Self Employment Policy Revision Team • Charles Puckett • David Beach • Suzanne Isaacs • Bill Pease • Robin Ritter • Jan Offutt
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 • 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 • 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…. 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 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 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 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 Revisions Required Assessments: • Vocational Goal • Consumers Aptitude for Self Employment • Feasibility Study Required prior to the Business Plan
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 (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 (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 (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 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 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 Home Based Business=Self-Employment • Contract Work is Self-Employment Home Based Employment = not Self-Employment • Telecommuting is not Self-Employment
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 • One year or more in operation= Maintain Case • Assess needs • Disability related services only • Negotiated under agency guidelines
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-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 SPECIALIST • Liaison with resources • Review the assessment • Report any problems with process or procedures
Financial Considerations • Consumer’s major source of income • Termination of benefits • Competitive employment standards
REVIEW OF THE PROCESS • Discuss OVR funding policy • Guidance and Counseling • Assessment of the vocational goal
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 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 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 • 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 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 Services • Property modification to make accessible-consumer owned • Rehabilitation technology • Appraisal of existing business or franchise
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
Exclusions • Construction of buildings • Permanent property modifications on leased or rented property. • Purchase of permanent buildings or real estate • Signing leases by agency
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.
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 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 Services Land Facilities Goods Space Personnel Equipment Materials
Tier I, II and III • Three levels of funding • Each level has specific requirementsand approval procedures.
Tier I Start-up Costs of $1,000 or Less OVR can fund up to $1,000 of start-up
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 Counselor Approves
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 • Requires a Feasibility Study • Requires a Business Plan • Both must be reviewed and deemed viable by an approved business consultant.
Tier II Required Training • Exploring business ideas • Starting your own business • Business plan development • Marketing • Financing
Tier II Approval Feasibility Study and Business Plan must be approved by: 1. Consultant AND 2. Counselor
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 • 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 • Exploring business ideas • Starting your own business • Business plan development • Marketing • Financing
Tier III Approvals • Business Consultant • District Branch Manager • Self-Employment Coordinator
Level III Example 1 Business has $10,000.00 in start up costs: • OVR provides _____________ • OVR provides _____________ TOTAL VR Support : ____________ TOTAL Consumer Contribution:______________