Failing to Address Full-Time Outside Employment

This is perhaps the most misunderstood red flag in DBE certification. Many applicants assume that as long as they own 51%, their employment situation doesn't matter. That assumption leads to denials.

Why Outside Employment Is a Red Flag

Think about it from the certification analyst's perspective:

If you work 40+ hours per week at another company, when do you have time to control day-to-day operations of your DBE business? Who's actually running things while you're at your other job?

The regulations require disadvantaged owners to have full-time devotion to the business during normal working hours. This doesn't mean you must work 60+ hours per week in your business, but it does mean:

- You must be available during normal business hours

- You must make operational decisions in real-time

- You must actively manage employees and contractors

- You cannot delegate fundamental management functions to non-disadvantaged individuals

The "Same Industry" Problem

Outside employment becomes even more problematic when it's in the same industry as your applicant business. Why? Because analysts will question:

- Are you using your employer's resources (equipment, contacts, knowledge) to operate your side business?

- Is there a conflict of interest between your employer and your business?

- Are you positioning yourself to leave your job eventually, or is this business genuinely independent?

- Could your employer claim ownership of opportunities or relationships you've developed?

Common Scenarios That Cause Issues

Scenario #1: The Transition Plan

"I work full-time now, but I plan to transition to my business full-time once I'm certified and start winning contracts."

Analyst's Concern: You don't control the business now. Certification is based on current circumstances, not future plans. Who controls operations currently?

Scenario #2: The Night-and-Weekend Business

"I run my business nights and weekends. My spouse/partner handles things during the day while I'm at my job."

Analyst's Concern: If your spouse or partner is handling day-to-day operations, they're controlling the business—not you. That violates the control requirement.

Scenario #3: The Retired-But-Not-Really Situation

"I'm semi-retired from my career. I consult part-time (20-30 hours per week) and run my business part-time."

Analyst's Concern: What does "part-time" mean in practice? Can you make real-time decisions for your business during your consulting hours? Is there a conflict between your consulting and your business?

How to Address This Issue

If you have outside employment, don't hide it. Analysts will discover it during your on-site visit or through tax return review. Instead, address it proactively:

✅ Document Your Schedule: Prepare a detailed explanation of how you manage both your job and your business:

- What are your employment hours?

- When do you work on your business?

- How do you handle business emergencies during work hours?

- Who (if anyone) assists you, and what are their roles?

✅ Show Decision-Making Authority: Provide evidence that you make all major decisions:

- Signed contracts

- Hiring/firing decisions

- Financial decisions (bank signature cards, major purchases)

- Email correspondence showing you direct operations

✅ Explain Your Exit Strategy: If you plan to transition to full-time eventually:

- Give a realistic timeline

- Explain what would trigger full-time transition (revenue milestone, contract award)

- Show you're already working substantive hours in the business

✅ Address Conflict of Interest: If your employment is in the same industry:

- Provide a letter from your employer acknowledging your business

- Explain how you keep activities separate

- Show your business doesn't compete with your employer

- Document that you're not using employer resources

✅ Consider Restructuring: If your situation is truly problematic, consider:

- Reducing to part-time employment before applying

- Taking a leave of absence during certification process

- Resigning and committing fully to your business

The On-Site Visit Reality Check

During your on-site visit, the analyst will:

- Ask who they should call to schedule the visit (testing if you control your schedule)

- Show up during normal business hours (can you be there?)

- Ask detailed questions about daily operations (do you know the answers?)

- Request to see evidence of your presence (your office, your files, your equipment)

If you're not actually present in the business regularly, this will become obvious and your application will be denied.

Exception: Part-Time Employment in Unrelated Fields

There is more flexibility if your outside employment is:

- Part-time (under 20 hours per week)

- In a completely unrelated industry

- In a role where you have flexible hours

For example, if you teach college classes two evenings per week while running a construction business during the day, that's generally acceptable. The key is proving the outside work doesn't interfere with controlling your business.

Full-time outside employment isn't an automatic disqualifier, but it creates serious scrutiny you must address head-on with compelling evidence of actual control.