POMS Reference

Table of contents Recent changes
Contact
Back
This change was made on Mar 13, 2018. See latest version.
Text removed
Text added

SI 00870.026: Plan to Achieve Self-Support (PASS) for Self-employment – PASS Specialist

changes
← * →
  • Effective Dates: 11/10/2009 - Present
  • Effective Dates: 03/13/2018 - Present
  • TN 9 (07-00)
  • TN 14 (03-18)
  • SI 00870.026 Business Plans
  • SI 00870.026 Plan to Achieve Self-Support (PASS) for Self-employment – PASS Specialist
  • A. Background -- need for a business plan
  • A. Overview of self-employment plans
  • Self-employment can be a way for people with disabilities to circumvent some of the barriers they encounter when trying to work. Being self-employed can be extremely demanding for the person and requires the ability to plan, coordinate, communicate, raise funds and manage. Putting together a business plan helps the person address these issues very early in the process of starting a business.
  • Self-employment is a desirable PASS goal for many individuals for a variety of reasons. An individual can schedule their own hours and work around the limitations of his impairments. If an individual is considering a self-employment goal, the PASS Specialist must discuss with the individual why self-employment is preferred over working for an employer in the chosen field. A self-employment goal will most likely require additional time, dedication, and effort on the part of the individual. A self-employment goal has limitations, both financial and circumstantial, that will not work for everyone. Ongoing family and community support will be key in determining the success of the business. An individual with a self-employment goal should seek out the expertise of a third party that is familiar with the chosen field. In many instances, Vocational Rehabilitation Services may assist individuals in establishing a business and paying for some start-up expenses. An individual may want to seek out the assistance of a Work Incentive Planning and Assistance (WIPA) agency or a benefits planner.
  • B. Business plan requirement
  • Self-employment can be extremely demanding for a person. For this reason, we require both the SSA-545 (Plan for Achieving Self Support) and a detailed business plan for self-employment goals. Starting a business requires the ability to plan, coordinate, communicate, raise funds, and manage. Developing a business plan allows the individual to address these issues early in the process of staring of business.
  • The plan should address how and when the business will generate enough income to meet the applicable criteria in SI 00870.006.
  • * The plan should, at minimum address include the following items.
  • * Title page
  • The business plan should start with a title page that provides the words “Business Plan,” the name of the business and the owner’s name, the owner’s address and telephone number.
  • * Table of contents
  • The business plan should include a table of contents listing the various parts of the plan. The individual should number the pages of the plan.
  • * General description of the business
  • This part should describe the business and answer the following questions:
  • * What products or services does the business sell?
  • * What is the business name?
  • * Where will the business be located?
  • * Why did the individual choose this type of business?
  • * What skills, experience, education, and training does the individual bring to the business?
  • * What are the individual’s goals for the business?
  • * What is the action plan to achieve these goals?
  • * Marketing the business
  • Product and service description
  • * What is the product or services?
  • * What is the demand for this product or service within the individual’s geographic area?
  • Description of the market
  • * Who is the customer?
  • * How does the individual recognize potential customers?
  • * Is the business involved in a fad or a trend?
  • * How does the individual expect the market to grow or change over the next few years?
  • This section can include any market research studies by industry experts or research the individual has done.
  • * Competition
  • * Who is the competition?
  • * What are their strengths and weaknesses?
  • * How do the individual’s prices and quality compare to the competition?
  • * What advantages does the individual have over the competition?
  • * Selling Strategy
  • * How will the business deliver the product or service?
  • * How will the business price the product or service? How did the individual derive the price?
  • * What is the advertising or marketing plan?
  • * Organization
  • The individual should include information about the operation, including the management, of the business.
  • * Production
  • * Who will do the work?
  • * How many does the business employ?
  • * What relationship, if any, do the employees have with the owner?
  • * Where will the work take place?
  • * When will the business begin making the product or providing the service?
  • * What is the expected rate of production or frequency of service?
  • * Quality Control
  • * How will the business assure quality?
  • * Describe the industry standard for quality in the business.
  • * How will the business be competitive if it cannot meet or exceed the industry standard?
  • * Legal Structure
  • * What is the business structure; i.e. sole proprietorship, partnership, or incorporation?
  • * Does the individual own the business with anyone else?
  • * Are there any permits or licenses needed to operate the business?
  • * Management
  • * How will the individual manage the business on a daily basis?
  • * Who will be responsible for financial records? Will the business require a certified accountant or attorney?
  • * Will the business management change in the future?
  • * What system will the individual use to manage the records?
  • * Does the individual have a mentor or knowledgeable individual in the field to offer advice?
  • * Other issues
  • * Are there any other issues that need addressing?
  • * Does the business require insurance? If so, what type and how much coverage is required.
  • * Financial Plan
  • Costs
  • * How much will the individual earn?
  • * What equipment or supplies does the business need to run?
  • * What resources does the individual already own?
  • * How will be business be financed?
  • Cash flow projections
  • This section should include monthly projections. These projections should include the individual’s “best guess,” considering “high side” and “low side” numbers.
  • Operating budget
  • * This section should include a monthly budget for the first year.
  • * This section should also include profit and cost estimates for the duration of the PAS plan and at least one year beyond its expected completion.
  • * Supporting material
  • * This section should include any documentation to support the prior content of the business plan.
  • * This section can include such items as brochures, business cards, summaries of market research studies, and references for the individual.
  • * Business loans
  • If the individual is applying for a loan, the section should provide the following information:
  • * How much money is the individual borrowing from a third party?
  • * How will the individual use the funds from the loan?
  • * Does the individual have credit problems? If so, how will these problems be resolved?
  • NOTE: If there have been any prior agreements or discussions regarding loans with the third party, the individual should submit documentation.
  • * Evaluating the business plan
  • An individual should not delay submitting a PASS application because the business plan is not yet written or complete. The PASS Cadre can approve the initial expense of developing or evaluating a business plan. The Cadre will review the PASS after a three-month period to evaluate the business plan.
  • Do not deny a PASS because the business plan does not cover the required elements. If the individual is willing to work to amend the business plan, provide assistance or direction as needed. If appropriate, refer the individual to a third party who can help develop a detailed business plan. Such sources include the U. S. Small Business Administration and its sponsored organizations, the Service Corps of Retired Executives (SCORE) and Small Business Development Centers (SBDCs), State Vocational Rehabilitation Agencies, local chambers of commerce, local banks, and appropriate staff at local colleges and universities.
  • C. Evaluating a plan for self-employment
  • An individual can submit a PASS plan for a self-employment goal to help cover start-up expenses only. An individual’s PASS plan should not extend beyond the start-up period. Once the start-up period has ended, the individual has purchased the items included in their plan, and the individual has met the initial milestones, the plan must be bringing in sufficient profit to support on-going business expenses.
  • The PASS Cadre will consider the following when making a decision on a PASS for self-employment:
  • * Does the individual have their Ticket assigned to an Employment Network (EN) or are they working with Vocational Rehabilitation Services (obtain the Individual Employment Plan, IEP, if so).
  • * What additional capital does the individual have besides PASS funds? Do they have investors, a small business loan, or VR financial support?
  • * Does the individual have outstanding debt that would prohibit further investments in the business, or encumber the ability to cover living expenses?
  • * What additional supports does the individual have in place for their business? Do they have a partner or family support?
  • * Are all start-up expenses listed in the plan and will PASS funds be able to cover everything?
  • * Does the individual require specialized training or additional education? Is this training included in the steps (Part C) of the plan?
  • * Has the individual had a prior PASS? If so, did they follow through with milestones and accounting provisions?
  • * Does the individual have profit and loss statement? Does it show that the business will make a net profit after the start-up period? Is the profit enough to replace their Title II benefits or significantly decrease their dependence on SSI per SI 00870.006A.5.
  • * Does the individual have a representative payee? Does the payee understand the requirements of the plan? Refer to SI 00870.023C.10.a. for reporting responsibilities.
  • If the PASS Specialist cannot approve the plan for self-employment, we should re-contact the individual to inquire if he wants to amend the goal to work in the chosen field for an employer. For more information, see SI 00870.025A.3. for modification of a PASS.
  • B. Policy -- business plan required
  • D. Procedure after PASS plan is approved
  • A PASS that has an occupational goal in self-employment must include a detailed business plan that covers, at a minimum, the items shown on the outline in C. below. If not explained elsewhere in the PASS application, the business plan should address how and when enough income can be generated for the individual by the business to meet the applicable criteria in SI 00870.006A once the start-up period discussed in SI 00870.006B.4. is completed.
  • If the PASS plan is approvable, post the net earnings from self-employment to the iSEI screen and exclude the PASS/business account as a resource on the RFIA screen in MSSICS. Add remarks to both screens and on the SSR as appropriate.
  • C. Outline of a business plan
  • The Cadre will complete a progress review within six months of the approval to ensure that the individual is following the plan and meeting the milestones.
  • 1. Overview of the outline
  • The items at SI 00870.026C.2. - SI 00870.026C.7., follow an outline of a business plan, and identify the kinds of information that, at a minimum, a business plan must contain.
  • 2. Title page
  • The business plan should start with a title page. The title page should provide the following:
  • * The words, “Business Plan”
  • * Name of business and owner's name
  • * Owner's address and telephone number
  • 3. Table of contents
  • The business plan should have a table of contents listing the various parts of the plan. The pages should be numbered.
  • 4. General description of business
  • This part of the business plan should describe the business the person is interested in starting. It should answer the following questions:
  • * What services or products will be offered?
  • * What name will the business go by?
  • * Where will the business be located?
  • * Why was this business chosen?
  • * What skills and experiences does the individual bring to this business?
  • * What are the person's goals for this business?
  • * What is the action plan to achieve these goals?
  • 5. Marketing the business
  • a. Product and service description
  • This section should answer the following:
  • * What is the product or service of the business?
  • * What demand is there for that product or service?
  • b. Description of market
  • This section of the business plan should provide information about the businesses or people who will be buying the goods or services produced by the business. This section should provide answers to questions such as:
  • * Who is the customer?
  • * How does the individual know?
  • * Is the business involved in a fad or part of a trend?
  • * How does the individual expect the market to grow or change over the next few years?
  • Additionally, the section should describe any market research studies by industry experts or research the individual has done.
  • c. Competition
  • This section should list the business' competitors and identify their strengths and weaknesses. It should compare prices, product quality, etc., and explain the advantages the business will have over the competitors.
  • d. Selling strategy
  • This section of the plan should provide information as to how the business will go about pricing and selling the goods or services. It should provide information to questions such as the following:
  • * How will the business deliver the product or service?
  • * How will the product or service be priced? Based on what?
  • * What advertising will the business do?
  • * What marketing promotions will the business do?
  • 6. Organization
  • This section should provide information about the operation, including the management, of the business.
  • a. Production
  • This section should provide details concerning how the product will be made or how the service will be performed. It also should clarify who will make the product or perform the service by answering questions such as:
  • * Who will do the work?
  • * How many people will be involved?
  • * What relationship, if any, do the people have to the individual owner?
  • * Where will the work be done?
  • * When will business begin making product or providing service?
  • * What is expected rate of production or frequency of service?
  • b. Quality control
  • This section should provide information regarding the process to ensure the quality of the goods or services by providing answers to questions such as:
  • * How will the business assure quality?
  • * What is the industry standard? (Describe it.)
  • * How will the business be competitive if it can't match or better the industry standard?
  • c. Legal structure
  • This section should provide the particulars about the legal form of the business; i.e., whether it is to be a sole proprietorship, partnership, or incorporation. It should identify whether more than one person owns the business and include any agreements. It also should identify any permits or licenses needed.
  • d. Management
  • This section should identify the people involved in running the business by providing answers to questions such as:
  • * How will the business be managed day-to-day?
  • * Who will be responsible for monthly financial records? Will an accountant be involved?
  • * How will management change in the future?
  • * How will the business records be maintained?
  • * Will an attorney be involved?
  • * Are there other people to turn to for good advice? Who are they and what is their relationship to individual?
  • e. Other issues
  • This section should include any other issues that are pertinent to the business, such as the type and amount of insurance to be carried by the business.
  • 7. Financial plan
  • a. Costs
  • This section should provide details regarding the expected costs for the business. It should provide answers to questions such as:
  • * How much will the worker earn? Will production be timed and priced by unit or task completed per hour?
  • * What equipment and supplies will the business need?
  • * What resources does the business have available?
  • * What financing will be needed for the business? See e. below if the business plan is part of a request for a loan.
  • b. Cash flow projections
  • This section should include monthly projections. These projections should include the individual's “best guess,” giving “high side” and “low side” numbers.
  • c. Operating budget
  • This section should provide a monthly budget for the first year. It also should include profit and cost estimates for the duration of the PASS and at least a year beyond its expected completion.
  • d. Supporting material
  • This section should include any documentation to support the prior statements made about the business. Although not all inclusive, it should include such items as: brochures, business cards, summaries of market research studies, and references from people who know the individual or the business.
  • e. Purpose and amount of loan
  • * If a loan is to be sought, this section should provide information relative to the following:
  • * How much money is the business looking to borrow from a third party? How will the money be used?
  • * Does the individual have any credit problems? If yes, the problem should be described and an explanation included as to how the problem has been or will be resolved.
  • NOTE: If there have been any discussions with the third party, the PASS should describe the outcome of the discussions.
  • D. Procedure -- evaluating a business plan
  • Do not deny a PASS because the business plan does not cover required elements. If the individual is willing to work on the business plan, provide assistance or direction as needed. For example, in some cases, this may involve asking a few questions which the individual may know or quickly determine. Remember, the costs associated with developing a business plan, including a feasibility study for the business, can be included in the PASS.
  • If appropriate, refer the individual to a third party who can help the person develop a detailed business plan. Such sources include the U.S. Small Business Administration and its sponsored organizations, the Service Corps of Retired Executives (SCORE) and Small Business Development Centers (SBDCs), State VR agencies, local chambers of commerce, local banks, and appropriate staff at local colleges and universities.
  • The PASS Cadre will complete a progress review per SI 00870.025 each year within the first quarter, to obtain the tax return from the prior year.
The materials available at this web site are provided free of charge, for informational purposes only, and without warrant by True Link Financial, Inc., and are not legal advice or Social Security benefits advice. You should contact your attorney to obtain advice with respect to any particular issue or problem, or the Social Security Administration with any general inquiries. Click here to view this section of the POMS on the Social Security Administration website.