Finances FYI Presented by JPMorgan Chase
Supplier diversity is a crucial part of an organization’s success. It’s a way for companies to promote innovation, cultivate networking, boost hiring, and perhaps most important of all, a way for companies to experience the many benefits of diversity while taking steps to close the racial equity gap. It’s no secret the past year has seen a crucial wave of racial justice and social consciousness. Now more than ever, consumers and companies alike are prioritizing businesses that are actively addressing diversity, equity and inclusion. They’re seeking out diverse suppliers – defined as businesses that are at least 51% owned and operated by underrepresented groups – in an effort to address racial injustice and support minority entrepreneurs.
According to the Billion Dollar Roundtable, 28 Fortune 500 companies spend at least $1 billion each year with diverse suppliers. These are some of America’s leading corporations actively looking to spend money with diverse-owned businesses. So, what does this mean? Being certified as a diverse supplier is more important than ever. Certification not only creates new business opportunities with larger corporations, it also increases access to resources and support. It serves as proof that your business is diverse, stable and ready to take on new growth opportunities – and it’s an important step for diverse small business owners looking to grow their business.
To learn more about the opportunities exclusively available for diverse-owned businesses and how the process works, we sat down with Edward Gay at JPMorgan Chase Commercial Banking, who provided these helpful insights on exposing and promoting your business.
The Medium: Why should diverse-owned businesses get certified?
Gay: Every business is in the relationship business. With the right connections, diverse small business owners can develop new ideas, avoid common (and costly) mistakes and uncover emerging opportunities. Getting certified as a diverse-owned business builds connections with other like-minded businesses, as well as hundreds of U.S. companies, representing billions of dollars in sourcing.
Further, diversity certifications serve as proof that your company meets inclusion program requirements and can be considered for supplier contracts with large companies, such as JPMorgan Chase, that go through formal procurement processes, as well as the federal government. Getting certified is the best way to be considered for these opportunities. Many private enterprises dedicate a percentage of their annual spend to certified diverse companies, so uncertified businesses are missing out on potentially lucrative contracts and growth opportunities. For example, more than $83 billion is spent each year with diverse suppliers of the Billion Dollar Roundtable. The federal government also allocated 16% of its $400 billion annual budget on products and services to diverse small businesses.
In short: Certification opens doors to places where diverse-owned businesses have been often shut out in the past.
The Medium: What are the benefits for minority-owned businesses to get certified?
Gay: Many opportunities are available exclusively to certified diverse-owned businesses. Certifying your business is an investment in your business, like when you apply for a loan. The time spent now collecting documents and meeting with people can pay off for years to come.
Some of the most significant benefits include:
• Business Opportunities. Top corporate purchasing agents are looking for diverse businesses. By getting certified, businesses are entered into a national database where customers go regularly to find companies that can meet their business needs and advance their diversity goals.
• Access to Capital. Certification provides companies with additional financing opportunities through banks and venture capital firms. Plus, many networks have dedicated pools of capital for diverse businesses.
• Meaningful Support. Certification organizations invest in the success of their member businesses. They often provide educational sessions, training, networking events and matchmaking programs that can enhance business opportunities for connections and growth.
• Access to Supplier Diversity Programs. Companies are now making a conscious effort to work with diverse-owned suppliers. Some have created special supplier diversity programs that cultivate relationships with other diverse-owned businesses, provide information sessions on how the company approaches procurement and host educational sessions.
• Referral Opportunities. Networks are powerful because they allow business owners access to hundreds of people they don’t already know. By entering one of the certification networks, diverse-owned business owners open new opportunities through direct relationships, and also through referrals.
As a certified diverse-owned supplier, you’re not only on their list, but potential customers are also on yours. Business owners can reach out directly to corporate supplier diversity teams to ask questions and explore opportunities, and they can contact other diverse-owned businesses to explore opportunities for collaboration.
The Medium: What does the official accreditation process entail?
Gay: There are many ways your company can become certified as a diverse-owned business. Each certification is designed for a specific historically underrepresented group, so each type of diversity certification has its own requirements.
Generally, supplier diversity certifications are available to companies that are at least 51% owned and operated by members of historically underrepresented groups, including ethnic minorities, women, veterans, members of the LGBTQ+ community and people with disabilities. Supplier diversity certifications are available through many organizations, including the National Minority Supplier Development Council, the Women’s Business Enterprise National Council, the National LGBT Chamber of Commerce, Disability:IN and the National Veteran Business Development Council.
The Medium: Why do you think there is reluctance among minority-owned business owners to get certified?
Gay: The certification process can be time consuming, so some minority-owned business owners hold off on getting certified. The rigor of the process ensures high standards and trust – and ultimately, ends with deserving minority-owned businesses being eligible for significant growth opportunities.
The time invested is well spent. Across every industry, many companies are making significant investments to meet the needs of Black and Latinx communities. For example, as part of JPMorgan Chase’s $30 billion commitment to advance racial equity, the company is increasing lending and technical assistance as well as spending an additional $750 million with businesses in Black and Latinx communities.
The Medium: What resources does JPMorgan Chase provide to help diverse businesses get certified?
Gay: JPMorgan Chase Commercial Banking has designated resources to help educate business owners about the game-changing effect of becoming a certified diverse-owned business. From general facts about the certification itself to landing procurement opportunities, business owners can learn more by accessing this how-to guide or visiting https://www.jpmorgan.com/commercial-banking/insights/benefit-from-diverse-owned-certification.
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