§ 7136.8. Self-Employment; Assessment of the Proposed Small Business.

(a) The summary of the proposed small business, prepared by the eligible individual as part of the Individualized Plan for Employment (IPE) development, as specified in Section 7136.5(c) of these regulations, shall include:

(1) The proposed products or services of the small business;

(2) The projected monthly income and expenses of the small business for the first 12 months of operation;

(3) The number of hours the individual will work in the small business on a monthly basis;

(4) The initial costs necessary to establish the proposed small business;

(5) The individual's resources;

(6) The market analysis and marketing strategy for the small business; and

(7) The staffing requirements of the small business.

(b) The eligible individual shall be required to prepare a Small Business Plan when:

(1) More detailed information regarding the proposed small business, beyond the information in the summary, is necessary to assess whether the proposed small business to be operated by the individual is reasonably likely to produce sufficient income, as specified in Section 7136.6(b)(2) of these regulations; or

(2) Preparation of such a plan will provide additional information that is necessary to identify the nature and scope of vocational rehabilitation services to be provided to assist the individual to be employed in the proposed self-employment setting.

(c) An eligible individual may elect to prepare a Small Business Plan, when not required to do so by the Department pursuant to subsection (b) of this section, when such a plan would assist the individual in obtaining resources necessary to establish or operate the business or in managing the business.

(d) The Department shall provide consultation and technical assistance necessary to assist the eligible individual in preparing or revising a Small Business Plan, through its staff or by referral to other sources such as the U.S. Small Business Administration, a small business development center at a local community college, Service Corps of Retired Executives (SCORE) or a Small Business Consultant.

(e) A Small Business Plan shall include:

(1) A description of the proposed small business and the products or services to be provided;

(2) The form of business organization;

(3) A detailed market analysis, including identification of potential customers, the geographic area in which the business will provide products or services, and potential competition within the area;

(4) A plan that describes how the products or services will be distributed and advertised;

(5) A projected timetable for starting business operations and an estimate of anticipated work hours before operations begin;

(6) A financial plan that includes a projection of estimated sales, monthly income and operating expenses for the first year of operation, an itemization of the costs necessary to establish the business, and an estimate of when the business will produce income that exceeds operating expenses;

(7) A description of required licenses, permits, or zoning variances and insurance;

(8) A description of the vocational rehabilitation services the individual is requesting from the Department, consistent with these regulations; the resources that will be obtained from other sources to establish and operate the small business; how the ongoing operating expenses of the small business will be funded, whether through the projected business income, loans, or other sources; and how the individual will provide for basic living expenses until the small business produces sufficient income, as specified in Section 7136.6(b)(2) of these regulations; and

(9) A description of the tasks to be performed by the individual in operating the business and anticipated hours that the individual will be required to work to obtain projected income.

(f) The Small Business Plan and any other available information shall be reviewed by the Rehabilitation Counselor (RC), with the assistance of other Department staff with expertise in self-employment, and/or a Small Business Consultant, as appropriate, to assess whether the proposed small business is reasonably likely to provide sufficient income to meet the ongoing operating costs of the business and generate income for the individual as specified in Section 7136.6(b)(2) of these regulations, including review of the following criteria:

(1) Whether the small business is reasonably likely to produce the projected income, including whether the products or services can be produced, marketed and/or distributed, whether a market exists for the product or services, whether the small business will be able to produce the product or services in the projected quantities, and whether the projected income of the proposed small business is consistent with industry standards (i.e., prevailing income of comparable small businesses within the same industry);

(2) Whether the projected ongoing operating expenses are necessary for the operation of the business, whether they are usual and customary for similar businesses, and whether they are sufficient in amount to generate the projected products or services;

(3) Whether the proposed income of the small business is sufficient to pay for the projected ongoing operational expenses;

(4) Whether the small business is subject to potential liability, risks or insurance requirements that will negatively affect the projected income;

(5) Whether the projected initial costs are necessary and are usual and customary for similar small businesses;

(6) Whether all resources necessary to establish and operate the small business have been identified, including funding sources for the ongoing operating expenses of the small business and the individual's basic living expenses; and

(7) Any other factors that would affect the projected income or expenses associated with the small business, or the individual's ability to establish and operate the business.

(g) For the purpose of a self-employment setting, ongoing operating expenses of a small business include but are not limited to: rent; utilities; insurance; professional services; payroll and payroll taxes; inventory; stock or supplies (above and beyond initial stock and supplies provided for a period of six months as initial costs); advertising; depreciation; repair and maintenance of property; replacement of tools and equipment; dues and subscriptions; assistive services, such as attendants, readers, and interpreters that will be used in operating the business; and transportation that will be used in operating the business.

(h) If it is determined, after assessment of the proposed small business, that the self-employment setting is not appropriate because it will not generate sufficient income, as specified in Section 7136.6(b)(2) of these regulations, the RC and the individual shall discuss alternative employment settings, and the IPE shall be developed, or amended, consistent with Section 7136.5(g) of these regulations.

HISTORY

1. New section filed 2-28-2008; operative 3-29-2008 (Register 2008, No. 9).

Note

Note: Authority cited: Sections 19006 and 19016, Welfare and Institutions Code. Reference: 29 USC Sections 705(2)(B), 705(11), 720(a)(2), 720(a)(3), 721(a)(19), 722(b), 722(d) and 723(a); 34 CFR Sections 361.1, 361.5(b)(6)(ii), 361.5(b)(11), 361.5(b)(15), 361.5(b)(16), 361.13(c), 361.45, 361.46, 361.48, 361.50 and 361.52; and Section 19011, Welfare and Institutions Code.