Thursday, October 1, 2015

Support the Economy: Get Certified!



As most NGLCCNY members are likely aware, NGLCC is the only body that certifies businesses that are at least 51% owned by LGBT individuals. As many of you are also likely aware, we are constantly encouraging you to have your business (or a business you work for or know of) certified by NGLCC if it is eligible. Some of you, including many of you who have obtained NGLCC certification as an LGBT Business Enterprise (LGBTBE), may not be aware of the benefits and full impact of your certification. 

A likely and certainly correct initial response to the question of why certification matters is that it enables the LGBTBE an opportunity to “get its foot in the door” of NGLCC’s Corporate Partners, other Fortune 500 companies, and federal, state and local governments. After all, one of the core reasons for the development more than 40 years ago of supplier diversity programs, which exist today in both the private and public sectors, is to ensure that businesses that traditionally have been underutilized in supply chains -- businesses owned by minorities, women, veterans, and more recently LGBT individuals -- be given opportunities to actively participate in procurement opportunities that historically were not (and in many instances, presently are still not otherwise) available to them. 

Although certification may help get that foot in the door, it is critical to remember that certification does not guarantee business opportunities. Certification is only as beneficial for your business as you allow it to be. It is therefore mostly beneficial if you put your best foot forward into that doorway. In other words, if certification enabled you to obtain a meeting with an NGLCC Corporate Partner, Fortune 500 Company or government agency, use of your LGBTBE certification has likely been maximized. It is now time for you to do what you do best -- sell your services or products. No Corporate Partner, Fortune 500 company, or governmental agency will care that your business is certified if you do not sell your services or products in such a way that they learn why hiring your business is more beneficial than hiring any of your competitors. 

Likewise, some of you may seek to enter a supply chain through connections other than certification and ultimately be considered among a handful of other suppliers that are considered to be equally capable and at a similar cost. On such a level playing field, your LGBTBE certification may be the deciding factor that gets your business that opportunity. 

While many of you may see LGBTBE certification as just a means to get your best foot in the door or as the deciding factor to get your business a particular opportunity, there are greater implications for us, as a community of diverse suppliers, to consider:

The Small Business Administration has conducted studies that show that diverse and women owned businesses are the fastest growing segments of the United States economy. For all of us LGBTBEs, that is a great fact, but does that growth have an impact other than benefitting each of our businesses and therefore our pockets? A recent study commissioned by the National Minority Supplier Development Council (NMSDC), authored by Scott Anthony Vowels, Ph.D., emphatically argues that this growth has a tremendous impact on the greater United States economy. 

Based on figures provided by NMSDC, the study opines that certification results in excess of $400 billion -- yes, billion -- per year. That equates to more than $1.1 billion per day! And those figures do not include other diverse owned businesses certified by other certifying agencies such as NGLCC and The Women’s Business Enterprise National Council (WBENC). The study further states that, due to that $400 billion in business, approximately 2.2 million jobs are either directly or indirectly created and/or preserved.

The effects of hundreds of billions of dollars in business due to the inclusion of certified suppliers in supply chains do not just benefit those suppliers. There is actually a significant positive impact on the general economy. For example, when a certified supplier, such as an LGBTBE, is awarded a contract, often times that LGBTBE will need to hire additional employees, subcontract a scope of the work (hopefully to another LGBTBE), and purchase certain supplies in order to fulfill its obligations. This domino effect of spending trickles throughout the economy. In addition, each of these LGBTBEs is paying additional (in proportion to their increase in revenue) federal, state and local taxes. (Keep in mind that many large businesses for which the LGBTBEs are performing work enjoy significant tax breaks.) Small purchasing acts in local communities create big impacts in the economy, such as creating jobs and wealth as well as increasing tax revenue that will further support local communities.

Taking it another step further, each of the LGBTBE business owners, their employees, their subcontractors, etc. are enjoying increased income, enabling these individuals to spend on every day needs as well as extras. Because most people tend to spend money within their communities, whether that means going out for dinner, buying groceries, or purchasing entertainment, much of that income is being spent at other LGBT owned businesses, thereby providing further strength to the LGBT community.

The NMSDC study concludes by suggesting that diverse owned businesses will contribute to as much as 70% of the total increase in purchasing power between 2000 to 2045 and that the number of minority business owners is growing at a rate of 17% annually -- that is six times faster than the growth rate of all firms. Although there has not yet been a similar study specifically for LGBTBEs or for all certified diverse businesses, it is clear that certification is providing significant benefits that touch more than just your certified business.

To read the complete NMSDC study, please visit here.


Written by Robert F. Finkelstein, Esq., NGLCCNY Supplier Diversity Chair. Rob is a partner at Finkelstein Platt LLP, a general practice law firm, with practice areas including commercial litigation, construction law, general business law, and employment law.


Rob can be reached via email at Rob@NGLCCNY.org

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