatever the case may be, it’s in a MWBE’s favor because Government Contracts are huge business efforts that require certified MWBEs for at least a percentage of the contract.
Credibility – We’re not saying that you’re not a credible source if you’re not certified, but you seem more credible when you’re on the government’s certified list. Credibility makes you more considerable to a contractor because they’re trying to meet government requirements and the simple way to do that is to use government approved resources aka a certified MWBE company.
Networking – When you become certified, you are opening the doors to new opportunities to not only possibly prime contracts, but also to network with other companies that need to reach those MWBE goals. In this day and age, networking can go a long way, you might not land the job this time, but an opportunity can come up a few months from now when your new business friends invite you to join their team on a new venture. Plus, some companies are just trying to add some diversity to their suppliers list.
Short and sweet: There’s profit in it for you. Right now, cities like NYC are taking huge initiatives to develop and fortify MWBE programs that not only introduce more MWBE firms into the business market but provide incentives and opportunities for MWBEs to thrive in the market but you got to be an MWBE to participate!
How do you become certified as an MWBE in New York?
The process to become certified averagely takes anywhere from 90 days to 120 days. However, each agency goes through their own verification and certification process which means time limits can vary. Some agencies also have expedited certification processes if you’re in a true rush.
To get NYS certified visit ESD’s website here.
To get certified in NYC visit SBS’s website here. Each agency has their own process and forms that will need to be filled out and each require different verifications.
These are the two most common certificates for New York State and New York City. If you are outside of New York, visit your state’s MWBE website for further instructions.
I got certified, now what?
Now that you are certified, start networking! Update your listings, commodity codes, websites and marketing material specifically stating that you are certified. Enlist on MWBE directories. Attend pre-bid conferences to meet those in your area of business and socialize.
“If you are in New York City and would like to receive assistance on MWBE certification, NYC SBS offers a mentorship program which provides both workshops and one-on-one technical assistance. To get in touch with NYC SBS please visit the web at https://www.eventbrite.com/o/nyc-department-of-smallbusiness-services-5423713077 or contact via email techassist@sbs.nyc.gov or phone 212-513-6444.”