Intro Slide - VCU
Slide 1
Introduction
FL CBTAC
Overview of Self-Employment
Where Do We Start?
Hello. I'm Cary Griffin. I'm with Griffin-Hammis Associates and the Center for Social Capital. Today we will be talking about helping youth and adults with disabilities to jump start their own small business enterprises.
Many of you taking this course may have been providing employment services for years but are new to the self-employment arena. Welcome! If you are unsure about how to proceed, don’t panic. This course will serve as a roadmap for you. We’ll show you the resources and guides you can turn to along the way.
When thinking about small business development, one of the first questions that most people ask,-- whether they are potential entrepreneurs, provider agencies, rehabilitation counselors, or family members is simply: where do I start? There are a lot of places to start. This course is going to show what we’ve learned about the best ways to begin.
Part of the process begins with supporting the case for small business ownership for individuals with disabilities.
You are fortunate to be working in a state that is taking a very proactive approach to self-employment right now. In many states, the adult rehabilitation system has been slow to accept self-employment as a reasonable outcome for all people with disabilities.
The leadership in your state, however, does believe that self-employment can be a viable outcome for any customer. They have also backed up this belief with comprehensive policies and programs which support self-employment.
We certainly agree that self-employment can be possible for anyone. We also have the evidence to support that belief. At this point, we have supported the start of nearly 450 businesses-- successful businesses with people who have many different kinds of disabilities.
Our experience has shown that given the proper support, anybody who wants to own a business certainly can own a business. For rehab and special education professionals, we can contribute to the success of the business by helping to match the person with a marketable business idea that first and foremost fits who the person is and what he or she has to offer. With careful planning, anyone can start and operate a business that makes sense and makes money.
Slide 2
Small Business Statistics
• Approximately 20 million small businesses in the US
• Over 60% of small businesses employ fewer than 5 people
• Small businesses are growing at an annual 4% rate
• They generate over $770 Billion annually
• Over 22% of Vets are starting new businesses
• Women-owned businesses growing 20% annually
SBA, 1999, SBA, 2002; Census Bureau, 2002
Why should we be helping people with disabilities to start their own businesses? As you can see from these statistics, self-employment is a growing source of opportunity for many segments of the economy.
Here are some data that show the growth of small business development in the United States.
In the United States today, approximately 20 million businesses are classified as small businesses. Small businesses generate over $770 billion annually in this economy. Over 60 percent of small businesses employ fewer than five people.
Small business development is growing at a rate of 4 percent annually. We are seeing constant growth here. Lots of people have part-time businesses. Self-employment is the fastest growing alternative to a wage job in the United States at this point.
Self-employment statistics also show the diversity of people starting their own businesses. Over 22 percent of veterans are starting new businesses. Women-owned businesses are growing at 20 percent annually.
The statistics show that self-employment is increasingly serving as an important work alternative for all people-- including those who have struggled to earn their rightful place in the employment arena.
People with disabilities deserve to have a full range of effective paths to employment. Self-employment must be one of those options if we are going to reach our intended outcomes for employment.
Slide 3
Framework for Small Business Development
• Discovery
• Feasibility
• Benefits Analysis
• Business Plan
• Support Strategies
• Skills, Training, Contingencies
• Finances
• Growth
As with all business development, it’s important to have a structure and framework for the process. It’s even more important when supporting a person with a disability to start his/her own business.
The most important element in the framework is the emphasis on starting with the person. Too many programs jump too quickly into business ideas or potential markets. The best chance for success lies in a careful match between who the person is and a marketable business idea.
That is why we start first with learning about the person – in depth. We call this part of the process “discovery” because we are taking active steps to discover everything we need to know about the person to help find the best path to employment. Discovery is our assessment process. Discovery helps us to understand-- Who is this person? What are her/his interests or passions; skills and talents? Where is the person at their best? What are the ideal conditions of employment? --as Mike Callahan might say.
We also use the discovery process to see if self-employment fits the person. Are they seeking self-employment because it is something they want to do or are they choosing it because they are running away from negative issues in their past. It’s better if the person truly wants to have their own business, but there are times when self-employment is a good way of creating the best possible conditions of employment for an individual’s unique needs.
The framework includes determining business feasibility. Do we think this is a reasonable idea? Will it make money? We do a benefits analysis to see if the person can access government programs that will help make it more feasible-- such as a PASS (Plan for Achieving Self-Support,) or other subsidies that offset earned income or Medicaid resources.
The framework for successful development also includes assuring effective planning throughout the process-- including a full business plan during start up; a plan for support strategies, skill training and contingencies; finance plans; and plans for the future growth of the business. If a business isn't growing every day, it's going out of business.
We will cover these elements of the business development framework in more detail in future courses. For now, it’s important to understand the importance of following an organized framework and assuring you don’t skip critical steps in the process.
Slide 4
Looking at Employment and Business Development Differently
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If we are going to find new and creative ways to help people earn income in satisfying and lasting employment situations, we have to approach employment from different angles. This chart shows what we see when we go out and look at jobs. Since a business is just a job that you do for yourself, then this chart also applies to self-employment.
When we look at most jobs that people with significant disabilities get in this country, they tend to be high turnover, entry-level jobs. While these jobs can offer people some opportunities to build skills and experience and put cash in their pockets, these jobs usually offer no stepping stone to better opportunities—no seniority, no career path, no higher salary levels, no chance to build equity or get off public benefits, no opportunities to buy a house or own a car. For people without disabilities, those jobs tend to be temporary, but for people with disabilities, they are seen as lifelong.
If we are going to create better employment outcomes for people with disabilities, we need to get beyond the “same old, same old.” I doubt that there is a grocery store in the United States that doesn't have someone with a disability bagging groceries. Why is that? It's not that people with disabilities are drawn to those jobs. It's the fact that these are the jobs that job developers find all the time. These are the jobs that are offered. If we stay on the surface level, settling for these kinds of entry level, high turnover, no future jobs, we will miss the potential that is shown on the iceberg diagram. There is a wealth of complexity in all employment situations that can offer people with disabilities a chance to enjoy the benefits of a successful career- either in a wage job or self-employment.
What we call the iceberg effect is the vast complexity of employment opportunities that are present in any business but are not easy to see on the surface. Many times, we avoid complexity because we don’t have the front line staff who can handle it. We haven't taught them how to support complex skill building and positive behavioral strategies. We look for jobs they know how to support people to do. We have to invest in staff development, staff skill building and supporting staff in order to raise the bar on what is possible.
Slide 5
Looking for the Business Behind the Job
• Spend time understanding the complexity of the business
• Get beyond what everyone else sees in the business
• Look for opportunities in businesses that match the individual’s interests and skills
• See unlimited possibilities in every business
When we take the time to get into a job or business though and we start to explore behind what everyone else sees, we get into the complexity that offers opportunity. If you go into a business like a Napa auto parts store, what you’ll see are three guys in front of computers selling parts. Most of us stop there. We don't get behind that counter.
• We don't see the person in charge of inventory control.
• We don't see the software person writing the inventory software.
• We don't see the person who keeps those computers running.
• We don't see the machine shop in the back that is busy doing valve jobs on engines.
• We don't see the recycling work- where they take brake shoes, package them and send them back to the factory for rebuilding.
There is complexity in any business that is not visible unless you get inside the business and explore beyond what other people see. Doing that kind of exploration, digging into the heavier complexity of a business opens up our eyes to many opportunities:
• to become a supplier to that business,
• to become an employee with a career path inside that business,
• to find more complex jobs that have the greater amounts of status, longevity, and higher pay that usually come with complexity as well.
We can learn many things while we are out there doing discovery and exploring work sites that match who the person is. While visiting a business that has attracted the person, we may find an opportunity to start a complementary business or become a supplier to this business.
Getting inside businesses helps us recognize small business opportunities. For instance, going back to the Napa auto parts, we were doing job development at a Napa auto parts store. They had a paint department with a machine that allowed them to mix custom paints for any chip of paint you brought in. They also had a little machine that filled empty aerosol bottles.
If you had a horse trailer with a scratch on it, you could take a paint chip in and they could match it, mix the paint, and fill an aerosol can with it- all with this little $300 piece of equipment. That is a potential job or a small business for somebody. There are all kinds of applications for that little business, but you would have never known that business opportunity existed until you looked for the business behind the jobs you can see.
Slide 6
Discovery
Discovery
• Seeks to determine “Who is this person?”
• Is based on preferences, skills, talents, supports, and not on opportunity in the
marketplace
• Marketplace matters, but it does not lead
Callahan & Condon in press; Griffin, Hammis, Geary in press
There are all kinds of business planning that need to be done for a successful business, but before you consider what the business needs, you have to consider what the PERSON needs. As we said before, success in self-employment for a person with disabilities is greatly affected by the match between the person and the business idea. The business idea has to FLOW out of what we know about the person. It has to fit who the person is—the whole picture of who the person is – interests and passions, skills and abilities, preferences and expectations for the future. It has to fit also the ideal conditions of employment—where, when and how the person will have the greatest chance for success.
Business ideas cannot be driven by the marketplace. So much of our traditional literature in small business has to do with finding an existing market and exploiting it. In self-employment for people with disabilities, it works better if we start with the person first and then work to create a market that matches their needs, preferences, skills, and talents. Starting with the person first turns traditional economic development theory on its ear. We’ve all seen how it’s usually done: We say, “Oh, computers are the next big thing.” So classes are started on how to solder PC boards in a factory--whether there is a factory there or not, and whether people enjoy doing computer boards or not. One of the things that we know is that people who do what they want to do are much happier than people who are working in jobs they don't like. Given the complexity of people's lives, it makes more sense to adapt to them, rather than trying to get them to adapt to the marketplace. That is one of the reasons why self-employment is so important.
Most people who start their own businesses are in fact artisans following their passions and using their existing skills. They don't know much about business. They learn as they go along or they hire people to do things they don’t know how to do. Their emphasis is on what they’re good at. That is where I'd like for you to keep your thinking at the beginning of the process. Let's not think so much about accounting and understanding liability and all those smoke screen issues that come up when we are talking about somebody owning a business. Let's talk about what the person is good at and see if somebody would buy that from them. Later in the business planning process, we will worry about the supports needed and how they will be paid for.
In our own business, we try to stay focused on our business, so we can do it better than anybody else, and we let other people take care of the things we need help with. We have to plan a business so that the business covers its own needs—one way or another. If we can’t figure out how to do that, then the business idea may not be a good one. The marketplace matters. Let me assure you, the marketplace is important. But it doesn't lead the process. It is not a market-driven process. It is a person-driven process. We match it up. That is where the magic happens.
Slide 7
Business Ideas
• Person-Centered thinking from Discovery
• Match to family, friends, neighborhood and other local business circumstances
Business ideas come from the person-centered thinking that is driven by the discovery process. But it has to be a type of person-centered thinking that strives for a critical degree of complexity in the process. This complexity will be revealed through a complete discovery process that goes beyond the basics of person-centered planning.
What has tended to happen with regular person-centered planning is that we pursued employment without a complete picture of who the person is. We have operated on surface kinds of information, which is why many people have person-centered plans but don't have a job in this country. Without learning who the person is-- as they interact with the business community around them, we will probably settle for employment situations that are short term, low paying and less satisfying to the individual --if we find one at all.
We want to back up and say – Let’s dig a little deeper. Let’s make the effort to discover the complexity of the individual. We shouldn't take the most surface kinds of renderings and create a business around that. Just because someone is interested in something does not mean they should create a business related to that. The business idea has to fit in a number of other ways.
We also need to match the idea to family, friends, neighborhood and other local circumstances. We look around to see-- Who in the family owns a business? What kinds of jobs do they do? Who are their friends? What is the neighborhood looking like? Are there opportunities there? Are there things that the person gravitates towards? What makes sense in the context of the person and his/her environment?
The only way you will find the answers to these questions is to go out in the person’s own community with them. Are there businesses that need this person's help as a supplier? Or maybe that would host them as a business within a business? You have to try out a variety of places to get ideas. And you have to get out into the community and start talking to people to find them.
Discovering good business ideas takes hands on exploration of real businesses and other activities in the community with the person. It takes watching for the places, people, tasks, environments, and experiences that “light up” the person and bring out the best in him or her. There’s an art and a science to it. If you learn to do discovery well, you will see how answers are found in the everyday experiences of being with the person in the world they live in.
Slide 8
Business Models
• “Business-within-a-Business” to enhance host business operations (Cup cake cart sales for the bakery)
• Resource Ownership: Possessing equipment or skills that make one exploitable in the marketplace (Computer tutor in the day care center)
The business model a person chooses for his/her business can affect the success of the business and the ease with which the person can operate the business. It’s important to understand the wide range of potential business models when you’re supporting someone to start a business. One creative business model is a business within a business. In this model, a person operates a small business that enhances the host business. The host business offers an environment for the new business to operate in. It’s a mutually beneficial relationship.
One example of a business within a business that we are working on now is a cupcake cart business. It's in a great little town with a very active town center. We are working with a young lady whose mother owns a bakery. During the discovery process, we saw how much she likes being around her mother and the bakery. She really likes doing laundry, so she first started a laundry service for the bakery. In the process of observing her doing that business, we came to see how --with her people skills-- she would be great at sales. She could definitely sell cupcakes-- which is a specialty that is all the rage right now.
We helped her to plan out a way to purchase a cart and sell cupcakes at lunchtime. She buys the cupcakes at wholesale from the bakery, takes them to the town square in her cart, and sells them for a nice mark up. She makes a ton of money. The bakery and the baker make extra money. This story also illustrates another business model that gives people a business advantage called resource ownership. The Rehab Act says a VR counselor can buy people tools and equipment that make them more employable. VR funding can be used to put nontraditional tools and equipment in people's hands that allow them to make a living. The equipment becomes an “exploitable” resource --much like people paying for a college diploma in order to make them more exploitable in the marketplace. In the story above, the young woman owns the cart that the bakery needs in order to make more money. By acquiring the cart, she has a way to make money that didn’t exist before.
Another example is a young lady in Georgia that we work with along with Doug Crandall and Nancy Brooks Lane. She is a computer tutor in a day care center. She is a wage employee now, but she originally started out as a small business. The business got started because she was able to purchase a computer system that the day care needed in order to offer computer tutoring as a billable service for families. The business fits this woman in that she likes children and has skills and interest in computers. Putting those two things together created a business with some complexity that made sense, made money for the person and the host business.
Think creatively about business models and you open up a world of possibilities for people.
Slide 9
Family Engagement
• What roles can family play in the business process? What do they have to offer??
• Do they have connections? Family networks leverage customers. Knowing customers before you start increases success by a factor of 27 (Rutgers, 2004)
• Families can help
o Location—Transit—Bookkeeping –Marketing—Networking—Production-- Personal Assistance-- Financial Literacy
The service system for people with disabilities has largely left families out of the loop. We have taught families that we will take care of individuals throughout their lives. But that's not true in most cases for other kids. Families are very much involved with their non-disabled family members moving into adulthood and getting set up to support themselves. Why not tap into this valuable resource for people with disabilities who are seeking to earn income?
It is fairly typical in business in the United States that family is very much an active ingredient in the start-up and long-term support of most small businesses in this country. We need to explore what a person’s family has to contribute to the process for a person with disabilities. We need to ask some questions: Does the family have a stake in this business? Do they have a way to buy in? Can they loan people money? Can they provide support for this person? Is there someone in the family who is already a business owner? They've got knowledge and maybe connections that can be leveraged. Generally, we find that folks are pretty intrigued with helping.
We need to look at the kind of connections the family has in the community. That family is out working, they are buying things, they have friends who have workplaces and buy things. That's how social networking happens. We have isolated people with disabilities so much that those social networks are pretty thin. We need to engage the family to help find customers & support.
Family networks can help leverage customers. A Rutgers study in 2004 showed that knowing your customers before you start your business increases the chances of success by a factor of 27.
That is so important. Families have those connections. They have monetary power in their communities. They have friends of friends. A lot of times we give the example of Lizzie in Montana who has a gourmet dog biscuit business. Her mother is a nun. One of the ways they got the business started is selling to people who go to the church regularly. Does that seem a little crass? Maybe. But that is how business is done-- you ask your friends for a sale. That is how you build your customer chain.
Families can assist with all kinds of things if they are willing and able. They can help find locations; provide transportation; assist with bookkeeping, marketing, networking and even production sometimes. They might provide support related to personal assistance or dealing with finances. One of the best learning experiences for people is just simply running a business. You start to understand how money works. Even people who have no interest in money start to understand the interaction between customers and having money and what that money will do for you. Most of the people I know who have businesses-- people without disabilities-- say that they never had a course in bookkeeping, or accounting, or marketing. But over the years of doing their business, they have figured those things out. They learned it by doing it. That is an important lesson for folks. We don't need to know how to do everything before we can do it.
Slide 10
Benefits Planning
• For Students: Apply for SSA benefits; Student Earned Income Exclusion ($1460/$5910)
• PASS (Plan for Achieving Self-Support)
• PESS (Property Essential for Self-Support)
• WIPA – (Work Incentives Planning and Assistance)-- vcu-
Work incentives and benefits planning is obviously a very large topic. We will cover it in greater detail in a future course. It’s important to understand the basics of benefits planning as you get started with small business development. Government benefits and work incentive programs provide valuable assistance and advantages that increase the feasibility of businesses for people with disabilities. These programs provide income support while businesses are getting up to speed. They also offer ways for people to save for and acquire assets. They allow more flexible methods of managing earnings. We want people applying for Social Security as soon as possible. Some people think that you can’t work and receive benefits. With good planning, there are several ways you can use benefits while working. One of those is the student earned income exclusion which excludes a certain amount of a student’s income from reducing his/her benefits. Right now it's at $1460 a month, or up to $5910 a year.
PASS (Plan for Achieving Self-Support) is an underutilized Social Security benefit that can greatly aid people in starting businesses. PASS plans can be written for children and adults on SSI. If you are serving someone who is getting SSI, or SSDAC or some combination thereof, explore the idea of a PASS. The Plan for Achieving Self-Support can leverage funds from Social Security benefits to use for a business. It maximizes the benefit and allows the person to save up for their future. It allows people to put earnings into a business, purchase equipment, pay for training or college and a number of other supports that assist the person to earn income.
The other thing that is great about owning a small business, especially for a SSI recipient, is that owning a business allows you to save up money without it counting against your public benefits. People who receive Medicaid and SSI usually are kept poor because of the $2,000 resource limit. Folks can go to work and earn money and that's great. However, when they get to the point where they have more than $2,000 in the bank by saving or an overpayment, they either have to spend down the money on things like a burial plot or take a cut in SSI.
Business owners can have a PESS (Property Essential for Self-Support) exclusion for their business. That means the resources in a person’s business are not impacted by that $2,000 resource limit. They can keep money and assets in their business well beyond that $2,000 resource amount. The money can be converted over to personal use as long as it's not in your account on the last day of the month. You can pretty much do what you want with it. But again, what we like to see is the money being used to improve the person’s long term quality of life like buying a house or car. These are allowed as excluded resources under SSI and Medicaid. Or use that money to invest in the future of your business.
For assistance with benefits planning, we refer you to the Work Incentive Planning and Assistance program. You can find the local WIPA representative who can do a benefit analysis for you at WWW.VCU-. Additionally, technical assistance is available from the Center for Social Capital staff at any time.
Slide 11
Business Planning
• Work backwards from desired earnings (if supported employment average is 20 hrs p/wk at $6 p/hr. --begin here)
• Primary & secondary customers
• Distribution & transportation
• Promotion
• Suppliers
• Tools & Equipment
• Skills acquisition (Systematic instruction allows us to consider complex tasks)
The next step is business planning. (Again there will be a full course on business planning later in this series where we will give you more detail on each element of the planning process. For now, we will hit the highlights of the components of a business plan.) First we look at how much money the person needs to make. Are they trying to get off public benefits entirely? If they’re using a PASS, Social Security will generally like to see that they are at least taking a substantial chunk out of their benefits at some point. Government programs support working toward benefit reduction--with easier ways of getting back on benefits ---new options under the Social Security Act-- and Medicaid buy-in for health insurance. So, we work backwards from earnings. Generally in calculating the desired level of net income, we want a goal that is at least equal to typical supported employment wages (around 20 hours a week at $6/hr.) We could also start at the benefits break-even point. We want to maximize earnings to show Social Security (and Voc Rehab) that this business is significantly helping the person to move forward in his/her life.
Once we know the income goal, the business plan focuses on answering questions about how the business will operate to get there. First we want to identify primary and secondary customers for the business. The primary customer is the typical user and the secondary customer is one who is going to use the product or service less often or in a different manner. Business planning also looks at distribution and transportation. How will the person get their product or service to the market? What transportation will be needed and how will it be addressed? Promotion is another planning issue. Most people are not going to use radio & TV ads. They are going to use some form of networking. The plan should identify specific people to talk to and what they will ask them to do-- How they will create a buzz about their business. The other way we talk about promotion in small business is through a process called listing--putting the information about the business where people expect to find it.
Further on in the business plan, we need to look at suppliers- which ones will be needed and back ups for them. There are many negotiation issues that go along with suppliers. --volume discounts --wholesale pricing --bundling your orders with other companies, etc. The plan also obviously needs to address what tools and equipment will be needed. Will the person buy or lease? How will they pay for them? How will that affect pricing and customer retention?
Then skills acquisition needs to be addressed which is something that is dreadfully overlooked in business plans. This is the point when we look at the help that people are going to need and how to support them --through teaching, assistive technology, or other supports. All of these elements come out of a thorough systematic instruction and job analysis process which is so important to skills acquisition and teaching people how to do complex tasks.
Slide 12
Natural Business Supports
• Employees (Ronny and Melissa)
• Biz within a biz
• Financial Literacy
• Earnings to cover services
• Family support in small businesses
• VR, LEAs and CRP’s provide a host of supports
The business planning process identifies what the person will need help with. We then look for the most natural ways to provide that needed support. We know that rehabilitation services such as job coaching are usually time limited and expected to fade. If a person needs long term assistance, we need to be creative in identifying supports that will be readily available on an ongoing basis.
One of the most typical natural supports in business is having employees. We need to be thinking about how the business can afford to hire the employees needed—creating a sales schedule and new markets and new customers that bring in the needed revenue. If a person isn’t able or willing to do certain required tasks for the business, then you have to be able to hire someone to do it. That is a very natural business solution.
Ronnie, who runs a towel sterilizing business in Georgia, needed an employee. The first year Ronnie’s parents and job coach did a number of the ongoing tasks for his business. When we developed his business plan in the second year, we saw that Ronnie really needed to relieve that situation by hiring his own employee. By setting up a sales schedule and target, he was able to meet that goal so that at the beginning of year 2, he was able to hire his first employee.
Same is true in Melissa's business. She was making gift baskets and her grandmother was her major support. When we wrote that business plan, we showed that through hitting a certain number of sales per month, by year 2 she would be able to hire somebody to help her put the baskets together and deliver them every day, giving Grandma a break. These are important strategies.
The other strategy which I talked a little about before is business within a business where a smaller business exists inside a larger business. The businesses are complementary—each providing a benefit to the other. One example we saw is an espresso stand inside a bakery. The espresso stand business owner receives natural support from the bakery staff and the bakery benefits from the extra customers who come in for the espresso.
A number of people with disabilities will need support around financial literacy. Having your own business is a great teacher as we said before. There are some good resources out there to help with supporting financial responsibilities.
We want earnings to cover the services which is the natural way for businesses. Family support is common in the majority of small businesses in the United States. Voc rehab, local education agencies and community rehab programs can provide a host of supports but they tend to be time limited. We need to dig deeper in our thinking about how to leverage ongoing natural supports.
Slide 13
Enterprise Feasibility
• Existence of supports
• Paying customers
• Marketplace
• Testing Feasibility (Sell something; surveys; data collection; ask experts with personal experience; get a job in the field)
• Resources: SBDCs, TBICs, Census Bureau, SCORE, Depts. Of Commerce
• Defining Customers (Primary customers, secondary customers
• Defining Competitors (competition signals a market exists and competitors may become customers)
Part of the planning process for small business development is determining the feasibility of the enterprise--testing the business idea. Before we can tell if this is a good idea or not, we want to look for the availability of support. We want to see if there are truly paying customers out there. Does the marketplace actually exist for this idea?
We do this through surveys and testing. Mostly that simply means going out and selling something. We have set up at flea markets on weekends to see if people like a particular kind of product. We have gone around and put fliers out to try to drum up business for lawn care businesses. We have gone out and done samples of giving out dog biscuits at a pet store to see if people like them enough to buy them. There is a variety of ways you can test a business. Again, sell something. Do some surveys. Get data off the Internet. Ask experts. Get a job in the field first. That's where a lot of us learned our craft before we started our own business. One of the cabinet makers that I know learned by working for his dad for years. He then went off on his own and started his own cabinet making business.
Where do you look for help with feasibility? Again, seek out local experts-- the small business development centers, the tribal business information centers, the census bureaus. These are great sources for data on the demographics of the neighborhood you’re interested in and who is likely to buy your products. Another resource is SCORE, (the Service Corps of Retired Executives.) Various Departments of Commerce especially at the state level have information on demographics, business loans, microenterprise grants and things like that. Look for small business development resources that everyone else uses. It’s the fastest growing employment option in the country! Resources are out there.
And again, we have to define the customers and the competitors as we talked about. Who is that primary customer? Who is that secondary customer? Is there competition in the area? I look for competition. I like competition. Competition tells me that there is a market. Now what I want to do is to differentiate my product a little. I want to make my product or my service a little different. And then also, talking with my competition and saying, Have you got too much work? Could I take some of your overload from you? Can you get enough raw materials? We did that with somebody who repairs violins. He has a competitor in his community, but the competitor has more work than he can do. So Jim now takes one or two violins every couple months from this guy and repairs them for him. Instead of competing head on, he works with him. You can see that business planning is a different process than any social service agency planning process. You’ve got to know what you’re doing from a business perspective.
Slide 14
Supportive Business Model
• An opportunity for resource ownership strategy
• Business within a business:
– Provides a mutually beneficial environment
– Highlights contribution & competencies
– Lowers costs (Rent, Phone, Utilities, etc.)
– Natural workplace supports
• Resist the Group Model:
– Emphasizes differences not similarities
– Becomes a program
– Reinforces Readiness Thinking
– De-emphasizes individualization
– Puts the opportunity before the person
– Adds cost & complexity
We are looking for a supportive business model—where the business model itself helps to provide what the individual needs to be successful in the business.
We’ve hit on several models that provide advantages and natural support for people with disabilities owning businesses. One again is the option called resource ownership, acquiring ownership of something that helps make you money. Also, looking at the business within a business model. That model provides a mutually beneficial environment that highlights the contribution and the competencies of the individual. It also lowers costs because you already have a place to do it. There is already a business that exists there-- the rent, the phone, utilities, copy machine is already there. Because the business has coworkers or another business owner, there are already some natural workplace supports there for you.
We want to emphasize how important it is to resist the group business model. A lot of people want to start group businesses. We get that a lot from agencies. I'll tell that you we do not work on group businesses. We don't believe in group businesses because we don't think they are good models. It emphasizes the differences of people. You’re in that business because you have a disability and because you happened to be associated with the agency that helped to set it up --not because that business idea makes sense for you. It’s impossible for one business idea to match the unique needs, skills, and interests of three or four or five different people.
It becomes a program down the road where everybody gets to run through it and it detracts from ownership. What I find is that an agency typically owns the business or a family owns it. It reinforces readiness thinking-- that people aren't ready to go out on their own to have their own business. It de-emphasizes individualization. You start to run the business for the group and make decisions for the group. This model often puts opportunities before the person. It usually starts with somebody having a business idea. Then they plug some people in to do it because they know they can teach people how to do this job. It's not person-driven and it also adds cost and complexity. Think of the complexity of the support plan that will be needed when you’re talking about 4 or 5 people and all their individual support needs. It’s likely the business idea will be a disaster for at least a percentage of the people causing problems for the others in the group. In short, don’t do it!
Slide 15
Financing
• Families/Individual Savings
• LEAs, VR, WIA, CRPs, DD Councils
• Loan Funds
• PASS
One of the first questions that comes up is the financing for the business. Again, we’re giving you more detailed information about financing in future courses. But you will see one theme in our discussions of financing—look for a variety of sources of funding and financing just like all businesses do. Sometimes in human services, we tend to look for the program that will solve all of our problems at once. That’s not how it is in business. Businesses use many sources for the financial support they need. We call it amalgamated funding.
What are some of these sources? Families can certainly help. Individuals who have saved money can put this into their businesses. Local education agencies can use money that would go to classroom training for individuals and help them with the business.
Florida DVR is committed to supporting customers down the self-employment path and this includes funding for starting businesses. DVR is certainly in the business of assisting people to get the training, tools, and equipment that help them start a business or get a job. Work Force Investment Act is also capable of helping out. Community rehab programs are funded to get people jobs. That is their major task. DD councils in some states are giving direct grants to individuals with disabilities. Kansas is leading the way in this, giving direct loans or cash grants actually to individuals who have small businesses.
Find your local resources and tap into a variety of sources.
Slide 16
Individual Funding Sources Graph
|[pic] |
There are a variety of loan funds available for folks. Certainly, one of the most underutilized sources of big amounts of cash is the Plan for Achieving Self-Support. Here are some data that we have recently seen from 75 businesses that were started in the last five years. Some are fairly new businesses and some are a little older than that. These are the amalgamated funding sources that we found.
• Families put in about $76,000 into those 75 businesses.
• Voc rehab put in an astounding $765,000 worth.
• PASS plans almost $470,000 worth. Very underutilized resource. Only about 1 percent of people eligible for a PASS have one in the United States. It's a shame that people and consumers don't know. We are not telling them as professionals; we are not telling them about PASS.
• CRPs, DD councils, local schools have funded to the tune of about $58,000. We believe they can do a lot more than they are doing.
• Bank and nonbank loans, mostly family, friends, that sort of thing, over $365,000 in those loans. I would guarantee you most of those are not bank loans.
• Customized employment. Over the last five years, the Department of Labor Office of Disability and Unemployment Policy (ODEP) funded 20 customized employment grants that put cash in the hands of individuals who wanted to start businesses or get a job. We were able to work with several states and put almost $333,000 in the hands of individuals to start their businesses.
• Then other miscellaneous grant funds, about $33,000.
So, there is money available. It's not easy to get. But it is out there certainly.
Slide 17
Gross Income Statistics
|[pic] |
This is a graph of gross income for those 75 business --minus one. I took one business out of this data report because the owner had a very sophisticated business as a glass designer and installer in a rural part of Montana. He ran his business for eight or nine years and then sold it for $1.5 million. At that time he was grossing about $900,000 a year. That is not typical. He started that business on about $7 or $8,000, in part from a program that we had funded by the Department of Labor employment training administration and then a loan of a couple thousand dollars from his family.
So if we included his earnings, the average gross earnings for a business are close to $40,000 per year. But we realize that did skew our data. And it was an older business than ones in the primary sample. So we took that business out of the data-- making our average adjusted gross income for the remaining 74 businesses around $28,000 per year. We don't have net earnings because that gets into some privacy and confidentiality issues. Our data are self-reported largely-- either from the business owner, the community rehab program that supports the individual, or from a VR counselor.
We saw the high end for earnings at about $130,000 a year. The low earnings business was about $4800. We don't like businesses that earn this small of an amount. But we do have some part-time businesses, weekend businesses and hobby businesses in this sample. We also have some start-up businesses included in this data. We are going to see the lower end of earnings in these circumstances and that's okay.
But the data show that people are making money in their own businesses. It can work!
Slide 18
Business by Disability Graph
|[pic] |
People are often interested in information about the types of disabilities of the business owners. This graph shows the breakdown of the people who were in the group of 75 businesses shown on the previous slide.
If we look at the demographic break down by disability of the folks we have been serving in our business development consulting,
• 20 percent had a primary physical disability
• 7 percent had another kind of disability; typically, a sensory disability of some kind.
• About 31 percent had a developmental disability.
• And about 42 percent had a psychiatric or mental health disability, which was kind of surprising to us because only about 15 percent of people with psychiatric disabilities are working in the United States. So self-employment certainly can help us break that tragic statistic.
And so, that is a very fast overview of getting started with small business development. We will cover all of these areas more comprehensively in the upcoming training sessions. Beyond this, there are lots more resources you can utilize.
• We have a book, Making Self-Employment Work for People with Disabilities. It's available from Brookes Publishers.
• We have many things on-line at VCU. Look for the Website through T-TAP. Look for the work supports website.
• And technical assistance is always available at any point from both The Center for Social Capital and from FL DVR.
• And then you can always go to our Website which is Griffin-.
Thanks. Talk to you soon as we explore the steps to enterprise development.
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