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Self-Employment and Microenterprise: A Customized Employment Option

Fourth in the portfolio Customized Employment: Applying Practical Solutions for Employment Success

Self-employment is a Customized Employment option that matches a job seeker's dreams and talents to economic activity while designing support strategies that promote success. According to the U.S. Census, small business ownership represents the largest market segment of new and expanding employment options in the United States. The self-employment rate is growing by more than 20% annually, and microenterprises (companies comprising one to five workers) generated over 40% of all new jobs in the past decade. Currently, small businesses in this country create more jobs than Fortune 500 companies!

Who Can Own a Small Business?

Anyone can own a small business if proper support, adequate financing, and paying customers can be secured. Individuals with complex disabilities resulting from autism to cerebral palsy to schizophrenia to spinal cord injury own and operate businesses.

Examples of Small Businesses Started by People with Disabilities

Construction equipment rentals and cost estimation, accounting and bookkeeping, pet gift baskets, mobile dog grooming, art and photography, technical and popular writing, snack and drink vending, apparel manufacture and retail, property inspection and management, landscaping, catering, jewelry-making, truck driving, computer repair and assembly, desktop publishing, small engine repair, power-washing services, firewood delivery, flower arrangement, water filtration systems sales, greeting card design, farming‚Ä¶ the list goes on and on.

Why Consider Self-Employment?

Self-employment is not for everyone, but it is a career option with unique considerations. Job seekers may consider owning a full-time or part-time small business because it:

Can provide the scheduling flexibility necessary to accommodate a disability or other life complexities
Allows job seekers to express their talents in the open market
Creates financial equity options that wage employment cannot always provide
Provides options to manage income relative to one's cash, medical, and other benefits

An Option for Saving Money!

Self-employment represents one of the few options to grow wealth for people who receive benefits from the Social Security Administration (SSA). For instance, the resource limit for individuals receiving Supplemental Security Income (SSI) is $2,000. However, a business owner who receives SSI can potentially have more resources in their business account as long as those funds are required for the business. Profits and personal withdrawals can then be managed to maintain appropriate resource levels for SSI eligibility.

Assisting the Potential Small-Business Owner

Employment professionals can provide a range of supports and services to assist a job seeker to start their own small business. This can be achieved through the following strategies.

Remember, it is important to start with an exploration process with the potential business owner to provide a foundation for business plan development and to ensure that the job seeker truly wishes to pursue self-employment before initiating the business-related steps. See "Job Seeker Exploration: Laying the Groundwork for Customized Employment" for more information.

1. Establish a Support Team

Many job seekers benefit from a business team, selected by the job seeker, that helps sculpt the job seeker's ideas, interests, aspirations, and talents into a profitable enterprise.

Membership varies, but teams typically include a combination of family members, employment professionals, and an expert in small-business development. Each can bring unique assets to the team.

Family involvement is traditional in small business and should be cultivated whenever possible. It can take the form of loans and cash gifts, transportation, assistance with production, networking, housing the operations, bookkeeping, etc.
Employment professionals can help coordinate resources, provide input on funding alternatives, and identify supports required for success.
Experts in small business development can consult on the creation of a business plan, financial statements, marketing and sales strategies, support services, and benefits analyses. Please see the resource list at the end of this article for places to access the support of such individuals.

2. Create the Business Plan

Businesses can truly benefit from a formal business plan. It should be noted that over 80% of small businesses are successful in the U.S., and since the majority of those do not have business plans, some flexibility in planning is recommended. However, a business plan is an absolute requirement of state departments of Vocational Rehabilitation (VR) and SSA.

The process of creating the business plan is as important as the plan itself!

Accessing Support for Business Plans

Even though many community resources advise on business plans, few individuals exist who actually write plans. Accessing an expert with experience in working with job seekers with disabilities may be necessary to develop a plan for someone who cannot read or write, or has limited understanding of the impact of self-employment income on their benefits. Be sure that the business plan clearly articulates the specific duties of the business owner, any supports that are necessary, and the expected business roles of any employees and supporters.

3. Secure Funding

Funding for small businesses is available from numerous sources. Many microloan programs exist nationwide for those who qualify for and can afford the payments. Various state systems also provide numerous opportunities for financing that do not load an individual down with debt. For example:

VR can pay for skill training, capital equipment, vehicle repairs and insurance, tools, work clothes, adaptive equipment, computers, job/business coaching, etc.
WIA providers (e.g., One-Stops) may be able to purchase some needed items through Intensive Services funds.
Community rehabilitation programs (e.g., those funded by state developmental disability and mental health agencies) can use general fund dollars to purchase a wide range of business necessities.

A collaborative funding approach is best, with each partner providing expertise and a portion of the financial assistance. (See "Blending or Braiding Public Funds: Securing Assets for Customized Employment" for more information about collaborative funding approaches.)

Using a Plan for Achieving Self Support (PASS) to Fund Self-Employment

SSA is actively promoting business ownership to stimulate the employment of job seekers with disabilities through the Plan for Achieving Self Support (PASS). A PASS plan leverages an individual's SSI payments to use in pursuing a career goal, and is one of the few financial options that can provide actual operating cash to businesses. PASS remains a critical complement to VR and/or WIA resources. For more information on PASS, see the resource section at end of this brief.

4. Line Up Training (If Necessary)

Training for prospective business owners can be critical. This includes training to refine a skill required to produce goods and services in the business, such as attaining a welding certificate or a chef's diploma. Training also can include attending classes in business ownership, many of which are available at no or low cost through local Small Business Development Centers (SBDC‚Äîsee the resource section for website). Both employment professionals and potential small business owners can also benefit from such classes because they provide networking opportunities: a chance to meet potential suppliers, customers, and mentors.

Stories of Self-Employment

Molly. Molly shared her interests in technology with her employment professional, who then arranged funding for a series of Microsoft certification classes. Molly began working as a part-time computer instructor at the local community college. However, panic attacks resulting from her psychiatric disability and exhaustion from her fibromyalgia caused her to lose that job. With assistance from the local VR office and a business design team including a local SBDC advisor, she began a mobile computer repair business specializing in assisting the growing community of retirees interested in learning basic computer and internet skills. The business soon branched out to include desktop publishing, specializing in formatting and printing local church and civic club newsletters.

Kevin. Kevin is a man with developmental and behavioral disabilities who spent many years in a segregated facility-based employment setting (a sheltered workshop) before enrolling in a community employment project funded by the state Developmental Disability (DD) Council. Kevin's interest in being a mechanic became clear, but no jobs were available for a young man without experience.

After many attempts, a local small engine repair shop agreed to have Kevin disassemble and clean a few motors every week. Because the single owner did not want employees, a business-within-a-business was created for Kevin to do disassembly and parts cleaning. In return for the space to operate this complementary service, and for mentoring in mechanics from the host business owner, Kevin paid a small percentage of his earnings to the shop. VR support, general fund expenditures from the local DD agency, and an SSA PASS plan provided Kevin with hand tools, work benches, a parts washer, and work clothes. Over seven years later, Kevin works 20 to 30 hours a week and charges approximately $30 per hour for his services.

Small Business Resources Online

The Abilities Fund (www.abilitiesfund.org)
Association of Small Business Development Centers (www.asbdc-us.org )
Entrepreneur.com (www.entrepreneur.com)
FirstGov (www.firstgov.gov)
Forum for Women Entrepreneurs (www.fwe.org)
Griffin-Hammis Associates, LLC (www.griffinhammis.com)
Inc. (www.inc.com)
Job Accommodation Network (www.jan.wvu.edu)
National Association of Women Business Owners (www.nawbo.org)
Office of Women's Business Ownership (www.womensbusinesscenter.org)
Online Women's Business Center (www.onlinewbc.gov)
The Rural Institute at the Univ. of Montana (ruralinstitute.umt.edu)
Rural Institute: PASS Plans Online (www.passplan.org)
SCORE: Counselors to America's Small Business (www.score.org)
Social Security Administration: PASS Plans (www.ssa.gov)
U.S. Dept. of Education (www.ed.gov/about/offices/list/osers/rsa/ index.html)
U.S. Dept. of Labor, Office of Disability Employment Policy (www.dol.gov/odep)
U.S. Dept. of Agriculture (www.usda.gov/da/smallbus/index.htm)
U.S. Small Business Administration (www.sba.gov)
Virginia Commonwealth Univ. Rehabilitation Research and Training Center (www.worksupport.com)