Steps to Success: Supported Self-Employment
By David Hammis
There is no single correct supported self-employment approach, and methods are constantly evolving due to the changing nature of business, supported employment methods, rehabilitation, and the economy. This article discusses some currently successful methods and presents simple stepped sequences of self-employment approaches for many people who might not be considered likely self-employment candidates. Each supported self-employment approach has a sequence, sometimes unique to itself and sometimes shared with other approaches. When considering supported self-employment, it is important to discuss each approach with the consumer or prospective partner or owner. Supported self-employment approaches include: Resource Ownership, Partnerships, and Sole Proprietorships. For each approach, high quality supported employment services occur simultaneously with supported self-employment.
Resource Ownership
In Resource Ownership, the individual with a disability owns a significant high quality employment-related resource. This might be a computer-controlled sewing machine; a twenty-bin, sorting/stapling, three-hole punch; a high-end Xerox copy machine; a best-of-breed Davenport Arabian stud horse; or any other "capital resource" valued, needed, and defined by an employer. The resource is one of the employee's "entrepreneurial assets." It enhances the employee's internal (used by the business) and external (used by the consumer at other times to increase income potential) entrepreneurial opportunities and profit potential. The employer is able to use the resource in accordance with the employee's preferences and interests. Although the employee works for someone else, owning the significant employment-related resource lends an entrepreneurial twist.
Implementation Sequence:
1. Identify the employee's preferences and interests using community based assessments, vocational profiles, and/or futures planning.
2. After establishing
a preference, narrow job development to local employers engaged
in such work.
Example: Carol Ann's interest in sewing led her and her supported
employment consultant to visit several sewing businesses. Carol
Ann did not like some employers and some employers did not like
her, but eventually the search narrowed to a business where both
she and the employer felt comfortable.
3. While negotiating employment, explain the concept of resource ownership to the job seeker and employer. Note the entrepreneurial advantages and ask the employer to define any capital equipment needs that could enhance the jobseeker's employment at his or her company. Also note this approach's low risk to either party and the entrepreneurial opportunity for both parties for increased profits and employment.
4. When the employer's capital equipment/resources needs are matched with the employee's interests, put the following requirements in writing:
The risk to both parties is minimal.
5. Buy the equipment with money from a Social Security Plan for Achieving Self Support (PASS), Vocational Rehabilitation, family members, or a community-based rehabilitation agency.
6. The employee
begins work, aided by the best supported employment methods, natural
co-worker supports and high quality supported employment on-the-job
training.
When implementing this approach:
Do not buy any resource or equipment until the employer identifies its specific requirements. All sewing machines, copiers, horses, packaging equipment, and computers are not alike—employers have specific needs and preferences.
Identify existing "redundant" resources while negotiating the employment/entrepreneurial joint venture. Make sure that if Carol Ann leaves and takes her sewing machine with her, she will not "significantly harm" her employer by taking the only sewing machine. The employer should have other "redundant" sewing equipment.
Use referrals and testimonials from successful employment/entrepreneurial situations to introduce the resource ownership approach to prospective employers and employees.
Partnerships
Partnerships offer an array of opportunities for successful, creative business relationships. A person with a severe disability can become a partner in an existing business with established cash flows, plans, markets, and customers. A cash investment from Social Security Administration, Vocational Rehabilitation and/or other capital resources allows both partners to gain and minimizes the partners' risks.
The sequence begins with steps one and two of the Resource Ownership approach. If you make a good match where both partners are comfortable with their shared interests and personalities, developing and implementing the methods and outcomes is fairly simple.
Features of this approach include:
"Guaranteed or fixed payments to a partner" where the business plan and partnership proposal state that a percentage of the profit will eventually be shared.
The partner with a disability develops a greater sense and of real power from being a part owner of a business than he or she would get in an employee/employer relationship.
Implementation Sequence:
1. Use community based assessments, vocational profiles, and/or futures planning to identify the consumer's preferences and interests.
2. Once a preference
is established, narrow job development to the local employers
engaged in such work.
Example: Glenn has had a relationship with three horse ranches
over a nine-year period. His interest in ranching led Glenn and
his supported employment consultant to visit several horse ranchers.
Eventually the search resulted in a match in which he and a rancher
both felt comfortable with each other. Glenn and the rancher outlined
a partnership to raise and train three Davenport Arabian stud
horses. As delineated in the partnership agreement, the rancher
would provide stable facilities and pay for half of the first
horse. Glenn would pay for half of the first horse, all of the
second horse, and training. Glenn would pay for horse upkeep by
working for the ranch a predetermined number of hours. Glenn wrote
a self-employment PASS to purchase the horse, training, transportation,
work clothes, and advertising.
3. Negotiate employment and explain the concepts of partnerships, limited liability partnerships, limited liability companies, and resource ownership to the consumer and his or her partner/employer. Note the entrepreneurial advantages and ask the employer to define any capital resource needs that could enable the consumer's employment or partnership with this company. Stress the low risk to either party with such approaches, plus the entrepreneurial opportunity for increased profits and employment.
4. Match the employer's needs for capital equipment/resources with the consumer's interests. If, for example, a limited liability partnership seems appropriate, write a limited liability partnership proposal that clearly delineates:
The amount of fixed payments due to each partner;
The percentage of quarterly profits due to each partner (based
on the sum invested in the partnership); and
The contribution of the consumer's labor as an active (not passive)
partner.
Determine the consumer's contribution to the partnership (often $3,000-$10,000 is enough). Propose and outline profit projections for the general partner, and describe how the partnership will be set up and fairly dissolved (a long term contingency). Both partners review and refine the proposal, with advice from an accountant on final financial projections. Again, the risk is minimal to both parties.
5. Buy the partnership resources or secure the cash contribution with money from a Social Security Plan for Achieving Self Support (PASS), Vocational Rehabilitation, family members, or a community based rehabilitation agency.
6. Begin the partnership employment using the best supported employment methods, natural co-worker supports and high quality supported employment on-the-job training.
When implementing this approach:
Do not buy any resource or equipment until the
major partner identifies specific requirements or determines the
amount of cash needed.
Do not buy any resource or equipment before the partnership proposal
and agreement are completed.
Be sure to inform the general partner that he or she will not have to develop a payroll or pay workers compensation because the new business partner is not an employee but an owner of the business.
Limited Liability Partnerships (LLP) offer substantial liability protection to the partner with a disability. Also partnership insurance is reasonably priced.
All states allow formation of Limited Liability Companies (LLC), which offer the liability protections of a corporation plus the tax advantages of a partnership. Both LLPs and LLCs offer tax (including estate and business inheritance tax) and business advantages to family run businesses.