Kentucky State Policies & Resources
Kentucky Office of Vocational Rehabilitation
Policy Summary on Self-Employment:
Kentucky VR defines self-employment as “a consumer-owned business, profession, or trade that sells goods or services for the purpose of making a profit.” Home-based businesses, or businesses that are consumer-owned and operated from the consumer’s residence, are regarded as a form of self-employment. Home-based corporate employment, wherein the consumer works for an employer by telecommuting, is not considered self-employment, nor is subcontract work.
Consumers interested in self-employment must first review Kentucky VR’s “Self-Employment Rehabilitation Process Form” with their VR Counselor. Afterward, the Counselor provides the consumer with assessment, guidance, and counseling services related to the self-employment process and facilitates a discussion about self-employment by gathering information about the proposed business idea, any related training or experience the consumer has, and the consumer’s financial goals and informing the consumer of the qualities required for successful entrepreneurship (e.g., good interpersonal skills, flexibility, and initiative). Early in the process, the consumer must undergo three assessments:
1. Vocational goal assessment: Evaluates the consumer’s strengths, resources, interests, and capabilities. Counselors use this assessment to ensure informed choice and to determine whether the consumer’s self-employment goal is appropriate for them.
2. Assessment of aptitude for self-employment: The Counselor and a business consultant determine the extent to which the consumer is prepared for small business ownership. As part of the assessment, the consumer must complete classes on starting a business and may be referred to other trainings and resources as well.
3. Feasibility Checklist and Feasibility Study: The Counselor completes a Feasibility Checklist, and the consumer completes a Feasibility Study. More detailed analyses of the consumer’s financial situation (credit score referral, benefits analysis, asset development) may be performed during this stage as well. Consumers submit the feasibility study and any other required documentation to the Counselor, who reviews it using the Agency Self-Employment Feasibility Review Form, and, if the study is acceptable, sends it to a business consultant for further evaluation and suggestions. Evaluation of the feasibility study includes consideration of the consumer’s experience in the business area, their support network, their understanding of their financial needs, goals, and benefits; and their knowledge of potential competitors and market demand. The study must be okayed by both the Counselor and the Consultant before the Business Plan can be written.
Once the Feasibility Study is approved, the consumer must write a business plan, with the support of small business consultants if needed. All business plans must include an executive summary, a description of the product or service, market and industry analyses, marketing and financial plans, production cost estimations, and an outline of the business’s management structure.
VR funding for the consumer’s business is organized in three tiers based on the level of funding required.
1. Tier I: Start-up costs of $1,000 or less; VR funding of up to $1,000
2. Tier II: Start-up costs between $1,000 and $5,000; VR funding of up to $5,000.
3. Tier III: Start up costs between $5,000 and $60,000. VR may fund the first $5,000, plus 50% of start-up costs up to $10,000, and 5% of any costs above $10,000. Consumers are responsible for securing any additional funding required.
Consumers seeking Tier II or Tier III funding must complete training in areas related to exploring business ideas, business start-up, marketing, and finance. Business plans requesting tier III funding must also be approved by the Business Consultant, District Branch Manager, and the Self-Employment Coordinator. Any tier III plan requesting more than $10,000 in start-up funding must be granted a policy exception by the District Branch Manager, Self-Employment Coordinator, and the Director of Program Services. VR will not pay for franchise fees, businesses based on speculative investing, non-profits, permanent alterations to rented property, the purchase of real estate, or the refinancing of preexisting debt.
A business owner who has been self-employed for one or more years prior to applying for VR services is considered a “maintain” self-employment case. The VR Counselor assigned to the case must decide whether the business meets the definition of competitive integrated employment. To do so, they evaluate the business using Kentucky VR’s Existing Business Checklist, referencing Federal Regulations, and reviewing up to three years of tax records and two months of bank statements.
If the business meets the definition of competitive integrated employment and the Counselor deems it an appropriate work goal, the Counselor gathers additional information on the business. This involves completing a business feasibility study worksheet, obtaining a copy of the business plan, and having both evaluated by an approved vendor. If the business does not meet the definition of competitive integrated employment, is determined to be a hobby, or it is not an appropriate work goal, the Counselor works with the consumer to establish a more realistic vocational goal. Otherwise, the consumer and Counselor work together to develop an Individualized Plan for Employment (IPE); disability-related services the consumer may receive VR assistance with are listed in the IPE.
A case is closed when VR has finished delivering planned services and the business is deemed stable. Stability is ideally defined as a situation in which the business’s revenues have been equal to or higher than its operating costs for at least a year. During that time, the consumer should have earned enough money to cover their expenses without any outside support.
The following downloadable PDF contains statewide self-employment resources and links for people with disabilities.