The following post by Executive Director of WEConnect International in Europe Maggie Berry first appeared on The Double X Economy blog.
In the 21st century, the business case for buying and sourcing from women’s business enterprises has been made perfectly clear. Around the globe, women control more than US$20 trillion in consumer spend. By diversifying their supplier base to reflect their markets, companies can enhance their competitive advantage. Yet, women-owned businesses currently earn less than an estimated 1% of the money spent on vendors by large corporations.
With this in mind, more and more corporations are launching initiatives to reach out to women business owners. At WEConnect International, we offer a Business Readiness and Certification Assessment, which includes a one-on-one evaluation for women-owned businesses based outside the US and whether they meet the universal standards for certification as a women’s business enterprise.
Our first and possibly most important requirement is that for a business to be certified as women-owned, one or more women must own at least 51% of the business. However, applicants sometimes ask, “I own 50% of my company and participate in all decisions. Why can’t I be certified?” The fact is that the 1% makes a difference.
The defining characteristic of the certification standard is control. Control of the company’s management and finances, both day-to-day and long-term operations as well as future direction rests with the majority shareholder(s) of a company. If one or more women do not have the authority to make these decisions, the business cannot be considered as being female controlled. The 51% ownership, management and control criterion ensures that the risks and profits of the company are in the hands of women.
The benefits of keeping to this standard reach beyond women’s economic empowerment. For governments, it means increasing their GDP and economic stability. It also means support for local communities, since women reinvest their money into healthcare, education and other social programmes. And how can sourcing from women-owned businesses improve a company’s bottom line? Purchasing products designed by women will speak to female consumers who are making the majority of purchasing decisions around the globe.
Consider woman business owner Anna Louise Simpson who started her own brand of teas in the UK. With a love of good quality tea, Anna Louise brings a flare to the world of tea. Early on her tea products, marketed for expectant and new mums, caught the eye of many buyers, who encouraged and supported her to expand her brand. With full control and some guidance, her company – Simpsons Tea – now sells exciting new tea blends in some of the world’s top hotels, including Marriott International.
Female entrepreneurs like Anna Louise are bringing a fresh perspective to the business world. They are offering products and services that reach more customers. They are making their buyers money. Smart corporations will incorporate majority women owned, managed and controlled businesses into their supply chains.