Building Blocks for Success - Policies, Programs, and Practices
The existence of targeted self-employment initiatives within public and private rehabilitation service systems is a fairly recent phenomenon, and the shape and style of these initiatives is still very much a work in progress. From million dollar statewide systems to local pilot projects, the objective is similar: To offer people with disabilities the choice of pursuing self-employment through effective service systems that encourage and support business success.
A review of active self-employment initiatives targeted to individuals with disabilities reveals a common set of building blocks for successful program design and implementation. Those building blocks are:
- Internal policy regarding entrepreneurship and self-employment
- Counselor preparation
- Assessing client potential
- Understanding market opportunity
- Technical assistance
- Financing, and
- Tracking and monitoring.
There is no single "best" method for developing or delivering this bundle of services. Initiatives are shaped by local regulations, policies, and customs.
Internal Policy Regarding Entrepreneurship and Self-Employment
Analysis of self-employment policies of vocational rehabilitation agencies in three states (Minnesota, Texas, and Iowa) revealed several commonalities. The agencies included in this analysis were Minnesota Vocational Rehabilitation, Texas Commission for the Blind, and Iowa Division of Vocational Rehabilitation Services/Iowa Department for the Blind. The analysis included general self-employment policies and structured self-employment initiatives.
Three common themes were identified: (1) Self-sufficiency as the primary objective of self-employment, (2) Comprehensive business planning as a valuable counseling tool, and (3) Parameters for financing self-employment outcomes. The specifics of state policies relative to these common themes varied from state to state.
The following synopses provide a snapshot of policies relative to self-employment in the three states:
- Minnesota Vocational Rehabilitation requires a business plan that has received a positive recommendation from a Small Business Development Center (SBDC) or a similar, recognized business planning organization. Businesses that receive a positive recommendation may receive up to $5,000 for business start-up, and no owner investment is required. Approved business plans must demonstrate that the business will provide significant income, enabling the owner to exceed expenses and, at a minimum, significantly supplement their income with business profits.
- Texas Commission for the Blind recommends a business plan, but only requires it for business start-ups requesting $7,500 or more; counselors can fund business ventures requiring less than $7,500 in start-up capital without a formal business plan, even when self-sufficiency is not eminent. Texas policy does not establish a cap on the amount of funds that may be provided, and owner investment is not required.
- Iowa Division of Vocational Rehabilitation Services (DVRS) and Iowa Department for the Blind (IDB) also require a business plan. When appropriate, the Iowa agencies purchase one-on-one technical assistance to help consumers prepare comprehensive business plans. In Iowa, DVRS consumers who are in the exploratory stage or for whom self-sufficiency is not eminent may participate in the First Step Program. First Step participants may receive financial assistance grants up to $2,500 with an approved business plan, and no owner investment is required. Those who pursue self-employment as a means for achieving self-sufficiency may apply for technical and financial assistance from Iowa's Entrepreneurs With Disabilities Program (a cooperative program supported by both DVRS and IDB). The Entrepreneurs with Disabilities Program provides equity grants of up to 50 per cent of the essential operating capital required for business start-up or expansion, not to exceed a ceiling of $10,000. Participants in this program must leverage the remaining capital from other sources such as owner investment, commercial loans or friends and family.
Some variation between states regarding what can and cannot be purchased with these funds was noted. Generally, public vocational rehabilitation funds may be used to purchase some level of stocks, supplies, and equipment. The purchase of real estate is universally prohibited, and policy regarding operating capital for advertising, legal services, accounting, utilities, and capital for the purchase of vehicles varies from state to state.
Insight from the policy review suggests that while public vocational rehabilitation programs do have self-employment policy models to draw from, inconsistencies are found in fundamental business issues:
- Is technical assistance and business planning a valued service regardless of the funding requirements of the venture?
- Should consumers requesting self-employment financial assistance dollars convey commitment to their vocational rehabilitation plan by participating in financing the goal?
- Finally, are hobby ventures consistent with successful employment outcomes as defined by traditional vocational rehabilitation?
These are among the existing policy issues critical to public and private vocational rehabilitation organizations and will likely be joined by others that emerge as self-employment outcomes continue to grow and rehabilitation professionals acknowledge and address lessons learned.
Preparing the Vocational Counselor
The attitude and experience of vocational counselors regarding self-employment or small business ownership is a key factor in determining if counselors present them as available options. Counselors who are unfamiliar or uncomfortable with self-employment or small business ownership may be less likely to present them as an options. If they are not presented as options, regardless of the reason, the consumer does not really have a choice.
For many years, self-employment has been regarded by rehabilitation professionals as an option of last resort. Low on the list of preferred outcomes, self-employment has been considered only when competitive employment and job placement fails. This is due, in part, to the fact that it requires a level of risk and resources unfamiliar to most rehabilitation professionals. It requires them to operate outside of common vocational rehabilitation strategies and demands skills and expertise that they have not had the opportunity to develop. This is compounded by insufficient policy guidance relative to self-employment. Thus, counselors who pursue self-employment with their clients are often unsupported by their agencies.
Organizations that are committed to entrepreneurship must support front-line employees with clear policies and ongoing education. As Franklin Corbin, a counselor with the Oregon Department of Human Resources, Vocational Rehabilitation Division, stated, "Self-employment used to be the kiss of death at this agency." He added that, " Fortunately, policy has changed, and if self-employment is the best choice, then let's do it!" This counselor's attitude and understanding of self-employment was supported by his agency with continuing education on the specifics of small business start-up and a clear agency policy toward self-employment.
Few states require vocational rehabilitation counselors to assist in the development of a business plan. Rather, most counselors are encouraged to identify and utilize local business planning resources. Nonetheless, it is essential that counselors have a basic understanding of self-employment and small business in order to provide adequate counseling support to clients. This basic understanding, developed through ongoing training, will help counselors know how to effectively use outside business planning resources, when to access them, and how to support clients in using those resources effectively.
A sample course outline for VR staff should include:.
- Self-employment as a proven and successful vocational goal
- Internal self-employment policy review
- Characteristics of successful business owners
- Assessing potential Business planswhat are they?
Products/Services
The market
Business operations
Financial assumptions and projections - Feasibility testing
- Community resources
Financing
Technical assistance - Agency policy
Monitoring
Case closure.
Assessing Client Potential
Experience has taught me that there is one chief
reason why some people succeed and others fail. The difference is not one of
knowing, but of doing. The successful man is not so superior in ability as in
action. So far as success can be reduced to a formula, it consists of this:
doing what you know you should do.
Roger W. Babson,
Financier, Educator, Entrepreneur
Within public and private vocational rehabilitation systems, the use of assessment tools is commonplace. The Guilford Zimmerman Personality Assessment, the Career Assessment Inventory, and the Wide Range Achievement Test are examples of assessment tools commonly used by rehabilitation professionals. Self-employment assessment tools may be a welcome addition for counselors who lack a background in business development. These tools can help counselors identify personal characteristics and experience that suggest proficiencies or deficiencies in self-employment potential. However, these assessment tools should not be relied upon too heavily for screening purposes, as it is impossible to measure an individual's entrepreneurial quotient or scientifically determine the probability for business success based on a test instrument. As with any tool, the effectiveness of self-employment assessment tools depends on how they are used.
Although there is no way to definitively test an individual's entrepreneurial quotient, there are a number of characteristics that entrepreneurs tend to share. These traits, as well as personal characteristics and financial issues, should be explored with aspiring business owners:
- Self discipline
- Motivation
- Internal locus of control
- Comfort with risk
- Ability to handle stress
- Money management skills
- Organizational skills
- Sense of humor
- Financial goals
- Credit history
- Personal support network
- Health factors.
Two instruments used by counselors within public and private vocational rehabilitation organizations to explore an individual's viability as a potential business owner include:
- The Business Assessment Scale, a statistical business evaluation (Goodman and Herzog & Associates), previously or currently used by vocational rehabilitation agencies in Michigan, Colorado, New Jersey, Pennsylvania, North Dakota, New Hampshire, Montana (Missoula area only), Maine (regionally), Virginia, and Alabama.
- The Measure of Self-Employment Potential (C/S Vocational Consultants), a counseling tool developed for rehabilitation and self-employment counselors by a team of certified rehabilitation counselors who provide small business technical assistance to people with disabilities. The tool is designed for use by counselors to not only collect critical data, but to encourage dialogue in the early stages of considering and then developing an employment plan. Introduced in 1999, The Measure of Self-Employment Potential is currently in use by Alaska Vocational Rehabilitation, Maryland Division of Rehabilitation Services (pilot program), Texas Commission for the Blind, Abilities of Florida (Clearwater area), Oklahoma Department of Rehabilitation Services, Iowa Division of Vocational Rehabilitation Services, and the Wisconsin Women's Business Initiative.
Market Opportunity
Selection of the right industry is a critical step in laying the groundwork for business success or failure. Far too many entrepreneurs select an industry based solely on personal interests, without adequate investigation of the marketplace. Many active self-employment initiatives address this issue by helping aspiring entrepreneurs conduct initial research designed to answer the following questions:
- What business idea appeals to the individual?
- What qualifications does the individual have relative to the business type?
- What are industry trends?
- Who are the customers?
- Will they buy from a new entrant?
- Is there room in the market for a new entrant? Who are the competitors?
Research regarding these initial questions in the business planning process can provide an early indication of business feasibility.
While most business concepts are derived from personal interests and then tested for feasibility, the converse is also effective. In Maryland, the Division of Rehabilitation Services (DORS) sponsors the RISE Program (Reach Independence through Self-Employment), which furnishes prospective and existing business owners with the results of a Targeted Industry Analysis (TIA). The TIA is a market research tool that identifies industries with the highest probability of success for new entrants and expansions within specific geographic boundaries. More specifically, the TIA report reveals industries with significantly fewer than the expected number of firms for their market area. Through the identification of these market opportunities, RISE participants can identify an industry opportunity that not only fits their personal goals but also has a high probability of business success.
Technical Assistance
Technical assistance for business start-up and stabilization is central to any comprehensive small business initiative. The need for technical assistance for business expansion purposes is rareexpansion indicates that the business is stable and successful, but the need to stabilize an existing business is common to all small business owners.
Rehabilitation programs may tap into a variety of local technical assistance resources, including professional consultants, Small Business Development Centers, and microenterprise organizations. Technical assistance can be delivered effectively in both one-on-one and group training formats. Regardless of the source and format of technical assistance, it should help the entrepreneur identify what information is critical to the business, where to access that information, and how to organize the information into a comprehensive and useful format (a business plan). Business planning will surface potential pitfalls so that they can be addressed prior to business start-up.
In addition to business plan development, new and potential entrepreneurs frequently need specialized technical assistance services such as specific marketing research and interpretation, development of record-keeping and bookkeeping systems, tax consultation, Internet expertise, and legal counsel regarding leases, contracts, and patents. It is impossible for any single organization to have the internal capacity to address the wide range of needs that may arise. However, it is imperative that resources are available to offer specialized assistance when it is critical to the success of a business.
Technical assistance may also be prescribed to review completed business plans. Review is a logical conclusion to business plan development and may support rehabilitation professionals in making funding decisions. Business plan review is particularly important when an individual is seeking financing outside of the rehabilitation system. Thorough review reveals the potential business owner's depth of knowledge regarding the intended operation of the business and prepares him or her to successfully seek and obtain adequate capitalization. Methods of review vary from peer review to analysis by management to evaluation by a team of financial professionals.
Business Financing
A combination of owner savings, commercial financing, non-bank financing, friends and family account for the capitalization of most business starts. A small percentage utilize other resources that may include credit card advances, vendor credits, and second mortgages on a residence. Of the 10,000 members of the Disabled Businessperson's Association, 47 per cent identified friends and family as their primary source of start-up capital with only 7 per cent acquiring capital from banks or investors. These statistics exemplify the difficulty targeted populations experience in trying to gain access to traditional sources of capital. Inadequate owner equity, due to exhausted assets often related to the disability, keeps many entrepreneurs with disabilities from obtaining financing from traditional sources. Ongoing economic distress, which inevitably impacts credit histories, is also common to their inability to access capital.
Many public vocational rehabilitation programs rely on Section 110 (case service) dollars to provide initial business funding. Many initiatives also encourage qualified individuals to access Social Security PASS (Plan for Achieving Self-Support) Plans and venture funding from the Veteran's Administration, when applicable. The advantage of these resources, aside from the fact that they are grants, is that they are booked on the asset side of the balance sheet and can be presented as owner equity to leverage a variety of bank and non-bank resources. Loan guarantees, microloans, and state and local economic development funds are more easily accessed when a comprehensive business plan and an equity grant from a public or private rehabilitation agency are in place.
Only a few state programs have developed targeted loan funds for people with disabilities. In Pennsylvania, a partnership between Pittsburgh Vision Services and New Castle's Office of Vocational Rehabilitation (OVR) have created a microloan fund for consumers of OVR services. The fund provides low interest loans of up to $10,000 for a maximum term of five years. Consumers are expected to provide 20 per cent of project costs from their own equity. In three years of operation, the program funded twenty-one new business starts in the New Castle area. In addition to the microloans, this partnership also provides ongoing monitoring and direct technical assistance.
Another example of a targeted loan fund is the Microloan Program operated by the Ann Arbor, Michigan, Center for Independent Living. The fund, which has been operational for 2 years, provides loan guarantees of up to $25,000 or 50 per cent of a commercial loan (whichever is less). The Microloan Program is capitalized primarily through a grant from the Mott Foundation with additional funds from United Way and Michigan Rehabilitation Services (MRS). The statewide program is open to any applicant with a disability, with the majority of participants being consumers of MRS. MRS consumers may receive an equity grant from MRS and use the Microloan Program if additional capital is required.
Tracking & Monitoring
As difficult as it may be to make the trip from initially considering self-employment through development of a business plan and ultimately the grand openingthat first day in business is really just the start of the journey. The most challenging days lie ahead for both the new entrepreneur and those who provide self-employment programming. Agencies that present and encourage self-employment as a vocational rehabilitation option should create a system to monitor the health and vitality of the start-up enterprises. Rehabilitation counselors, local government and non-profit agencies, volunteers, private service providers, or any combination of the above can effectively monitor business progress. With a monitoring system in place, the needs of the business and the entrepreneur can be addressed as they arise.
Iowa's Entrepreneurs With Disabilities Program (EWD) utilizes a cadre of professional business consultants who work one-on-one with the business owners at the direction of the program manager. Through monthly monitoring sessions and periodic on-site visits, the business consultants are able to observe operations first-hand, review and analyze records, and prescribe appropriate technical assistance as required. Policy ensures that EWD clients are monitored for a period of two years from the time of start-up or until financial self-sufficiency is achieved. This policy varies from traditional rehabilitation policy, which recommends case closure within three to four months following successful placement in competitive employment.
Ohio Rehabilitation Services' EnterpriseWorks Program utilizes an alternative approach to monitoring client progress and providing technical assistance. The Ohio initiative delivers individualized technical assistance to their participants through regional Small Business Development Centers (SBDCs). This ongoing technical assistance is provided to business owners for as long as necessary. The expense to EnterpriseWorks is $250 per month per client served. Annual contracts with the SBDCs describe the specific monitoring and counseling activities to be undertaken in each community. SBDCs also play a major role in the provision of technical assistance and monitoring services in self-employment initiatives in New York, Michigan, Maryland, and Alabama.
Summary
There is no standard "cookie cutter" approach to designing and implementing successful self-employment programs targeted to individuals with disabilities within public and private rehabilitation service systems. Existing programs across the nation are as unique as the individuals they serve. While no two programs are identical, they share several common threads: internal policy, counselor preparation, assessment of client potential, understanding market opportunity, technical assistance, financing, and tracking and monitoring. These program characteristics serve as building blocks for successful self-employment programs and can be shaped to reflect the unique needs of local areas.
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