Self-Employment Business Startup Appendix

These items as well as any additional ones that might not be listed here should be used as discussion points with the consumer regarding the advantages/ disadvantages of Self-Employment.

Advantages of Self-Employment

• Independence - control over work setting and schedule
• Employment where/when outside opportunities are few
• Work activities that fit personal interests and capabilities
• Being the boss
• Interacting with customers, suppliers, and others
• Enjoyable work
• Sense of achievement/satisfaction if the business succeeds
• Control over job security
• Control of business decisions
• Better standard of living
• Feeling part of the community; connections with other community business members
• Long-term employment with opportunity for personal growth

Disadvantages of Self-Employment

• No regular paycheck or routine
• Financial risk; may need collateral, a loan or co-signer
• Pleasing the customer (the REAL boss); must be able to get along well with all types of people (clients or customers, suppliers, family, funding sources, etc.)
• No employer benefit package (no paid vacation or sick time)
• May need to provide own health insurance and retirement plan
• Long, hard hours with little free time – owning a business requires longer hours and much more work than a 9-5 job
• Fluctuating income
• Unrelenting responsibility
• Possibility of business failure
• Stress on family/resource
• Possible exacerbation of health problems/disability

Any advantages or disadvantages not listed above that are specific to you?

Do you have any past experience in self-employment? If so, what did they learn from that experience?

Consumers receiving SSI and Medicaid should be aware that for Limited Liability Corporations (LLC), S Corporations, and C Corporations business assets may be considered as personal assets.

Working with a work incentives benefits specialist will assist consumers in making an informed choice on pursuing self-employment and if a consumer decides to proceed with self-employment, it will help them understand how Social Security evaluates work activity, available employment supports, and how to structure their business.

Information regarding Social Security Work Incentives provide an opportunity for individuals on SSI/SSDI to work. Some individuals may be interested in creating a PASS Plan through Social Security.

This questionnaire is designed to help the consumer to think about and explain how their skills, abilities, and access to resources may lead them toward a successful self-employment outcome. The questionnaire will assess the consumers management experience, industry/technical experience, personal credit and financial solvency, commitment/desire/persistence, and family/community support.

The questionnaire should be completed by the consumer (with supports/assistance as needed) and upon completion, reviewed with the consumer and DVR staff member to determine if additional information is needed.

This information will then be used to complete the Business Assessment Scale.

Entrepreneurial Readiness Questionnaire (ERQ) (DVR-19899-E)

Roles and Responsibilities Prior to BAS Review:

VRC:

• Attach the following in IRIS (be sure PPI is redacted) and submit to the Local BAS Representative:
  • ERQ
  • Credit Report with FICO Score (not Vantage or other score, must include the consumer's name and date and should not be a copy and pasted document)
  • CCAP Review
  • DOJ Criminal Background Check
  • Personal Finance Worksheet
  • Rational on if the VRC supports the consumer in self-employment occupation? Why or why not?
• If Local BAS Representative determines ERQ is not complete, work with the consumer to update the document. Note: If the consumer declines the opportunity to update the ERQ, notify the Local BAS Representative, so the process can move forward.
• Review the BAS process with the consumer and give the consumer a copy of the BAS tool. Note: The consumer should not score the BAS prior to the meeting.

Local BAS Representative:

• Verify that the ERQ and supporting documents are attached in IRIS and that the ERQ is complete. If not complete, advise the VRC on what items need to be updated.
• Submit the completed ERQ and supporting documents to the BAS Coordinators.
  • If the consumer does not have a FICO score, the ERQ should not be submitted for review.
  • If the FICO score is below 639, the VRC should inform the consumer they will automatically receive a Red score, but the ERQ can be submitted for full review.

Coordinator:

• When ERQ and supporting documents have been received, enter the following in the BAS Tracking form: IRIS number, ERQ submission date, number of business days to BAS meeting, credit report w/ FICO submitted, CCAP submitted, DOJ criminal background check submitted, personal finance worksheet submitted, and ERQ submitted.
• Assign raters to BAS review, using BAS Committee Rotation.
• Using initial email template, email BAS Raters and VRC. Include ERQ and supporting documents, BAS form and instructions, and Consumer Satisfaction Survey.

Raters:

• Work with the VRC to schedule a meeting with both Raters, the VRC and the Consumer.
• Review the ERQ and supporting documents prior to the meeting. Do not score the BAS in advance of the meeting.
• Review BAS Scoring Guidance prior to rating an ERQ.

Roles and Responsibilities During to BAS Review:

DVR Staff Member:

• Support the consumer during the meeting and provide prompts as necessary. The DVR Staff Member does not need to score the BAS or take notes.
• After the raters leave the meeting, verbally give the Consumer Satisfaction Survey to the consumer and record their responses on the form. Attach the survey in IRIS and submit a copy to the BAS raters.

Raters:

• Identify one rater to take notes during the meeting, using the BAS Notetaking Template. This rater will also write a letter to the consumer and
• Score BAS and notify the consumer of score and category (red, yellow, or green).

Roles and Responsibilities After to BAS Review:

DVR Staff Member:

• Once informed of the final BAS decision, contact the consumer BEFORE they receive the letter and discuss the final decision and next steps.
• Complete the Entrepreneurial Readiness Worksheet in IRIS.
• If Raters provides next steps for the consumer, monitor that the consumer completes the steps by the deadlines provided. If the items aren't completed by the deadline, redirect the case towards employment or case closure. If the consumer has a justifiable reason to need additional time, submit a request to WDA Director or designated Supervisor.
• Once all steps are completed, contact the BAS raters to determine if the consumer is approved to move forward or if self-employment is denied.

Raters:

Within 3 Business Days of BAS Review:

• Case note the meeting in IRIS. Note: Notes made to self during the meeting are not part of the case record and do not need to be attached.
• Use letter template to write and send a letter based on consumer's BAS score. Include appeal rights. Attach letter in IRIS.
• Inform the VRC and Director/Supervisor of the decision. Remind the VRC that they need to inform the consumer of the decision before the letter arrives.
• Enter the following in the BAS Tracking form: BAS Score, BAS red/yellow/green, number of days from meeting to letter, VRC contacted consumer regarding results, number of days to Entrepreneurial Readiness in IRIS, returning business owner with new idea, and hobby turned business.

Within 10 business days of BAS Review:

• Review the file to ensure that the Entrepreneurial Readiness Worksheet has been filled out by VRC. Verify that BAS Tracking form has been filled out.

Title Page Includes: Business Name, Consumer Name, Address, Phone, Email, Date.

Executive Summary

The executive summary is the first and most important section of a business plan. Its purpose is to convince the audience that this business is worthwhile. This “opening argument” must capture and hold the intended reader’s attention and direct it to a specific purpose. The executive summary should avoid industrial jargon – the reader may lose interest. Make the summery clear, concise, and convincing. Although the executive summary appears first in the plan, usually it is the last section written.

The Business Description

The Business. This section discusses the purpose of the business, form of ownership, ownership interest, industry trends, background information about the owners.

• Business History: This section describes the need for a new business. It describes how and why new business is needed. For a new business, it should discuss the industry on a local and regional basis and the projected growth of the business.
• Form of Ownership: This section specifies and discusses the rational for the type of business ownership. It includes documents or agreements between partners or shareholders. It discusses how the potential business owner determined the appropriate form of ownership for his or her business. The Secretary of State’s office in the state where the consumer wishes to open the business can help. This information is found on the Wisconsin Department of Financial Institutions website. For example, you can form a LLC by paying $130 and applying on this website. The booklet details the legal steps necessary to start, maintain and/or dissolve a business. A potential business owner should also contact a certified public accountant or a business consultant to discuss the appropriate form of ownership for his or her particular business.
• Ownership Interest: This section lists all owners, such as major shareholders or partners. It also documents owners’ or shareholders’ willingness to provide personal guarantees for any financing. Tax ID Number (TIN).

  Visit the IRS website (irs.gov) to obtain a Federal Tax ID Number for your business. Industry Trends

  This section discusses the current trends of the proposed business and the industry. It describes whether or not the demand for the product or service exceeds current supply.

• Background Information About the Owners: This section provides information about the owner(s), describing any experience in the industry or with managing a small business. This section also contains information about any business advisors other than lawyers or CPAs.

The Marketing Plan Products and Services

This section describes the product or service, the currently unsatisfied market need or desire, and describes how the product or service will meet that need or desire.

• The Target Market : This section describes the market and the customer. Many resources are available at public libraries that provide data on markets and customers.

  Here are just a few:

  • County and City Data Book
  • Statistics for States and Metropolitan Areas
  • Statistical Abstract of the United States
  • Trade Association Publications
  • A Guide to Consumer Markets Make sure all information sources are referenced and describe the method used to gather target market data; describe the geographic market including its physical size, history, and trends (e.g., growth); and the proximity and relevance of potential customers.

  This section should also contain an estimate of the potential market, the number of customers the business expects to serve immediately after opening, the rate of expansion, and possible expansion into other markets.

• Business Location: Describe possible locations explored, why the selected location is the best, and how it will benefit the business.
• Competition: This section describes others who are competing for the same market, what they charge, their weaknesses and strengths, how your product or service differs from theirs, and the features and benefits of your service or product versus the features and benefits of competitors’ service or product. Describe the methods used for gathering this information. Describe how you will gain market share. For example, will people patronize your business because of price, technical sophistication, image, superior product or service, location, or sales and/or marketing techniques?
• Advertising and Promotion Strategies:
  
This section describes how the message about the product or service will be communicated to the users. It should describe the business owner’s philosophy about customer service, the image you wish to portray about your product through packaging, brochures, letterhead, business cards, displays, and the behavior/dress of employees. It also discusses all promotional activities and answers the following questions. What advertising media will be used – newspaper, radio, television, the Internet, windshield handouts, magazines, mailings, billboards, demonstration sites? What is the frequency of advertising – daily, weekly, monthly, bi-monthly? Will promotions (giveaways, discounts) be used? Who will contact customers – in-store sales staff, sales representatives, telemarketers? How will customers be contacted – by telephone, in-person cold- calls, trade show(s), e-mail? Will a website be created? Page 53 of 67 Finally, this section should also discuss how customer satisfaction will be assessed. For example, through questionnaires, focus groups, repeat business, and/or referrals to others.

The Operations Plan

The operations plan explains how the work will be done and how the business will be managed and the business’s location. It also describes the manufacturing process including materials used in the process and employees and their duties. It also describes the business’s location.

• Inputs: “Inputs” are materials, suppliers, and arrangements with suppliers. This section describes them and lists prices, volume discounts, and payment options that might influence the decision to trade with a higher-priced vendor.
• Facilities: “Facilities” include location of the business and its physical layout. This section describes the location, features of the building and site, ownership, lease arrangement, remodeling needed (and costs), other businesses in the area, and zoning. It discusses why the location was selected and its advantages and disadvantages. It may include a floor plan. Questions that should be answered here include: Is the business located outside of the home? Is parking adequate? Are modifications necessary to accommodate the business owner’s disability or to ensure ADA compliance?
• Operating Costs: This section describes, and lists costs for, all utilities (heat, light, telephone and water) to be used by the business for production and operation. Licenses, Permits, Zoning, Insurance, Taxpayer Number, Corporation Status. The types of licenses, permits, insurances, and taxes paid vary according to the business. But it is likely that a business will require one or more of these to operate. It depends on the business.
• Capital Equipment: Capital equipment includes permanent items that the business keeps and uses for many years. These include equipment, furniture, and fixtures needed to start and run the business. This section describes each piece, discusses why it is necessary, and lists its cost and supplier.
• Production Methods: If applicable, this section describes both the tools used for making the products or performing the service and the work space(s), including the amount of room needed for each employee; the labor needed to produce the product or provide the service; methods for monitoring quality; and methods for complying with environmental and safety regulations.
• Management Methods: This section describes how the business will be managed and the business owner’s knowledge, skills and experience for completing day-to-day business functions and obtaining specialized services.
• Employees: If applicable, this section describes staffing requirements for both production and business management. It discusses the type of work to be done, qualifications needed for the job(s), plans for filling open positions, wage rates, and benefits package(s).
• Outside Services: This section describes the types and costs of outside services provided by non- employees, such as lawyers, bookkeepers, CPAs, and business managers.

The Financial Plan

This section discusses the investment required, sources of funds for the business, and financial statements. Developing these financial statements is one of the most difficult tasks facing a new business owner, because in most cases there is no history for reference. Unless you plan to purchase an existing business, these statements will be based on projections. Develop the Income Statement, Cash Flow Projections, and Balance Sheet statements for the first 2-3 years of business operation. First-year Cash Flow is projected monthly. Years 2 and 3 Cash Flow projections are quarterly rather than monthly. Need for and Sources of Cash. This statement lays out how much cash the business will need to open its doors and to operate until it is profitable. Most of this information will come from other parts of the business plan.

• Equipment List: This is a list of each item of business equipment and its value. Generally the items should have a useful life of one year or longer. You should consider whether or not to purchase or lease equipment.
• Income Statement: The income statement shows a business’s financial activity over a period of time to determine if the business made or lost money. It matches expenses with business revenues. The income statement includes total sales, cost of goods sold, gross profit, indirect expenses, other expenses, pre-tax profit or loss, taxes, and net profit or loss
• Break-Even Analysis: The break-even analysis helps you determine the success of a business before it begins. It describes the number of units of a product or how many hours of a service must be sold to break even or to make a profit or the effect that changing a product’s price or reducing expenses has on profitability.
• Cash Flow Statement: Cash is even more important to a business than profits – a profitable business may still be unable to pay its bills. The cash flow statement shows when the business will receive cash and when cash must be available to pay bills. The cash flow statement shows when the cash actually will be received and the expenses actually paid. Don’t confuse this with your own personal cash flow statement you completed earlier. The personal statement shows the amount of money you need to live and cover monthly expenses. The business cash flow statement predicts when the business will need cash and when cash will be available.

  The cash flow statement has two sections. The top section shows how and when cash will be received by the business. The bottom section shows how and when the money will be used to pay bills. Unlike the income statement, the cash flow statement shows money coming in only when the business actually receives it and going out only when the business actually pays a bill.

• Balance Sheet: The balance sheet is a snapshot of a business at a particular point in time. It shows a business’s assets (what the business owns), liabilities (what the business owes), and owner’s equity (what the owner is worth). A new business gets its first Balance sheet when the business starts. It is updated annually thereafter, usually at year’s end. The balance sheet shows the business’s financial status and stability, and if the owner’s equity is increasing. It consists of two parts: Assets and Liabilities and Owner’s Equity. For many home-based, service businesses, or businesses where the owner has no credit rating separating personal and business assets and liabilities is difficult. When this is the case, a personal financial statement may be used in lieu of the balance sheet or the balance sheet should reflect personal assets, liabilities, and owner’s equity mixed with those of the business.

Supporting Documents (optional)

This section includes other documents needed to support and validate the business and business plan. These include a cost-of-living budget and personal balance sheet for the business owner(s), resume(s), credit reports, contracts, legal documents, leases, job descriptions, letters of support and reference, letters from potential customers stating they will buy from the business when started, contracts, and other documents that bolster confidence in the proposed business.

Attachments:

• Resume.
• Other documents pertaining to or clarifying specific sections of the business plan.

The Business Plan Review Committee (BPRC) Role:

• Become familiar with the DVR Self Employment Toolkit.
• Identify local community resources that may assist DVR staff and consumers through the business planning process.
• Act as a resource to the DVR staff as they assist the consumer through the self-employment process
• Designate a contact person for the DVR staff to notify when the consumer is ready for the business plan to be reviewed.
• After receiving the business plan, schedule a meeting within 14 business days to review the proposed business plan. If the committee is not able to meet within this time frame, a reasonable extension can be agreed to by all interested parties including the consumer.
  • It is recommended that all Business Plan Review Committee’s schedule 1-2 reoccurring meetings every month as placeholders on their calendars, to ensure they are able to meet with consumers as business plans are submitted.
• Review the business plan and any other submissions utilizing the Business Plan Development Technical Specifications. Ask the consumer questions for clarification as needed.
  • Please note, the role of the committee is to not question the appropriateness or the feasibility of either the consumer or the business as these questions have already been answered in the process.
• Develop and send to the consumer the business plan review committee’s formal letter of support. This should be completed within 3 days of presenting the business plan, including any open action items that need to be addressed or completed prior to the purchase of items/ services toward the start-up of the business. If applicable, the letter should include the consumers appeal rights.
  • If appropriate, include the recommendation that the consumer connect with a business mentor (see VRC Guide and Job Aid for more information).
• Identify in the letter the BPRC representatives that will give the final approval when the open action items have been completed.
• It is recommended that an outside business expert be a member of each WDA’s

Business Plan Review Committee Member(s) Responsibilities:

• Let Coordinator know in advance of your scheduled date (to review plan) conflicts and arrange for another statewide member to replace you.
• If can't attend last minute, let Coordinator know your feedback.
• Share information with WDA regarding statewide Business Plan Review Committee meetings and expand staff knowledge of self-employment policies/best practices.
• Encourage WDA staff to share potential self-employment cases with the local Committee Member as to what business plans will need to be submitted for review in future.
• WDA Committee Member will review checklist with VRC prior to submission to make sure consumer knows business plan and everything is complete as possible prior to submission.
• A single BPRC committee member attends on-site review (when site is available) with VRC and Sup/Director in advance of the business plan submission.
• Serve as notetaker as assigned on the rotation schedule.
• When notetaking, the notetaker will work to draft and finalize letter with committee and include who was part of review (Post-Review Meeting).

Business Plan Review Coordinator(s) Responsibilities:

• Send outlook invite using Microsoft Teams as place holders for next six months
• If Plan is scheduled to be reviewed, will send follow-up invite 10 business days in advance that includes pre-meeting, consumer presentation and post-meeting. Will include all materials and mark as "private". If no business plans Coordinator will cancel meeting invite 10 business days prior to meeting.
• Will serve as facilitator.
• Follow rotation list.
• Provide technical assistance to state-wide team members as needed and consult as needed with Policy Analyst, Deputy BCS Director or others as needed.
• Can review checklist with WDA VRC and local Committee Member prior to submission, if requested.
• Coordinator signs and mails letter to consumer after the business review is complete within 3 business days after meeting is complete.

DVR Staff Member Responsibilities:

• Work with WDA Committee Member to use and talk through the Pilot Checklist to explore self- employment throughout the process, document in IRIS and attach document when complete.
• Help WDA Committee Member coordinate logistics for site visit.
• Support the consumer before and during the Business Plan Review and attend Review.
• Consultation with WDA Committee Member, Coordinator, and others throughout the process.
• Contact consumer to make sure meeting location/mode works, determine if consumer needs others to attend and test remote equipment as needed prior to Review Meeting.
• Review with consumer if there is any product/service example to present to the Committee and walk through how it will be presented.
• Possess a working knowledge of how business will operate and generate income.
• Review Regional Business Plan Review Checklist with Consumer, and WDA Committee Member
• Work with consumer to identify timeframes and complete follow-up items as identified by Regional Business Plan Review Committee.

Local WDA Director/Supervisor Responsibilities:

• Support WDA Committee Member at the local level and staff collaboration/following process.
• Review in advance of submission any business plan that exceeds VRC spending authority.
• Provide feedback to local staff as result of review as to strengths/areas of concern and recommended next steps.
• Attend on-site review in advance of business plan submission for any case that exceeds VRC spending authority.
• Attend business plan review committee meetings for cases submitted from your WDA that exceed VRC spending authority.
• May attend any on-site review or business plan review at their discretion.
• Provide input and ask questions/points of clarification at prep meeting, during business plan review and after.
• Provide support to staff at WDA level, along with the WDA Committee Member, in implementing business plan review recommendations.
• Provide informal review(s) and represent Administrator at impartial hearing for cases in your assigned WDA as appropriate.

Yellow Light Feasibility Finding IPE Example

Green Light Feasibility Finding IPE Example

BPRC Approved Business Plan IPE Example

Accounting - The recording, classifying, summarizing, and interpreting of events of a financial nature. These events include income, expenses, and cash flow.

Accounts Payable - Trade accounts of businesses representing amounts owed for goods or services received.

Accounts Receivable - Trade accounts of businesses representing amounts due for goods sold or services rendered.

Amortization - Paying off debt in regular installments over a period of time, or deducting certain capitalized expenditures over a specified period of time.

Asset - Anything that an individual or an entity owns that has value. Cash, equipment and stocks are all considered assets.

Balance Sheet - A financial statement that includes a company’s assets and liabilities. A company's net worth is equal to its assets minus its liabilities.

Business Plan - A planning document that describes a company, its market, management team, potential, competitors and all other relevant information about how it will do business and future prospects.

Capital – (1) Assets less liabilities, representing the ownership interest in a business, (2) a stock of accumulated goods, especially at a specified time and in contrast to income received during a specified time period, (3) accumulated goods devoted to the production of goods, and (4) accumulated possessions calculated to bring income.

Capital Expenditures - Business spending on additional plant equipment and inventory.

Cash Flow - An accounting presentation showing how much of the cash generated by a business remains after both expenses (including interest) and principal repayment on loans are paid. A projected cash flow statement indicates whether the business will have cash to pay its expenses, loans, and make a profit. Cash flow can be calculated for any given period of time, normally done on a monthly basis or yearly basis.

Collateral - Something of value pledged to support the repayment of an obligation or loan. Examples include real estate and certificates of deposit.

Corporation - A form of organization that provides its owners and shareholders with certain rights and privileges, including protection from personal liability, if proper steps are followed. Corporations may take a number of forms, depending on the goals and objectives of the founders. Types include C, S and nonprofit corporations. Corporations are regarded as “persons” in the eyes of the law and may thus sue and be sued, own property, borrow money and hire employees.

Cost of Goods Sold - This term represents the cost of buying raw materials and producing the goods that a company sells. It also includes the cost of the company’s labor force and overhead costs.

Credit Score - A statistical summary of the individual pieces of information on a credit report. A credit score predicts how likely it is that a company or individual will repay debts. Lenders use credit scores to determine whether to extend credit and at what interest rate.

Depreciation - An accounting procedure that spreads the cost of purchasing an asset over the useful lifetime of the asset.

Direct Marketing - The process of sending promotional messages directly to individual consumers, rather than via a mass medium. Includes methods such as direct mail and telemarketing.

Doing Business As (DBA) - A situation in which a business owner operates a company under a different name than the one under which it is incorporated. The owner typically must file an assumed name certificate with the county in which it is located. Sole proprietorships are often DBA’s (e.g., Sam Jones DBA Sam’s Landscaping).

Employer ID Number (EIN) - An identification number assigned to businesses for taxpaying purposes by the IRS or state taxing authorities. An Employer ID Number is required for partnerships, corporations, and trusts, and it may be required for sole proprietorships that have employees. Also called a Federal ID Number or Taxpayer ID Number.

Entrepreneur - One who assumes the financial risk of the initiation, operation, and management of a given business undertaking.

Equity - An ownership interest in a business. For example, stock in a corporation represents equity in the corporation.

Feasibility Study - A preliminary study undertaken to assess whether a planned project is likely to be practical and successful and to estimate its cost.

Financial Statements - There are 3 main financial statements. They concern the financial aspects of a business:

1. Balance Sheet - A report of the status of a firm's assets, liabilities and owner's equity on a specific date.
2. Income Statement - A report of revenue and expense which shows the results of business operations or net income for a specified period of time.
3. Cash Flow - A report which analyzes the actual or projected source and disposition of cash during a past or future accounting period.

Financing - New funds provided to a business, either by way of equity infusion, or loans.

Fixed Costs - Costs of doing business, such as rent and utilities that remain generally the same regardless of the amount of sales of goods or services.

Franchising - A relationship in which the franchisor provides a licensed privilege to the franchise to do business and offers assistance in organizing, training, merchandising, marketing, and managing in return for a consideration.

GIG Economy – A labor market characterized by the prevalence of short term contracts or freelance work as a opposed to permanent jobs.

Guarantor - A person who makes a legally binding promise either to pay another person’s obligation or to perform another person’s duty if that person defaults or fails to perform.

Income Statement - A record of the financial performance of a company over a period of time. It records all the income generated by the business during the period and deducts all its expenses for the same period to arrive at net income, or the profit for the period.

Independent Contractor - A worker who works on a specific project for a specified period of time. Independent contractors are not subject to tax withholdings and usually don’t receive benefits granted to full-time employees.

Inputs. – A section in the business plan. It refers to materials, suppliers, and arrangements with suppliers. This section describes them and lists prices, volume discounts, and payment options that might influence the decision to trade with a higher-priced vendor.

Interest - An amount paid to a lender for the use of funds, or the cost of using credit or another person’s or company’s money. Interest is usually calculated as a rate per a period of time, typically a year.

Joint Venture - An agreement between two or more partners to pursue collaboratively a particular project or business, with a sharing of profits or losses.

Lease - A contract by which a tenant takes possession of office space, furniture, equipment or other property for a specified rent and specified amount of time. At the end of a lease, the property reverts back to its owner.

Letter of Credit - A document issued by a bank guaranteeing payment of a customer’s debt up to a set amount over a set period of time. Letters of credit are used extensively in international trade.

Liability - Any debt or obligation due now or potentially in the future. Liability is synonymous with legal responsibility.

Limited Liability Company (LLC) - A flexible business structure, popular with small businesses, offering owners the advantage of limited personal liability and the choice of being taxed like a partnership or a corporation.

Limited Liability Partnership (LLP) - A type of partnership that protects individual partners from personal liability for negligent acts committed by other partners and employees not under their direct control.

Loan Agreement - An agreement for the borrowing of money, typically containing pertinent terms, conditions, covenants and restrictions.

Long-Term Debt - Obligations or liabilities that a company owes in one year or more.

Market Analysis - Marketing research that yields information about the marketplace relative to the service or product.

Marketing Plan - A company plan for marketing products and services and increasing sales.

Market Share - The percentage of a product category’s sales, in dollars or units, that a particular brand, product line or company controls.

Nonprofit Corporation - A form of corporation in which no stockholder or trustee shares in profits or losses and which usually exists to accomplish some charitable or educational function. These organizations are exempt from corporate income taxes, and donations to these groups may be tax deductible.

Operating Expenses - The costs of maintaining a business. Examples include utility expenses and property taxes.

Partnership - A legal relationship existing between two or more persons or entities contractually associated as joint principals in a business.

Pre-Venture Exploration - Involves working with an individual to help them gather information about their general readiness to be an entrepreneur. It requires the entrepreneur to assess their own skills, strengths, weaknesses as well as opportunities and threats in the marketplace.

Prospecting - The process by which a business owner determines whether or not a business or an individual could qualify as a potential customer.

Return on Investment - The amount of profit based on the amount of resources used to produce it. The ability of a given investment to earn a return for its use.

SBA - The US Small Business Administration, created to help entrepreneurs form successful small business enterprises. A common misconception is that the SBA makes loans to small businesses. Generally, they don’t. Banks make loans that are guaranteed by the SBA.

Sales Tax - A tax on retail products based on a set percentage of retail cost.

Sole Proprietorship - A sole proprietorship is a one-person business that is not registered with the state as a corporation, partnership or LLC.

Sole proprietorships are so easy to set up and maintain that you may already own one without knowing it. For example, if you are a freelance photographer or writer, a craftsperson who takes jobs on a contract basis, a salesperson who receives only commissions, or an independent contractor who isn't on an employer's regular payroll, you are automatically a sole proprietor.

Sole proprietors may have to comply with local registration, business licensing, or permit laws to make the business legitimate. These business owners are personally responsible for paying both income taxes and business debts.

S-Corporation - A form of corporate organization where the profits of the entity pass through to shareholders and are taxed on their personal returns under subchapter S of the Internal Revenue Code.

Target Market - A specified audience or demographic group that an ad, product or service is intended to reach.

Telemarketing - Using the telephone to sell, promote or solicit products and services.

Trademark - A name, phrase, logo, image or combination of images used to identify and distinguish a business from others in the marketplace. The term is often used to include service marks, which apply to businesses providing services as opposed to selling products. Trademarks can be either registered or unregistered, with different levels of protection.

Venture Capital - Money used to support new or unusual commercial undertakings; equity, risk or speculative capital. This funding is provided to new or existing firms that exhibit above-average growth rates, a significant potential for market expansion and the need for additional financing for business maintenance or expansion. Venture Capital is extremely difficult to secure for a variety of reasons.

Working Capital - The difference between current assets and current liabilities. Working capital finances the cash conversion cycle of a business - the time it takes to convert raw materials to finished products to sell and receive cash.

* If the business plan would be fully funded by DVR, per DVR Self-Employment Fee Schedule, this step may be skipped.

If the start-up costs will require the consumer to financially participate, the consumer should begin submitting the plan to potential investors to secure funding to cover the start-up costs identified in the business plan. Once funding is secured this should be documented through notarized letters to DVR. This can occur simultaneously while the business plan is being submitted and reviewed by the Business Plan Review Committee (BPRC). If outside funding has not been secured prior to the BPRC review, this would be an action item for completion under initial approval.

Potential funding sources can include family, friends, banks, micro loan programs, and Social Security Administration Plans for Achieving Self-Support (PASS). See Appendix 2 for information on Social Security Administration (SSA) Plans for Achieving Self-Support, Individual Development Accounts, or Assets for Independence Act.

If potential funding is available and documentation of DVR’s potential contribution is needed to secure this funding, the consumer should proceed with submitting the business plan to the BPRC. The BPRC will need to complete their initial review prior to a collateral letter being written.

This appendix includes resources that might be helpful during the self-employment process. This list of resources is not meant to be all inclusive.

Small Business Development and Information Websites:

• AICCW - American Indian Chamber of Commerce of Wisconsin
  American Indian Chamber of Commerce of Wisconsin (AICCW) promotes economic development in Wisconsin Indian Country by offering targeted services to American Indian entrepreneurs.
• SBA - Small Business Administration:
  Support America's small businesses. The SBA connects entrepreneurs with lenders and funding to help them plan, start and grow their business
• DATCP – Department of Agriculture, Trade, and Consumer Protection :
  The Wisconsin Economic Development and Innovation Center supports the growth and success of local and regional food systems through business, farm, and rural development programs and services.
• SBDC - Small Business Development Center: at UW-Madison provides no-cost consulting and non-credit courses to help businesses from startup through growth.
• WWBIC - The Wisconsin Women's Business Initiative Corporation:
  WWBIC is an economic development corporation providing quality business education and access to capital for entrepreneurs.
• SCORE – Service Corps of Retired Executives:
  "Counselors to America's Small Business" is America's premier source of free and confidential small business advice for entrepreneurs.
• WISCAP:
  A voluntary association of Wisconsin’s 16 Community Action Agencies (CAAs) and 3 special purpose agencies that have state-wide anti-poverty missions. Provide resources and links on business development.
• Ability Funds:
  Has a number of programs and services available to entrepreneurs, many that are open to any individual in the US with a disability.
• WCCE -Local Chambers of Commerce:
  Local chambers provide networking and mentorship opportunities and play a critical role in strengthening the collective voice of their members by promoting policies at the state and local levels that will help businesses create jobs and grow the economy.
• Center for Community and Economic Development UW-Extension:
  Local Extension offices provide Small Business Support Program aims to provide support services to entrepreneurs and small businesses in their county.

Credit Score and Report:

Credit Score and Report:
Self-Employment FICO Score Request

Financing:

• Wisconsin Department of Commerce:
  Services and assistance to promote economic development.
• Minority Business Development Loan Program:
  Provides financial assistance for the start-up and expansion of minority- owned businesses in Wisconsin.
• WisLoan Loan Program

Government Sites:

• Veterans Business Development
• Wisconsin Department of Revenue: Tax information and forms for the State of Wisconsin.
• US Patent & Trademark Office.
• IRS - Internal Revenue Service
• USDA Rural Development: Promote economic development by supporting loans to businesses through banks and community-managed lending pools.
• Employment Support for People with Disabilities - Social Security: Provides information on employment support and options for individuals receiving disability benefits.

Introduction: This guidance is intended to describe DVR's policy and scope of services related to individuals wishing to pursue work as an independent contractor. An independent contractor typically does not need to market their skills or abilities to obtain outside contracts. An independent contractor is hired to render goods or services to another entity. Sometimes independent contractor work can be considered part of the "gig economy".

For individuals wishing to pursue employment as an independent contractor, DVR may support:

• training for the IPE goal (whether it's via an employer or independent contractor),
• technical assistance for understanding tax rules for independent contractor work,
• financial literacy and benefits analysis, State of WI Exam and licensure costs for the occupation (CNA exam and license, CDL license, Class A driver's license) and
• occupational tools and equipment, which could include computers, following existing fee schedules.

There can be many benefits to Independent Contractor work, along with considerations.

Benefits:

• Allows flexible work schedule (dependent upon needs of disability or other factors).
• Helps to address limited work history.
• Allows method to earn flexible income while pursuing long-range employment goal(s).
• Depending on work, can limit face to face interactions.

Counseling Considerations:

• Will need to be responsible for paying taxes (1099) and documenting business deductions.
• Impact of independent contractor income on Social Security or other public benefits.
• May need a checking account (for the deposit of monies earned).
• May need access to a computer, smart phone and/or data plan (and use of app/navigating the app/hand and finger dexterity).
• May require your own resources, including use of personal vehicle, proof of insurance, professional insurance and ability to financially maintain personal vehicle.
  • DVR will not pay fines to reinstate a license, or insurance costs related to the occupation/Independent Contractor work.
• May need to lease a chair, rent a space, and/or require business insurance, but these are not costs DVR will pay for.
• Discuss a contingency plan if an Independent Contractor work ends.

Examples of Independent Contractor Employment:

Consumer wants to drive for Uber as an independent contractor. The consumer may require technical assistance related to filing taxes and/or bookkeeping and may need assistive technology. The consumer already owns a vehicle and has insurance that meets Uber's requirements. The consumer does not have to advertise and will get all riders from Uber.

Consumer wants to work in a nail salon as an independent contractor. The consumer may require technical assistance related to filing taxes and/or bookkeeping. They may require training and licensure, face masks, a lamp, and occupational tools per the DVR fee schedule (e.g. air brush, files, clippers, nail brushes, small fan, etc.). The consumer will not advertise, and all customers will come through the salon.

Staff are encouraged to work with their supervisors when these cases arise to assist in determining the appropriate process to be used.

Examples of scenarios that require use of the Self-Employment Toolkit:

Consumer offers craft or antique resale on Facebook Marketplace, eBay. They do not have a sole source contract or contracts and need to advertise and promote on these platforms to acquire sales and business.

Consumer wants to work as a massage therapist and must lease a building space, has to purchase table, tools and equipment, requires marketing and advertising, maintain licensure and insurance.

Counseling Considerations for Independent Contract Work/Gig Economies:

Note: Occupational Tools and Equipment and Computer Purchase fee schedules should be used for gig work

• Most gig work requires use of personal vehicle (car/truck/cube van/motorcycle/bike). DVR does not purchase vehicles without an exception.
  • Proof of insurance, or other personal resources and professional insurance is required.
  • Must have valid drivers license
  • DVR will not pay fines to reinstate a license, or insurance costs related to the occupation/Independent Contractor work.
• Most companies require a background check (run by Checker)
• You work when the retailer has the order from the customer (busy times vs slow times)
  • No going out to drum up business
• Food safety/allergen concerns for driver and customer (touching food bags, drink containers, packing grocery items)
• Requirement for some food items to be transported in a food bag/catering bag/cooler
• Liability concerns (food safety, vehicle accidents)
• Car insurance coverage (personal use vs delivery driver usage considerations)
• Ongoing vehicle maintenance (gas, oil changes, repairs)
• Keeping track of mileage (tax write off)

Considerations:

• Do you own a smart phone?
• Are you familiar with using Apps on your phone? Which ones do you use most?
• Are you old enough and comfortable enough to deliver alcohol or prescription drugs?
• Would you be okay with shop-and-pay work (grocery items, personal care items)?
• Are you okay with delivering food (groceries, fast food, alcohol, frozen and cold foods/beverages)?
• Are you okay with moving and delivering larger items (grills, wheelbarrows, lumber, TVs, pallet of topsoil bags)?
• Are you able to climb stairs, have good night vision, okay to drive during inclement weather?
• Would you feel comfortable with other people in your vehicle (Uber/Lyft passengers)?
• How are your customer service skills (customers might be unhappy with your delivery)?
• Can you "multi-app" to stay busy (food delivery, passenger pick up, package pick up all in same hour/day)?