Tips From The Staff/Board

Are Husband/Wife Businesses WBENC Eligible?

It’s a question we get so very often.

“If my husband works in my business, can I get certified?”

“I’m a 100% women-owned business. How is it fair to allow husband/wife teams to be certified?”

Let’s break down the eligiblity criteria to get a true understanding of why some businesses are eligible and why some aren’t… and how we keep things unbiased and equitable for women.

So are husband/wife (or sister/brother, father/daughter) teams eligible for WBENC certificiation? The short answer is… it depends.

Some women build their business completely on their own with blood, sweat, and tears. Other women build their business with blood, sweat, tears, and a male family member by their side. Either way, it is our goal to economically empower these women, and ensure they are able to have a fair shot in the procurement world.

But the unfortunate reality is that there are male business owners who will put the extra 1% in the hands of a woman (wife or otherwise) just to be able to claim that they are a women-owned business. Not only is that fraudulent, but it undermines the foundation of what the certification stands for- to create economic equity for women entrepreneurs and equal access to contract opportunities.

The goal is not to give women-owned businesses an advantage over male-owned businesses, but to help put them on an equal footing. After all, it wasn’t until 1988 that women were legally allowed to obtain a business loan without a male co-signer.

Many women-owned businesses rely on this certification to provide equal access, and it’s WBENC’s job to ensure we uphold the standards so only businesses that are truly women-owned AND women-run are certified.

That’s right, the certificate is not just about ownership (a very common misconception).

So if you work with your husband, or son, or grandfather, or male best friend, here are the questions you need to truly ask yourself before you apply:

Is this MY business?

Do I have the final say on all decisions? Do staff and clients defer to me as the head of the business and final decision maker? Am I actively exercising decision making power on a daily basis? Do my legal documents (bylaws or operating agreement) protect me as the final decision maker? If I have another job or am retired, am I a passive decision maker or truly overseeing and driving the daily operations?

Is this my industry?

Am I the one who has the foundational industry knowledge? Can I adequately evaluate the work that my staff and male partner do daily? If my male partner were to leave the business immediately, would I be able to easily take on and delegate his responsibilities? If I disagree with a technical decision that my male partner makes, do I have the expertise to back up my opinion, and will my male partner defer to me?

Am I reliant on any resources from my male partner?

Does my male partner hold a license, have specific contacts, or own/operate a piece of equipment that’s necessary to fulfill my projects? Am I able to get my own clients and contracts, or do they primarily come through him?

Is my business intertwined with another family business?

Does my male partner own or work in another business in a similar industry? If so, do we share employees, clients, or equipment? Would I be able to run my business if this other business and its assets immediately ceased to exist at this very moment?

Can I fire my male partner?

(Yes, we said it.) Family dynamics aside, do I have the legal power to fire him, and the confidence to immediately run the company successfully without him?

What’s my geniune motivation for pursuing this certificate?

Am I being honest with myself about the questions above? (It’s an unfortunate reality that we have to ask)

Examples of NOT Eligible Business Scenarios

(note that we can never promise certification without fully reviewing the whole application for all eligiblity criteria)

  1. A construction company was started by John Smith ten years ago, and about five years ago his wife Jane Smith joined the company as the administrator and CFO. Earlier this year, John saw that he could get a big contract if his company was women-owned, so he gifted 51% of shares to his wife and gave up his title as President to her. Though John has a new VP title, he is still driving the same daily operations and exercising day-to-day decision making power. While Jane is working full-time in the business and is generally knowledgeable about the operations, she does not have the technical expertise to oversee the field work, estimating and projects without her husband.

    Why it was denied: Jane does not have the industry expertise to run this business without her husband.

  2. After retiring from the family marketing firm, the previous owners hand the business over to their children, Jane, who will be President, Joshua, who will be VP, and Jack, who will be CFO. Jane owns 60%, while her brothers each own 20%. Jane meets the majority of WBENC criteria as she holds the majority ownership, has the highest title, is experienced in the industry, and is driving the day to day decisions and operations. However, to put her on equal footing with her co-owners, their bylaws state that all major business decisions must be made by unanimous consent of the 3 owners.

    Why it was denied: Jane’s governing documents do not give her total control over the business. Her male co-owners can veto her business decisions. Learn more about ineligible clauses in governing documents.

  3. Jane Smith started a bookkeeping firm five years ago to manage the finances of her brother Jacob Smith’s utility company, ABC Light Co. Jane’s only client is ABC Light Co., and Jacob encourages Jane to apply for WBENC certification so that they can use it to obtain contracts.

    Why it was denied: Jane is reliant on ABC Light Co., a male-owned business, as her only client, and would have no revenue without it. Plus they plan to fraudulently use the certificate for Jacob’s contracts.

  4. Joe Smith has a CDL and is an experienced trucker. His mother, Jane Smith, recommends that they start their own small trucking company, with her as the President and 100% owner. She will manage the office and he will drive the truck that he owns to complete projects.

    Why it was denied: Jane doesn’t have a CDL or expertise in trucking, and couldn’t complete projects without Joe.

  5. Jane Smith ran her business successfully for 40 years. While she still hold 90% of shares and once a month has a board meeting to sign off on major decisions, Jane’s son Jim now owns 10% of shares and is running the daily operations as the Manager.

    Why it was denied: A woman must hold the highest title and be overseeing the daily operations

Ultimately, we will eventually get a clear picture of your business, whether through our face to face conversation with you, or through the dozens of pieces of documentation that we review. WBENC is the gold standard certification because of this rigorous review, and it’s why so many corporations and government agencies accept it.

And for those doubters who scoff when they see a man out doing a sales pitch on behalf of his wife’s business, ask yourself: if the roles were reversed and you saw a wife pitching her husband’s business, would you react the same?

So yes, while we have some certified businesses that are husband/wife, mother/son, or father/daughter co-owners, when we certify someone, we are confidently saying that this business is run by a woman at the helm with the expertise, independence, and decision-making power to do so.

Up next: 7 Things All Business Owners Need to Know About Supplier Diversity

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