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Division Of Vocational Rehabilitation Self-Employment/Business Ownership Policy & Procedure

Appendix I

Division of Vocational Rehabilitation
Self-Employment/Business Ownership
Policy & Procedure

I. POLICY

1. Purpose.
The mission of the Division of Vocational Rehabilitation (DVR) is to assist eligible individuals with disabilities to achieve independence through employment. The Rehabilitation Act of 1973 (the Act), provides, at § 2(b) that the purpose of the DVR program is to “empower individuals with disabilities to maximize employment.” An employment outcome is defined in the Act, at § 7(11) as, “entering or retaining employment in the integrated labor market (including supported employment), or self-employment, telecommuting, or business ownership, in a manner consistent with this act.”

2. Definition.
Business ownership and self-employment involve selling goods and services to others for a profit. A business is an organization, which applies human resources, products or services, and organizational resources in order to make a profit. Self-employment means earning income directly from one’s own trade or profession, rather than a salary from an employer. An independent contractor, who provides services to another business for a fee rather than a salary, is a form of self-employment.

3. Passive Ownership Distinguished.
There is a difference between active and passive business ownership. Passive business ownership is more of an investment and is not considered to be an employment outcome. Passive business ownership involves purchasing an ownership interest in a business and deriving dividend income from the profits of that business as a result of the ownership interest, rather than actively managing the business operations and producing income from one’s effort.

4. Telecommuting Distinguished.
Telecommuting means to work at home by use of an electronic linkup with a central office. An individual who telecommutes is still an employee, even though performing work functions at home.

5. Unprofitable Business Operation.
A business, which does not generate profit, can become a substantial economic liability. By definition, a business must produce a profit. If the business just generates enough income to meet its expenses, including the cost of the owner’s time and efforts, there is usually no advantage to business ownership. The capital investment is non-productive. In that situation, it is safer, and cost less to be paid for labor in competitive employment. There is no investment required. If the business has capital resources, those capital assets can be consumed in the day to day cost of running the business, if sufficient revenue is not generated to maintain operations. A specific operating budget must be developed as part of a business ownership plan and a definite, realistic time frame for the business to generate sufficient income to meet expenses and provide a profit. DVR shall not support
an unprofitable business.

6. Employment Outcomes.
Self-employment and business ownership are employment outcomes. Laws, regulations, policies and procedures regarding employment outcomes apply to self-employment and business ownership, and this policy shall be construed in accordance with such provisions. Choice is one provision that applies to self-employment and business ownership. The Act provides, at § 102(b)(2)(B), that “an individualized plan for employment shall be developed and implemented in a manner that affords eligible individuals the opportunity to exercise informed choice in selecting an employment outcome…” and at § (b)(3)(A), that a specific employment outcome shall be chosen by the individual consistent with his/her unique strengths, resources, priorities, concerns, abilities, capabilities, interest, and informed choice (these are the “primary employment factors”). If the chosen employment outcome is consistent with the primary employment factors, and can realistically lead to employment, the counselor can approve the employment outcome in an IPE.

The process of selecting self-employment/business ownership is one part of the already existing process of selecting an employment outcome. Self employment and business ownership are employment outcomes, and information provided to the eligible individuals about selecting employment outcomes should include information about self-employment and business ownership. The eligible individual will select an employment outcome as part of the process of developing their individualized plan for employment. Counselors are frequently involved in the selection of an employment outcome, by invitation of the individual or his/her representative. There may be circumstances that lead a counselor to believe that self-employment/business ownership is an appropriate employment outcome. The counselor’s assessment, like the consumer’s is guided by the primary employment factors.

Self-employment/business ownership is not a stand-alone employment outcome. The type of business, the nature of the self-employment is an integral part of this selection. A business must be about something; it must provide some specific goods or services. The nature of the business can change substantially with the nature of the business elected. Managing a tavern is quite a different matter from managing a coffee shop or a bookstore. Selection of a specific business is part of the selection of a self-employment/business ownership outcome. They must both be considered in the process of assessment and approval of the employment outcome.

7. Facts to Consider.
Self-employment and business ownership requires certain skills, knowledge, strengths, resources, abilities, and capabilities. Without these, an individual is unlikely to succeed. Financial risk is a component of business ownership and self-employment. The consequences of a failed business can be economically disastrous to an individual, and certainly contrary to the purpose of the program which is to assist eligible individuals to achieve independence through employment. A failed business can be more harmful financially than termination of an employment relationship with an employer. The DVR counselor should therefore proceed more cautiously when an eligible individual identifies self-employment or business ownership as a chosen employment outcome.

8. Individualized Plan for Employment.
According to § 102(b)(2)(C), approval by a qualified vocational rehabilitation counselor employed by DVR is a mandatory procedure in the development of an IPE. A qualified vocational rehabilitation counselor must approve the employment outcome chosen by an eligible individual as part of the development of an IPE. The DVR counselor must use the “primary employment factors” identified in the Act as a standard to measure the appropriateness of an eligible individual’s selection of an employment outcome. Informed choice is one of those factors, but not the primary factor to be considered.

As with any IPE, one which identifies self-employment/business ownership must identify the services needed by the individual to achieve the outcome, establish goals for the individual to achieve, establish performance measures and milestones for the individual to meet. The services, resources, skill development, financial support, and other services needed to develop and manage a business operation must be addressed in the IPE, along with all other required vocational rehabilitation services.

A Business Plan is an important tool in developing and managing a small business. The business plan explains the major components of starting and managing a small business, including financial, marketing, managing, growth and other related considerations. A business plan is necessary to obtain financing and/or investors. A business plan develops and plans the necessary areas to successfully establish and maintain a business operation. Developing a complete business plan shall be included in any IPE that identifies self-employment or business ownership as the employment outcome, unless an individual already has an established business.

9. Assessment.
Section 102(b)(1) of the Act provides, “[i] if an individual is determined to be eligible for vocational rehabilitation services…[DVR] shall complete the assessment for determining eligibility and vocational rehabilitation needs.…” A vocational rehabilitation counselor shall rely on the information in the assessment to determine whether self-employment or business ownership is an employment outcome consistent with the individual’s unique strengths, resources, priorities, concerns, abilities, capabilities, interest, and informed choice. The Rehabilitation Services Administration, in its Policy Directive, RSA-PD-97- 04, provides at page 3: In many instances, DSUs should be able to determine whether an individual’s interests and informed choice are consistent with his or her primary employment factors during the comprehensive assessment of vocational rehabilitation needs. In determining whether the individual possesses the strengths, resources, priorities, concerns, abilities and capabilities needed to perform the desired employment goal, the DSU may seek to acquire performance-based information. Performance- based information may be sought during the comprehensive assessment or by establishing discrete short-term objectives in the [IPE].

An assessment of the eligible individual’s unique strengths, resources, priorities, concerns, abilities, capabilities, and interest relative to the specific self-employment outcome shall be conducted as part of the assessment process when self-employment or business ownership is an identified employment outcome. This assessment shall be conducted with the assistance of a professional who is knowledgeable in the area of establishing and conducting a business. The self-employment assessment shall address three specific areas critical to the success of the eligible individual’s achieving a successful employment outcome through self-employment:

the individual’s ability to successfully develop and operate the selected enterprise;
the economic viability of the specific enterprise selected;
the individual’s access to adequate resources to develop and operate the selected enterprise; As identified in RSA Policy Directive 97-04, discrete short term objectives shall be established in developing a plan for self-employment, which objectives are consistent with the preparation for, initiation, development and managing a business enterprise. These include:
- education/training on the necessary skills/abilities required of business managers;
- development of a business plan which details the nature of the business venture, the plan for initiation of the business, financing, and all other aspects of developing, initiating and managing a business enterprise;
- securing necessary commitments for financing sufficient to meet the capital requirements identified in the business plan;
- securing the necessary resources to develop, initiate, and manage the business operation.

10. Services.
Specific services available to eligible individuals under an individualized plan for employment (IPE) relative to self-employment are described in § 103 of the Act (a) as: any services described in an individualized plan for employment necessary to assist an individual with a disability in preparing for, securing, retaining, or regaining an employment outcome that is consistent with the strengths, resources, priorities, concerns, abilities, capabilities, interest, and informed choice of the individual, including:

(12) occupational licenses, tools, equipment, and initial stocks and supplies; and (13) technical assistance and other consultative services to conduct market analysis, develop business plans, and otherwise provide resources, to the extent those resources are authorized to be provided through the statewide workforce investment system, to eligible individuals who are pursuing self-employment or telecommuting or establishing a small business operation as an employment outcome;

DVR will work in partnership with other public and private agencies to identify and make available services to eligible individuals that will support self-employment and business ownership when selected as an employment outcome by an individual. Business development is supported by several public and private organizations that provide services to support self-employment and business ownership. Such organizations include the Small Business
Development Center of the Delaware Office for Economic Development; Department of Labor Division of Employment and Training and Office of Labor Market Information; Senior Corps of Retired Executives (SCORE); Delaware Chamber of Commerce; YWCA Women’s Center for
Economic Development; Division for the Visually Impaired Business Enterprise Program; post-secondary educational institutions; private small business consultants; and other such individuals and organizations.

Services generally which are available through these organizational resources as they relate to self-employment include:

assessment to determine an individual’s strengths, resources, priorities, concerns, abilities, capabilities and interest relative to self-employment;
training in how to develop a business plan; secure financing through micro-loan programs/lenders; how to start and/or manage a business;
training in specific skills necessary to develop, implement and manage a small business such as accounting, financing, management, taxes, etc;
consulting services to provide assistance related to the development, initiation and management of a business (developing a marketing plan, securing loans or funding);
business development (e.g. securing government contracts).

One of the specific services that is available is mentoring (for example, SCORE provides mentoring services). An eligible individual with self-employment as an employment outcome should have mentoring services identified in his/her IPE. A mentor has knowledge and skills and can assist the individual in a variety of ways.

The Rehabilitation Act does not require or permit DVR to provide funds to an individual under an IPE to finance self-employment. There are a number of funding resources available to provide funding for self-employment and business ownership, including financial lending institutions, micro-loan programs in the Small Business Development Center. The DVR counselor should support the eligible individual’s efforts to complete the steps necessary to establish a viable business plan which would qualify for funding under one of the identified funding programs, as part of the IPE. A consultant or mentor can be helpful in this phase of business development.

11. Comparable Services & Benefits.
Section 101(a)(8) of the Act provides: Prior to providing any vocational rehabilitation services to an eligible individual (except core services), DVR will determine whether comparable services and benefits are available under any other program. The provisions of the Act relative to comparable services and benefits apply to self- employment in the same respect as they apply to all other IPEs. When an IPE is developed which provides self-employment as an employment outcome, an array of services related to making the self-employment outcome a reality becomes a part of that IPE. Many of the services related to self-employment will be available at no cost from the “service providers” identified above, along with others to be identified. Others will have a fee associated with them. Training programs related to skills and abilities required establishing and maintaining a business operation can be acquired from several sources, including post secondary institutions. Standard casework manual procedures for financial aid apply to tuition for coursework related to self-employment skills.

II. PROCEDURE

Development of self-employment as an employment outcome in an IPE. Self-employment/Business Ownership is an employment outcome. Vocational
Rehabilitation is a process by which an individual with a disability receives services, including counseling and guidance as needed, which support the individual’s accomplishment of the goal of achieving employment. Self-employment is no different in that respect. An IPE must be developed for all eligible individuals who receive services, including those for whom self-employment is an identified employment outcome.

Each IPE is different. It reflects the unique circumstances that exist for each eligible individual at the time the IPE is developed. It also reflects the individual’s goal for employment. It is a path to independence, and each path is different. The IPE for self-employment/business ownership must include services that prepare the individual to accomplish the goal of establishing and operating a business. It must also include services that assist the individual to establish the business, and to successfully operate it until the individual’s service record is closed. The following is a guideline for developing an IPE for an individual with self-employment/business ownership as an employment outcome.

1. Information is provided to the eligible individual.
Information is provided to the eligible individual that describes DVR services and assists the individual in selecting an employment outcome as required in § 102 of the Act. Information about DVR services will include information about the services related to self-employment. The DVR counselor shall provide information to eligible individuals regarding self-employment and business ownership as part of the general body of information provided to such individuals regarding selection of an employment outcome. No additional presentation of information about self-employment need be made.

2. An assessment is conducted for the individual.
The policy and procedures identified in Chapter 4 of the Casework Manual are applicable to assessments. The assessment conducted for the individual can be used to establish eligibility, vocational rehabilitation needs, as well as the individual’s unique strengths, resources, abilities, capabilities, interests, and informed choice relative to his/her employment outcome. Assessment is a process of gathering information regarding the individual that is necessary to develop a plan and to make the choices inherent in that process. It takes different forms for different individuals and different circumstances.

Assessments to assist an individual identify an employment outcome can include a functional assessment of the individual’s abilities and capabilities with respect to performing work-related tasks; a vocational interest assessment to assist the individual to identify employment outcome choices which are consistent with the individual’s primary employment factors. There are a number of instruments which can be self-directed or administered by a professional, including the vocational rehabilitation counselor.

In addition, when self-employment/business ownership is identified as an employment outcome, the assessment of the individual should include an assessment relative to the knowledge, skills, abilities and capabilities required to establish and maintain a business operation. An additional component of assessment includes assessment of the identified plan for establishing and maintaining a business operation.

3. Employment outcome selected.
The employment outcome of self-employment/business ownership is selected using the process identified in Chapter 10 of the Casework Manual. As with any employment outcome, the eligible individual chooses an employment outcome consistent with their primary employment factors. If it is a choice that is consistent with those primary employment factors, based upon information known to the counselor from the assessment and other sources, the counselor will approve the selected employment outcome.

4. Services necessary to achieve the employment outcome in the IPE are identified.
The particular services identified and included in the IPE are determined by the vocational rehabilitation needs of the individual, and the employment outcome selected. Information about services in general will be provided to the individual as part of the process of developing an IPE. As assessment information is obtained, and an employment outcome is selected and approved, the focus on services narrows to particular services.

Services which support and promote self-employment/business ownership include education and training, professional mentoring and consulting, capital acquisition, acquisition of tools/equipment and stock in trade. Some of the services and service providers available are:

Senior Corps of Retired Executives (SCORE). SCORE utilizes volunteer executives with expertise on how to successfully establish and maintain a business, who function as counselors/mentors to individuals establishing and maintaining a business. SCORE provides training workshops on such topics as: assessing entrepreneurial potential; starting a business; developing a business plan; obtaining financing; selecting a legal entity; marketing/advertising; hiring and retaining employees; financial controls.
Small Business Development Center (SBDC) of the Delaware Office of Economic Development. The SBDC provides services to support development of small businesses in Delaware. Training programs are offered; counseling/technical assistance is available from staff; micro-loan programs provide access to funds for business start-up expenses.
YWCA Women’s Center for Economic Options. The YWCA administers a program entitled Working Capital which provides networking and financing assistance to individuals seeking to establish and operate a small business.
Colleges & Universities. The University of Delaware, Delaware Technical and Community College, and Drexel University have certificate programs which teach skills related to starting and operating a business.

5. Establish criterion to evaluate the client’s progress in reaching an employment outcome.
An IPE which identifies self-employment/business ownership as an employment outcome shall include evaluation criteria which objectively relates to the acquisition of knowledge and abilities needed to succeed in business, as well as the steps necessary to successful development of a business operation. The following are examples of such criteria:

possess adequate knowledge, skills, and abilities in those areas necessary for establishment and maintenance of a business enterprise, including marketing, management, accounting, financing, business organization;
development of a business plan;
btaining adequate financing to establish and operate business operations as identified in the business plan.

6. Establish timelines for the initiation/completion of services and achievement of the employment outcome.
Timelines must be established and monitored for initiation and completion of services such as training; for activities such as development of a business plan; obtaining financing; and specific criteria related to start-up of a business operation. An employment outcome for self-employment or business ownership requires that the individual maintain successful business operations for 180 days (rather than the usual 90 days of employment) before a successful outcome is recorded.

III. LEGAL AUTHORITY

Statutes.

Rehabilitation Act of 1973, as amended

* § 2 Purpose;
* § 7(11) Employment Outcome;
* § 103(a)(11)-(12) Vocational Rehabilitation Services;
* § 102(b) Development of an Individualized Plan for Employment.

Regulations.

* 34 CFR § 361.46 Content of IPE
* 34 CFR § 361.48 Scope of Vocational Rehabilitation Services
* 34 CFR § 361.50 Written Policies governing provision of services to individuals with disabilities
* 34 CFR § 361.52 Opportunity to Make Informed Choice
* 34 CFR § 361.56 Individuals determined to have achieved an employment outcome.

RSA Policy.

RSA Policy Directive: RSA-PD-97-04

DVR Policy.

Casework Manual Chapters 2, 4, 5, 1