ISO 9001 Certification—How It Could Help Your Business’s Bottom Line

Priyanka Prakash, JD

Senior Staff Writer at Fundera
Priyanka Prakash is a senior staff writer at Fundera, specializing in small business finance, credit, law, and insurance. She has a law degree from the University of Washington and a bachelor's degree from U.C. Berkeley in communications and political science. Priyanka's work has been featured in Inc., Fast Company, CNBC, and other top publications. Prior to joining Fundera, Priyanka was managing editor at a small business resource site and in-house counsel at a Y Combinator tech startup.

Maybe you’ve already started a business and are looking to take it to the next level, or maybe you’re looking to streamline your costs. ISO 9001 certification is not something that most small business owners know about, but it can help you conserve costs and be more productive.

The ISO, or International Organization for Standardization, is an independent, non-governmental body that develops international standards—like specifications and guidelines for manufacturing, health and safety, environmental preservation, and more. Nearly 1 million companies across 170 countries have achieved ISO 9001 certification.

A business of any size and in any sector can get ISO certified. Learn about what’s required to get certified, the time commitment and cost involved, and the benefits of ISO certification.

ISO 9001 Certification: Why Does It Matter?

If you’re running a company with ISO 9001 certification, then you’ve been deemed to demonstrate a consistent ability to provide products and services in accordance with customer needs and any applicable statutes or regulations. That’s a nice badge of honor, but there are financial advantages as well.

These are the benefits of ISO 9001 certification:

  • Competitive advantage and more revenues – Certified businesses can label their product, process, or storefront as being ISO 9001:2015 certified. That makes customers more likely to choose your product over a competing product that doesn’t have the same guarantee behind it. And that means more revenue and profits for your business.
  • Receive contracts – Your organization could also find it easier to receive public-sector and private contracts. Because the ISO 9001 is an internationally recognized standard in over 160 countries, government customers understand certification is associated with ongoing high-quality output from a company.
  • Lower insurance premiums – business insurance premiums may go down with certification. Certification can lower the level of risk in some industries—and the likelihood of being found liable for accidents may go down, too. A snow-plowing company that investigated slip and fall legal cases found that about 70% of them were dismissed in court when those companies proved they applied ISO-certified quality management systems during snow removal.

Here’s an example of a business advertising ISO 9001 certification:

Storefront advertising ISO 9001 certification

Who Sets the ISO 9001 Requirements?

The International Organization for Standardization (ISO) sets the standards for ISO certification. The standards were last updated in 2015, so you’ll see them written as ISO 9001:2015. 164 countries, including the United States, are ISO members. A majority of member countries must vote to approve the standards before they can be updated and released.

ISO standards are concerned with helping companies formulate and follow a quality management system. A quality management system is a set of documents, policies, processes, and steps that allow you to better serve your customers.

There are seven quality management principles that form the basis for ISO standards:

  • Customer focus – The main focus of any quality management system should be to meet customer requirements and exceed customer expectations.
  • Leadership – Leaders at all levels of the company should encourage their teams to meet quality standards and provide the tools for them to do so.
  • Engagement – Everyone in the company is empowered to improve the company’s quality management processes.
  • Process approach – Consistent, predictable results are achieved when discrete processes are all thought of as interconnected parts of one quality management system.
  • Improvement – Companies should continually focus on improving their current quality management system.
  • Evidence-based decision making – Company decisions should be made based on the evaluation and analysis of data.
  • Relationship management – Business owners must have good relationships with suppliers, managers, and employees to maintain high quality output.

Under ISO 9001, the development of a quality management system centers around these seven principles.

What Kinds of Businesses Should Get ISO 9001 Certification?

The number of companies that become ISO certified varies from year to year. In 2017, 1,058,504 ISO certificates were issued. Businesses in any industry can seek ISO 9001 certification, but there are certain industries for which ISO 9001 certification is particularly applicable:

  • Manufacturing
  • Technology
  • Engineering
  • Health care
  • Construction

The ISO has sector-specific 9001 standards for particular industries. They are:

  • Petroleum, petrochemical, and natural gas
  • Medical devices
  • Governmental electoral organizations
  • Local government
  • Software engineering

Your business can get certified regardless of size, type, product, service, or industry.

ISO 9001 Requirements: Steps for Certification

As we mentioned earlier, ISO 9001 certification ultimately depends on your business’s ability to follow a clearly documented quality management system. A quality management system is a set of documents, policies, processes, and steps that help you meet company goals and serve your customers.

For example, you can have a quality management system for product safety or development of a new pharmaceutical drug. Here’s an example of a quality management system from Toyota, in this case a checklist for inspecting used cars. In order to work, a quality management system must be tailored to your industry and your product or service. However, the ISO’s seven guiding principles can help you develop a custom quality management system.

Once you have a quality management system in place, here are the required steps for ISO 9001 certification:

1. Prepare for ISO 9001 Certification

The most important part of this step is deciding whether you want to handle ISO 9001 certification in-house or entrust a third party consultant.The ISO recommends contacting the accreditation body in your country as a first step to finding a reputable third-party provider. In either case, you’ll want to appoint a point person to lead the effort for ISO 9001 certification and make sure that there’s buy in from all of your employees.

If you go the do-it-yourself route, there are ISO 9001 certification kits that bring executives up to speed on what’s required. Several firms also have ISO 9001 training courses to help prepare businesses for ISO 9001 certification, You’ll get all of the know-how and tools needed to plan and implement a quality management system that’s compliant with ISO 9001 standards, plus perform your own regular internal audits to maintain its upkeep.

Some online courses deliver the training in about 12 hours. In other cases, a trainer may come to your facility, or you might choose an off-site educational option that involves going to a campus in your area.

Keep in mind that your quality management system must be should be suitable for your business and your product or service. An external consultant might not have the knowledge or experience to prepare internal documentation and do an internal audit.

2. Document Your Quality Management System

Writing out the processes, policies, and steps that make up your quality management system is the hardest part of getting ISO certification. You need to draft process checklists, instructions, work flows, and diagrams. There’s no specific number of documents required, but you should document every stage of your quality management system in detail.

3. Implement Your Quality Management System

In this step, you’ll need to introduce your employees to the quality management system and train them to incorporate it in their daily work.

4. Conduct an Internal Audit

An audit by a certified external auditor is required for ISO 9001 certification, but you’re also required to conduct internal self-audits. These are on-site audits conducted by your lead ISO person or consultant who is trained in ISO 9001 certification. The purpose of the audit is to evaluate that all work is in compliance with the quality management system.

5. Set Up an External Audit, and Get Certified

The last step to ISO 9001 certification is to get the approval of an external ISO auditor, also called an ISO registrar. There are many accredited companies who can help you with this step.

Usually, the external audit is divided into two parts. In the first, the auditor will remotely assess that your company meets minimum ISO certification requirements. In the second, the auditor will visit your place of business and evaluate compliance with ISO requirements. The auditor will interview your staff and check your quality management system documentation.

If everything is in order—fingers crossed!—you’ll get recommended for certification. An approvals process review that occurs after the final audit is necessary before you’ll get your certificate. External audits must be repeated every year, and certificates are reissued every three years. Here’s a sample ISO 9001 certificate:

Sample ISO 9001 Certificate

Photo credit: Weberpackaging.com

How Long Is ISO 9001 Certification Good For?

To remain ISO 9001 certified, your organization must undergo annual surveillance audits. Just like that initial auditing process to get your first certification, a person trained as an ISO auditor performs those checks. They’ll examine your quality management system and decide whether you’re holding up your end of the bargain and also making improvements along the way. Remember, continual improvement is one of the ISO’s guiding principles, so you should take time to correct and prevent errors.

After three years, a recertification audit is carried out. It’s possible to lose your certification for big violations, like knowingly concealing product defects and continuing to sell the items anyway. However, the auditor might allow businesses in danger of having their ISO 9001 certifications revoked time to make amends.

How Long Will ISO 9001 Certification Take?

The length of time that passes before your company gets certified varies and is often size-dependent. For example, a company with fewer than 50 employees could get certified in as few as six months—that’s good news for a small business. If you’re running a shop with more than the 500 employees, though, you might be waiting upwards of a year.

Also, if your current quality management processes barely resemble what’s spelled out in ISO 9001 standards—or you don’t have any procedures in place at all—gear up for the process to take longer.

On the other hand, maybe you’re already doing things at your business such as:

  • Actively managing customer relationships
  • Maintaining a culture of trust and integrity
  • Encouraging and upholding an organization-wide commitment to quality
  • Following quality control procedures
  • Conducting surveys to gauge satisfaction, then taking appropriate action to address concerns

Those are some of the many steps contained within a quality management system. If they’re already part of your organization’s operations, you’ll likely find it easier to become ISO 9001 certified compared to starting from scratch.

Also, the third-party companies responsible for sending auditors to your organization for the initial certification audits make independent decisions about how long your quality management system should be in place before the audit happens. Therefore, that’ll affect the your overall time frame for certification.

ISO 9001 Certification Cost

Taking a do-it-yourself approach by purchasing educational materials from the ISO or a third-party company could cost slightly less than $1,000 for the training and implementation stages. However, you might prefer to hire a consultant to guide you through the process from start to finish. In that case, the cost could be $50,000 or more.

External auditors and the certification body can charge additional fees as well—$2,000 to $3,000 up front, plus $1,500 to $2,000 annually.

Just like the timeline for certification, your cost will also depend on company size and what kind of procedures you do (or don’t) already have in place. The cost can seem expensive when you add everything up, but there’s research to back up the likelihood that you’ll see long-term monetary advantages from certification.

According to the American Society for Quality, $1 invested in a quality management system can result in an additional $6 in revenue, $16 in cost reductions, and $3 in profit increases. The boost in sales can happen for two reasons. Customers perceive that certification signals a high-quality company, or customers feel more satisfied by what the organization provides. Either way, it’s money in the bank. And because the certification is recognized around the world, you could find it makes your company more competitive regardless of location.

iso-9001-certified

What to Do After You Get ISO 9001 Certification

After achieving certification, your company will use well-defined, clearly documented procedures to guide processes. That means you can phase out outdated, inefficient, or unnecessary ways of doing things and replace them with more effective, appropriate methods. Your company is less vulnerable to mistakes or waste time since it’s following best practices—and efficiency will hopefully translate to a better bottom line.

In 2016, QMS International, a company that helps companies achieve ISO 9001 certification, surveyed 330 of its clients. In its results, more than half of their clients saw increased customer satisfaction following their certifications. Plus, customers appreciate getting high-quality products every time they do business with an ISO 9001 certified company—and certification signifies outstanding quality.

Another part of the QMS International poll asked respondents why they chose to get certified. The majority—74%—did so to demonstrate excellence. Plus, 47% of those who either primarily got certified to show excellence or for a tender mentioned they gained new customers as a result of their efforts.

The use of quality management systems is common in the manufacturing sector, especially for automation practices. But it can be invaluable in customer-facing, service-oriented industries, too. For example, JM Electrical, which provides electricians from its base in Lynnfield, Mass., got ISO 9001 certified and found its customers rated the service given as good or excellent 96% of the time during a five-year span after certification.

The Hilton hotel chain opted to go through the process of getting ISO 9001 certification, too. It realized doing so gave its global stakeholders assurance the brand was upholding consistently high standards at more than 3,750 properties. Hilton’s decision helped solidify its continued prominence in the hospitality market. And there are benefits across industries—Intelex, a company that offers cloud-based software related to ISO certifications, found 85% of certified companies reported an increased market share, plus greater demand for products and services.

iso-9001-certified

Is ISO 9001 Certification Right for Your Business?

Choosing whether to get ISO 9001 certification requires careful thought. Although being ISO certified is a sign of credibility that could help you attract more business and score important contracts, you have to have the cash flow to get the process underway and then maintain your quality management system thereafter.

Also, since part of the certification requires that your managers must show an ongoing commitment to the quality management system, they have to be fully on board with the associated responsibility. Keeping future goals in mind is an important way for a leadership team to decide whether to move forward with the certification process.

Editorial Note: Fundera exists to help you make better business decisions. That’s why we make sure our editorial integrity isn’t influenced by our own business. The opinions, analyses, reviews, or recommendations in this article are those of our editorial team alone. They haven’t been reviewed, approved, or otherwise endorsed by any of the companies mentioned above. Learn more about our editorial process and how we make money here.

Priyanka Prakash, JD

Senior Staff Writer at Fundera
Priyanka Prakash is a senior staff writer at Fundera, specializing in small business finance, credit, law, and insurance. She has a law degree from the University of Washington and a bachelor's degree from U.C. Berkeley in communications and political science. Priyanka's work has been featured in Inc., Fast Company, CNBC, and other top publications. Prior to joining Fundera, Priyanka was managing editor at a small business resource site and in-house counsel at a Y Combinator tech startup.

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