Business Guide

Lesson Two
Start-up Considerations

This lesson will discuss the basic startup and operational considerations of an advocacy service.  Please understand that we at Disability Associates have no way of determining each student's level of business expertise.  For this reason, we must keep our business presentation as simple as possible for the beginner. 


The Advocacy Business:

Regardless of the type of business you enter, a wise entrepreneurial manager must carefully evaluate the cost of his venture in three dimensions. Those dimensions are time, space and monetary resources. The Disability Advocacy business is no different!

Most businesses in the US fail because they lack adequate initial funding and/or they are poorly managed.  Inadequate funding is the result of incomplete planning on the part of the manager and is so important that we’ll discuss it first. 

We’ll try to reduce the negative effects of any planning pitfall by performing much of the basic groundwork for you in our training course.  However, it will not be possible for us to hold your hand during normal day-to-day operations.  Therefore, you must always keep abreast of what is occurring in your company and at least try and stay cognizant of events within the Social Security system.  We make this task a little easier with our membership approach to student support. 


Business Entity:

A business entity, also known as a legal structure is defined as the type of business you create under the law.  At the very start of a business, the owner must decide what type of business entity he/she she will create.  The type of business entity you choose will most likely be based upon three important considerations.  These considerations are:

1. Liability – In business, the term liability speaks to the level of business risk a person must undertake in order to operate the business successfully.  Fortunately, in the field of disability advocacy, the risk of a law suit from an applicant is reasonably low.  The reasons for this low level of liability are many.  However, the most important reason is the fee structure upon which Social Security allows a representative to be paid.  Since fees are only paid for successful cases, this greatly reduces the probability that a suit will occur.
    
2. Availability of funds – I’m sure you know that there is a cost to becoming and operating a business.  These costs are increased depending upon the type of business entity you become.  For example, there are usually greater costs to operating a C- Corporation when compared to operating an S- Corporation.  Therefore, if your budget is tight, it would make good sense to begin your service as a lower costs entity.  You can always change entity designation at a later time. 
    

3. Tax considerations – Depending upon your tax situation, you may wish to use a business entity that provides more tax loopholes and incentives.   

We recommend that new disability advocates begin their service as a sole-proprietorship.  The sole-proprietorship is the cheapest and easiest legal structure to create and it does not require an attorney to create.  The sole-proprietorship has few reporting requirements and is relatively easy to handle at tax time.

Creating a sole-proprietorship can usually be accomplished quickly with an average cost of less than $150.  To create a sole-proprietorship, write a letter, two or three paragraphs in length, explaining the basic purpose and primary service offered by your company.  Take that letter to your local business registration office.  Fill out any required forms and pay the fee. Your advocacy service is now legal in your state of registration and you can begin your practice. 

Since all states are different, it's a good idea to seek out any special legal requirements in your state.  For example, some states require that you have a consultant’s license.  If this is the case, do what is required to get this license so that you can practice legally in your state.

The Initial Investment:

We have claimed in our ads that disability advocacy can be started with a fairly low initial investment.  Now that you have purchased this course, we’re not about to change our tone.  We will list the more common budgetary considerations later in this lesson.  Here is a generalization of the more important budgetary items to consider:

a)  Decide how much you’re willing to invest in the start-up of your company.  What you're creating here is essentially an operational budget.  If possible, it’s a good idea to set aside these funds and try to stay within the amount your have budgeted.  

b)  Decide how your funds can best be spent to bring in the maximum amount of benefit and exposure to your business.

c)  Start small and build gradually.  Rapid growth of your business can be as dangerous to business success as inadequate funding.

The above budgetary approach may sound elementary, but you’d be surprised at how many entrepreneurs totally ignore them and suffer failure as a result. 

Budgetary Basics

This segment contains a list of basic equipment and services you’ll need to operate your advocacy service.  You’ll be pleasantly surprised at just how little you need to operate this type of business.  Each item below will be explained in detail to assure that you understand why we have made these recommendations.

1. Home or Apartment Office:

Disability Associates recommends that you start this business from your home if you do not already have an exterior office location.  The reason for this recommendation is to reduce and control facility overhead to that which you would have been paying anyway.

Use your home office space exclusively for business so that the area can be written off against income produced by your service. The new tax laws allow home office write offs only against net earned income generated by the company's bottom line. For example, if your company earns $1000 after expenses, you may then deduct up to $1000 in office expenses.

Office expenses can also include such items as space modification and utility costs. These expenses are usually written off as a calculated percentage of that part of your home used exclusively as an office.  Therefore, if you make improvements to your home, you can only usually write off that portion related to the business area. 

Example:  If 25% of your home is used exclusively for business, you may write off up to 25% of the overall mortgage, rent, modifications, utility costs and property taxes during the time period the business was actually operational.

If you have never been in business before, we recommend that you acquire a free copy of the IRS Small Business Tax Guide. This text guide can be acquired from any IRS tax assistance office. We also recommend a basic business start-up text such as the Idiot's Guide or the Dummies Guide to starting a business. These types of basic business texts are extremely helpful to the beginner entrepreneur.

2. Licenses and Permits:

To our knowledge, there are no special licenses or permits required to perform as a disability representative in most states.  However, in most states you are required to register your company as a business before beginning operations.  Check into whether a consulting license or special permit is required in your state.  Usually if a consulting license is required, it is not very expensive. Take the time to look into and follow the specific licensing regulations in your state.

3. Liability Insurance:

Liability insurance protects the advocate against claimant lawsuits.  A malpractice suit associated with disability representative is highly unlikely, although not impossible.  In my many years of service to this industry, my company has never come close to being sued by a client.  It is for this reason that we do not recommend spending additional funds on insurance in the beginning stages of your service.  If this course is used properly, legal struggles with customers are not likely to occur. 

The greatest protection you have against legal action is associated with Social Security’s restrictive fee structure.  Social Security’s fee structure does not allow for a fee unless the case is won.  If you win the case, there is little or no reason why the client would sue you.  You can further protect yourself by using protective clauses in your service contract.

Social Security does not require that you purchase liability insurance unless you plan to be certified through their office.  Certification is optional and you must have experience before you can take Social Security’s examination.  See our article on this subject in the Executive web under special subjects.

4. Accounting and Taxes:

Some of you may be new to business and are not familiar with basic accounting and bookkeeping procedures.  If this sounds like you, we recommend that you utilize the services of a private bookkeeping service or purchase a text on basic accounting.  There are many local bookkeeping services that are both convenient and inexpensive.  These services can do a fine job handling your business related paperwork if you can’t do it for yourself.

Check the accounting or bookkeeping company's background before signing on. Make sure that the person your hire can handle an audit. You’ll also need a basic bookkeeping program like Quick Books Pro or Peachtree.  Either of these bookkeeping programs is excellent!

Most bookkeeping services usually ask that you keep all receipts associated with your business and deliver them to the service on a monthly basis. If you have a computer program, records can be exchanged by simply making a printed copy of all monthly transactions or copying the monthly data to a disk and handing it to your accountant. Utilizing a bookkeeping service will free up your time to concentrate on developing your advocacy skills. Cost for this service should not exceed $100.00 per month.

Be sure to set aside up to $300 for your end-of-the-year tax and accounting services. Keep your company books up-to-date and easy to understand.  In bookkeeping there is an old saying, "Keeping it simple also keeps you safe - from the IRS."

5. Printing and Supplies:

Operating your service will also require a computer with word processing software, bonded paper, pens and envelopes. If you’re using our software, you’ll need to stick with the Windows XP operating system.  You may also want to produce a bordered newspaper or magazine ad in the form of a slick that can be used repeatedly. You may also want to create a letterhead for correspondence with your customers, medical sources and Social Security.  Since we really have nothing new to offer on the subject of printing and supplies from that provided in the DA pro, we’ll end this section here.

6. Equipment:

Other than a phone, desk, computer, printer and fax, equipment needs for this service are minimal. Your greatest expense will be in document control equipment like a home computer and a secure file.  Most office equipment, including furnishings purchased solely for business use can be deducted or depreciated.

You also have the option of leasing or renting whatever equipment you need until you become confident in your service's ability to succeed.  Leasing allows you to write off each monthly payment as a direct business expense. You can always return the equipment if the business fails which is highly unlikely in the field of disability advocacy.   

Although a short term lease will protect you from committing large sums of money, it is also more expensive in the long term.  If you're looking to save money in the short term, then consider leasing as an alternative.

Most types of equipment can be depreciated over time or written off in one lump sum up to a specified IRS limit. Equipment deductions alone can save thousands of dollars off your tax bill even before you acquire your first customer.  Make sure your business has the proper legal designation when appreciating equipment.  Every person’s financial circumstance is different.  Be sure to visit your accountant to determine exactly how you should proceed from a tax standpoint.   

7. Reference Materials:

Please note that the materials mentioned below are optional and are not required to practice disability advocacy.  However, these materials can be extremely helpful for improving the quality of your service.  You may wish to purchase the following additional reference materials:

The Merck Manual:

This text is highly recommended.  When practicing as a disability advocate, you’ll be exposed to numerous diseases suffered by claimants. Unless you’re a MD or some other type of medical professional, you’ll need to educate yourself about these conditions. The best way to learn about any medical condition is to read about it. 

The Merck Manual costs around $35.00 and can be purchased at any University or Campus bookstore. You can also order this text online or directly from the Merck Pharmaceutical Company. 

If you’re unable to find a Merck Manual, you may use any medical text that defines in simple terms, common medical conditions.  Look for a text that uses layman's terms as well as medical terminology in describing common medical disorders.  We also provide a direct link to the Merck Manual online through our Advocate Client Manager Pro software.  If you have the ACM Pro, there is no need to purchase the Merck Manual.

As part of your training package, we provide the Diagnostic Restrictions Guide and the Social Security Disability Guide.  The SSDG contains some very useful medical reference materials covering all fourteen of the medical categories of disease.  We use the SSDG in conjunction with our Systems Explorer.

A Medical Dictionary:

Almost any medical dictionary can be used as a source of term definitions and medical terminology.  The medical dictionary you choose is purely a matter of choice.  However, we highly recommend that you have a medical dictionary available when practicing disability advocacy.

8. Inventory:

There is no inventory to worry about in disability advocacy. You need only to keep a supply of the required forms to be available when needed. 

SSA Forms: 

Social Security rules state that you must use an original SSA form when making application for disability benefits.  The good News is that with the advent of the Internet, all this is changing quickly. You can acquire forms by visiting www.SSA.gov online or by visiting your nearest Social Security District Office. 

Ask for forms by their functional name instead of by number.  Don't be surprised if an Social Security employee has no idea what form number you need.  If Social Security refuses to meet your request, complain to the next highest-ranking person in the office.  If you’re unsure of the form name or number, describe the function of the form.  Form numbers do change occasionally; so don't panic if the form number has been updated. Remember, you’re dealing with government!

Disability Associates also provides a direct link to several of the most common forms used in the disability process.  You can access these forms and fill them out on your desktop if you have access to our Forms Buddy website. 

In some situations, writing a letter can substitute for a particular form if you spell out exactly what your desires are and the purpose of the correspondence.  For example, you can present the claimant's past work history on the 3369 Vocational Report form or you can present the information in a narrative letter. Both are valid.

9. Advertising and Promotion:

Promoting your service is an important aspect to creating a successful advocacy service.  However, you’re not obligated to destroy your budget in the attempt to acquire customer. There are many well-accepted marketing methods that can be applied to this service.  Most of our advocate trainees do just fine using one or more of our community based approaches to attracting customer.  The point I'm make is that there is no one way to promote an advocacy business! 

One of the best ways to assure the success of a new business is to maximize your community exposure with consideration of those who live within that community.  We at Disability Associates refer to this marketing philosophy as a community based marketing approach.  We discuss the concept of community based marketing in several segments of our course.  The techniques themselves for community based marketing are discussed in the Marketing Manual.

The marketing of an advocacy service is usually of great concern to new students. As in any business, success in disability advocacy is determined as much by marketing strategy as it is by perseverance and hard work. To save money, instead of purchased advertising, we suggest that you use Public Relations, agency referrals and e-marketing approaches in the early stages of your service.  We provide a mini-course in public relations advertising on the Executive Website.  We also provide our complete basic marketing course in the Marketing Manual.  Whatever marketing approach you decide to use, stick to it! Continually expose your service to the public even if you find plenty of business using referral techniques.

Generally, in the early stages of a business, more advertising is needed.  The purpose behind any marketing approach you use must be to gain exposure in your community.  As your service matures, you will depend less on paid advertising and more on community referrals and pure PR.  However, initial advertising can create valuable public exposure for your service without much effort.  The more a customer hears about your service, the more likely he/she is to trust and utilize it.

When I first began my career in disability advocacy, the first major challenge to my success was whether or not I could market this service.  My first step was to sit down and realistically analyze my own financial circumstance.

The primary question was:  How much money can I afford to put into a marketing campaign?  I had less than $1000 at that time.  Of course, that was more than eighteen years ago.  It was clear that I would have to use multiple creative approaches if I wanted my unique service to succeed.  Keep in mind that at the time, I had never heard of PR.

My concern was how does one get noticed on a $1000 budget?  Here is how I began!  No matter what area of the country you live in, there is a nearby Social Security District Office. The Social Security District Office is the primary site where applicants apply for disability benefits.

I quickly discovered that Social Security had no intention of allowing me to approach potential customers in the Social Security office itself.  But, outside was another story.  I took an aggressive multilevel approach to marketing that proved to be extremely successful at the time.  I created a nicely designed brochure and business card combination with a simple message on the back that introduced my company name, service and concept. It went something like this:

I also used this ad and continue to use it today:

After a few days, a Social Security official came outside and began telling me that I cannot hand out cards in front of the Social Security Office.  So, I went across the street.  After a while, I was again asked to leave.  However, by that time, I had handed out over 500 cards. 

I then hired an attractive young lady and had her start the hand out process all over again.  My helper was instructed to dress conservatively and note those people exiting the Social Security office.  She was instructed to offer my card everyone exiting the office not wearing a suite.  I told her to pay special attention to anyone leaving the office who appeared unhappy.  The young lady's time was very inexpensive and the approach worked well.  She put in less than twenty hours total with over 100 eventual contacts.

She passed out my cards for another two weeks before they asked her to move on.  However, by then, I had reached by objective. 

The above approaches put my fledgling company on the map overnight and the phone has never stopped ringing since. But, I didn't stop there!  I then sent out a four-page direct mail flyer and brochure that introduced my service to the local community by zip code. You use zip codes to focus your marketing to the middle class custom.  You’ll learn why later in your training.  I simultaneously sent letters to advocacy organizations such as the United Way and to as many medical related organizations as I could find. This resulted in meetings and presentations about disability advocacy and my service.

What I learned:

The most important lesson I learned in those early years of marketing was that I couldn't take it for granted that people will understand the value of this unique service.  To be successful, you must be willing to educate the public as to the benefits of utilizing a advocate when applying for disability benefits.

Marketing VS Advertising

The approach I described above was the result of a marketing plan.  A successful advertising campaign must begin with a plan that is based on the specific demographic characteristics of your community.  A marketing approach, especially advertising, should begin with local sources such as Newspapers, city magazines, thrift papers, flyers, Cab signs and of course a Web site.  However, you should not be in a hurry to use these paid advertising sources. 

It is my opinion that you’ll do just as well advertising your service using medical sources.  And, if you approach them correctly, you won’t have to pay them a dime.  The secret is mutual benefit.  You’ll direct customer in their direction if they will direct client’s to you. 

I also found that small local radio campaigns are fantastic for beginner advocates.  It is a quick and easy way to get your name ringing in the ears of potential customers. Bordered ads in the classified sections of your local Newspaper are one of the least effective methods of fining new customers.  If you must use this approach, best in small towns, start with the Sunday and Wednesday editions only and chart the results.

Be aggressive, but don't be foolish!  Unless you have the cash available, hold off on expensive media buys. Try getting some free exposure by letting your local News channel know about your service.  Disability advocacy is such a unique public service that you’ll be amazed at its newsworthiness.

Try requesting free airtime on your local public access channel to explain the concept of disability representation. You would be surprised at the number of people who actually watch these types of channels for community-based information.

Using your business card or brochure, you can quickly introduce your service to a large segment of the general population. Try creating a business card that doubles as an advertising tool by placing your primary message on the back of the card.

The header message you use in your cards and brochures can be the exact statements made in your short print ads. This message approach works well and will prevent claimants from ignoring or throwing away your card. 

Speaking of marketing messages, here is a product that may be extremely useful in presenting your service to the public.  It's called the CPT or Customer Presentation Tapes.  All students are provided with an uncut version of the CPT at no additional charge.  We also offer a dissected version of the CPT that enables you to use prerecorded segments of this ad in many different ways.  If you're an Executive member, you already have access to the dissected version.  Non executive students can either upgrade to the Executive course or purchase the dissected CPT version using the link below:

Dissected Customer Presentation Ad Click link below to purchase product CPT Pro     Upgrade to Executive

When a claimant receives his first denial notice from Social Security, he will find your card and contact you for services as fast as he can.  Remember, a potential customer may not become a customer right away.  It's unfortunate, but many people actually believe that they do not need a disability advocate until they have lost their initial claim for benefits.  Social Security encourages this belief, which has resulted in a lot of people being denied disability benefits.

Internet Marketing

You cannot expect to be successful as a disability advocate in today's market without having an website.  In this business, a website is used to provide free information to potential clients.  The free information should always include:

a)  Company contact information, information about your service and how your service can be utilized.

b) General information about the Social Security disability process.

Providing information about your service with instructions on how to use your service is absolutely critical to your success.  A website used in this manner multiplies your ability to share the message about your service.  A potential customer should be able to visit your website and learn exactly what he/she must do to take advantage of your service. 

It's also important to create a method of collecting contact information from your website visitors.  This can be done in a number of different ways.  One of the most common approaches for collecting personal data from a website is by requesting a potential customer's e-mail address.  An effective way of getting a customer to share his e-mail address is by requiring an e-mail in order for the customer to access your free information.

You can also create a form that enables a customer to provide you with details about his/her impairment.  Providing a method for collecting customer data from your site is a non-threatening way of getting a customer to interact with your service. 

Disability Associates offers a basic course in Internet marketing called the ecommerce training program.  If you're an Executive member, this course is included in your package.  If not, you can purchase this course using the link below or upgrade to the Executive program: 

E-commerce Training Program Click link below to purchase product E-commerce Course     Upgrade to Executive

Experiment

This is not a scientific suggestion!  J  Experiment with as many down-to-earth ways of becoming known in your community as possible, even as you prepare to invest in print or media advertising.  Think community!  Spread the word about your service via your friends, church, clubs, family doctor, etc.  It's amazing how quickly a service will grow just by word-of-mouth alone, but it takes personal effort. Word-of-mouth works best in small or ethnically homogenous communities, but should be attempted in all settings.

Try leaving your business cards or brochures at your local welfare or public assistance offices, state vocational rehabilitation offices and businesses that deal with the handicapped.  As mentioned earlier, organizations like the United Way, the Red Cross, etc, can also be a very good source of referral. 

Agency Marketing

In order to make the agency approach work, you must develop an inside contact. Try and befriend an agency employee.  This person may not be able to directly refer clients to you, but he/she may be able to steer or convince others within the agency to do so.

Other useful approaches to gaining public awareness of your service are posters strategically placed around the entrance of district offices.  Make sure the posters are not placed on federal property without permission.  Imagine having a billboard ad located just outside of a Social Security office that can be seen by every person leaving the building.  Billboard ads are expensive, but used correctly, it can be an effective marketing tool. 

Once you begin to enjoy success, the real opportunities for exposure begin.  Back in the days before I began offering training, I used a movie theater ad that really produced results.  You know those ads that run until the movie starts.  Back then, they were cheap and experimental.  Today, you need big bucks to use this add approach.    .

One of our students successfully used a card stand to distribute his literature, which effectively advertised his services.  He created a relationship with a group of pharmacies.  They agreed to allow him to place his card stack in their businesses.  In exchange, he recommends their pharmacies on his website for inexpensive and high quality medications.  See e-com course for details about this marketing strategy. 

Before using any marketing approaches mentioned above, please review the online Marketing Manual located in the Student website.  Allow me to apologize.  When I get started on marketing, it’s hard for me to shut-up.  Let's get back to budget basics

10. Telephone:

Most advocates begin their practice locally.  This eliminates most long distant calling to areas outside of your state.  However, depending on your level of success, there can be some interstate calling costs.  To save money, look for the cheapest interstate calling plans you can find.  Long distance phone service today is extremely competitive and inexpensive services are readily available.

If you don't already have one, you’ll need a phone installed with a call-forwarding and three-way or phone conferencing capabilities.  This allows you to forward your calls to an answering system when you're not available.  These features also allow you to do three way application calls with Social Security. 

Phone installation costs and monthly service fees vary so much across the country that it would be impossible for me to quote a price.  However, I believe it’s safe to say that phone installation and services is not extremely expensive.

You’ll also need an answering service or machine to take calls while you are at your daytime employment.  This will enable you to keep tabs on your company and accept new clients without hanging around the house waiting for a customer to call.  Answering services run from $40-$180 a month for basic message retrieval service.  Live Operators are the most impressive to potential clients.  However, live Operators are also more expensive. 

Keep your calling plan as simple and inexpensive as possible.  Also talk to your answering service about additional services that may act to enhance the effectiveness of your customer retrieval system.  Examples of such additional phone services are auto-messaging, call forwarding to cell phones, etc.  Each of these can be incorporated into your service in such a way that it meets your specific needs.

11. Mailing Costs:

In disability advocacy, the cost of mailing is directly related to how the mail is used. Snell mail can be used in operations, promotions or both.  If used in both, you would expect to incur higher mailing costs.

Most of the communications in this business must be presented in writing for reasons of documentation.  As a result, you will not be able to completely escape some level of mailing.  We recommend that your correspondence be sent only by first class mail because of the importance of the materials.

Using our approach to disability advocacy, you will usually request a development fee from the client at the beginning of the case.  These funds can be used to pay for phone calls, mailing, etc, which reduces your out-of pocket expense for case development.  Since mailing expenses cannot be completely avoided, consider it strongly when determining your development fee.  At least one-hundred dollars should be available to cover initial mailing costs associated with the processing of a claim.

As you can see, start-up costs for this type of service is as low as can be expected.  Many of the above items mentioned are already owned or in use by the majority of our new advocates which makes start-up costs that much cheaper.

Professionalism:

We at Disability Associates have a business philosophy.  That philosophy is:  Do as little work as possible to achieve the best possible result!  This philosophy has driven our company for more than eighteen years.  It has motivated us to create custom software and operational techniques that save an enormous amount of time.  I'm not talking about the time it takes to get a case decision.  I'm taking about how much time you spend on a given case over the life of that case.  If you can reduce this time element, you actually increase the profitability of your firm.  The less time it takes for you to win a case, the more cases you can represent.  The more cases you represent, the more money you make.

Being professional is easy if you practice it from the very start of your service.  Always return calls and respond to customer questions.  Present yourself in a way that projects knowledge and concern about the client, even when you suspect that the case or the customer is a loser.  Provide information even to those who are not current customers.  Be helpful and friendly at all times and never abuse the person you’re representing. 
 

Preview of Lesson three:

In lesson three, we’ll discuss that all important first interaction between a disability advocate and a potential client.  The approaches discussed in the next lesson assume that you are using our support software. 

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