Small Business Success Story: OutSmart Office Solutions & LGBT Certification

 
This article originally appeared on Nerdwallet.com and shared with permission of the author
 
OutSmart Office Solutions’ co-owners are gay and lesbian, and they want their customers to know it.
 
George Pieper and Dawn Ackerman’s business is certified by the National Gay and Lesbian Chamber of Commerce (NGLCC), a Washington D.C.-based organization that supports business owners who are lesbian, gay, bisexual and transgender. As a certified LGBT-owned business, OutSmart Office can market their office supplies and office design services to the NGLCC’s corporate partners: Fortune 500 companies that have pledged to work with diverse suppliers.
 
“We’re coming out as business owners every day,” Pieper says. “We don’t want to have to be in the closet to serve our clients.”
 
OutSmart Office Solutions formed in 2007 and sells wholesale office furniture, office supplies and EcoSmart Toner Cartridges, the company’s environmentally-friendly printer toner. OutSmart Office also helps other companies design, plan, set up and move into new office spaces.
 
OutSmart Office Solutions Dawn Ackerman George Pieper
OutSmart Office Solutions co-owners Dawn Ackerman, left, and George Pieper with Lia Rogers, second from left, and Christina Raftery, both from Office Depot. OutSmart’s partnership with Office Depot allows it to serve larger clients. 
 
 
LGBT certification has given Ackerman and Pieper access to a tight-knit business community, opportunities to meet and network with potential clients, and a marketing hook. Many corporations have internal goals to spend a certain amount each year sourcing products and services from minority-owned businesses. OutSmart Office positions itself as a “diverse solution” for those companies.
 
“It’s a value-add that we’re bringing” to clients,” Pieper says.
 
The company is lean, with Ackerman working in San Francisco, Pieper in Seattle and one additional employee in Portland. To keep overhead costs low, OutSmart Office sources the office supplies it sells from vendors instead of having its own warehouses and workers to handle the inventory. Ackerman and Pieper make it a point to hire other minority-owned businesses, a practice inspired by LGBT certification.
 
“Before I got certified, I was just doing business,” Ackerman says. “I wasn’t really thinking how or who I was doing business with.”
 
The advantage of certification
The certification program is part of the NGLCC’s Supplier Diversity Initiative, which aims to connect LGBT businesses with corporate supply chains. Certified LGBT businesses get opportunities to network with the NGLCC’s 140 corporate partners, including IBM, American Airlines, Chevron, FedEx, Google, Kellogg’s, Office Depot, Pepsico and PG&E. Being certified doesn’t guarantee contracts with those companies, but it’s a way for small businesses to differentiate themselves and get noticed by corporations looking for diverse business partners.
 
Certified businesses are included in a database that NGLCC corporate partners can access when they’re looking for suppliers. Certified business owners can also get paired with mentors to help them with business development, and they can attend networking events with corporate supplier diversity representatives and people from other LGBT-owned businesses.
 
“Certification is much like a toolbox,” NGLCC Supplier Diversity Manager Brent Stewart says. “Within that toolbox there are a lot of tools you may or may not use, depending on what you’re trying to do with your business.”
 
There are 1.4 million LGBT-owned businesses in the country, the NGLCC estimates, but only 650 of those are certified. Ackerman and Pieper were among the first business owners to be certified when the program began in 2004. Ackerman says OutSmart Office grew by 50% in its first year because of certification, and she estimates that 75% of the business’s 2014 gross revenue was a result of its certification and involvement with LGBT chambers.
 
Financial challenges
Like most small-business owners, Ackerman and Pieper have faced their share of challenges. For one, they could not have predicted that the Great Recession would hit just after they started the company. Money was tight during their first few years in business.
 
“Funding is always a problem,” Ackerman says. “You can sell and sell and sell and you’re making a profit, but cash flow is a very different story.”
 
At one point in 2008, the company lost three months’ worth of orders because cash-strapped clients put a hold on office furniture orders, Pieper says. Banks weren’t doing much lending, so OutSmart Office relied on credit cards and personal lines of credit for funding.
 
“You couldn’t go to a bank as a small business without tying your personal house to it,” Pieper says. “They just wouldn’t look at you.”
 
Ackerman is currently applying for a microloan backed by the U.S. Small Business Administration through Working Solutions, a San Francisco-based nonprofit lender that prioritizes low-income and female- and minority-owned businesses. The loan will provide the cash OutSmart Office needs to buy furniture to complete a large contract it recently won with the University of Washington.
 
Being an LGBT-certified business has helped OutSmart Office maintain a steady stream of clients, allowing the company to stay afloat even when the economy was tanking. Ackerman and Pieper have found many customers through their relationship with LGBT chambers, most notably Office Depot.
 
Partnership with Office Depot
OutSmart Office’s certification led to a partnership with Office Depot, which has given OutSmart Office the ability to compete for contracts with larger companies it wouldn’t otherwise be able to handle. Pieper and Ackerman first met Office Depot representatives at an NGLCC conference in 2009, where they learned about Office Depot’s Tier One program. The program allows OutSmart Office’s clients to purchase anything that Office Depot sells through OutSmart Office. The partnership benefits both parties: Office Depot can keep business from customers who want to work with a small, diverse supplier, and OutSmart Office doesn’t have to compete with the industry’s corporate giant.
 
“Instead of bidding against them, we go to the table with them,” Ackerman says.
 
OutSmart Office signed on as Office Depot’s first LGBT partner in 2010. Within the partnership, OutSmart Office interacts with the clients, handling invoices and customer service. Clients pay OutSmart Office, and OutSmart Office pays Office Depot to provide  the inventory and handle the delivery. Additionally, Office Depot began selling OutSmart Office’s original EcoSmart Toner in Office Depot stores in 2013.
 
“We help OutSmart Office meet the goals of large customers that have requirements for direct spending with diverse vendors,” Christina Raftery, Office Depot’s senior manager of Tier 1 partnerships, said in an email to NerdWallet.
 
How to get certified
To get certified as an LGBT-owned business, your company must be at least 51% owned and run by a person who is lesbian, gay, bisexual or transgender. The certification application is designed to confirm that this is true, not to check whether your business is financially sound. (See NerdWallet’s step-by-step guide to LGBT certification, and learn about the benefits of joining an LGBT chamber of commerce.)
 
To apply, create an account at my.nglcc.org. You’ll start by filling out a business profile that includes basic identifying information about your business, three references and a resume or bio for every LGBT owner of your business. You’ll also have to show proof of LGBT status, which could be a marriage or domestic partnership certificate, a letter from an NGLCC affiliate chapter, or a note from a doctor confirming a gender reassignment procedure, among other things.
 
Once you’re a certified LGBT-owned business, you can attend an orientation webinar that explains how to make the most of your certification by taking advantage of networking events, scholarship opportunities and corporate partnerships. You’ll also be able to register with NGLCC corporate partners through the MyNGLCC database so those companies can find your business when they’re looking to hire a diverse supplier.
 
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This article first appeared on Nerdwallet.com. For more information about how to start and run a business, visit NerdWallet’s Small Business Guide. For free, personalized answers to questions about starting and financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.
 
Teddy Nykiel is a staff writer covering personal finance for NerdWallet. Follow her on Twitter@teddynykiel and on Google+.