As a business owner or leader, a crucial part of your role is sourcing goods and services for your company. Plenty of factors go into choosing vendor partnerships, but an often overlooked aspect is the diversity of your supply chain.
Promoting inclusivity and diversity as part of your procurement process has social and commercial benefits for a business. Understanding supplier diversity and its importance is the first step toward building an effective supplier diversity program that can help your business ecosystem grow.
What is supplier diversity?
As a business strategy, supplier diversity is a concentrated effort to broaden a business’s supply chain through partnerships with a wide range of companies. This should take place throughout all levels of the supplier base during the procurement of goods and services for your business.
Going even further, the partner businesses that your company works with should be considered diverse-owned businesses. This means that they are owned and operated by underrepresented demographic groups.
Identifying diverse suppliers
When you’re looking to diversify your partnerships, particularly if you’re looking to work with minority-owned businesses, it’s important to understand what exactly a diverse supplier is. Generally, a business is considered diverse if the majority ownership (51% or more) is part of an underrepresented or underserved group.
In the United States, small business enterprises (SBEs), women-owned business enterprises (WBEs), minority-owned business enterprises (MBEs), veteran-owned businesses (VBEs), businesses owned and operated by LGBTQIA+ individuals, and entrepreneurs with disabilities are all considered to be diverse businesses.
These companies may hold diverse certification, which authenticates their inclusion in at least one recognized diverse group. For those looking to expand their supply base and build business opportunities with minority groups, there are several organizations that maintain records of these registered businesses.
The National Minority Supplier Development Council (NMSDC) is one of the best places to start, along with the U.S. Hispanic Chamber of Commerce and the Women’s Business Enterprise National Council (WBENC).
Other organizations like the National LGBT Chamber of Commerce (NGLCC) work closely with and certify business owners who identify as LGBTQ-owned businesses. The U.S. Department of Veteran Affairs also certifies service-disabled veterans and veteran-owned businesses through the Vets First Verification Program.
On a state and local level, the Small Business Administration (SBA) and local chambers of commerce may also hold their own records of minority business enterprises working in various industries. This is the best place to go when you’re looking to improve your diversity efforts through business connections and partnerships.
Benefits of a supplier diversity program
Building a more equitable world and improving inclusivity for all, particularly in business, should be something that every business owner is thinking about. Simply put, it’s the right thing to do.
Beyond social responsibility, though, businesses see tangible benefits to their bottom line when doing business with diverse companies and making dedicated efforts to build a supplier diversity program.
Diversity brings economic growth
Minority-owned and diverse businesses have traditionally found it more difficult to access the necessary capital and support to become successful than non-minority-owned businesses. But many of these challenges can be overcome when partnerships are made and supplier diversity initiatives are introduced.
When diverse businesses thrive, cash flow is introduced to the underrepresented groups they’re a part of. From there, jobs are created, and more money is available to uplift and provide sustainability to the whole community. The economic impact that successful diverse businesses bring is impossible to deny. And when these small businesses grow, everyone benefits.
There are also notable economic benefits for the businesses investing in and supporting these diverse businesses. Research has repeatedly found that diversity-supporting companies earn more over time. A 2022 study reported that inclusive businesses earned more than two times per employee than businesses that were not diverse, with productivity increasing by 35%.
More suppliers improve product variety and quality
Adding diverse suppliers to the procurement process gives businesses a competitive advantage. With more variety in products or services to choose between, vendors work to produce the highest quality materials at the best prices to win your business.
With more sourcing options open, there’s also greater resilience and agility throughout the supply chain. It’s a win for the diverse businesses you partner with and a win for you with a greater return on investment (ROI).
Additionally, widening your pool of potential procurement partners fosters an environment of innovation and creativity. Working with suppliers who bring their unique viewpoints and knowledge to the table can often lead to new opportunities that help you stand out from competitor businesses.
This translates to a more diverse range of options for your customers to choose from within your organization, helping you increase your market share within your industry.
Supplier diversity programs support recruitment efforts
Working with diverse suppliers isn’t only beneficial from a direct economic impact perspective. Thinking about your business’s overall reputation, and efforts to become more inclusive and increase diverse spending within your supplier base is a significant outward demonstration of the values your brand is built on.
This is of critical importance when you’re looking to grow your own operations and bring on new team members. 92% of Americans say that it’s important for businesses to promote racial equity in the workplace, while 64% of Millennials say that they won’t work for companies with poor corporate social responsibility.
Investing in supplier diversity programs and working with more minority and women-owned enterprises (MWBEs) is a clear signal to potential employees that your business is serious about diversity, inclusivity, and equity. As a result, you can expect to see more applications from top candidates whose skills and expertise can be vital assets to your business.
Challenges in expanding supplier diversity
One of the biggest challenges that comes with expanding your supply chain to include more diverse businesses is finding companies that meet both diversity certification standards and the procurement needs of your company.
Working through larger entities like councils or chambers of commerce is one solution to this issue. This solves many of the verification problems that businesses may run into when looking to confirm whether or not a business is owned and operated by an underrepresented group.
But this doesn’t account for local businesses that may not be aware of these organizations or the certifications they offer. On a local level, your business may have the opportunity to work with an uncertified diverse business and provide them with outreach or mentoring that allows them to meet the standards required for certification through a larger entity.
3 tips for starting a supplier diversity initiative
Despite the difficulties that come with launching a supplier diversity program, the benefits to both your business and those in your community make efforts worth the time and financial investment.
1. Set goals and benchmarks for diverse partnerships
Just as you would with other areas of your business development, setting measurable and trackable goals is an essential step in building a supplier diversity program.
Determine the metrics that you’ll be using to chart your success, such as spend per quarter with diverse businesses or the savings made from working with diverse suppliers.
You can also track figures that aren’t revenue based, like the number of diverse businesses your company works with as regular suppliers or jobs created in your community through minority-owned businesses.
2. Continually review and identify possible diverse suppliers
Research companies in your industry, both suppliers and competitors, who are considered diverse or work with diverse businesses. This is a good starting point if you’re looking for partners but need to figure out who to approach first.
Get involved with networking opportunities and events through some larger organizations supporting minority-owned businesses. Not only can the other attendees help you find diverse suppliers, but they can also provide you with valuable insight into starting and running a supplier diversity program within your business.
3. Build a diverse and inclusive company culture
Focusing on goals and benchmarks around supplier diversity is important in measuring how successful your program is, but it can quickly become the sole focus if other areas of inclusivity aren’t addressed within your business.
A crucial part of becoming a more socially responsible company is changing your company culture to reflect the inclusive values you want your business to stand on—this should be more about allyship and creating opportunities for underrepresented groups than a performative effort to improve your brand appearance.
That’s why creating a truly inclusive company culture should be at the forefront of your business growth plans. At all levels of your business, employees should be asked for feedback on diversity and inclusion efforts and diverse recruitment practices must be incorporated by your HR team to grow your workforce’s diversity naturally.
This article originally appeared on the Quickbooks Resource Center and was syndicated by MediaFeed.org.
Are you saving enough money every month?
You likely already know it can be wise to save money every month. Whatever your income or age, putting money aside for the future can help you maintain financial stability and achieve your goals.
But how much of your paycheck should you save each month? Financial experts often recommend putting at least 20% of your monthly take-home income into savings for future financial goals, such as buying a home and funding your retirement.
Exactly how much you should save each month, however, will depend on your income, current living expenses and financial obligations, as well as your goals.
Here are some guidelines to help you figure out how much of your income you may want to set aside each month, plus some simple ways to jump start (or build) your savings.
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It can be difficult to know how much money you should save each month without having a sense of what you are saving for. Setting a few financial goals can also help motivate you to save, rather than spend all of your income.
There are some savings goals that can make sense for everyone. If you don’t already have at least three to six-months worth of living expenses stashed in an emergency fund, for example, that can be a good place to start.
Without a solid contingency fund, any financial set-back -– such as a job layoff, large medical bill, or costly home or car repair — can throw you off balance and cause you to rely on high interest credit cards.
Many people will also want to save for retirement. At the very least, savers may want to take advantage of company matches offered in their workplace retirement plan by contributing the maximum amount the company matches.
After emergency savings and retirement, goals may start to look different from person to person. One person may want to save up for a down payment on a home, another may want to save up to start a business, and yet another may be interested in college savings.
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A rule of thumb that is sometimes used in personal financial planning is a spending/saving breakdown of 50/30/20. Using this guideline, you would spend 50% of your take-home income on essentials (including minimum payments towards debts), 30% on nonessential (or “fun”) spending, and 20% on savings goals, including debt payments beyond the minimum.
To use the 50/30/20 method to determine how much you should save, you can simply calculate 20% of your monthly after-tax pay. For example, if you earn $3,000 each month after taxes, $600 would go towards savings or other short term financial goals.
You may want to keep in mind that your 20% savings goal can include the money you’re saving for retirement. You can determine how much you’re putting toward retirement each month by looking at your pay stub or electronic payment record. If your employer is automatically depositing money into your 401(k), you may be able to put less into savings each month.
While the 50/30/20 can be a helpful guideline, how much you should — and can afford — to save each month will ultimately depend on your individual circumstances, such as your current income, monthly expenses, and future goals.
If the cost of living is high in your area, for example, you may not be able to swing 20% savings each month.
On the other hand, if you make a significant amount more than you need to live on each month, you may want to put away more than 20%, especially if you’re working towards a large short-term savings goal, such as buying a home in the next couple of years.
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The best account for building savings will depend on what you are saving for.
If you are saving up for retirement, for example, you’ll likely want to use a designated retirement account, like a 401(k) or IRA, since they allow you to contribute pre-tax dollars (which can help lower your annual tax bill).
You may want to keep in mind, however, that there are annual contribution limits to retirement funds.
For an emergency fund or other short-term savings goals (within three to five years), you may want to open a separate savings account, such as a high-yield savings account, money market account, or a checking and savings account. These savings vehicles typically offer more interest than a traditional savings account, yet allow you to easily access your money when you need it.
(Learn more atPersonal Loan Calculator)
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Below are some strategies that can help make it easier to start — and build — your monthly savings.
Automating Savings
One great way to make sure you stick to a money-saving plan is to automate the process. You may want to set up a recurring transfer from your checking into your savings account on the same day each month, perhaps the day after your paycheck clears. Even setting aside just a small amount of money each month now can, little by little, add up to a significant sum in the future.
Putting Spare Change to Work
There are apps that will automatically round-up any amount paid on a credit or debit card and then put that little bit of extra money into savings accounts or even invest it. This “pocket change” can add up over time.
Using Windfalls Wisely
If a lump sum of cash, such as a bonus or monetary gift, comes your way, you may want to consider funneling all or part of it right into savings.
Or, if you get a percentage raise on your salary, you might want to boost your automatic monthly transfer from checking to savings by the same percentage.
Reviewing Your Budget
If you feel like your budget is too tight to save anything at the end of the month, you may want to review your monthly and habitual expenses.
You can do this by combing through your checking and credit card statements and receipts for the past few months. Or, you may want to actually track your spending for a month or two.
You can then come up with a list of spending categories and determine how much you are spending on average for each.
Once you can see exactly where your money is going each month, you may find places where you can fairly easily cut back, such as getting rid of streaming subscriptions you rarely watch, quitting the gym and working out at home, or cooking more and getting take-out less often.
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The right amount to save each month will be unique to you and includes factors such as your financial goals, how much you earn, and how much you spend each month on essential expenses.
One of the most important keys to saving is consistency. No matter how much of your income you choose to set aside each month, depositing small amounts regularly can build to a large sum over time to achieve your goals.
This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
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