RRTC LIVE WEBCAST CAPTIONING
SELF EMPLOYMENT FOR INDIVIDUALS WITH DISABILITIES
FEBRUARY 12, 2002
Captions Provided By: Caption First, Inc.
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>> TERI BLANKENSHIP: Hi and welcome to the RRTC webcast on self-employment
for individuals with disabilities. I'm Teri Blankenship. Thank you for joining
us today.
There are a couple of items I wanted to mention before I introduce our presenter
for today. The first one is that the webcast and transcripts will be
archived for you and it will be available tomorrow. And you can
go to the same Web Page that you're on right now and just click on the archive
link at the top of the page.
The second item that I wanted to mention is that the program is open
captioned. All you need to do is click on the open caption link. It will take
you to another page. You'll see a text box with streaming text. And if you
would like, you can leave your RealPlayer open so you can see both the webcast
and streaming text at the same time.
It is now my pleasure to introduce our presenter today, Cary Griffin. Cary
is senior partner at Griffin-Hammis Associates and special projects director at
the Rural Institute at the University of Montana, where he provides training to
professionals in the rehab and businesses. He has been instrumental in
designing self-employment protocols and training for individuals, agencies and
states. Let's get started. I'd like to turn the program over to Cary.
>> CARY GRIFFIN: Good day. Hope you all are doing well out there. Today
what we are going to do is we are going to run through sort of the overview,
using a flowchart that you all have access to on the Web. It basically guides
the development of a small business and takes you through the idea formation
into looking at how should that business be structured, what are the critical
components of it.
And so we have got 30 minutes today. So it's going to be very, very quick.
Certainly, not the definitive look at business planning or small business
development for folks with disabilities, but again to give you some ideas of
both the simplicity involved in small business, and also in some of the
complexities and some of the places where you might see that you or the person
that you're helping to support may need some help.
We are also going to just briefly touch on some of the Social Security
aspects. One of the reasons why we decided to start this short introduction to
self employment around the idea of business plans is that having a business plan
for those of us without a lot of ready cash, and that would certainly describe a
lot of folks with significant disabilities, having a business plan is your key
to funding, a lot of times. Whether it be presenting an overview of your
business idea to the Social Security Administration through a PASS plan, whether
it be going to vocational rehabilitation to try to find support and financing or
whether it would be going to a banker or maybe a workforce investment program of
some kind. All of those organizations are going to request to see some formal
approach and some proof that you've thought through the business idea.
Now, none of those agencies has to require you to have a business plan before
they start supporting you. In fact, one of the great things that voc rehab or a
PASS plan can do or a workforce investment can do is to pay to help you develop
this business plan. But again, thinking through the plan a bit, thinking
through the business development, is going to be critical to presenting a good
idea, as here is my career goal. This is why my business will work. And so we
will give you a nuts and bolts small business approach to it.
Having said that, we come from the background of supported employment. So
we are thinking, just as employment happens, that small business happens with
support, and that anybody can be a small business owner, provided that there is
a market for the product, that it meets that person's needs and dreams and all
the other variables that would go into wage employment. But that also there are
some critical thinking that goes into this.
For a lot of you, this is a new area of exploration. Right now, we at both
in our private business and at the University of Montana, we have helped support
about 200 different kinds of businesses. Some in Montana and some in Wyoming
through a Department of Labor project, but also just around the country. We are
just starting to work with Kentucky, with both their DD system and their VR
system. We have been out to Maryland to talk to those folks a bit, and Maryland
looks like it's taking a lead, certainly North Carolina, California,
Oregon and Washington. Lots of folks are picking up on this idea that here is
another opportunity for folks to go to work. I also want to say that this is a
great opportunity for folks in rural areas, where maybe there aren't quite as
many job options, but there are a lot of things that local communities buy or
that can be sold in state, in the region, globally, however that market
develops. So, it's just another opportunity to help people get productive and
to get some economic opportunities in their lives.
So what I'd like to do is to walk through the process a little bit. Again,
this is a very short introduction. It's not going to be comprehensive to any
degree. It's to get you thinking about how logically you think about developing
a business idea with somebody, and then presenting it in such a way that it can
garner support from those other partner agencies that you and I both work with.
This will be followed up at some time in the future with a Web course that
has more in-depth materials and study questions and materials, and will also, if
you get into the chat room after this, you can ask about particular materials
and we can also make sure that some of those are available to you.
Some of the facts first before we get into the depth of this is that most
small businesses succeed in the United States. Certainly, there is that old
myth that 80 percent of small businesses fail within the first five years.
Unfortunately, the data and the way that they collect it and reported that data
has been misleading for a number of years. And so if you go to the Department
of Commerce, the Department of Commerce last year released a study that showed
that 79 percent of all small businesses actually succeed. What happens is that
many people develop a small business, and then harvest it. They sell it off.
They start another business. They add a partner. They diversify and change
their name and their organizational structure.
But business, small business, is especially lucrative and it's an especially
nice way to sort of avoid the pitfalls, sometimes, of wage employment. Not to
say that it's not a difficult thing to do. Small business always has its
challenges. Our challenge as a field is to figure out how do I support this
person or these people in this particular business venture.
We also know that 90 percent, roughly 90 percent of businesses owned by
people with disabilities succeed. So, again, even though some small business
has this atmosphere around it of high risk, it's actually as successful and in
many cases more successful, because it's individually driven, than wage
employment is. And it is a much easier accommodation, sometimes, for folks with
particular types of disabilities. Home-based business is one of those
accommodations or business models that accommodate a variety of personality
types and products and disability. For many years we stayed away from small
business development because we were afraid that we were going to isolate
people. What we found, and I wish we had found it out much earlier because I
think we lost 20 years in some cases, is that people are connected because,
first of all, people have money in their pockets. If you have money in your
pocket, that means you have a certain amount of power in our society. But folks
also have customers and they are making those contacts, they have a supply chain
that they are working through. And so we found the exact opposite, that folks
in home-based businesses, even though they might look isolated, are actually
very much connected to their customer base, suppliers, and their community. And
again they have the liberating forces of actually having some expendable income.
I want to say that certainly many of you know that voc rehab for many, many
years has supported small business, and that vocational rehabilitation around
the country, many, many state agencies and certainly the rehabilitation services
administration, very supportive of small business, but that many states are
struggling under current rules and regulations and staff training issues around
what constitutes a closure. Because they are a results based system. How much
money is enough money to invest in a small business? How much should the
consumer bring in? How do we measure the legitimacy of a business? How do we
form new partnerships in the community with small business development centers,
with tribal business and information centers? How does this work in urban versus
rural issues? So, there are a lot of issues that voc rehab is going to struggle
with. We're working with lots of VR offices and agencies around the country and
we're taking it on a case-by-case basis at this point. But we know that voc
rehab closes nationally somewhere in excess of 5,000 small businesses a year. As
successful closures, there is no rule yet that really pinpoints what a
successful closure is, but it's important for you out in the audience today to
understand what can be done. And an individualized approach, based upon the
individual plan of employment, makes a lot of sense at this point as we start to
figure out how that system works.
Also, the Workforce Investment Act program can and do support small business.
We just wrapped up a three-year demonstration project using WIA funds in the
Department of Labor in Montana and Wyoming. We worked through the Montana job
training partnership and a host of other partners, like the Montana Job Training
Partnership and Montana Community Development Corporation and Vocational
Rehabilitation and many community rehab programs and centers for independent
living. We were able, in three years, to help support about 80 small
businesses, and another 80 wage jobs through that money. Again, it was
demonstration and we are starting to figure out how is it that we are going to
do more and more self-employment for folks who are going through the one-stop
system.
And, certainly, Social Security work incentives are going to be critical to
those of you understanding small business. And again, that is another web-based
class that will probably be going up in the near future through Virginia
Commonwealth University. But the use of self-employment subsidy to protect
benefits, the use of PASS plans to finance small business has been critical to
us and to others around the country who are doing a lot of self-employment
pieces.
Property Essential for Self-support, which allows a business owner to go
beyond that $2,000 resource limit under SSI, which really, you know, restricts
people in being able to build equity in a business or in their own personal
lives. So Social Security has been tremendous, just in their support in the
PASS cadre and certainly in folks that we call a lot in Baltimore to talk about
these emerging issues in self-employment. So all of those systems are coming
onboard.
I want to talk now about getting into the actual physical network and
development of a business plan. And again, I'll say that having a business plan
does not guarantee success in a business by a long shot. In fact, it's been
estimated that 75 to 80 percent of successful businesses in the United States do
not have a business plan. However, we can probably pretty much predict that 100
percent of unsuccessful businesses didn't have a business plan, either. And so
we really do want to think about the future. That is especially critical when
we are using somebody else's cash resource, such as vocational rehabilitation,
or we are using a PASS, to look at what are the impacts of self-employment
income on the benefits, on Medicaid or Medicare. How does that impact section 8
housing? All of those things, again, are beyond the scope of what we're going to
do today. Having a business plan allows you to project what your possible
earnings might be and safeguard and work with these systems to create something
that flows a bit more precisely. We also need a business plan to think about
the future in terms of how is our market liable to evolve. Is there a point at
which we need to get out of the small business, and is there a time? Certainly
lots of people who start small businesses start them to run for a very short
period of time, sell out, build -- take the capital and start another business,
and keep building that way. Certainly, if anybody owns rental property, you
know that that's a common approach to building a portfolio of revenue producing
property. And it certainly is the same in small business. Lots of small
businesses get sold and they were started for that very exact reason, was to
start a small market, grow it a bit and then leverage that business to get a
better business.
We start, and again if you go to the Web and just do a search, you can find
examples of business plans for all types of different businesses. Let me
reinforce that businesses are not started because there is a market need for
them. That is the old economic development model. That is sort of related to
the old job development model, where we go out and find a job for somebody and
then try to fit them into it.
We really look at what is -- what does that person want to do? What is their
dream? What are their gifts and talents and can we indeed create a market? So
we start by looking at the product or service that they are going to offer and
we try to refine that. And when you're writing a business plan, as you'll see
when you look at an executive summary on the Web of somebody's business plan,
you'll find that they can pretty much, in a sentence or two, define what their
business is, who their customers are and what is it precisely that they are
going to do. So we are really trying to clear out the cob Webs and really sort
to pinpoint what it is that exactly we are going to do.
When we look at the environment in which we are going to be running this
business, and that is a very broad and very diversely defined term, the
environment can refer to the economic climate of the local area. It can refer
to a global market. It can refer to the environment of the Internet, if you are
going to do E commerce. It can refer to a Main Street business or the local
location that you're going to operate out of. So, environment takes into
account all different sorts of aspects of the environmental issues.
And again, the location is obviously closely tied to that. Are you doing it
from a workstation inside your study at home? Are you running it from an
Espresso cart and you have a particular location that you go in the morning and
a different one at drive time at night? All those things are critical and they
are tied back to that particular product or service.
One of the things that, just to be very clear on, is that when starting a
small business, don't try to be all things to all people. Really start to
refine that idea. You probably don't want to sell hotdogs and birthday
balloons. You probably want to focus in on one thing that you're going to do
really well and then diversify later if that needs to happen.
As we move on, probably the single most question that we are asked is how do
we know that a business is going to work? And again, this is sort of looking at
that potential and feasibility. We work with a number of small business
development centers around the country, and one of my favorite people, Rosalie
Kates, who runs the Montana Community Development Corporation, has a wonderful
small business feasibility study. She tells people: Go sell one. Tell me what
you did. Tell me who bought it. Tell me what they did. Selling one or two
products, if that is feasible, tells you a lot about what the end-user is. If
you sell it wholesale, then your marketing approach will be different if you are
actually selling it to the end-user.
So we want to think about how do we test this? We have done a variety of
different sort of feasibility studies. One of the things that I like to do is
that after I've worked with somebody for a couple days, go back to my motel room
or to my home, get out of phone book, and draw up five or six questions about
that particular product or service, and call people at random, sort of like a
telemarketer would do, and say, you know, very simply: I would like to ask you
a few questions about a business we're considering in your community. Do you
have a few seconds to talk? I just want your opinion. If you don't have time,
thank you very much. We won't bother you again. And you'd be surprised how
many people want to talk to you about your business idea, because a lot of
people have business ideas and they don't know how to go about getting them
started.
The other piece, obviously, is that there are a lot of generic services
available in most decent sized communities, certainly the small business
development centers, the senior corps of retires executives, tribal business
information services, local economic development folks. Many chambers of
commerce have small business groups that meet regularly. So again, developing
the potential and feasibility, a lot of times it's not a major statistical
undertaking. It is a word of mouth, opinionated, here is what we did once, sort
of look at your community. A lot of small business is guesswork, and there is
no way to engineer that out, you know. So talk to people who are experienced in
small business and who understand a variety of products and services.
One of the next major places that we come to in the plan are the three C's.
That is, we are defining our customers. Sometimes people will say well,
everybody is our customer. We want everybody to buy Jello on a stick. You
can't start that way. You have to really refine: What is our typical customer
going to look like? Well, the buyer of Jello on a stick may not be a three-year
old. It may be a three-year-old's mother. So that tells us right there who is
making the buying decisions. There is lots of information about who makes
buying decisions. There is lots of information in bookstores, especially in the
business section, about sales and marketing and finding who your customers are.
If you're going to sell pet food you know that you need to target people who own
pets. It's only logical that you do those sorts of things. But again, this may
help you refine who your customer is. Maybe you don't have a distribution
network where you could go actually go out and sell pet food, but you could sell
pet food to the stores that sell pet food. So, again you might be also selling
to a manufacturer of pet food who does not have the capacity to meet all of the
requirements of their customers. So there are a variety of ways to look at how
you sell your product by defining who your end customer is.
Then we look at our competitors. Who else is out there making this and what
are they not doing? We work with a gentleman who sells glass for custom houses,
and he grossed a lot of money this year in a small town in Montana. He realized
he didn't have to compete with other glass installers and glass designers. He
had to show his customers that he had a better product. So he could ignore in a
lot of ways his competitors by just looking at what are his competitors not
doing? Again, there is an opportunity to go in and work with competitors who
maybe have more business than they could handle and to form a partnership of
some kind, whether that's a formal or a loose partnership. Again, you need to
look at is there somebody else selling my exact service? Is there a way that I
can do something value added? Ford certainly didn't close up when General Motors
started selling cars. What they did was that they differentiated their product.
They said: Our product is better for these reasons. Our product comes in this
variety of models. You can get it in this color, whereas maybe you can't get a
Chevrolet in that color.
There are a variety of ways to deal with your competitors. Again, looking at
a business plan is a great way of looking at how a variety of people develop
their competitor analysis. Again, we are not talking reams and reams of paper.
We have seen really good business plans that were five pages long. We have seen
more complex ones that were 100 or 200 pages long. The typical one just isn't
that big a document, and so it shouldn't scare you away.
Those of you who write plans for achieving self-support for Social Security,
you are already well versed in the ability to put words on paper that make
sense, that build a career, and it's basically the same process. A lot of what
would go into a PASS plan would also go into a business plan.
Finally, we look at our capabilities. How much can we legitimately produce?
Working with Alyssa, a young lady in Montana who makes gourmet dog biscuits.
Her capacity was limited, because she only wanted to grow her business to the
size of her residential kitchen. But the problem with that is if you only grow
your business so big, and it's a competitive market, which dog treats are, what
happens is somebody else comes in who isn't afraid to get bigger and they take
your market. So what she has had to do, and luckily she makes enough money that
she can do this, now she grows her business and she has two contract bakers
working for her. It only took about $3,000 to start that business, and now she
has two contract bakers working for her. That is impressive.
Most of our businesses have only cost in the $4,000 or $5,000 range, so we
are not talking about businesses like Microsoft. We are talking about
enterprises that employ 1 to 5 people. So when Henry Ford started making model
Ts, he said our capability is that we offer only one color. This is what
capabilities mean. How far can I go with this product, how far can I ship it,
how far can I advertise, and how many of these things can I make in a day or
deliver in a day? And that is something that needs to be realistically
portrayed. You can grow it later, and indeed we encourage people to grow their
businesses, but not too fast.
The marketing mix is basically where we start to look at where is that niche
market that we were talking about? If we are going to do a pooper scooper
business for dogs, we will only go to neighborhoods where there is a high
concentration for dogs and people who don't have kids, whose job it is to clean
up after the dogs. We find that out through knowing people, canvassing, and
just knowing people in a variety of neighborhoods. We can go talk to city
planners about where we might find those folks.
The reason why the Dan Quayle center and museum is up, that picture is up in
Indiana, this is a specific niche in that community that people want to come and
see this particular vice president's memoirs and the library and all those
things associated with him. And this is truly a niche market.
We want to look at price. You know, how much can people afford? Do we need
three different versions of it? Do we need Levi's or some off brand, K-Mart
brand Levi's? Even if we make them out of the same shop, people want variety,
sometimes. Sometimes there is a low cost buyer, sometimes there is a high cost
buyer, so we have to determine where is it that we can sell at what price.
Distribution is one of our toughest pieces, especially for those of you in
rural areas that, you know, getting the product out to a variety of people can
be very tough. This is where we want to maybe hire a sales representative to go
out and sell our product. This is where maybe we want to look at some form of
Internet sales. This is where a service like an auction house like E-bay, which
brings in 6 to 10 million buyers a day to look at products, this is another
approach for distribution. This is getting a wholesale agreement with somebody,
or it means selling chocolate chip cookies on Main Street. If you have a town
of 300 people, you probably are going to exhaust your market really fast. So
you want to be looking at diversification and you want to be looking at how do I
get my chocolate chip cookies to six other small towns in the area? Again, you
are just thinking about how are we going to do it? In promotion, we look at how
is it that we are going to market and advertise this product? Are we going to
do word of mouth sales? Are we going to have an advertising budget? Are we
going to advertise in print media or are we going to go on the radio or the TV?
We've had people buy radio ads in Montana or Wyoming for their businesses, which
is generally a pretty big mistake, because we don't have drive time. We don't
have people stuck in cars where they are in range of the local radio station.
When you go behind a mountain in Montana or Wyoming or Colorado or New Mexico,
you've lost your market.
Print advertising or word of mouth, networking, joining the local Chamber of
Commerce or Kiwanis sometimes can be your best promotion, doing public service
announcements, getting press. Any time -- you know, doing a press release,
there are variety of ways that you can promote a small business for low cost.
And certainly we spend time on operations. How is the person going to actually
produce and deliver the product? This is where a lot of people will need a
variety of supports that are similar to supported employment. And the training
techniques and the support techniques, assistive technology, are all the same
sorts of things.
Lots of times, it's a matter of having an Internet connection or a digital
camera to display your goods. It's the ability to own an automobile so that you
can go out and sell your products. So again, operations take those all into
consideration.
Having a good supplier chain so you can get your products when you need them.
If you are running a Bagel stand and the local bakery every other day, their
ovens break down and you have got no product to sell is not a good situation to
be in. So you need to cultivate good prices and good delivery with your
suppliers. And you need to think this through before you open your business.
It doesn't mean you can't establish new relationships as you are going.
Training, people need hands on in producing a product. So we will teach
people and instruct them.
Finally, you need contingencies in case there is an accident and your
products or supplies don't get to you. And that gets folded into a production
plan. How many of these can we produce on a given day and how many do we need
to? When do we need to tell people that we are done?
Finally, the financial piece, how much cash do you have to put into this
business? Is somebody else contributing cash? Again, we are not looking at
major capitalization. What are the assets that you bring? Is this a place
where we look for investors? Let's do a simple cash flow projection. Those are
easy to do. You can find those on the Web. What kind of work incentives can we
use? Do we want to borrow money? There are a number of low interest and
unfortunately high interest loans for entrepreneurs. We do simple break-even
analyses. At what point do profits exceed expenditures, so that we know when we
are starting to make a profit?
And again, finally, how do we use our Social Security work incentives, such
as property essential for self-support and plans for achieving self-support?
And our 30 minutes are up.
>> TERI BLANKENSHIP: Thanks. We hope that you enjoyed this webcast today,
and we would like for you to join us in our chat room. Just a note, we have
added a discussion forum for you, in case you are unable to post your question
in the chat room. The discussion forum is linked off the chat room Web Page.
Thank you for joining us, and we will meet you in the chat room.