This chapter provides guidance to a counselor working with a consumer who is interested in establishing or maintaining a small business venture as an employment outcome. This chapter reviews some of the benefits and risks of self-employment and includes information about requirements for a consumer who chooses self-employment as his or her vocational goal, including a business proposal or plan and the vocational goal and expected financial contributions. Any exception to the following guidelines requires appropriate review and approval.
Self-employment is an employment outcome in which the person works for profit or fee in his or her own business, farm, shop, or office, and includes sharecroppers. Consumers working for profit or fee in those types of jobs, but in need of job retention services (for example, purchasing assistive technology or physical restoration services) are also considered to be classified or coded as self-employed.
The following employment outcomes are not recognized as self-employment for the purpose of this section:
For coding of self-employment cases, see the directions in the ReHabWorks Users Guide.
An applicant's suitability for self-employment services is determined in the same manner as other services. For instance, an applicant who is already self-employed and applies for services because the person is in danger of losing his or her business because of the lack of necessary training, tools, and equipment would generally be eligible for services if the services would help him or her retain employment.
A feasibility study of the business idea is required (see sample feasibility study). A Feasibility Worksheet is also available to assist with this process. Within the Feasibility Worksheet, the North American Industry Classification System (NAICS) is referenced. The NAICS is used by federal statistical agencies to classify business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. For more information about the NAICS, see http://www.census.gov/eos/www/naics/.
An applicant who is requesting financial support for tools or equipment for an existing business will not meet all eligibility criteria if the business venture can be reasonably expected to succeed without assistance.
The choice of self-employment as an employment outcome, as with any vocational goal, is consumer driven. The decision to pursue such a goal should not be limited based on the severity of multiple disabilities.
Counselors should advise consumers interested in establishing a small business that the Small Business Administration (SBA) reports that many new business ventures fail within the first three years (some estimates are as high as 50 to 80 percent). Small business ventures are much more likely to succeed when the business owner
Self-employment, as with other more-common forms of employment, is intended to result in a person's financial independence. Therefore, agency decisions to support self-employment ventures are based on a reasonable expectation that the venture will succeed. Consumers voicing an interest in exploring self-employment should be made aware of these facts. The counselor must make the consumer aware that he or she is expected to make a substantial contribution to the start-up costs of the business either through personal capital or in-kind contributions.
Counselors should also advise consumers of the possible benefits of self-employment. Although the benefits vary from person to person, they include
Consumers decide what type of business is appropriate for them, but illegal or prohibited businesses are not supported. Self-employment does not include hobbies that periodically produce income, enterprises in which income is based primarily on recruiting salespeople (commonly known as "pyramid" schemes), enterprises prohibited by law, or those that sell products prohibited by law.
The Federal Trade Commission defines a pyramid scheme as "an organization in which the members obtain their monetary benefits primarily from the recruitment of new members rather than selling goods and/or services to the public. The main benefit of membership is the right to recruit others and to receive monetary compensation for doing so. Like any chain letter, a pyramid scheme is just a mechanism to transfer funds from one person to another...".
For further information on pyramid and multilevel marketing schemes, refer to www.pyramidschemealert.org.
Counselors may seek guidance with difficult cases from their supervisors, the employment assistance services field specialist, regional program support specialist, or the Small Business Administration.
To determine the viability of a business venture and the consumer's aptitude for self-employment, the counselor should assess the consumer's
The vocational goal of self-employment requires the consumer to function with independence and confidence and to be able to make decisions—or to have sufficient support in place to meet these requirements. Counselors should discuss these factors with consumers as part of informed choice. Counselors also complete the Characteristics Checklist with the consumer. Consumers with severe multiple disabilities, such as those who are deafblind, may require an alternative method to confirm that there is a defined support structure that meets these same characteristics.
A preliminary business feasibility study must also be completed by the VRC before a business venture can be accepted as a vocational outcome.
Traditional diagnostics and measures should be used when agreed upon by the consumer and the VRC. As appropriate, these include
Before submitting a proposal letter or business plan, the counselor and the consumer use objective observations to assess each item and work together to complete the Independence Matrix. For consumers with severe multiple disabilities such as deafblindness, the counselor completes the Team-Approach Matrix, and attaches it to the front of the proposal packet. The independence matrix or team-approach matrix can be completed any time self-employment is being considered. However, if a matrix is completed in the assessment stage or more than 30 days before the proposal packet, it must be updated before being submitted.
The team-approach matrix includes applicable data for people who may require more support and is completed by the VRC and the support team.
After determining consumer eligibility, the counselor supports a self-employment outcome by helping the consumer
Note: The VRC must approve or disapprove the self-employment business proposal or plan and document the decision in the case notes.
The VR counselor may solicit input from the
The counselor should encourage the consumer to seek opportunities that will result in a living wage.
Finally, the VR counselor must either approve or not approve the IPE, and follow all approval requirements outlined in 29.6 Small Business Venture Development Guidelines, 29.7.1 After Approval, and 29.8 Follow-Up.
Exercising informed choice and responsibility in the VR process requires the consumer to determine his or her self-employment goal. To be fully engaged in the VR process, the consumer must
It is the consumer's responsibility, with assistance from the VR counselor and any other team members, to solve problems related to the employment goal. To help determine self-employment issues, a consumer may
Once a consumer indicates a goal of establishing a small business, the counselor informs the consumer that he or she is expected to make a substantial financial contribution toward the business, not counting the purchase of assistive equipment for his or her use.
DBS requires the consumer to contribute to the start-up costs of the business in order to make the consumer a stakeholder with a vested interest in the success of the small business and to encourage diligence, perseverance, and commitment. In determining the required amounts, DBS considers the funds available to the consumer from other sources as well as funds available to DBS under its current budget limitations.
The consumer's contribution may be satisfied in whole or in part by in-kind contributions (personal assets provided by the consumer, which may include items such as tools, furniture, supplies, and business space) and funds acquired or to be acquired from other sources. A consumer requesting funds is expected to contribute a percentage of the total funds according to the following:
If a consumer does not contribute at these percentages,
A consumer receiving SSI can also use a tool called PESS (Property Essential to Self-Support). PESS allows a small-business owner receiving SSI or Medicaid to have business equity and operating cash that do not count towards the SSI limit for personal cash resources. The business must be a "real business," or one that manufactures and sells a product or service. The following website offers more information and links to resources: http://www.griffinhammis.com
A consumer receiving SSDI has a different situation, which can be very complex. It is important to set up the case correctly at the beginning of the business venture to ensure that no SSDI overpayments are made, which would have to be repaid later. For more information and links to resources, see http://www.griffinhammis.com. Consumers concerned about losing benefits can also locate an SSA-sponsored Benefits Planning, Assistance, and Outreach Program. Counselors can also review a listing of Work Incentives Planning and Assistance (WIPA) programs in Texas that can help beneficiaries with disabilities make informed choices about work.
Note: Consumers who are currently receiving either SSI or SSDI based on their disability cannot be required to contribute financially to a business venture. They should, however, participate with in-kind contributions and attempt to obtain funding through the Economic Development Board and similar organizations.
Determining the assistive equipment required for a small business venture is the same as for any other vocational goal. The consumer may need assistive equipment before and after a small-business venture is chosen and approved. In determining the consumer's assistive-equipment needs, the counselor should refer the consumer to the employment assistance services team and may also use the services of the deafblind services team, the Assistive Technology Unit, or a comparable evaluation site.
The costs of any assistive equipment, such as a CCTV, computer with speech or large-print program, scanner, or notetaking device, are regular VR expenses and follow standard technology-purchasing procedures. Software such as Quickbooks®, computers without assistive software, printers, and supplies are not considered assistive equipment. Assistive equipment costs should not be included in a proposal letter or business plan when referring to the self-employment funding guidelines.
The Division for Blind Services requires verification that the consumer has sought funding for the small business from other sources, including
Note: Generally, the SBA, banks, credit unions, etc., loan money more often to established businesses than to new businesses. However, the consumer should establish relationships with these institutions even if an initial loan request is denied. These relationships may be beneficial in the future for such things as business expansion.
If DBS is not financially supporting a venture, then a business plan or proposal is not required. All services should be outlined in the IPE (for example, purchasing assistive technology or physical restoration).
A consumer who is seeking financial support of a business venture totaling $1 to $5,000.99 must submit a proposal letter for review. The proposal letter must contain
A business plan is required for all small business ventures totaling $5,001 or more. The business plan helps the consumer consider all the details related to the venture and make plans accordingly. The business plan also provides information to the counselor and other potential funding sources about
For all requests over $5,000.99, a copy of the completed business plan with all the required items must be provided to the employment assistance services field specialist. For more information on required items, see 29.6 Small Business Venture Development Guidelines.
The counselor gives the consumer a copy of the suggested format for a business plan.
Computers with speech and large-print access are available in each agency office. A consumer may use these computers to access the Internet for research and to create his or her business plan.
The business plan may be developed at the same time or after the IPE. An example of a self-employment IPE is available at IPE for Self-Employment Example.
The IPE for self-employment must include
The consumer must be informed that DBS' self-employment services do not include the purchase of any of the following items:
However, the cost of any of these items that are necessary to the business may be included in the total cost of the venture reported in the business plan, and may be considered a part of the consumer's contribution.
The Division for Blind Services' financial support of a small business venture is limited to business start-up costs, and includes the merchandise expected to be sold or used during the first three months. A longer period of support may be considered with exceptional justification.
Funds for renovations or remodeling are limited to those that are essential to start the business, and when the business cannot be conducted without the requested renovations. DBS cannot participate in the cost of renovating or remodeling without written permission of the property owner.
The consumer is responsible for identifying a business location. Counselors are never authorized to sign lease or rental agreements. The lease is between the consumer and property owner or manager.
The consumer is responsible for obtaining and completing the applications for all required certificates, licenses, and permits needed to operate the business. Counselors may provide assistance with these applications when necessary. The consumer is responsible for ensuring compliance with all zoning laws.
The counselor has the option of contacting the Standing Committee for assistance during any part of the self-employment process. This committee is accessed through the employment assistance services field specialist.
An amendment to the original business plan is required if further funding is requested after the initial approval of a business venture. The amendment should contain justification for the additional funding. If the new total amount requested exceeds the original funding category, the consumer must contribute the appropriate amount for the new funding category. For more information, see 29.4 Consumer Participation in Small Business Ventures.
The following grid is designed to serve as a guide to the counselor and consumer. A key of definitions follows the grid, and examples of business plans and proposal letters are provided on the Self Employment web page.
Note: The Division for Blind Services does not issue grants for self-employment nor does it provide venture capital. If a plan or proposal is approved, DBS may purchase equipment or inventory.
The required and optional steps for different funding amounts are detailed below.
$10,001 or Higher
Notes: For any venture totaling $1 to $5,000.99, a proposal letter is necessary; for any venture totaling $5,001 or more, a complete business plan is necessary. For proposal letter and business plan examples as well as information on business resources, see the Employment Assistance Services site.
A business venture requiring a proposal letter can be approved by the counselor. Help determining the viability of the venture is available from the field director, EAS, EAS field specialist, regional program support specialist, SCORE, etc.
Business plans are reviewed by the counselor, EAS, EAS field specialist, regional program support specialist, and field director. If it is determined that the plan is viable, the plan must be approved by the field director. The field director documents his or her decision in a case note in the consumer's file, which includes recommendations, approval or denial, and any suggested changes that would improve the chances of success for the venture. The Standing Self-Employment Committee (SSEC) is available for consultation through the EAS field specialist if needed. If the field director does not approve the plan, the SSEC is not required to review it. However, a copy of the plan and all required items should be sent to the EAS field specialist along with the field director denial.
Business plans in this category are reviewed by the counselor, EAS, EAS field specialist, regional program support specialist, VR supervisor or field director, the SSEC, and the director of Programs Management. The SSEC reviews, evaluates, and scores business plans, and reports their findings to the chair of the standing committee. The chair of the SSEC reports his or her findings to the counselor, EAS, regional program support specialist, VR supervisor or field director, and the director of Programs Management by an email, confirming that the findings include recommendations for funding, not funding, or suggested changes that would improve the viability or augment the success of the venture. The director of programs management must approve the business plan. The director of programs management documents his or her decision in a case note in the consumer's file including recommendations, approval or denial, and any suggested changes that would improve the chances of success for the venture. Consumers must expect to work full-time (unless documented disabilities prevent full-time work).
Business plans in the $15,001 and above category are reviewed by the counselor, EAS, EAS field specialist, regional program support specialist, VR supervisor or field director, SSEC, the director of programs management, and when required, the director of blind services. The SSEC reviews, evaluates, and scores business plans and reports their findings to the chair of the SSEC. The chair of the SSEC reports the findings to the counselor, EAS, regional programs support specialist, VR supervisor or field director and the director of programs management by an email, confirming that the findings include recommendations for funding, not funding, or suggested changes that would improve the viability or augment the success of the venture. If the SSEC or the director of programs management does not support the plan, the director of blind services does not need to review the plan. The director of programs management and the director of blind services must approve the business plan. The director of programs management and the director of blind services document their decisions in a case note in the consumer's file. Consumers must expect to work full-time (unless documented disabilities prevent full-time work).
Once a business plan is approved, the counselor should
The vocational rehabilitation counselor should review the consumer's profit and loss statements and monitor progress on the venture. Depending on the results, further counseling and resource information may be necessary to protect the agency's investment in the venture and increase the consumer's success in achieving his or her vocational goal.
For any business venture $5,001 and above, the VRC must send an action in the case management system to the RPSS requesting a full review of the business within three to six months after it opens. The RPSS uses the IPE and business plan to ensure that the objectives of the business plan are being met. The RPSS should have access to any documentation or records of the business. The RPSS notes any findings including recommendations and needed follow-up in a case note in the consumer's file.
DARS may terminate support of any small business venture that after a reasonable period of time shows no need for support or that fails to satisfy projected outcomes.
Before closing a case in self-employment as successful, ensure that it meets all criteria for closing a case as rehabilitated, which are
The counselor and consumer agreed in the IPE on a business stability measure, such as when the business revenue equals or exceeds
Business documents must
Documentation of the length of business operation can be
The federal government has mandated and encourages self-employment as a viable employment outcome for VR consumers. The key to successful self-employment, as with any successful employment outcome, is communication of realistic expectations, needs, and expertise between the consumer and the VRC. Self-employment can be a challenging outcome to achieve. For assistance with a self-employment case or clarification of information presented in this section, the VRC can contact the regional EAS, regional program support specialist, coordinator, or the employment assistance services manager at (512) 377-0650.
A meeting arranged by the vocational rehabilitation counselor (VRC) and attended by the employment assistance specialist (EAS), and consumer where the EAS preassesses the consumer's assistive technology needs relative to established vocational goals. Consumer skills, abilities, and experience are also considered. Information is shared regarding assistive and other technology options, and plans are formulated for any additional evaluation services needed. Vocational goals are discussed within the context of current job markets.
Assistance with exploring a small business as a career option. Available as part of the comprehensive program at the Criss Cole Rehabilitation Center in Austin and some community colleges.
Letter outlining the type of proposed business, what is needed to begin the business and why, the consumer contribution (both in-kind and financial), and the total funding amount requested. (See an example of a self-employment business proposal letter on the EAS Web page).
A service established by the Small Business Administration to assist individuals operating a small business. Locations are in various communities throughout Texas and are listed on the U.S. Small Business Administration website.
A group of people who have related experience and are available to review business plans and offer advice related to operating a small business. They are located in various communities throughout Texas. Locations are listed on the U.S. Small Business Administration website.
A training class or seminar that provides an organized curriculum about establishing a small business and retaining self-employment. Classes may be available through the Small Business Administration (SBA) or local community colleges.
An organization within the federal government that provides technical and management assistance to help start, run, and develop small businesses. The administration's approval of a proposal can help to support a funding request. See more on the U.S. Small Business Administration website.
A self-employed person who may or may not be blind, who can provide the consumer advice and ongoing support. This person should, ideally, be working in or have experience successfully running a business similar to the one planned by the consumer. The consumer should share any information with his or her VRC (name of mentor, etc.). The consumer could also benefit from input from a person who was not successful in establishing and running a similar business.
A formal and detailed written description of a proposed business. The business plan serves to help the business owner consider all the details related to the venture and to plan accordingly. It also provides information to funding sources regarding the type of proposed business, how much funding is needed, why this amount is needed, how any funding might be used, how the business will be run and marketed, and other details. (See the example on the EAS web page or consult the planning resources on the U.S. Small Business Administration website).
A tool to ensure consumer independence before a small business venture is funded.
A tool that includes applicable data to ensure success by people with severe multiple disabilities such as deafblindness.
A committee consisting of the employment assistance services manager, consumer services support director, assistive technology support specialist, regional program support specialist, and others. The committee reviews plans and renders an opinion within 30 days of receipt of a complete package, which includes all required items. For more information on required items, see 29.6 Small Business Venture Development Guidelines.
The employment assistance services field specialist receives copies of all proposals and plan packets submitted by the VRC, documents receipt in a case note in the consumer's file, refers plans to the next level review as needed, and documents in the case notes of the consumer the findings of the standing committee.
The regional program support specialist is available to consult for any business venture and upon referral from the VRC. The RPSS conducts a full review of the business three to six months after it opens using the IPE, business plan, and other documentation in the case file to ensure that the objectives of the business plan are being met.