Many years ago when I was still working at WPEO NY (now WBEC – Metro NY) I spoke to a woman business owner who had been certified for a few years. When it was time for her annual renewal, she called me to discuss the ROI on certification.
She was torn about keeping up her certification. “I enjoy the networking with other business owners but I haven’t really gotten anything out of the certification.” I asked her a few questions. “What events had she attended? How was she following up? How did she get involved?”
Her response was unexpected but I realize now, pretty typical.
She said that she attended a few events but not regularly. She had developed relationships with some of the supplier diversity people but it had never resulted in new business. Then she said that all the business she had gotten was through another WBE who had subcontracted work to her. In fact, she was considering selling her company to that business.
When I pointed out that she had in fact gotten new business just as a second tier supplier, she responded that it “didn’t count” because she was being paid by another business owner who “didn’t care” whether she was certified or not.
This is when I learned a valuable lesson about managing expectations.
I realized that what I considered to be a win from the network – more revenue – was not what this business owner expected to get from being certified. Even though she had strengthened her relationship with her prime WBE through the network, she said that company would have done business with her anyway. The certification wasn’t a deal breaker.
What can you really expect to gain?
When I tell clients what they can expect from the supplier diversity networks, I’m careful not to guarantee that they will win corporate contracts. I do talk about winning new business. I clarify that new business may come from relationships built in the network, even if they are not prime contracts explicitly with corporate members.
In that case, what exactly is the ROI of certification?
1. Education – There’s a lot to learn about the supplier diversity network and doing business with large procurement organizations in general. One thing that the supplier diversity organizations have expanded a lot in the last few years is their educational programing. WBENC, for example, launched WEThrive, WEIgnite, and the Tuck capstone program all have an elevated profile in the network. The success of those programs has spawned industry specific groups like the Chemical Industry Accelerator or Women in Retail. And this is just one organization! It doesn’t include the other diverse business organizations, the regional affiliates, and governmental resources.
You may feel that you don’t need additional business education. In that case, I encourage my clients to “get on campus” as much as possible with potential clients both as a matter of making connections and doing market research on those clients.
2. Resources- The resources available to you within the network depend on the time and energy you have to leverage them. You can think of it as similar to any other organization, club or business development endeavor you engage in. You have to put something into it to get something out of it. So resources in this case might be events, additional organizations, and webinars. In addition to providing business owners resources like access to capital or access to experts, those opportunities can also be your chance to share your experience and expertise with other business owners in the network.
3. Connections – The connections with corporate members is the main selling point for supplier diversity organizations. I have benefited from those relationships first hand. But there are other connections that are just as invaluable.
As a WBENC star this year, I have made a whole new group of 13 other WBEs. We are investigating ways to promote our businesses and each other. Having them a text away is a gift that is unique to the network.
I’ve also started a joint venture with WBEs and Disability-Owned Businesses (DOBEs) so connections in this network have been downright transformational for me and my business.
4. Visibility – For companies to do business with you, they have to know about you and the network provides that. I wrote last month about pitch competitions. I covered what kind of visibility those provide and that is only one opportunity in the network for visibility.
5. Clients – Finally, the one you’ve been waiting for. Diverse companies are doing business with each other through the network. Corporations do business with diverse business owners. Diverse business owners contract with each other. Federal, State and Local governments buy from diverse businesses. There is prime contracting, second tier, and a plethora of other revenue generating opportunities.
Going back to our initial reluctant WBE, I tried to explain the above but at that point did not have that information at my fingertips the way I do now. In the words of Taylor Swift, I’m the problem it’s me. I often touted corporate contracts as the holy grail of certification, the true reward at the end of the certification journey.
I know now that it’s more nuanced than that and the ROI varies for different business owners, with different goals, in different industries.
At the end of our discussion, I encouraged her to reach out to her WBE prime contractor to see if that company, as a client, did in fact count her spend. It turns out, they were reporting it as second tier spend to a couple of corporate members so while her certification wasn’t a deal breaker, it did make a difference.