Retirement and succession planning can be full of emotions and questions. But one that business owners don’t often consider is… at what point in my succession journey is my business no longer eligible for the WBENC certification? Let’s walk through it all to help you understand when it’s time to stop renewing.
No longer WBENC certified? Looking for a new certification for your successor? Keep scrolling down for plenty of small business certifications with NO gender or ethnicity eligibility.
First, let’s look at your ownership:
Do your governing docs still give you full legal control?
Once you no longer hold 100% of stock, you need to figure out if you’ve given up any legal control.
Bylaws (for corporations) and operating agreements (for LLCs) often have very specific clauses about how shareholders vote on business decisions and how directors and officers are appointed. Whenever there is any ownership change, particularly when you start to sell or give your shares in the company away, you must consider how these clauses start to affect your ability to make unilateral decisions on behalf of the company.
Women owners must have total legal control to be WBENC eligible.
So what should you be on the lookout for?
Specifically, watch for “unanimous consent” or “supermajority consent” clauses in which male co-owners can veto you on specific decisions or actions. If there are, you need to amend your documents to specify that all voting and decision making is done by majority vote (since women hold the majority 51%).
This can be a tricky conversation to have with your successor, since new owners often seek some amount of control in return for their investment. Making these changes to maintain the WBENC certification is a decision you’ll have to make together, and with your current business goals in mind.
The exception to this is if all of the owners are women. Unanimous consent clauses ARE acceptable if it means one woman can overrule another woman.
Do you still have the highest title?
Your bylaws or operating agreement should name a specific officer and/or director as responsible for overseeing the operations of the company. If you’ve recently changed titles around (example: you became CEO and promoted a key manager to President), you need to also make that change in your governing documents to define your new title as the head of the company.
Again, the exception is if another woman now holds the highest title.
Is there a trust involved?
Ownership held in a trust has some very specific requirements in order to be counted as eligible.
Irrevocable trusts:
• Trustee(s) must be a woman OR a financial institution. Male co-trustees are not eligible.
• The woman beneficiary must not be a minor
• The woman beneficiary must have a present interest – current ability to receive distributions, income, or principal
Revocable trusts:
• Trustee(s) must be a woman OR a financial institution. Male co-trustees are not eligible.
• The grantor(s) must be a woman
• The woman beneficiary must not be a minor
• The woman beneficiary must have a present interest – current ability to receive distributions, income, or principal
Is there a holding company involved?
To count any ownership held by a holding company, we must essentially look at whether the holding company also meets the WBENC criteria of being owned and controlled by a woman or women.
• Do women own at least 51% of the holding company outright?
• Do the governing documents give her total voting power over the holding company?
• Is she the highest titled officer?
Next, let’s consider your current role:
Have you retired?
If you are actively stepping back, even if you still hold the highest title, you must take a serious and honest look at who is actually running the day-to-day. If it is another woman, the company may remain eligible to recertify. However if the company is no longer being managed on a daily basis by a woman, the business is no longer eligible.
But retirement can be hard to define, especially when you’ve poured your heart and soul into this company.
So let’s break it down further to see what the eligibility looks like at a detailed level. Keep in mind this is a guide to help you critically analyze your daily involvement. Think about the aspects you have officially handed off, and whether your successor has transitioned into more of a daily leadership role.
Who is your successor?
To be WBENC certified, a company must be run day-to-day by a woman. If your successor is another woman, that simplifies things.
However if the rising leader isn’t a woman, or if you have a mixed-gender team of incoming leaders, you need to take a critical self-reflection to recognize who is actually in charge of handling the day-to-day.
Perhaps it may be time to consider another certification better suited to your successor.
So what are my next steps?
Recertifying with new ownership or bylaws:
Reach out to your friendly WBEC-East certification officer. We will be happy to talk you through your unique situation.
If you submit your recertification and your governing documents do not meet WBENC eligibility (scroll up to the first part), we have a process called “preliminary denial.” This isn’t a denial, per se, but is a measure to let you know what we found so that you can avoid denial. If a preliminary denial is issued, you will have 60 days to issue an amendment to your bylaws or operating agreement, if you so choose.
Keep in mind that it is never our intention to tell you how to run your business.
As impartial certification officers, we cannot coach you, beyond letting you know what does and does not meet WBENC criteria.
Your certification officer is simply letting you know what needs to change in order to maintain your WBENC certification. If you feel the changes aren’t right for your business goals, that is 100% your call. Just know that your recertification will likely not be approved.
Staying engaged after certification:
So the time has come, and your company no longer meets WBENC criteria.
You are not by any means being kicked out of the WBEC-East network.
Anyone in the small business community, regardless of certification status, is welcome to take advantage of WBEC-East’s resources, workshops, and networking events.
The network is open to entrepreneurs of all genders, races, religions, abilities, etc.
Pursuing other certification options:
We get it! Certification can be a really valuable tool for contracting.
There are so many different certifications out there. It may be time to look at another certification that better fits your ownership and management structure.
Certification programs are intended to bring small business owners from all walks of life into the supply chain.
Some other certification programs to consider:
US Federal 8(a) Program (economically disadvantaged small businesses) – small business owners with low personal net worth and personal assets; all genders and ethnicities
US Federal HUBZone Program (small businesses in underutilized zip codes) – headquarters and employees located in predominantly rural and/or urban zip codes; all genders and ethnicities
Pennsylvania SBE (small business enterprise) – all genders and ethnicities
New Jersey SBE (small business enterprise) – all genders and ethnicities
City of Philadelphia LBE (local business entity) – small businesses headquartered in Philadelphia and/or with the majority of employees and revenue in Philadelphia; all genders and ethnicities
City of Wilmington, Delaware DBE (disadvantaged business enterprise) – new and small businesses owned by individuals with a net worth under $500,000; all genders and ethnicities
Disability:In (disability-owned) – accepted nationwide by many corporations, states and cities
NMSDC MBE (minority business enterprise) – accepted nationwide by many corporations, states and cities
NaVOBA (veteran-owned) – accepted nationwide by many corporations, states and cities
NGLCC (LGBT-owned) – accepted nationwide by many corporations, states and cities