How Minority Certifications Can Boost Your Business | Ep. 357

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It's the Money Talk with Tiff podcast.

Hey, everyone.

I am so excited because I have Suzanne Marika on the line, and she's here to talk to us about something we've never talked about on the podcast before, and that is minority business certifications and how those can play into government contracts. So, hey, Suzanne, how are you? Hi.

Hi, Tiffany. I'm glad to be with you today.

Yes. And I'm so glad to have you because like I said, we've never talked about this, and I just want to go ahead and hop right in.

So when we're thinking about minority certifications, what does that even mean for our audience?

So what a MBE certification is, is that it's a certification that your company is owned 51% or more by an ethnic minority.

So a person of color, it could be Asian, African American, Hispanic, 51% ownership of that company must be by a person of minority that's considered a minority from that classification and to be considered a minority business. There's also women's certifications, too, where a business is 51% owned by a woman. That can be a business that's certified as a wbe.

Nice, nice. And I feel like sometimes as business owners, we hear about these programs, but sometimes not. Like, is this on a national level? Is it on a state?

State level? Like, where? How could we get the city level?

You know, it's a variety of different levels. You may have it on your state level, you may have it on your city level. There may be local levels, like your county may have a program.

There are federal programs, too, like your 8A programs also, that you can get into. So there's a variety of different ones.

And usually sometimes there's a relationship with the certification entities where they'll honor one certification if you're automatically done certified by another. But it can be on various different levels, those certifications.

There's even certifications in the private sector, for example, if you're wanting to do business with some of the businesses, like Coca Cola, you may go through the National Minority Supplier Development Council in order to get certified for those.

Nice, nice. And, you know, our audience might be thinking, so what's the point in doing these certifications?

Because I know from my experience it is a long process in some cases as far as, like, the documentation, documentation they need and so on and so forth. But what are the benefits of getting It.

So there could be, you know, you're right. Absolutely, Tiffany. It could be a long process depending on the entity that you're going through.

They're going to be a lot of times they'll come out and interview, they'll ask for your tax returns, they may look at your financial statements, they may interview some of your customers. So you're absolutely right in that it can be a long process in order to get those certifications. However, there are many benefits.

You know, a lot of times if you're going through the National Minority Supplier Development Council and let's say you want to do business as one of the larger companies that are out there as maybe a subcontractor that's working under a prime, those.

A lot of times those entities offer educational programs where they connect you with different resources to talk about different opportunities within businesses. That may be a learning opportunity. They may offer scholarships, they may offer connections with various funding sources.

So if you have a large contract and you need to get into factoring or you need to have a loan, those entities may connect you with those type of sources too to make that happen for you.

Very interesting, very interesting.

And I know one more thing I want to throw out there as a benefit too because I have a couple of certifications in North Carolina with one of those, when it was around Covid, just because I was certified, I had access to grant money and I ended up getting funded twice from the state of North Carolina for my for profit business. And so I just wanted to throw that out there as well. That, you know, that's another benefit to these certifications.

Absolutely. You have no idea what might be coming down the pipeline. And a lot of times those set asides are done through those different types of programs.

Yes.

Now you mentioned being subcontractor or contractor and you know all of this terminology when it comes to working with the government, whether it be state, city, local, whatever the case may be.

Now when we're thinking about how you mentioned, you know, you can be a subcontractor or a contractor or whatever the case may be on a government contract, how do these certifications play a role in that? Like do cities have to have a certain amount set aside for minority businesses or is there any stipulation like that?

So a lot of times cities will have goals that they'll, they'll want to do businesses with. They'll want to do business with minority or women owned businesses.

So they may have a 5% set aside goal where 5% of their contracts are awarded to minority businesses.

Now sometimes what happens in these contracts is that a contract will be rewarded to or awarded to a larger company that may be more experienced in that particular area.

But what they'll do is they'll require that, that that larger contractor, which we'll call the prime because they're the primary contractor on the, on the engagement, they will subcontract with a minority or woman owned small business and that that business will now get exposure into the larger contract, but then they'll have a portion of the revenue that will go towards that contractor for the work that they're doing.

Gotcha, gotcha. And as a business owner, I'm like, where do I find these opportunities?

Like how, how do I know when someone gets awarded for something and they're looking for me as a minority business if I already have my certifications?

So I think it's important first of all to know what you do and where you can add value at in these entities. So for example, you know, being an accounting firm, I'll give you an example. You know, there's different opportunities in auditing for us.

There's different opportunities for fractional CFO services if they're having a joint venture on the private side. And so first of all it just becoming aware where you can add value into these different entities.

And one of the first things that I would look for is, you know, first of all getting certified within those entities because you never know when an RFP might come out or request proposal might come out. That's looking for the type of work that you do.

And so by at least eliminating that barrier and getting your certification when that opportunity arises, you're able to jump on it. So, so first of all, just getting certified. So first of all on your local level, what certifications are required from your local city?

I know we live in a port city, so our ports also have a certification. With that the state has a certification.

And then if for any of us that have been business for a while that wants to go on a national level, there's the 8A program that you may qualify.

So first of all just, I call it just sprinkling the dust and getting certified with all the entities that are available, the next thing that you want to do is I would go ahead and schedule a meeting with whoever your, your most likely buyer would be. So look at, you could start with the procurement office, say hey, this is what I do.

Who in your city or your governmental entity purchases these type of services?

And a lot of times they'll connect you with who that potential buyer is or that End user and then it's scheduling that conversation of hey, this is what I you and is there an opportunity for us to help you?

I always think that the more hands you shake, the more people that you get to know before you get a, before that RFP comes out, the better your chances are in terms of one, knowing who you're sending that proposal to. So they're going to recognize you. That name recognition goes far. And second of all, you're already starting to build that relationship.

They know who you are, they know some of the work that you've done. You've already shaken a hand versus a cold RFP or cold proposal that they might be receiving and you're no different than anybody else.

The next thing is signing up to receive those rp. You never know when that RP is going to come out. That's going to be for the services that you can provide.

And so you want to be on that email distribution list so that you receive those proposals that are coming out. And so now it's a matter of watching for those proposals. I always say to you it's a good idea to grab the prior bid tabulation.

So, and of course you want to grab that before the RP comes out because you want to see what is the competitor charging. Just to get an idea of is this a contract that's even worth me bidding for? Right.

Because of the competitors charging below price or below cost that might not be in a contract you may even want to pursue.

So looking at from that perspective, you know what, getting a copy of that bid tabulation, finding out what the government is currently paying, find out who is the prime that's already on that contract is, is there an opportunity for me to even meet that prime if I'm not going for prime and I'm, I'm interested in just being a subcontract, maybe, maybe there's an opportunity for me to shake hands with the prime contractor and let him know or her know what I do because there might be an opportunity for me to partner with them as a subcontractor.

So again, building that relationship before the RP actually comes out so that it's a warm lead versus a cold lead by the time that you're bidding, bidding or the things that you want to do.

Yes, yes, I love that. That is a few gems sprinkled in there, what you just said.

And one of those being connections, I think as small business owners, just in general with the ones that I've worked with, we're scared to reach out ahead of time. Like, we might see the rfp and we're like, oh, let me go, you know, put my bid in for this. But we're not making any connections ahead of time.

So I love that you mentioned that.

Oh, yes. I mean, relationships are so important.

And that's another benefit, too, of getting your certification, because they do have events where they're networking events that gives you an opportunity to shake hands with other contractors, other vendors, and getting to know what. Who does what in what industry. You know, you never know when there's an opportunity to partner with. So that's another benefit of becoming certified.

Yes, yes. Now, when expanding into government contracting, what works and what can lead to disaster?

Because it sounds like we talked a little bit about what can work, but what are some things that can lead to disaster if we don't step right.

So I think the first thing that's important for a business is to have a realistic understanding of the cost that's required to bring your best work to market. I think a lot of times, you know, as. As MBEs, we're used to making things work, right. If we have a $5 budget, we can make it work on a $5 budget.

But the reality is that's not going to be our best work, and that's not the work that we're probably going to be able to grow our business in a way that we're going to be proud of in the future. And so it's first of all, having a realistic understanding of the cost that's required to bring your goods and services to market.

Because one of the worst things that you can do in a RFP or request for proposal is to bid below cost. Because now you're running at a loss and you've contracted yourself to do this contract and you have to finish the work.

You may even be bonded to finish to work, and it will destroy your credit if you do not finish this work. And now you're forced to take loans knowing that you'll never recoup the funds and you'll always run out of loss.

So, first of all, making sure that you understand your cost and making sure that the price that you're bidding in not only allows you to cover your costs, but allows you to create a profit with that also is also important.

And I know that's one thing that a lot of business owners struggle with is pricing. And I feel like part of that is for that reason not knowing our costs.

Like, we have to know how much we're spending out in order to see what would be profit. Like what would be a profitable price for this? Or bid? You know, if it's a government contract. So I love that you mentioned that.

Exactly. And costs, it includes a variety of things. Right? It includes labor costs. Even if it's your own labor, it includes opportunity costs.

What else could I be doing right now in the world that would allow me to make more? Sometimes saying no bid is the best response that you can give. Material costs. And even service based businesses have material costs.

Then there's overhead, like your utilities, your rent, your support staff.

You may need more to that as you get larger contracts, your office supplies even, and these are variable costs and they're going to increase as your volume increases. And so as a business owner, we have to understand the cost that's required to bring our goods and services to market.

And it's not just an addition thing, it can be a multiple thing. For example, if I'm growing this rapidly and taking on a large contract, my current location may not be enough to support this contract.

I may need to even get a bigger warehouse. And so understanding that is really important to know up front.

Yes. And another thing I want to put out there too is collaborating as well.

So like for instance, somebody I know that's in my industry, she's like, hey, Tiffany, I'm about to put in for this. Do you want to be a part? And I'm like, sure. And so also that's another thing I wanted to mention as well. Like one person can be the prime.

Like you said, somebody can be a subcontractor. But don't be afraid to partner with people already in your industry.

Exactly, exactly. And I also think it's important too to as much as you can.

You know, I think there's a tendency for people to get into commoditized spaces, meaning that spaces that there's a lot of competition. I'll give you an example. Like cleaners, janitorial. And now when you're in that sector, there's a lot of competition for that sector.

And when you have a lot of competition, you have people that may not be thinking about the cost that's involved in bringing their service into contract. They're just seeing the millions and they're thinking, if I keep a small part of this, I'm going to be a rich man. Right.

And they're not pricing responsibly.

And so if you're coming in with a reasonable bid and you're competing against a commoditized industry, for a lot of people that are willing to lowball just to get the Work, you know, that may be a waste of your time just filling out the paperwork. And so as close as you can get to sole source. And when I say sole source, that means what's an area that only you can do?

What is an area that you have a specialty in? Maybe it's a software that not many people know how to use.

Maybe it's a methodology that a lot of people don't know how to implement that methodology. That's where you want to head if there's. If there's that possibility.

Because the closer you get the sole source, the more profitable that contract is going to be.

Yes. I love that. Soul Source. Okay. And you have dropped so many gems on us today, I'm gonna have to rewind this back myself.

But if people were interested in learning more about you or any of this great information that you're putting out, where could they find you?

So I have a book. It's part of the Profit first family, and it's called Profit first for Minority Business Enterprises.

And there are chapters that we specifically talk about government contracting in terms of how it pertains to Profit First.

And so definitely, if you want to learn more about government contracting, the Profit first methodology, that would be the best way to do that through the book Profit first for Minority Business Enterprises, written by Suzanne Mariga. Now, I would also say for the book, for you guys that are wanting to get a copy of that book, you're also supporting a scholarship program.

We send a dollar for every copy of the book that's sold to a nonprofit called Hope Worldwide. And we send girls to school in Zimbabwe.

So, you know, the government typically pays for their college education, but a lot of times the families are on their own to pay for their primary education. Well, a dollar from our book goes to supporting girls education.

Yes, I love that. And I'll make sure I have a link to the book in the show notes as well. And Suzanne, what about social media or any other way they can reach you?

So I'm active on LinkedIn, so if you are wanting to learn more, just follow me and see things that I'm dropping. LinkedIn. Suzanne Mariga is definitely the way to go.

Perfect. And I'll have that link in the show notes as well. So thank you so much, Suzanne, for coming on the show today.

I know I need to get that book because this sounds very interesting. If you're dropping the type of gems that you just dropped here, I need to get there.

But thank you so much and I hope you have a wonderful rest of your day.

Thank you for listening, joining, and being a part of the Money Talk with Tiff podcast this week.

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