The National Blue Ribbon Panel on Self-Employment, Small Business,
and Disability focused on four primary topics related to self-employment: (1)
Training and Technical Assistance, (2) Finance, (3) Government Policy, and (4)
Entrepreneurs' Perspective. Forty-four participants were organized into four
work groups, with each group exploring one of the four topics. Each work group
identified opportunities and barriers related to their assigned topic and
developed recommendations for eliminating or minimizing those barriers.
The individuals participating in the Blue Ribbon Panel were
selected based upon their interest and expertise relative to self-employment,
small business, and vocational rehabilitation. Participants represented a
cross-section of public and private interests. Public sector representatives
included the Small Business Administration (SBA), small business development
centers (SBDCs) from several states, the Social Security Administration (SSA),
Rehabilitation Services Administration (RSA), several state vocational
rehabilitation (VR) programs, and service organizations for blind individuals.
The private sector was represented by an interesting mix of bankers, business
owners with disabilities, small business development professionals,
rehabilitation organizations, and insurance companies. Non-profit organizations
representing disability and microenterprise interests were also present.
Participants used their collective expertise to discuss self-employment and
small business ownership opportunities for individuals with disabilities. The
resulting dialogue set forth recommendations based upon acknowledged barriers
to self-employment for individuals with disabilities.
Although four work groups were established, the recommendations
that emerged from the work groups centered on three topics: (1) Training and
Technical Assistance, (2) Government Policy, and (3) Finance. The
recommendations of the various workgroups were frequently overlapping. For
example, recommended changes in government policies were identified by all four
work groups. The Entrepreneur's Perspective Work Group transcended all topic
areas and, as a result, their recommendations were blended into the
corresponding topics in this report.
This report is a compilation of barriers and recommended actions
identified by the four work groups. Additional barriers and recommendations
have been incorporated to supplement the proceedings of the Blue Ribbon Panel.
While the objective is to bring awareness to critical barriers and suggest
solutions to addressing those barriers, the number of individuals with
disabilities who are becoming self-employed is growing and therefore, new
barriers and opportunities continue to surface.
Each of the four work groups of the National Blue Ribbon Panel
acknowledged that the current level of education regarding self-employment as a
viable option for individuals with disabilities is inadequate. The work groups
recognized that a variety of educational approaches are warranted to facilitate
timely progress on this important issue. Consequently, the recommendations
gleaned from the work groups relative to training and technical assistance
focus on establishing a framework for addressing the educational needs of
individuals with disabilities and the public and private entities that serve
them. This framework includes four broad components:
- Compilation of small business planning materials
- Development of service delivery systems for providing
comprehensive training and technical assistance to individuals with
disabilities
- Education of professionals, and
- Establishment of a trade organization.
Small Business Planning Materials
Over the past ten years, newsstands, libraries and bookstores
have witnessed an explosion of printed materials, including books and
magazines, that focus on starting or expanding a small business. The "how to"
aspect of these materials is typically general in naturemeaning that the
approach is generic and can be adapted to any type of business. These general
materials are augmented by those focusing on specific businesses and
industries. For example, materials focusing on best practices for developing
consulting firms, import/export businesses, home-based businesses, and
Internet-based businesses are commonly available. Printed resources are now
complemented by software, informative Web sites, television programming,
distance learning, audio tapes, and video tapes; these mediums take information
off of the bookshelf and into the living room. Additionally, a variety of U.S.
and European publishers have developed effective training programs and
curricula that are appropriate for many age groups and reading levels and are
well-suited for both group training and individual study.
Given the widespread availability of business planning materials
on how to start any type of business, is there a need for a new body of
published materials designed specifically for individuals with disabilities?
Nobusiness practices are standard and applicable to all who want to
minimize the risk of starting or expanding a small business by researching,
planning, and preparing for success. There is no need to reinvent the wheel.
What is needed is a concerted effort to ensure that new and existing materials
are accessible to and usable by people with all types of disabilities.
Recommendations
- Compile a comprehensive list of resource materials related
to effective small business planning practices. Individuals with
disabilities both inside and outside of service delivery systems will be well
served by convenient access to an organized and accessible compilation of
business planning resources. Existing materials should be reviewed to identify
general business planning and industry-specific resources that are
high-quality, user-friendly, and available in a variety of mediums. An
essential component of this strategy is an effective means of delivering those
resources into the hands of individuals who can benefit from them.
- Encourage publishers to adapt materials into alternative
formats, such as large print, Braille, audio tape, and video tape. While
business planning resources are widely available, those resources can rarely be
found in formats that are accessible to individuals with print impairments.
This is a significant barrier that must be addressed.
It should be noted that the Office of Disability Employment Policy
has launched a Web site (http://www.jan.wvu.edu/sbes) that provides a
comprehensive listing of resources on self-employment and small business. The
information is available from the site's home page by clicking on Resources for
Self-Employment and Small Businesses which has the following links: Small
Business Administration and Related Resources; Social Security and Related
Resources; Small Business and Self-Employment Associations and Organizations;
Consumer Protection Resources; State Economic Development Resources; State
Vocational Rehabilitation Offices; Additional Disability and Small Business Web
sites; and a Publications List. Some of the listed resources pertain
specifically to individuals with disabilities.
Service Delivery Systems and Self-Employment
Small business and self-employment may not be widespread or
consistently embraced within public rehabilitation service systems, but the
capacity has been established. Cited in the Workforce Investment Act of 1998,
the Rehabilitation Act Amendments of 1998 define self-employment as a
reasonable employment outcome and refer to the need for adequate technical
assistance to support small business planning activities.
A review of successful self-employment programs within vocational
rehabilitation agencies nationally reveals that, although they are all
different, each serves the needs of the consumer. While approaches vary,
programs share one commonalitythey all include a format for providing
business planning technical assistance that is consistent with the capacity of
that state. Some utilize publicly funded, mainstream business planning services
such as small business development centers (SBDCs), often requiring consumers,
at a minimum, to have their business ideas and subsequent business plans
reviewed by SBDC staff. Others contract with private business consultants for
the delivery of individualized, one-on-one technical assistance. Some
rehabilitation programs rely on existing staff to facilitate the business
planning process until the consumer's needs exceed the counselor's capacity, at
which point they are referred to other local resources. Finally, others tap
into local microenterprise organizations who typically deliver services in a
group training format and follow up with individualized assistance to complete
the business planning process.
Regardless of the method or source, an organization's framework
for delivering technical assistance must be consistent with its internal
capacity and the availability of local resources. In urban and suburban areas,
for example, services are plentiful and likely include several microenterprise
organizations, SBDCs, and many independent service providers. Conversely, in
rural or remote areas, services are limited by local availability.
Technical assistance services should not be discontinued when
business planning is finished. Although emphasis is usually placed on the
start-up phase, many technical assistance needs do not surface until the
business is operational. Monitoring business performance after start-up can
help identify technical assistance needs before they become detrimental to the
business. Regular review and interpretation of business performance data can
inform business decisions and suggest needed supports. Within the technical
assistance framework, monitoring after business start-up can be administered by
any of the resources previously described.
Common to individuals in the business start-up phase is an
overwhelming feeling of isolation. For an entrepreneur who has spent countless
hours planning for business start-up with help and support from friends,
family, business advisors, and technical assistance providers, isolation
becomes very real once the business is launched and the business owner is out
there alone facing the stark reality of the marketplace. Mentors can provide
invaluable support for business owners during this difficult time. A committed,
experienced mentor does not develop a co-dependent relationship with the
business owner, but acts as a sounding board. One well-known mentor
organization is the Service Corps of Retired Executives (SCORE)a
national, SBA-sponsored organization that is dedicated to helping less
experienced entrepreneurs weather the trials and tribulations of business
start-up.
Recommendations
- Public and private rehabilitation programs should establish
formal relationships with qualified, experienced small business and
self-employment service providers. These relationships will facilitate the
provision of comprehensive, effective technical assistance to individuals with
disabilities, whether such assistance is delivered through group training,
individualized consultation, or a combination thereof. In any case, business
planning research and technical assistance should be completed in cooperation
withnot on behalf ofthe potential business owner. Technical
assistance providers should facilitate business planning, not do it for the
individual. It is critical that potential business owners become knowledgeable
of all aspects of their businesseven the aspects that they intend to hire
others to carry out. The business planning process should facilitate this
learning.
- The use of distance learning programs should be explored as
a means of providing training and technical assistance to potential business
owners with disabilities. Distance learning could be an efficient and
effective strategy for meeting the needs people with disabilities living in
rural or remote areas, as well as those with mobility and transportation
barriers.
- Technical assistance should not be discontinued once a
business is operating. Monitoring services are essential to ongoing
business success. Monitoring services include reviewing financial data and
market development information on a monthly basis at first, with quarterly
reviews following the first year of business operation. Careful monitoring
should trigger the provision of timely technical assistance services to help
business owners address issues as they arise.
- Mentor/protégée relationships should be
encouraged. Mentors can be an invaluable resource for inexperienced
business owners.
- Programs should share the framework that they adopt for
providing training and technical assistance services with other state and local
stakeholders. From public and private rehabilitation programs to economic
development organizations, each entity should be responsible for sharing their
framework with others. This sharing will facilitate client referrals for
service and acknowledge the availability of a network of qualified service
providers. Further, it will prevent some organizations from having to "reinvent
the wheel" by making them aware of models that already exist.
The Business of Small Business: Educating the Professional
Community
Having established the need for a framework for small business
training and technical assistance for people with disabilities, it is equally
important that service providers have sufficient background to work effectively
with the clients they serve. At a minimum, counselors will manage the cases of
clients whose vocational goals include self-employment. Other counselors may be
required to facilitate business plan development. Whether their role is case
management or business planning facilitation, rehabilitation professionals must
be prepared to effectively and efficiently address the small business and
self-employment needs of today's consumers.
The issue is a simple one: most vocational rehabilitation
professionals are educated within a social services paradigm. There are no
vocational rehabilitation or counseling degree programs located within business
schools, nor should there be. However, this does not minimize the need for
rehabilitation professionals at both the undergraduate and graduate levels to
be trained in small business issues that will affect their clientele.
Considering the acceptance of self-employment and business venturing as a
viable vocational outcome, it is time that small business and self-employment
coursework be incorporated into post-secondary curriculum for rehabilitation
professionals. This will prepare up-and-coming counselors to help their clients
pursue self-employment. A more timely method is needed to address the
educational needs of today's rehabilitation professionalscontinuing
education and staff development workshops on self-employment topics such as
basic business planning, understanding markets, financing business ventures and
interpreting financial data are needed. Integration of small business and
self-employment into formal education programs, coupled with ongoing continuing
education opportunities, will provide an effective mix of educational resources
for rehabilitation professionals.
Equally critical to the advancement of small business and
self-employment for people with disabilities is the education of professionals
outside of the rehabilitation field. Most banks and non-bank lenders (microloan
funds, venture firms, etc.) have little or no background regarding disability
as it relates to business ownership. They are in the business of providing
capital to customers, whomever they may be, who want to build capacity to
launch or expand a business venture. It is likely that lenders will see an
increased volume of applicants with disabilities as a result of, among other
things, the endorsement of self-employment as a viable vocational outcome in
the Rehabilitation Act amendments. Whether or not these lenders understand the
potential of business ownership by individuals with disabilities is in
question, as well as how prepared they are to effectively communicate with this
audience. For example, are their banking forms accessible?
The same issues ring true for publicly funded low-interest loan
programs and microloan programs whose eligibility guidelines typically include
women, minority, and low-income business owners, but not people with
disabilities. While people with disabilities may belong to any or all of these
groups (and are, in fact, a minority in their own right) few targeted programs
recognize people with disabilities in their eligibility guidelines. As a
result, many such programs do not have experience working with people with
disabilities and are often not confident that small business ownership is
viable for this population.
Educating bank and non-bank lenders and low interest loan program
managers regarding the viability of individuals with disabilities being
successful business owners will require a variety of methods, which could
include presentations at trade conferences and events, presentations to local
lenders, and printed educational materials targeted to the lending community.
Recommendations
- Undergradutate and graduate rehabilitation programs should
incorporate small business and self-employment into their curriculum.
Rehabilitation professionals should leave post-secondary education with the
tools that they will need to effectively facilitate self-employment outcomes
for people with disabilities. Without self-employment as part of their
curriculum, up-and-coming professionals are at risk of being ill-prepared for
the changing landscape of vocational rehabilitation.
- Continuing education and staff development opportunities for
today's rehabilitation professionals should include topics related to small
business and self-employment. Business-related learning opportunities will
fill out the menu of continuing education opportunities currently available to
rehabilitation professionals, including administrators.
- A comprehensive and coordinated marketing campaign targeted
to all types of lenders should be developed to promote the viability of small
business ownership for people with disabilities. Through the development
and dissemination of educational packets distributed through national and state
banking associations, lenders will recognize people with disabilities as
potential commercial customers. The campaign should include natural and subtle
portrayals of disabled business owners who are well prepared and succeeding in
business as well as information regarding the Americans with Disabilities Act
as it applies to lending practices. Implemented by the Small Business
Administration, the campaign will be national in scope and directed toward both
state and nationally chartered banks and non-banks. This national approach
could be complemented by local efforts. Educational presentations offered by
business owners who have disabilities and rehabilitation professionals would
increase awareness at the local level.
Organizing Our Efforts: Creating a Trade Organization
There seem to be as many trade organizations as there are business
types and categories. Whether national, regional, statewide, or local in scope,
trade organizations are typically member-oriented and provide formal and
informal supports through continuing education sessions, newsletters, and
networking opportunities. Many trade organizations include value-added benefits
such as annual conferences where members can meet others with similar
professional interests, share experiences, and learn from each other.
To augment the framework for educating professionals who serve the
business development needs of people with disabilities (including those both
inside and outside of the rehabilitation field), the creation of a trade
organization is advisable. A trade organization would cultivate the movement
toward and subsequent growth of small business and self-employment initiatives
for people with disabilities. Using a traditional model, the creation of a
professional trade organization would offer a forum for acknowledging best
practices, provide a vehicle for continuing education, and encourage networking
among existing and emerging small business and self-employment programs
targeted to individuals with disabilities. Additionally, an on-line component
of the trade association would present an opportunity for encouraging distance
learning programs, organized chat rooms, and information exchange.
Why a trade organization for professionals? Why not a trade
organization for entrepreneurs with disabilities? The Entrepreneur's
Perspective work group of the Blue Ribbon Panel said it bestcoordination
among the professionals who provide small business and self-employment services
is needed to encourage and support entrepreneurship for people with
disabilities. A trade organization is a significant step toward organizing the
current patchwork of services. Further, the Entrepreneur's work group expressed
a desire to be more fully included in mainstream trade organizations, Chambers
of Commerce, and other business networks. This suggests that, rather than
focusing on a trade organization for entrepreneurs with disabilities, these
business owners may be better served by efforts to educate mainstream business
networks to ensure that business owners with disabilities can fully participate
in these organizations.
Recommendations
- Establish a national trade organization for professionals
who provide self-employment and small business services to individuals with
disabilities. This trade organization should include both rehabilitation
professionals and business development professionals who share a common
interest in small business and self-employment for people with disabilities.
The organization could provide opportunities for networking, continuing
education, and information sharing through an annual national conference,
membership meetings at the state, local and regional levels, and an on-line
component.
- Implement a national marketing campaign to educate trade
organizations, Chambers of Commerce, and other mainstream business networks
about the needs and abilities of business owners with disabilities. Such
materials should be subtle and encourage organizations to make their programs
and materials accessible to business owners who have disabilities.
The number one reason that small businesses fail is
undercapitalization. Thus, access to capital is central to any discussion about
self-employment and small business. The Finance Work Group was assigned the
task of addressing financial barriers to self-employment. However, given the
significance of this topic, it is not surprising that each of the four work
groups acknowledged the need for financing options for entrepreneurs with
disabilities.
The Finance Work Group was represented by a mix of lenders,
business planning practitioners, entrepreneurs, and government agencies.
Participants were well versed in barriers and facilitators to financing small
businesses. Based upon the range and depth of their collective expertise, they
arrived at three primary categories of recommendations that focus on the
critical need for access to capital:
- Rehabilitation Services Administration,
- Venture capital and the development of a national investment
corporation, and
- Microloan funds.
Rehabilitation Services Administration
Throughout the four work group discussions at the National Blue
Ribbon Panel, vocational rehabilitation (VR) was consistently noted as a
critical player in ensuring the future success of self-employment for people
with disabilities. Consequently, pressure for leadership and innovation is
placed on VRand rightfully so, it seems. Through their use of federal
funds, VR has an unmatched capacity to impact the future of self-employment for
individuals with disabilities. Although it has been previously noted that VR as
a whole has not widely embraced or encouraged self-employment outcomes in the
past, with appropriate policies and counselor education in place, VR has the
opportunity to take self-employment of people with disabilities to new levels.
Considering their size and stature, it seems that VR agencies hold the keys
that open the doors to self-employment.
Relying on VR to instigate and implement significant change would
require a state-by-state effort. This approach lacks efficiency. However, the
Rehabilitation Services Administration (RSA), which funds and regulates the
vocational rehabilitation system at the federal level, may be a more effective
starting point. Considering that RSA holds the purse strings and is charged
with the development and implementation of vocational rehabilitation policies,
where should the pressure for leadership and innovation be placed? Is it the
responsibility of the service delivery mechanism (VR) to push the
envelopeor should the onus be placed on RSA, who has the capacity to
shape the attitudes and practices of VR agencies across the nation? It seems
that a concerted effort by RSA would be less incremental, more efficient, and
would reduce inconsistencies between state programs.
Access to capital has been unevenly addressed by VR from state to
state. Due to a lack of policy guidance from RSA, some states offer carte
blanche financing while others will not finance any part of a business venture.
It is RSA's responsibility to ensure that people with disabilities in every
state who pursue self-employment are treated evenly by VR with regard to fair
and equal access to capital. This could be accomplished through clear policy
directives and the set-aside of resources to be used for equity grants. Without
equity grants, many people with disabilities are unable to leverage sufficient
resources to adequately capitalize their businesses. RSA is the single largest
source of funds targeted to advancing the employment of people with
disabilities. It is logical to look to it to provide funding for targeted small
business initiatives. RSA has the opportunity to use existing resources more
flexibly and ensure the availability of equity grants to entrepreneurs with
disabilities across the nation.
Why equity grants? Given the level of resources required to
adequately capitalize some business ventures, many entrepreneurs seek financing
from a variety of sources. This is known as "financial packaging." Most lenders
and other financiers require a small business owner to contribute capital to
their business venture. This demonstrates the owner's commitment to the success
of the venture and a willingness to share risk. Without this commitment, an
individual's financial position is weakened. Equity grants allow VR funds to
serve in place of the owner's contribution when leveraging financing from
another source.
RSA's organizational structure includes 10 Regional Offices,
headed by five Regional Commissioners, who report directly to the Commissioner
of RSA. The Regional Commissioners coordinate funds from RSA and other
resources that are used to serve to people with disabilities through
State-Federal administered programs and grantees receiving discretionary
project funds. Given this layer in the RSA organizational structure, Regional
Offices could be the catalyst for advancing the capacity of VR to improve
self-employment outcomes for people with disabilities.
Recommendations
- Encourage RSA to earmark funds to be used for innovation
grants to improve access to capital for consumers of vocational rehabilitation
services. Equity grants from state VR agencies could dramatically impact
access to traditional and non-traditional capital sources. As previously noted
in this report, inadequate owner equity, due to exhausted assets and often
related to the disability, precludes many entrepreneurs from obtaining
financing from traditional sources. The availability of equity grants from
state VR agencies would be tied to an individual's goal of leveraging financing
from another source.
Funds granted to RSA Regional Offices would enable the
development of Requests for Proposals from state agencies in each region. If
each regional office granted a minimum of one innovation grant, that would
enable at least ten different approaches to using equity grants as a means to
accessing capital. The benefit would not only be the creation of innovative
program models, but also the advancement in those regions of entrepreneurs with
disabilities who utilize equity grants to successfully leverage financing to
start or stabilize businesses.
- Publish a standardized set of policy and program components
along with successful program models administered through state VR
agencies. The perceived lack of commitment to self-employment by VR may be
largely due to the lack of information readily available regarding successful
policy and program models. A published recommendation for policy and
programming components, supported by a sampling of successful policy and
program models, would take RSA out of a passive position on self-employment and
move them into a leadership role. It is important to note that the
standardization of policy and programming components simply suggests a
framework without prescribing an approach. The approach should be consistent
with local regulations, policies, and customs and reflect the unique character
of the region to be served.
Private Capital for Small and Medium Sized Firms
Venture capital is an important source of financing for small and
medium sized firms that require substantial capital. Venture capital is usually
reserved for businesses that have large capital needs and expect a high rate of
return over a specified period of time. While this does not describe the
majority of start-up businesses, venture capital is critical to those who need
it.
The Finance Work Group recognized that, at this time, the extent
to which venture capitalists are aware of the financial needs and capacity of
disabled business owners is unknown. Research is needed to determine whether or
not existing venture capital firms can and do serve the needs of people with
disabilities. If not, is a separate venture capital firm needed, or can the
issue be adequately addressed by educating existing firms?
Recommendation
Establish a task force to research venture capital as a potential
source of funding for small and medium sized firms owned by people with
disabilities.
Access to Capital Through Microloan Funds
The success of other disadvantaged populations using
self-employment as a means of alleviating poverty is encouraging. The strategy
has been so successful that an entire service delivery industry has grown from
it. This industry is known as microenterprise industry and serves targeted
populations. There are now more than 340 microenterprise organizations in the
United States. They are typically funded by public and private entities who
support the theory that business ownership contributes to the economic
empowerment and individual growth of marginalized populations. Microenterprise
organizations help individuals enter or re-enter the workforce by replacing
need-based public benefits with income generated through self-employment.
The microenterprise service system typically couples business
planning and technical assistance with microloan funds. The microloan funds can
be seeded with public or private capital and are intended to be used for equity
grants, interest buy-down grants, or direct loans. Microenterprise
organizations with microloan funds represent a system that is in place and
underutilized by individuals with disabilities and the agencies that serve
them. Microloan funds could be a source of equity grants or additional capital
leveraged with VR equity grants.
Recommendation
- Create linkages between microloan funds, microenterprise
organizations, VR, and people with disabilities. The potential of the
microenterprise industry to serve individuals with disabilities has been
underacknowledged and virtually unexplored. At a minimum, on-going dialogue
between rehabilitation agencies, the disability community, and microenterprise
organizations is warranted. This dialogue may foster linkages that serve the
interests of all stakeholders: Rehabilitation needs the sound business
expertise of the microenterprise industry; microenterprise will benefit from an
expanded customer base; new avenues for financial and technical assistance will
be available to people with disabilities.
It should be noted that The National Blue Ribbon Panel on
Self-employment, Small Business, and Disability was an introductory move to
cultivate this relationship. Sponsored in part by the Association for
Enterprise Opportunity (a national microenterprise trade organization) and the
President's Committee on Employment of People with Disabilities (now the Office
of Disability Employment Policy), the meeting was the basis for developing a
relationship that, hopefully, will be nurtured.
The Government Policy Work Group examined the role that local,
state, and federal government policies play in facilitating and discouraging
self-employment among people with disabilities. After identifying barriers to
self-employment that are imposed (often inadvertently) by government policies,
the work group developed recommendations for informing and changing current
policies and developing new ones that encourage self-employment for people with
disabilities. The Entrepreneurs' Perspective Work Group and the Training and
Technical Assistance Work Group also identified barriers and developed
recommendations relative to government policy. Several recommendations made by
the work groups were implemented with the passage of the Workforce Investment
Act of 1998 (WIA) and the Ticket to Work and Work Incentives Improvement Act of
1999 (TWIIA)two landmark pieces of legislation that will change the
landscape of employment opportunity for people with disabilities.
The work groups' collective insights and recommendations are
summarized below. Recommendations were made in six broad categories:
- Inclusion of people with disabilities in all small business
development programs
- Collection, analysis and dissemination of data and
statistics
- Vocational Rehabilitation
- Small Business Administration
- Work disincentives, and
- Health insurance and the Ticket to Work.
Who Should Serve People with Disabilities? ALL Small Business
Programs
People with disabilities have never routinely been considered a
part of small business development initiatives targeted to the general public
by government agencies. In spite of the fact that Section 504 of the
Rehabilitation Act of 1973 prohibits federally funded programs from excluding
people with disabilities, many agencies presume that people with disabilities
should be served only by special programs for people with disabilities.When
people with disabilities approach these programs for assistance, they are
routinely redirected to vocational rehabilitation. This sends an implicit
message that people with disabilities are not suitable candidates for
self-employment, and if they are, it is the responsibility of VR to assist
them.
There are currently 54 million Americans with disabilities,
cutting across all socioeconomic backgrounds. No single agencyno matter
how large or effectivecan serve all of the needs of this vast and varied
population. In fact, VR serves only 1.3 million people with disabilities,
suggesting that the remaining 52.7 million Americans with disabilities are
served by other public and private agencies or receive no services at all. The
practice of offering VR services to the exclusion of other services limits
choice and opportunity. VR services should augment and complement services
available to the general publicnot preclude people with disabilities from
accessing more generalized services, either in combination with VR services or
separately.
One reason that many public agencies are quick to redirect people
with disabilities to vocational rehabilitation is a lack of understanding of
the needs and abilities of people with disabilities. The historical segregation
of services for people with disabilities has mystified the delivery of services
to this population. This "specialization" has underscored the belief that
serving people with disabilities is too complex and involved to occur in the
mainstream. Thus, many public employees feel ill-equipped to serve customers
with disabilities. Further, people with disabilities have not been expected to
work. As a result, mainstream small business development agencies have not
perceived people with disabilities as a logical or viable market for their
services. This lack of employment expectation, which is informed by prevalent
myths and stereotypes about people with disabilities, presumes that people with
disabilities cannot work. If people with disabilities are not considered
suitable candidates for employment in general, it is no wonder that they are
overlooked as candidates for self-employment.
Recommendations
- All local, state and federal government programs must be
implemented in a manner consistent with the spirit of the Americans with
Disabilities Act. The needs of people with disabilities must be considered
and included in all new and existing public programs. This includes not only
providing physical access and program access, but also educating public
employees to understand the needs and abilities of customers with disabilities.
Education and awareness building among public employees at all levels is
essential.
- Establish task forces (similar to the Presidential Task
Force on the Employment of Adults with Disabilities) at the state and local
levels to facilitate interagency collaboration. Small business development
programs tend to lack information about disability-related services,
technologies and supports. Likewise, rehabilitation programs frequently lack
information and expertise about business development services and strategies.
The establishment of state and local task forces will initiate interagency
dialogue relative to small business development for people with disabilities,
encouraging the establishment of common goals, cross-pollination of ideas, and
the sharing of expertise. This strategy has shown promise at the federal level,
where an Executive Order from the President established the Presidential Task
Force on Employment of Adults with Disabilities in March of 1998. The
Presidential Task Force is a coordinated and aggressive federal interagency
initiative focused on reducing employment barriers for people with
disabilities. One outcome of the Presidential Task Force is the establishment
of a partnership agreement between the U.S. Small Business Administration and
the U.S. Social Security Administration to encourage people with disabilities
to become entrepreneurs. To ensure success, similar dialogues and partnership
agreements must be initiated at the state and local levels. State and local
agencies (as well as state and local field offices of federal agencies) are on
the front lines of service provision. A truly coordinated and aggressive policy
initiative cannot occur without involvement at these levels.
- Mainstream small business development programs should market
their services to potential customers with disabilities. For too long,
people with disabilities have been relegated to separate services. A focused
marketing effort is needed to make people with disabilities aware of mainstream
services and to let them know that these services are available to them. This
marketing effort will not only help people with disabilities see themselves as
potential customers of small business services, but will also help government
employees and the general public see people with disabilities as potential
small business owners.
- A comprehensive campaign to increase awareness about the
self-employment potential of people with disabilities must be undertaken.
People with disabilities, government employees and the general public need
to know that self-employment is a viable option for many people with
disabilities. There are few highly visible role models with disabilities in
self-employment. Successful entrepreneurs who have disabilities should be
profiled through a variety of mainstream media outlets to increase awareness
about the self-employment potential of people with disabilities.
Data Collection, Analysis and Dissemination
Mainstream small business development agencies do not think of
themselves as providing services to people with disabilities. Nonetheless,
these agencies serve people with disabilities on a daily basisoften
without even realizing it. A key reason that they are not cognizant of serving
people with disabilities is that they do not collect disability-related
information from their customers. Business statistics and demographics about
people with disabilities are not collected in the same manner that information
is collected regarding the general population, women and minorities. Disability
must be measured by these agencies in order to determine the extent to which
they are serving people with disabilities and the effectiveness of those
services.
The collection of data may seem to be more useful to government
agencies than to the people with disabilities who seek services from them, but
reliable data can be a useful tool in ensuring that people with disabilities
are routinely considered and included in new and existing programs and
services. Why is data essential to self-employment outcomes for people with
disabilities?
- Policy and funding decisions have historically been made on the
basis of reliable data. Without it, self-employment for people with
disabilities is not likely to command the attention it deserves from
policymakers and public administrators.
- We tend to measure the things that we value, and value the
things we measure. The collection, analysis and dissemination of
disability-related data will call attention to self-employment issues for
people with disabilities. By quantifying the issue, it becomes tangible and is
elevated from a "feel good" issue to an economic imperative.
- Agencies and organizations must understand their customer base
in order to design and deliver effective services. If government agencies do
not know the extent to which they are currently serving people with
disabilities, they cannot determine what policy or procedural changes would
promote self-employment opportunities for people with disabilities.
Establishing a baseline is needed to identify realistic goals and determine
what policy changes would be meaningful.
In addition to disability-specific data, there is a need for
dissemination of reliable data about self-employment in general. Widely
publicized information about small business development and self-employment
often paints an unjustly hopeless picture of the risks and costs involved. This
misinformation discourages many individuals, with and without disabilities,
from seriously considering self-employment as an option. While it is commonly
believed and reported that 4 out of 5 business fail in their first five years,
updated research suggests that small businesses succeed at much higher rates
than previously reported. Although comprehensive, national statistics are not
available, people with disabilities appear to be succeeding in small business
at rates equal to or greater than the general populationIowa's
Entrepreneurs with Disabilities Program, for example, boasts a measured 92 per
cent success rate. Likewise, it is a commonly held belief that starting a small
business requires tens of thousands of dollars. In reality, the U.S. Census
Bureau reports that 57 per cent of small businesses are started with less than
$5,000 and 25 per cent require no capital.
Recommendations
- Disability should be measured by all government agencies
that collect labor statistics. The current void of information available
about the self-employment of people with disabilities must be remedied.
Government agencies should measure disability in the same way that gender,
minority status and other characteristics are measured. Until this happens,
there is no way to determine with any accuracy the extent to which people with
disabilities are pursuing self-employment, their success rates, the economic
impact, and best practices.
- Realistic, accurate, and current information about the
costs, benefits, and risks of self-employment should be collected and widely
publicized. Information should be presented in a manner that neither
glosses over nor exaggerates the potential risks and benefits of small business
ownership. Such information must be widely distributed through both mainstream
media outlets and government sources and should be offered in alternative
formats for individuals with print impairments. Deciding to start a business is
a significant, life-altering decision; accurate and up-to-date information is
needed to support informed decision-making.
Vocational Rehabilitation
Without question, vocational rehabilitation plays a key role in
facilitating the employment of people with disabilities. The fedral-state VR
program has historically been, and continues to be, a leader in addressing the
high unemployment rates among people with disabilities. However, the program's
employment outcomes have focused more on traditional employment settings,
leaving self-employment an often overlooked option. In fact, of the
approximately 210,000 people that VR helps obtain employment, only 5,600
(slightly more than 2 per cent) become self-employed. What accounts for this
imbalance?
VR counselors are often unfamiliar with self-employment practices.
Their expertise is in rehabilitation; business development requires other skill
sets that many counselors have not had the opportunity to develop. Counselors
who do not understand self-employment may be less likely to present it as an
option to their customers. It is not necessary for VR counselors to become
small business development expertsthere are a variety of local experts
that they can help their customers access. What is needed is a general
understanding of the business development process, a recognition that business
ownership is a viable option for many individuals with disabilities, and
familiarity with the network of business development experts in their local
area.
Another reason that state and local VR offices have not
consistently embraced self-employment as a viable alternative for people with
disabilities is that they are often misinformed about the risks associated with
self-employment. Exaggerated failure rates and start-up costs for small
businesses have created a cloud of skepticism around self-employment. As a
result, many VR offices require extra layers of approval and documentation in
order to authorize funds to be used for self-employment. This extra "red tape"
discourages many counselors from encouraging their customers to consider
self-employment.
Traditional case closure criteria complicates effective
self-employment services within vocational rehabilitation programs. The ability
to monitor clients through business cycles is compromised when counselors must
apply competitive employment case closure criteria to individuals who are
self-employed. Like forcing a square peg into a round hole, competitive
employment case closure criteria does not address small business time frames or
financial issues. For example, it is very common for small business owners to
find part-time employment while they are launching their
businessesemployment that sometimes requires them to work extraordinary
hours for short periods of time. Competitive employment case closure criteria
is impossible to apply to self-employment in this scenario. It is also
impossible to apply hourly wage criteria to a sole proprietor who will pay
personal income taxes on all profits realized after business expenses are
deducted.
The 1998 re-authorization of the Rehabilitation Act includes
specific references to self-employment outcomes. However, guidelines for
self-employment programs within VR are not clearly delineated. The
interpretation of regulations relative to self-employment vary significantly
from state to state (and even among area offices within a given state). Many
states do not have specific self-employment policies, and those that do have
policies in place vary from state to state.
Recommendations
- Vocational rehabilitation counselors and administrators need
ongoing training and education about self-employment and small business
practices. See pages 21 and 22 for proposed curriculum content.
- Vocational rehabilitation programs should develop formal
partnerships at the federal, state and local levels with individuals,
organizations and agencies offering business development expertise. VR
should utilize the expertise of business development professionals to assist
their customers. In turn, VR can offer valuable rehabilitation expertise to
these entities.
- Clear criteria for successful case closure should be
developed for self-employment. VR cases files are typically closed after 90
days of successful employment. However, 90 days is an inadequate amount of time
to ensure that a new business is stabilized. In fact, most small business
owners find that it takes six months to a year before their business can begin
paying them a decent wage.
- The differences in state policies on self-employment need to
be clearly understood and fully explained. Cost, income, economic impact,
sustainability, and other factors related to self-employment outcomes should be
fully analyzed in comparison to those policies. This information will
facilitate a heightened understanding of effective self-employment practices
for people with disabilities and will inform the development of "best
practices" in rehabilitation and self-employment. Likewise, demonstration
projects should be dusted off and reviewed for valuable lessons learned that
may inform future policy development in the area of self-employment.
Leveling the Playing Field
People with disabilities comprise the single largest minority
group in America. Significant discrepancies exist between the status of
Americans with disabilities and those without. Although the past decade has
brought unprecedented changes in public policy for people with
disabilitiesincluding the passage of the Americans with Disabilities Act
of 1990people with disabilities continue to lag behind their non-disabled
peers in most quality of life measurements. A 1998 Harris Poll indicates that
they tend to be poorer, less employed, less educated and less satisfied with
their quality of life than people who do not experience disabilities:
- Only 29 per cent of people with disabilities age 18 to 64 are
employed, as opposed to 79 per cent of non-disabled personsa gap of 50
percentage points.
- 72 per cent of those who are not employed indicate that they
would prefer to work.
- One-third of adults with disabilities live in households with a
total income of $15,000 or less, compared to 12 per cent of those who do not
experience disabilities.
- 20 per cent of adults with disabilities have not completed
their high school education, while only 9 per cent of adults without
disabilities have not finished high school.
- Two out of three (67 per cent) Americans with disabilities
report that they are dissatisfied with life in general, whereas four out of ten
(40 per cent) non-disabled Americans report such dissatisfaction.
- Seven out of ten (69%) indicate that their disability prevents
them from getting around, attending cultural or sports events, or socializing
with friends outside their home as much as they'd like to.
In spite of clear and consistent evidence of social and economic
disenfranchisement among people with disabilities, government programs do not
recognize people with disabilities as a legitimate minority group. The Small
Business Administration's 8(a) Business Development and Small Disadvantaged
Business programs, for example, offer government contracting assistance and
other supports to small businesses that are "owned and controlled by one or
more socially and economically disadvantaged individuals. . . ." Among those
presumed to be eligible are Black Americans, Hispanic Americans, Asian Pacific
Americans and Subcontinent Asian Americans. The SBA states that it will admit
other individuals into the programs if they can demonstrate through a
"preponderance of evidence" that they are socially and economically
disadvantaged. The SBA defines such evidence as being of a "quality and
quantity which leads the decision maker to conclude, objectively, that the
existence or truth of the fact(s) is more probable than not." People with
disabilities are listed among those who may qualify (if they provide adequate,
substantive proof that their disability has put them at a disadvantage).
However, what and how much evidence is required to meet the SBA's burden of
proof is unclear. Such requirements are reflective of the pervasiveness of the
social, economic, and institutional biases that affect individuals with
disabilities.
Recommendation
- People with disabilities must be included in the list of those
automatically presumed eligible for the SBA's 8(a) Business Development and
Small Disadvantaged Business programs. The inclusion of people with
disabilities is merited on the basis of the breadth and pervasiveness of the
social and economic distress experienced by this population. The addition of
people with disabilities is critical, not only to create access to these
programs, but because these programs serve as a national model for other public
and private programs targeting minorities. Many lending institutions,
procurement programs, and diversity programs have adopted the SBA's definition
of a disadvantaged business for their own programs. Thus, inclusion of people
with disabilities in the SBA's definition of disadvantaged businesses will have
an impact that reaches far beyond the SBA itself.
Work Disincentives
For years, people with disabilities who have attempted to leave
the rolls of the Social Security system through employment have been penalized
for their efforts. The reduction of cash assistance, health insurance and other
vital services frequently outpaces their ability to replace those benefits
through earnings. This phenomenon, commonly referred to as the "income cliff"
has been a major deterrent to employment for people with disabilities. The
Social Security Administration has implemented several provisions over the past
decadecalled work incentivesaimed at alleviating the employment
disincentives within its programs. These work incentives, however, have not
resulted in a significant reduction in the disability rolls. In fact, less than
one-half of one percent of beneficiaries (about 6,000 people annually) leave
the SSA rolls by returning to work. One reason that the work incentives have
been so underutilized is that few beneficiaries are aware that they exist.
Another reason is that they are incredibly complicated. Local SSA employees are
often unaware of the work incentives provisions or do not understand how to
apply them, particularly in the context of self-employment. When people inquire
about the work incentives at their local SSA offices, they are often told that
no such provisions exist or are given misinformation about them. When the work
incentives are used, they are often applied incorrectly, resulting in
overpayments of benefits that must be repayed when the error is discovered.
Miscommunication, apparent inconsistencies and the complexity of the Social
Security work incentives have made many people with disabilities dubious of the
rules that deny or allow them to keep all or part of their benefits.
In response to these concerns, a growing profession of independent
"benefits counselors" is evolving. These benefits counselors fulfill a role
similar to that of a tax advisor, offering consultation regarding how
individuals can best take advantage of the available work incentives and
provide assistance with initial and ongoing paperwork. However, these
independent benefits counselors are not monitored or certified in their
profession; there is no professional code of ethics that they must follow, and
there is no formal mechanism in place to help potential customers discern the
authentic benefits counselor from the charlatan.
Recommendations
- Formal mechanisms should be developed to provide consumer
protections for those who seek benefits counseling services. Standardized
training, certification and a professional code of ethics should be developed
for benefits counselors.
- Individualized, ongoing benefits counseling must be
available through a variety of reliable sources, including vocational
rehabilitation programs, the Small Business Administration, and other
government agencies that serve the employment needs of people with
disabilities.
- Computer software programs, easy-to-complete forms, and
instructional materials should be widely available to help people with
disabilities take full advantage of available work incentives. Without
question, Social Security rules and regulations are complex. Our nation's tax
code is equally complicated, yet there are hundreds of easy-to-use, widely
available software programs, forms and instructional materials available that
enable most Americans to successfully file tax returns each year. A similar
approach should be taken with regard to Social Security work incentives.
Health Insurance and Ticket to Work
Recent legislation, including the Balanced Budget Act of 1997
(BBA) and the Ticket to Work and Work Incentives Improvement Act of 1999
provides new, more meaningful incentives to encourage the employment of people
with disabilities. Notably, states are allowed and encouraged to develop
"Medicaid Buy-In" programs, whereby working people with disabilities may
purchase health insurance from their state's Medicaid program at a reasonable
price. Medicaid Buy-In has the potential to profoundly impact the ability of
people with disabilities to earn substantial income without penalty. This
program goes a long way toward alleviating the "income cliff" that has
prevented people with disabilities from working for so long. The program holds
particular promise for individuals who are self-employed, because these
individuals cannot obtain access to group plans offered through traditional
employment.
Adoption of Medicaid Buy-In policy is discretionarystates
may choose not to participate. As of April, 2000, eleven states were at various
stages of implementing Medicaid Buy-In policy, with programs up-and-running in
four states. While the BBA and TWWIIA have paved the way for progress, the
heavy lifting remains to be done. Implementation of progressive Medicaid Buy-In
programs in all 50 states is needed. Medicaid Buy-In holds great promise to
improve the employment situation of people with disabilities, but it should not
be seen as a magic bullet.
In addition to Medicaid Buy-In, TWWIIA establishes, among other
things, a "Ticket to Work" program whereby Social Security Disability Insurance
and Supplemental Security Income beneficiaries may obtain a ticket that they
can use to obtain vocational rehabilitation services, employment services, and
other support services from their provider of choice. It is unclear at this
point how the ticket may be used with regard to self employment.
Recommendations
- Encourage the implementation of Medicaid Buy-In programs in
all 50 states. Those states that have successfully implemented Medicaid
Buy-In programs should openly exchange information about policy development,
implementation strategies, and outcomes.
- The Social Security Administration should include in its
"Ticket to Work" regulations provisions that would allow an individual with a
disability to use their ticket to capitalize a business venture. Tickets
could be used to purchase small business planning services and specialized
technical assistance. Tickets could also be used to purchase needed inventory,
provide operating capital, and equipment. Additionally, tickets could be used
as owner equity to leverage other financing needed to adequately capitalize the
business.
[ Previous Page
]
[ Back to Index Page
]
[ Next Page ]
|