Policy Analysis on Micro Businesses

October 1 2005

Micro-businesses are small businesses that provide self-employment or employment to adults with developmental disabilities. These businesses are developed by Job & Community Placement Staff. They generally arise out of employment proposals with other community partners, and fill a market niche that is not occupied by many competitors.

The entrepreneurial model was developed by Denise Bissonnette (1994) and uses the concept of creating employment proposals to create jobs. Over the course of this project we have expanded this concept to incorporate the notion of creating micro businesses.

The Problem

Adults with developmental disabilities are under represented in the labour market. Research has concluded that "neither disability nor severity of disability are the primary reasons" (Roeher, 1993, p. xiii) that account for this phenomenon. People with developmental disabilities are excluded from the labour market because of systemic, situational and dispositional barriers that are articulated in public policy, program arrangements and because of the accumulation of other barriers (e.g. public perception of appropriateness of employment options) that are not addressed by public policy.

The study by the Roeher Institute (1993) found that the number one barrier facing all disabled workers was discrimination in employment practices and in gaining access to needed training and educational opportunities.

Similar studies (see Salzberg, Likins, McConaughy, & Lingngaris-Kraft, 1986) undertaken regarding the employment of persons with developmental disabilities have found that the factor most directly impacting the employability of the developmentally disabled person is the vocational competence of the worker.  The more vocationally competent people are, the more likely they will be successful when job opportunities arise.

The convergence of these barriers influences the employment of persons with developmental disabilities. Factors like the general economic climate of the community, the attitudes of employers toward disabled workers, the attitudes of supported employment program staff, and the effectiveness of these programs in job placement and training all create the elements of barriers.

Within the city of Kenora, JCP have found that the views of employers and the expectations of families remain to be an obstacle to employment opportunities. As a group, people with developmental disabilities are still thought to have little or no skills and when community organizations are approached to determine their need for volunteers they often still request to have support staff. Similarly, many employers require that an individual has proven their ability and the employer can observe vocational competence for themselves, before they consider the payment of wages.

The primary vocational option currently available for individuals with developmental disabilities is offered through the supported employment program of KACL. Supported employment programs are characterized as having paid competitive positions within the community where the supports needed by the individual worker are provided by job coaches (Cimera & Rusch, 1990, 1999). MCFS (1990) defines supported employment as follows:  Supported Employment is paid employment in an integrated, competitive work setting where on going, individualized training and support is provided to a person with a disability (p.5).

The Interventions:

The interventions that Job & Community Placement have developed to address these barriers to employment are:

1. Creating and developing training sites in the city of Kenora where local employers, in partnership with KACL, create environments where valued job experiences lead to vocational competence. (Mt.Evergreen Ski Club, Agape Table, Second Street Bakery, LOW Minor Soccer Association, JCP Lawn Care)

2. Creating small micro business on behalf of persons with disabilities so that valued training experiences building vocational competence can be accumulated.

3. Creating opportunities for small business initiatives of persons with disabilities by providing "micro credit" for start up costs incurred through JCP program funds, and/or Kenora Association for Community Living reserve funds.

4. Providing intensive support in order to develop vocational competence by creating habits and expectations on the part of persons with developmental disabilities in the 4 areas of essential employment skills. These skill areas address the multiple situational, dispositional and institutional barriers faced by the consumers of Kenora Association for Community Living as they pursue jobs and careers.

Job Responsibility (i.e. behaviours that suggest a commitment to the job, punctuality, low absenteeism and working continuously as job tasks);

Task Competence (working to the standards for accuracy or competence established by the enterprise or organization);

Social Vocational Competence (refers to the adequacy of a person's interactions with co-workers or supervisors, the ability to get along with others); and

Personal Power personal motivation and career planning skills (refers to the personal, or dispositional barriers to employment faced by many people with limited vocational experience, including fears, depressed motivation to work, and unclear aspirations).

What we have learned from the development of micro businesses.

The Meaning and Value of Work

The outcomes of developing a micro business on behalf of a consumer must be considered in both economic and other terms. First, if the activities of running the business are considered, in part, as a small business, and in part as an opportunity for JCP to develop a training site for other consumers working on skills in the 4 areas of vocational competence, then we have found that the businesses can be viable. Second, while is it unlikely that the income derived from any of the businesses developed will be sufficient to replace the income support provided through ODSP, the income derived does provide an opportunity for lifestyle enhancement while living on ODSP.

The outcomes that cannot be accounted for in purely economic terms speak to the meaning and value of work in people’s lives. The value and benefits of employment must therefore be seen within the context of broader social, economic and political concerns. Wages earned are one obvious and important variable; however, other factors, such as acceptance by others in public work spaces, being seen in a valued social role and demonstrating vocational competence to others, the enhancement in selfesteem and the effect of having meaning and purpose in one's life and the impact of that on overall wellness must also be considered. During the course of this project all these factors were observed in the behaviour of consumers:

An individual created a book about her small business that demanded she take many risks as a learner. Previously she was reluctant to challenge herself with learning tasks that posed some risk to her ego.

Another individual was hospitalized for an episode of mental illness. His psychiatrist reported that the individual's desire to return to work helped him with his recovery and discharged from the hospital. The same individual calls himself a "working man", which he has high esteem in his family where the work ethic is deeply entrenched. His understanding of himself as a man cues his self-management of his behaviour, which has been a significant barrier to traditional employment and community living. This was previously not part of the individual's self-identity.

Another individual has demonstrated almost complete independence on the work site where he manages the stocking of a coke machine. He is increasingly showing that this independence is generalizing to other vocational and community settings, and it demonstrates a significant improvement in his vocational competency in all 4 areas since his involvement with the program.

Another individual made the calls and contacts to potential customers in his snow shovel business this winter. Previously his barriers to employment in the area of social competence made this type of activity difficult for him. His motivation to earn money this winter in a business that he was completely in charge of helped him take the risks involved in contacting people.

Another individual is seen as competent and in charge at the concession stand he runs during the McDonald's Minor Soccer Schedule. An approach has been made (to JCP) to have him run the concession at the Keewatin Arena this summer as a direct result of his visibility in the community to large numbers of people (over 300 children enrolled in each of 4 age categories, and their families).

Systemic Barriers to Self-Employment for Adults with Developmental Disabilities

Systemic barriers to self- employment include the influences of systems and program or public policy (Quigley, 1997) on these opportunities. These types of barriers were found to be significant in our attempts to set up micro-businesses. They are detailed here, and include how we overcame them, or the ongoing problem they are causing.

-Must be applied for from the City of Kenora.

-The license type is determined by the City of Kenora.

-City Contact is Sandy Ratacliffe.

-Information about business licenses, by-laws and applications forms are available at www.city.kenora.

-The cost ranges between $65 and $100, and must be renewed each year.

Business License Requirements:

Type of business determined.

3-4 days approval.

Requires a business name.

Requires a business bank account.

Requires a person's name to register the business in.

Requires a CPIC at the same time, from KPS at a cost of $21. This caused a problem when two consumers were being considered to work together in a business. This is often necessary because of dispositional and situational barriers that persons with developmental disabilities often face when considering employment (i.e., med effects, health concerns, problems with transportation, time restrictions imposed by caregivers etc)

This is an application to register the name of the business. It is done at the Land Titles Office.

Fee $60

Title Search:$15-20

Have to register a business every 5 years.

As soon as a business has a name, other than just a person’s name it must be registered. E.g.. As soon as the word shredding is added to an individual’s name it needed to be registered.

WSIB

If your business has employees or sub-contractors you need to pay WSIB premiums.

All information to apply is available on WSIB website. It is a very easy process on-line.

The application requires information contained on the business license, and personal information about the business owner.

Premiums are paid yearly.

WSIB covers injuries to workers incurred while performing the duties of a worker of the business.

As an example, a local Shredding micro business pays $500/year, based on annual income of $5000, and covers 8 workers. WSIB's first aid requirement is covered by the presence of JCP staff at the job site but would otherwise create a severe problem. Kenora Association for Community Living's WSIB premiums cover JCP staff.

JCP provided training on behalf of the business to all sub-contractors working for the shredding business.  Information is posted in symbolized format, and a package was sent home to caregivers of all sub-contracted workers.

Liability insurance covers injuries, accidents on the work site of a small business. This was researched on behalf of a shredding business because her small business required a permanent location for shredding and storing paper.

Insurance broker advised us that because of trends in the insurance industry it was difficult to obtain insurance for this type of business at an affordable rate. The issue seems to be the fact that the business deals with confidential information that could cause the shredding company to be sued if information was made public. Any company willing to take on that type of business risk would only do so at annual premiums that are beyond the ability of the business to cover. Liability coverage was obtained through a rider on Kenora Association for Community Living’s insurance policy at an annual cost of $400.The rationale for allowing this:

Loans:

Loan payments are considered a legitimate business expense by ODSP.

ODSP must approve the consumer receiving a business loan. In this case ODSP requires a business profile (similar to a business plan) to be submitted.

Someone on ODSP operating a small business is allowed to have $5000 in personal cash and assets, as well as $20,000 in business assets and cash.

Expenses: small business owned by a consumer is allowed to deduct certain business expenses. The cost of wages to sub-contractors or employees is not considered a business expense. This requirement made it necessary to transfer ownership of the shredding business to a member of the public whose daughter was employed in the business.

Earnings: The problem of consumers and their families being unwilling to earn above $160 per month is on-going. We have offered plain language and verbal instruction to consumers to help them understand that it is ultimately in their best interest to earn more than this amount. The issue seems to be one of being able to hang on to earnings for the purpose of pre-planned expenses when the predictable and budgeted amount of ODSP allowances are adjusted downward. The budgets of consumers are generally very tight and very inflexible. Overall, once our consumers gain access to the labour market, many require forms of income support to meet their disability-related costs and they have a concern that they will lose them if they earn "too much".

Generally, all of these small businesses require the on-going support of someone to ensure that the business survives. This includes the market research, preparation of the business plan, applying for licenses and other regulatory requirements, preparing employment proposals, inventory management, financial management, ordering, paying sub-contractors and paying bills for business expenses, preparation of monthly Employment/Training Income support forms, dealing with ODSP personnel, dealing with customers, and approaching families for their support to the plan. To date, JCP has been the support to the consumers in these small enterprises.

Additional Issues

Possible New Actions:

Lobby with provincial parties regarding the ODSP barrier to considering wages of ODSP recipients as claimable business expenses.

Consider micro-loans on a more formalized basis with Kenora Association for Community Living Board of Directors.

Preparation of business plans for all self-employment options.

Research ODSP regulations regarding self-employment.

Consider JCP as a business license holder for multiple ventures.

References

(Cimera & Rusch, 1990, 1999). Cited in Salzberg et al

Denise Bissonnette (1994).Beyond traditional job development: The art of creating opportunity. Milt Wright & Associates Inc:San Francisco.

RoeherInstitute (1993).On target Canada's employment-related programs for persons with disabilities.

Salzberg, C.,Likins, M., McConaughy, E., & Lingngaris-Kraft, B. (1986).Social Competence and Employment of Retarded Persons. International Review of Research in Mental Retardation, 14, p. 225-257.

Quigley, A.(1997)Rethinking literacy education, Jossey Bass: Francisco