S ELF E MPLOYMENT F UNDAMENTALS Deb Henderson-Guenther Shannon Huff

W HAT IS SELF - EMPLOYMENT ? Selling or producing a product, or service, or both. Having profit motive. The person owns the business as a sole proprietor, general partner, LLC*** or independent contractor. Not a Cooperative or Non-Profit Sometimes referred to as microenterprise. **Individuals with SSI and Medicaid considering the LLC structure for their business should talk with a Work Incentives Benefit Specialist about this structure’s impact on SSI and Medicaid benefits.

HobbyBusiness Consistent work effort Active Marketing, & Established business processes Generates net income of $400 or more/year Profit Motive Inconsistent activity No Marketing No Business Processes No profit motive Self-Employment is an investment of effort, time, and money.

VR D ATA ON S ELF -E MPLOYMENT 2012 WI. VR data on Self-Employment  285 Open Cases with plan type Self-Employment  48 Successful Closures  35 Unsuccessful Self-Employment Closures  1.5 % of Total Successful Closures (3250 total successful closures)  61.45% of self-employment closed cases are with individuals who receive SSI/SSDI (63.18% of open cases) The average hours per week worked for the 48 consumers closed successful were hours. Maximum of 80 hours; minimum of 1 hour. The average hourly wage for the 48 consumers closed was $ Maximum of $ minimum of $7.25

The average hours per week worked for the 48 consumers closed successful were hours. The average hourly wage for the 48 consumers closed was $ Maximum of $ minimum of $7.25

L EGAL S TRUCTURES Sole Proprietor General Partner Limited Liability Company C-Corporation S- Corporation Non-profit Cooperative

B ASIC F INANCIAL T ERMINOLOGY Gross Receipts Gross Income Net Income Expenses – Fixed and Variable Cost of Goods Sold Breakeven Analysis Profit and Loss Cash flow Cash Basis vs. Accrual Basis

F EASIBILITY S TUDY Major Components: Description of Product or Service Opportunities in the Market and Strengths of the Business Owner Target Customer Market Environment and Consumer Trends Competition Research and Survey Methods used Barriers to Market Entry Regulations and Legal Considerations Start Up Requirements

F EASIBILITY S TUDY Should be more than just research on data and trends Trying the tasks, selling some Surveys Informational Interviews with similar businesses Should uncover potential barriers and challenges Difference between Viability and Feasibility

W HY A B USINESS P LAN ? Helps to organize information about the business. Helps to think through all the important factors of running a business. Written ‘proof’ that the person has learned about the business and what it will take to be successful. Spells out how to sell enough products or services to cover expenses and make money.

M AJOR C OMPONENTS OF A B USINESS P LAN Product/Service Description Marketing Plan (Details on Customers, how you will reach them and how you will compete with other businesses) Operations (How you will do what you do) Financial Plan (What you need to start and How you will make money)

E NGAGING IN S ELF -E MPLOYMENT D ISCUSSIONS Self-Assessment and Counselor Assessment Business Goal Health and Wellness Credit and Financial Legal Issues Housing and Transportation Support System

W ORK I NCENTIVES B ENEFITS P LANNING AND B USINESS P LANNING In the early stage: when considering the pros and cons of self-employment In the mid-stages: When determining income goals When exploring or accessing supports to carry out a business When developing the business plan In the final stages: When establishing bookkeeping and reporting systems

D ON ’ T P UT THE C ART B EFORE THE H ORSE I’m Doing It: What are you making or selling? Sellers Permit? Registered/Structured? Show profits and expenses? Filing taxes? Goals? I’m Interested Establish Feasibility Training & Skill Development Business Plan Establish Business Launch Business Ongoing Development of Business Acumen

E NGAGING IN S ELF -E MPLOYMENT D ISCUSSIONS Barriers will come up….what do you do?

S UPPORTS FOR B USINESS O WNERS All business owners need support of some kind. Financial Marketing Management Operations Coaching Others?

R ESOURCES FOR B USINESS P LANNING Self-Assessment Tools First Steps SBDC Courses Check lists Credit Counseling (including Student Loan Debt) Business Planning Writing the Plan Funding Sources Business Education and Supports Operations and Management Legal Issues Accounting Marketing