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2010 Self-Employment Policy Revisions. Self Employment Policy Revision Team. Charles Puckett David Beach Suzanne Isaacs Bill Pease Robin Ritter Jan Offutt. The Team Fully Embraced Their Charge. The Issues. Staff felt inadequate

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self employment policy revision team
Self Employment Policy Revision Team
  • Charles Puckett
  • David Beach
  • Suzanne Isaacs
  • Bill Pease
  • Robin Ritter
  • Jan Offutt
the issues
The Issues
  • Staff felt inadequate
  • If a person cannot secure a loan should we continue to support?
  • Should there be a percentage of required contribution from the consumer?
branch managers recommendations
Branch Managers Recommendations
  • Small business expert to assist VR in writing guidelines.
  • Consider consumer’s ability to contribute monetarily to the business, i.e. 10-15% of start up costs. Maximum allowable rate of $10,000.
  • Consumer must have acceptable credit rating before VR will assist.
  • District specialists be re-trained once new guidelines are set.
team strategies
Team Strategies
  • Surveyed Staff
  • Rehab Net of other states policies
  • Met with SBDC and private consultant
  • Discussed with bank loan officer
  • Reviewed current policy with Council
what we learned
What We Learned….

From the Counselor Survey:

  • 100 % -wanted to require consumer contribution
  • 77% - wanted to require acceptable credit rating
  • 75% - consumer includes the OVR projected contribution in the business plan
what we learned1
What We Learned….

From other states:

  • Several levels of support and approval.
  • Required to do more than write an acceptable business plan.
  • Emphasis on feasibility study.
what we learned2
What We Learned….

From other states:

  • Consideration given to financial resources available other than OVR
  • Demonstrate their ability to perform the job
  • Demonstrate their ability perform all the business related aspects.
2010 policy revisions
2010 Policy Revisions

A Quick Look….

  • Sub Contract added-no business plan required
  • More clarification on the Self-Employed Applicant
  • Changes to the process and process form
  • Flow Chart of process
  • Revised “Counselor Review Form”
2010 policy revisions1
2010 Policy Revisions

Required Assessments:

  • Vocational Goal
  • Consumers Aptitude for Self Employment
  • Feasibility Study Required prior to the Business Plan
2010 policy revisions2
2010 Policy Revisions

Administrative Regulations

      (1) An eligible individual shall undergo appropriate assessment to determine work potential, including mental and physical abilities, and interests, aptitudes, personality traits and other pertinent characteristics.

administrative regulations
Administrative Regulations

(2)An eligible individual shall participate in prevocational and small business training.  

(3) An eligible individual shall obtain any required license, permit, certificate, or lease, and be in conformity with all federal and state laws and local ordinances to commence an enterprise.

the changes
The Changes

(4) An eligible individual seeking to develop a self employment enterprise requiring start up costs of more than $1,000 shall:

(a) Complete a feasibility study; and

(b) Submit a business plan and have it approved by the office prior to provision of services..

more changes
More Changes

(5) The office shall not be the sole source of capitalization for a self-employment enterprise with start up costs of $5,000 or more.

(a) In addition to requirements under subsection (4), an eligible individual seeking financial assistance with start up costs of $5000 to $10,000 shall contribute fifty (50) percent of the cost in excess of $5,000 either in capital or documented in kind resources and ninety (95) percent of the cost in excess of $10,000.

(b) An eligible individual shall provide documentation that the assets necessary for the required financial participation are in place prior to provision of services by the office.

more changes1
More Changes

(6) The total office expenditures toward the start up costs for a self employment enterprise shall not exceed $10,000. The Director of Program Services or designee may make an exception if:

(a) All provisions of subsections (1) through (5) are met; and

(b)1. The nature of the individual’s vocational rehabilitation needs make it necessary that the service be provided; or

2. The denial of the service will prohibit the individual from achieving the vocational goal; or

3. The provision of the service will result in a cost savings to the Office

review of policy
Review of Policy

What Is Self Employment?

  • Consumer owned business, profession or trade that sells goods or services for the purpose of making a profit.
  • At home or another work site.
  • Sole Proprietorship
  • Partnership(51%)
  • Corporation
contract vs telecommuting
Contract vs. Telecommuting

Home Based Business=Self-Employment

  • Contract Work is Self-Employment

Home Based Employment = not Self-Employment

  • Telecommuting is not Self-Employment
subcontract work
SUBCONTRACT WORK
  • Arranged for, contracted work to be done for others
  • Work for a contractor - not considered self-employed.

For example:

  • carpenter
  • painter
the self employed applicant
THE SELF-EMPLOYED APPLICANT
  • One year or more in operation= Maintain Case
  • Assess needs
  • Disability related services only
  • Negotiated under agency guidelines
the self employed applicant1
THE SELF-EMPLOYED APPLICANT
  • Services related to start-up and operational costs are not provided.
  • A Business Plan is not required.
  • Proof that the business has been the major source of income over the past 12 months is required.
district self employment specialist
DISTRICT SELF-EMPLOYMENTSPECIALIST

Role:

  • Resource to district staff:

- local Small Business Development Centers

- Service Corps of Retired Executives

- Self-employment training resources

- Business consultants

  • Answer questions
district self employment specialist1
DISTRICT SELF-EMPLOYMENT SPECIALIST
  • Liaison with resources
  • Review the assessment
  • Report any problems with process or procedures
financial considerations
Financial Considerations
  • Consumer’s major source of income
  • Termination of benefits
  • Competitive employment standards
review of the process
REVIEW OF THE PROCESS
  • Discuss OVR funding policy
  • Guidance and Counseling
  • Assessment of the vocational goal
review of the process1
REVIEW OF THE PROCESS
  • Assessment of the individual for self-employment
  • Complete required self-employment training

and education

  • Completion and approval of a Feasibility Study
  • Completion and approval of a Business Plan
  • Conducting an economic needs assessment
review of the process2
REVIEW OF THE PROCESS
  • Networking with partners to identify financial resources
  • Obtain verification of consumers financial contribution
  • Identify needed ongoing supports and services
  • Develop the Individual Plan for Employment (IPE)
self employment process
Self Employment Process

Application

VR Eligible

Vocational Assessment and Guidance and Counseling

Develop Viable Vocational Goal

Training/Certifications

Is this SE?

No

Begin Feasibility Study

Yes

Submit to Consultant

Approval given

No

Yes

Anticipated start up costs less than $1,000

Anticipated start up costs greater than $1,000 but less than $5,000

Anticipated start up costs greater than $10,000

Anticipated start up costs greater than $5,000 but less than $10,000

Full business plan development by consumer

Abbreviated

business plan required

Full business plan development by consumer

Exception required

Approval of plan by business consultant

Counselor approvesbusiness plan

Approval of plan by business consultant

Requires counselor, District Manager and Program Director/Designee approval

Negotiate services funded by OVR < $1,000

Negotiate services funded by OVR < $5,000

IPE Developed

IPE Developed

Services negotiated up to $5,000-consumer 50% > $5,000

IPE Developed

scope of services
Scope of Services
  • Training in the actual field
  • Specific entrepreneurial training
  • Referral to consultants
  • A portion of initial stock, supplies, tools, and equipment-during first 6 months
scope of services1
Scope of Services
  • Coordination and referral for small business loans
  • Initial business licenses
  • Start-up marketing and accounting costs – first 6 months
  • Operational costs-first 6 months
scope of services2
Scope of Services
  • Property modification to make accessible-consumer owned
  • Rehabilitation technology
  • Appraisal of existing business or franchise
exclusions
Exclusions
  • Operating Capital or grants
  • Franchise fee’s or purchase of an existing business
  • Businesses that are speculative in nature
  • Business organized as non-profit
exclusions1
Exclusions
  • Construction of buildings
  • Permanent property modifications on leased or rented property.
  • Purchase of permanent buildings or real estate
  • Signing leases by agency
exclusions2
Exclusions
  • Refinancing or payment of existing debt
  • Payment for services or goods purchased prior to the approval of the business plan and signed IPE
  • Liens by a 3rd party on OVR purchased equipment.
  • Inclusion of OVR provided goods or services in the profit & loss statement.
exclusions3
Exclusions
  • Provision of services for consumer in more than one business.
  • Sole source of funding for stocking a business with inventory for resale.
  • “On-going” business expenses (past first 6 months) not provided- Federal regulation.
funding and consumer cost participation
FUNDING AND CONSUMER COST PARTICIPATION

Funding sources other than OVR will be required for businesses with start-up costs in excess of $5,000.

  • Consumer must have a personal investment in the business and resources available to sustain the business beyond the six month start up phase.
  • Cash investment or non-monetary, in-kind contributions. (not sweat equity)
consumer participation
Consumer Participation

Services

Land

Facilities

Goods

Space

Personnel

Equipment

Materials

tier i ii and iii
Tier I, II and III
  • Three levels of funding
  • Each level has specific requirementsand approval procedures.
tier i
Tier I

Start-up Costs of $1,000 or Less

OVR can fund up to $1,000 of start-up

tier i requirements
Tier I Requirements

Develop an Abbreviated Business Plan:

  • The operation of the business
  • A marketing plan
  • An itemized list of goods and services that OVR is asked to purchase, along with the lowest purchase price.
  • Obtain approval of the abbreviated business plan from the counselor.
tier i approval
Tier I Approval

Counselor Approves

tier ii
Tier II

Start-up Costs over $1,000 up to $5000.00

  • OVR can fund up to $5,000 of start-up
tier ii requirements
Tier II Requirements
  • Requires a Feasibility Study
  • Requires a Business Plan
  • Both must be reviewed and deemed viable by an approved business consultant.
tier ii required training
Tier II Required Training
  • Exploring business ideas
  • Starting your own business
  • Business plan development
  • Marketing
  • Financing
tier ii approval
Tier II Approval

Feasibility Study and Business Plan must be approved by:

1. Consultant

AND

2. Counselor

tier iii
Tier III

Start up Costs $5000.00 to $10,000.00

OVR must not be the sole source of funds for the capitalization of a Tier III business

  • OVR can support the first $5,000
  • 50% of additional expenses up to $10,000
  • 5% of the additional costs beyond $10,000
tier iii requirements
Tier III Requirements
  • Requires a Feasibility Study
  • Requires a Business Plan
  • Both must be reviewed and deemed viable by an approved business consultant.
  • Documentation showing the source of the consumer contribution must be provided.
required training
Required Training
  • Exploring business ideas
  • Starting your own business
  • Business plan development
  • Marketing
  • Financing
tier iii approvals
Tier III Approvals
  • Business Consultant
  • District Branch Manager
  • Self-Employment Coordinator
level iii example 1
Level III Example 1

Business has $10,000.00 in start up costs:

  • OVR provides _____________
  • OVR provides _____________

TOTAL VR Support : ____________

TOTAL Consumer Contribution:______________

level iii example 2
Level III Example 2

Business has $15,000.00 in start up costs:

  • OVR provides ________________________
  • OVR provides ________________________
  • OVR provides ________________________

TOTAL VR Support : _________

TOTAL Consumer Contribution: __________

level iii example 3
Level III Example 3

Business has $20,000.00 in start up costs:

  • OVR provides _____________________
  • OVR provides _____________________
  • OVR provides _____________________

TOTAL VR Support : ________________

TOTAL Consumer Contribution: ________

level iii example 4
Level III Example 4

Business has $40,000.00 in start up costs:

  • OVR provides ____________________
  • OVR provides ____________________
  • OVR provides ____________________

TOTAL VR Support : __________

TOTAL Consumer Contribution: ________

level iii example 5
Level III Example 5

Business has $50,000.00 in start up costs:

  • OVR provides _____________________
  • OVR provides _____________________
  • OVR provides _____________________

TOTAL VR Support : ____________

TOTAL Consumer Contribution: _________

exceptions
Exceptions
  • Over $10,000 is considered an exception
  • Meet the agency exception guidelines
exception guidelines
Exception Guidelines
  • 1) The nature of the individual’s vocational rehabilitation needs makes it necessary that the service(s) be provided or continued outside of the established guidelines,

or

  • 2) The discontinuation or denial of the service(s) will result in the loss of an immediate job placement or prohibit the individual from achieving the vocational goal,

or

  • 3) The provision of the service(s) outside of the guidelines will result in a cost savings to Vocational Rehabilitation.
required approvals
Required Approvals
  • District Branch Manager
  • Director of Program Services, or designee
exception example
Exception Example

Consumer business has $100,000.00 in start up:

  • OVR provides _______________________
  • OVR provides _______________________
  • OVR provides _______________________

TOTAL VR Support : _____________

TOTAL Consumer Contribution: __________

required documentation
Required Documentation
  • Copy of the approved Feasibility Study and Business Plan;
  • Counselor Review Form;
  • Business Consultant critique of the Business Plan;
required documentation1
Required Documentation
  • Description of needed purchases;
  • Documentation of consumers contribution;
  • Results of exploration of comparable benefits
agency guidelines
Agency Guidelines

State purchasing laws and zoning regulations

  • Under $1,000 = no bids
  • Over $1,000 and less than $3,000= 3 quotes
  • Over $3000= bids
tips on bids
Tips on Bids
  • No quotes from Amazon or E-Bay.
  • Specs must be on similar items
agency guidelines1
Agency Guidelines
  • Explore Comparable Benefits
  • Check VR Inventory List
  • Follow Rehab Tech Guidelines
  • Follow Financial Needs Test
agency guidelines2
Agency Guidelines
  • Independent appraisal required of existing business or franchise
  • In partnerships, consumer must have a formal agreement and own 51% of business
  • In a partnership all partners contributions considered prior to OVR contribution determined.
expenditure codes
Expenditure Codes
  • 93C Technical Assistance
  • 93D Initial Stock and Supplies
  • 93E Initial Operating Expenses
follow up
Follow-Up
  • First year of operation
  • SBDC will meet quarterly to review books, bank statements, and tax returns
  • Regular phone contact

- Cash flow

- Look for signs of stability

business consultants
Business Consultants
  • Irene Dervin- Phoenix Business Consulting
  • Mary Cleary & Bob Tiell- Jewish Family & Career Services
  • Small Business Development Centers