The Diverse Supplier’s Guide to the Galaxy

For small, diverse business owners, every attempt to win a contract may be like trying to take a trip to another galaxy. Why? The status quo. Your revolutionary product is met with, “well, we've always done it this way ...” The company you want to work with “has always partnered with Supplier X, a nonminority-owned company.”

And yet, women- and minority-owned businesses are booming. According to the U.S. Census Bureau, the number of women- and minority-owned businesses continues to rise faster than nonminority-owned firms. Women of color in particular are outpacing all other segments: While the number of women-owned businesses grew 114% from 1997 to 2017, firms owned by women of color grew at more than four times that rate (467%), according to a report from American Express.

In conjunction with the increase in women- and minority-owned businesses, study after study shows that companies with strong supplier diversity programs see greater return on investment, lower costs, more innovation, and an overall positive impact on their bottom line. Yet despite the increased emphasis on corporate supplier diversity, women- and minority-owned businesses still account for a much smaller percentage of corporate spending than nonminority-owned firms.

This can be disheartening, but here's the good news: you don't have to fight the status quo alone. An entire galaxy of support and guidance is available to you. Supplier diversity professionals are ready to advocate for you within their firms, and supplier diversity councils have developed resources especially to help your business grow and succeed. The tools and educational opportunities available for diverse suppliers now are astronomical.

In the Diverse Supplier’s Guide to the Galaxy, we will cover several of the challenges diverse suppliers encounter and the solutions to resolve those challenges.

Gaining third-party certification as a diverse business is a must-do to make yourself more attractive to larger companies you want to do business with. In the past, businesses could “self-certify,” attesting to their minority status by filing a form with the U.S. Small Business Administration, but now more than half (53%) of companies are requiring third-party certification to insure the integrity of their own supplier diversity programs.

As a general rule, a diverse business is defined as one that is at least 51% owned and operated by a person or persons who are U.S. citizens or lawful permanent residents and belong to a minority group, e.g. people of color, women, LGBT individuals, military veterans, disabled individuals, etc.

The firm must also have its principal place of business (or headquarters) in the United States and be formed as a legal for-profit entity in the United States. Additional criteria may be required by third-party certification entities, so be sure to read the applicable standards carefully.

The Benefits of Certification

Attaining diversity certification is by no means a guarantee that you'll win contracts with your dream customers, but it can provide you with tools and access to be in the same orbit. Here are a few of the benefits you gain with third-party certification status.

Access to capital – Thanks to the U.S. Small Business Administration's guaranteed loan program, small and diverse businesses have better access to business loans and lines of credit through private lenders and banks.

Access to business development resources – Whether through your local council or through companies with diverse supplier development programs, certification opens up a world of business development opportunities designed especially for diverse suppliers and the challenges you face.

Access to networks – A strong professional network is a crucial factor in a business’s success. As a certified diverse supplier and member of your certifying body, you gain access to a network of similar small businesses, federal buying entities, and larger firms invested in your success.

More attractive to companies with supplier diversity programs - Third-party certification allows companies you supply to confidently include you in their diverse spend reporting, assured that if (when!) they are audited, your valid certification strengthens the veracity of their supplier diversity program.

How to Gain Certification

The certification process verifies that you are who you say you are: a diverse supplier. While each certifying body has its own process, they are similar enough to each other that a general overview will give you an idea of what to expect.

The first step is to decide which certification(s) applies to you. Maybe you're a Black man who owns your own business—then the National Minority Business Development Council (NMSDC) can certify you. Maybe you're a Hispanic lesbian—then you should look into NMSDC certification, and Women's Business Enterprise National Council, and NGLCC: The National LGBT Chamber of Commerce certification.

Once you've ascertained which certification is most appropriate for you, there are four basic steps for completing the application process:

• Create a profile – Each certifying entity maintains its own database of certified members. You will need to access the entity's website and create a profile for your business to get started. Be clear, accurate, and thorough because this information will eventually be made available to potential partners.

• Submit supporting documentation and fees – After you create your profile, someone from the certifying body will contact you with information about which documents are required to verify your status as a diverse-owned business. This ranges from your business license to a business history to personal identification verifying minority status. Most certification entities also require a sworn affidavit regarding accuracy and access to information. Note that all certifying bodies charge a non-refundable fee for the certification process, although some will waive the fee if you are a member of your local council.

• Complete a site visit – A trained site visitor will arrange to meet you at your place of business to complete the site visit. You'll need to set aside a few hours for the site visit, depending on the size of your business. Be prepared to answer questions about your business and give a tour of the facilities. The business owner must be present at the site visit.

• Submit for review by committee – The final step in the certification process is a formal review of all supporting documentation as well as the site visit report by the certifying body's review committee. This committee decides whether or not certification requirements have been met.

A note about confidentiality: Carefully read the section in any affidavit or other paperwork to ensure that the information you provide during the certification process is held in strictest confidence. Any documentation, as well as information received during the site visit, should be subject to non-disclosure agreements signed by all parties involved. A reputable third-party certification entity will provide a confidentiality agreement as standard practice.

If this all sounds like a galactic amount of work on top of running your business, don't worry; resources exist to help you with the certification process. Independent consultants and firms will handle some of the tasks for a fee, but your local diverse supplier council is your most valuable asset.

Many regional councils offer regular certification workshops to help business owners navigate the process. Although they cannot guarantee the success of your application, they are well-versed on the entire process and can provide invaluable guidance and support. A quick online search should yield contact information as well as news of upcoming events related to certification presented by your local council.

 

Diversity certification makes you more attractive to potential business partners, but if you stop at attaining that status, then you're essentially setting your business adrift in space. In addition to getting certification, here are some ways to stand out to supplier diversity professionals.

Supplier Portal

Supplier diversity professionals use supplier databases to search and identify potential diverse-owned businesses to add to the supply chain. Maintaining an accurate, thorough, up-to-date profile makes it easier to find you and your company.

Your primary goal when registering with a supplier portal is to show up in relevant searches. You don’t want to spend time creating an in-depth profile only to have it fall into a blackhole. You want your profile to stand out from the crowd in a simple search, and appear at the top in targeted, detailed searches.

To maximize your profile, you need a brief but clear company description, concise product descriptions so it’s easy to understand what you do, keywords that are relevant to your core, niche offerings as well as your preferred client or industry, NAICS codes, honest revenue information, and up-to-date references.

That’s a lot to remember, so we have a handy checklist for you. We recommend creating a document with this information so you can easily find it and input the information in a supplier registration portal without needing to recreate it every time.

Supplier Registration Best Practices

• Perfect your company description: Describe who you are and what you do in no more than two lines. Be specific!
• Clarify product descriptions: Include clear, concise product descriptions so anyone can easily ascertain what you offer. Avoid vague buzzwords.
• Define keywords: Make sure you show up in the right portal searches by selecting keywords that are relevant to your core, niche offerings and are client or industry specific. Keywords should be specific and narrow your scope.
• Use correct NAICS codes: Use only specific and correct NAICS codes, and limit yourself to three.
• Report accurate revenue: Be honest and accurate when entering revenue information. Buyers often search within a revenue range; don’t miss opportunities because you’ve left this field blank and excluded your company from appearing in search results.
• Include references: Include up-to-date references in your profile—the more industry- and client-relevant, the better.
• Be thorough: Don’t simply fill in the minimum information required for your profile. This is another opportunity to pitch your company, so leverage it! Make procurement’s job easy by giving them clear, accurate information about what you have to offer.
• Stay updated: Most portals have autonotification for expiry dates (diversity, insurance, etc.); make sure you update your profile annually on your certification renewal date to insure potential clients have access to accurate information. Quick Tip: Add a calendar event 51 weeks out from when you create your profile. This will give you two layers of notification that you need to update expiring documents.
• Be selective: Complete a profile for only the product or service you have identified as having the most opportunity (don’t be a jack-of-all-trades) and those products or services relevant to the customer’s business (target, target, target).

Networking

You're just a profile in a database until supplier diversity professionals put a face with the name, so get out there and network! Your local diversity council hosts regular networking events that bring together local small and diverse businesses as well as larger companies looking for potential suppliers.

Also, be on the lookout for corporate-sponsored or hosted events for diverse suppliers, such as Toyota's Opportunity Exchange or Coca-Cola's Business Forum and Supplier Showcase. These may require an invitation to attend, but an email or phone call to your supplier diversity contact at the company should get you on the list.

Your council's national conference is another ideal place to network with decision makers, supplier diversity professionals, and other diverse business owners. These conferences usually offer matchmaking opportunities as well, letting you bypass corporate gatekeepers and get your pitch in front of buyers.

Building a relationship takes time and patience, but companies do business with people they know and supplier diversity professionals are your advocates. Make it a priority to be a familiar face with a stellar pitch so you're top of mind when opportunities arise.

Unless your ancestors were galactic overlords, chances are you started your business with limited access to capital. Now you want to scale so you can go after larger contracts. High interest rates, low or nonexistent credit, minimal collateral—these are just a few of the obstacles you might face when seeking additional capital to invest in your business. Fortunately, as a certified diverse-owned business enterprise, some of those obstacles have been removed, or at least reduced.

As mentioned in the Certification section, one of the many resources the Small Business Administration provides is access to loans. Instead of loaning the money directly to small businesses, the Administration sets loan guidelines with partnering lender organizations around the country. The SBA guarantees these loans will be paid, which means small businesses (like you) generally receive lower interest rates and fees compared to non-guaranteed loans.

Most states also have community lending organizations to help small and diverse businesses grow. Check with your local diversity council for possible sources of capital.

You started your business with a great idea for a product or service. You devoted all your time and energy to launching that first product or signing that first client. Now you're ready to scale up, but how? It's time to invest in you, the CEO and president.

If you’re ready for an intense, life-changing experience, apply for a program such as the Advanced Management Executive Program at Northwestern's Kellogg School of Management in collaboration with NMSDC, the Tuck-WBENC Executive Program at Dartmouth's Tuck School of Business, or the LGBTQ Executive Leadership Program at the Stanford Graduate School of Business.

These programs are designed with business owners in mind, providing intensive courses covering a range of topics to help you get laser-focused on how to grow professionally. Several Fortune 100 companies have scholarships available for one or more of these programs as part of their supplier development programs.

Closer to home, your local diversity council offers a wealth of educational resources, such as workshops about everything from formalizing your business plan to pitching 101 to bookkeeping, led by people with skill and experience. Take advantage of these professional development opportunities offered by people who are invested in your success.

Are you a minority who is earning an MBA or has recently graduated? Several organizations geared specifically toward minority MBAs are ready to welcome you and help you succeed:

• Black MBA Association
• Hispanic MBA
• Reaching Out MBA (LGBTQ)

We've talked about how the certification process works and how it can help you be more attractive to potential clients, how certification can give you access to capital and professional development, and how to stand out in a galaxy of suppliers. But what if you still don't win the coveted contract?

There are four main reasons a diverse supplier's proposal may be passed over, all of which are fixable.

Lack of Capacity

Small businesses often lack the capacity to work directly with a Fortune 500 company. Procurement managers may review your proposal and wonder how you could possibly meet their needs given your current capabilities. Show your potential client that you understand their needs by including a clear, viable plan for scaling to meet demand as part of your proposal.

If you are not yet able to scale, ask about Tier 2 or Tier 3 opportunities. Start small as a supplier further down the chain. Take advantage of the business development opportunities, trainings, and resources at your local supplier diversity council and/or corporate partnerships to help you grow sustainably. Continue to improve and scale while proving your value as part of the supply chain.

Lack of Professionalism

Nothing sinks a pitch faster than lack of preparation. Research your potential client meticulously, then develop a thoughtful, targeted proposal that clearly demonstrates how you can meet their needs. Practice your accompanying pitch until you can deliver it confidently. Most regional supplier diversity councils offer workshops and coaching for fine-tuning pitches and proposals. Use the resources available to you!

One of Many

Many companies are pursuing the same opportunities you are, and, of course, you will bear similarities. Help your firm shine brighter by showing a thorough understanding of the company you're pitching—what they do, who their customers are, problems or challenges they're facing, relevant trends in the industry—and how you can meet their needs. Your pitch and proposal should focus on how you will solve the company's problems, not your firm's story or accomplishments.

Not the Right Fit

Maybe you're just not the right supplier at this time. That doesn't mean your efforts have been wasted. You've laid the groundwork with this potential customer by networking, learning everything you can about them and their needs, and preparing a stellar proposal—build on that. Continue to nurture the relationship by updating your supplier diversity contact about major milestones, new products or services, and major awards or recognition from your industry.

Now go a step further and ask for feedback about your proposal. Supplier diversity professionals are usually happy to show you how to improve your proposal for next time, and demonstrating that you are willing to learn makes a memorable, positive impression.

Diverse, small businesses face a lot of challenges on the way to business success. Certification as a diverse-owned business enterprise, coupled with the resources available to certified businesses and the help of dedicated supplier diversity professionals, can provide a map to the stars. supplier.io helps connect diverse suppliers with larger corporations, forever changing the trajectory of both organizations. Visit our portal at supplierone.com to learn more.