Self-Employment Steps for Vocational Rehabilitation Counselors: Helping a Consumer Start a Business


Chapter 4:

The Business Assessment Scale

The Business Assessment Scale (BAS), is a self-employment assessment developed specifically for use by vocational rehabilitation agencies. It was developed by Goodman, Herzog & Associates, Inc., Traverse City, Michigan and is available from them through a license agreement. To insure proper use, this instrument must be administered only by professionals who have been trained by Goodman and Herzog. 

The BAS evaluates the person who already has a business idea. It currently is undergoing further validation, but in a retrospective study of Michigan self-employment outcomes conducted by two Michigan Rehabilitation Services supervisors and Herzog it correctly classified 87.5% of the self-employment cases. Their study used the records of 24 businesses that had been funded for two or more years before the analysis. The BAS predicted that 12 of the businesses would be successful and 12 would not. The records showed that 10 of the 12 businesses predicted by the BAS to be successful actually were successful and only one of the 12 predicted as unsuccessful was a success. 

The BAS evaluates both the market demand and the individual’s characteristics: management expertise and skills; his or her commitment, desire and persistence; technical skills and work experience; and personal credit and financial solvency. 

The counselor and consumer each complete the BAS independently. The counselor evaluates the consumer and the consumer self-evaluates. Where appropriate, documents should be supplied to support each factor’s ratings. Differences are discussed to reach consensus on each factor. The final score is discussed and next steps determined. Scores should not be used as the sole indicator of an individual/business’s potential for success–they are considered in conjunction with other information such as evaluations, the business plan, recommendations of the business development expert, and counselor observations of and experience with the consumer. 

Advantages of the Business Assessment Scale

Consistency: It evaluates each person on the same measures, eliminating any tendency of the decision-maker to consider some and ignore other equally important qualifications. 

Defensibility: Choices based on the BAS are defensible to the decision-maker and others because the bases for choices are explicit and valid and because the decision maker has used all of the information in a consistent manner. 

Efficiency: The BAS gathers information of proven importance, so VR professionals do not waste time, energy, and other resources on irrelevant aspects of the process. 

Use the BAS Twice (during the Self-Employment Process)

  • First Use: As Part of The Feasibility Study, Before Developing The IPE

We recommend using the BAS (see Figure 7), Beginning to Develop Your Business Plan, and the Monthly Personal and Living Expenses Worksheet as a preliminary feasibility study. When used early in the self-employment process, the BAS targets those individuals whose current status predisposes them to success; suggests the knowledge, skills, and experience that others should acquire before continuing to pursue self-employment; and it identifies individuals likely to fail even with additional training. Answering the Beginning to Develop Your Business Plan questions requires thinking about the business in a realistic way and it requires conducting some minimal research. Completing the questions in conjunction with the Monthly Personal and Living Expenses Worksheet provides a clear picture of monthly living expenses in relationship to anticipated business income. It also gives you, the VR professional, the opportunity to evaluate how realistic the consumer is about the proposed business. His or her answers and worksheet figures help identify areas where more thought is necessary before both parties can identify self-employment as the employment outcome on the IPE.

At this stage you are not evaluating whether the business is likely to be successful. That determination will be made later while the business plan is being developed or after it is completed. 

  • Second Use: After Training and the Business Plan Are Completed

Administer the test again after the business plan is developed but before VR commits to contributing funds to the business. This second use of the BAS predicts the likelihood of success of both the individual and the business. At this point the BAS might indicate the individual is a good candidate for self-employment, but not in the business he or she has proposed. 

To ensure proper use, the Business Assessment Scale is licensed and administered only by professionals who have been trained by Goodman, Herzog & Associates, Inc.


Figure 7: Business Assessment Scale

Abridged Version:  For Promotional Purposes Only

The Business Assessment Scale is intended as an early assessment of the likelihood that an individual will be able to establish a successful enterprise.  The Business Assessment Scale has been developed to assist an individual, counselor, or funder in evaluating the individual in terms of five attributes/factors, which research has shown contribute to successful operation of a business. The Business Assessment Scale can also help identify key areas where additional planning or effort will be needed.

The Business Assessment Scale can be used:

  • to evaluate applicants for a loan fund; 
  • to evaluate clients as candidates for a self-employment program; 
  • as a pre-screening tool prior to developing a business plan; 
  • in conjunction with a business feasibility assessment. 

The individual will need to provide initial information regarding the proposed business. The individual should also be prepared to discuss his/her credit status. Finally, the individual will need to make arrangements with employers and trainers to verify skills and experiences. 

Follow the steps listed below to complete the Business Assessment Scale:

  1. The organization representative or "counselor" and the applicant or "client" reviews the purpose of the assessment scale - and definitions used. The review should include a discussion of the importance of the client providing specific, behavioral examples for each factor or attribute. 
  2. The counselor and client should complete the assessment scale independently. 
  3. The final score should be discussed and next steps determined. 
  4. The client and counselor should plan to spend two to three hours completing the assessment scale.

Definitions of each factor or attribute appear later in this promotional copy. For each definition, use the descriptions, levels, and benchmark scores to determine any appropriate score from 0 to 100. Once you decide on a score for each factor, write in the scores on the corresponding line in the Client Initial Assessment table.

Example 1: Jane Doe has no market data but has talked with several business people in the area who have indicated that "they think there may be some demand for her proposed service." Because Jane Doe has no market data, but has some initial suggestion of demand the score should be greater than zero but less than 50. A score of 15 might be appropriate because the information is very general.

Example 2: John Doe has national market data for Franchise X, but no local market data. A score of 20 probably is appropriate because national and state trends are not necessarily indicative of local demand.

Management Expertise/Skills

The degree to which the individual possesses the expertise to manage people and finances. Consider knowledge of, or expertise in, sales/marketing, operations, finance/accounting. If acquired pre-injury, individual must continue to demonstrate these skills/abilities.

Commitment/Desire/Persistence

The degree to which the individual exhibits the following behaviors:

  • Commitment of time, personal resources, and skill acquisition directed toward operating a business.
  • Desire to operate a business demonstrated by initiative to research information, network with individuals and business organizations, and independently seek professional consultation; and
  • Persistence in resolving problems and overcoming obstacles. 

Technical Skill/Work Experience

The degree to which the individual demonstrates technical skills and knowledge of the industry based on work experience and/or training.

Market Demand

The degree to which information supports the need for the proposed business. The feasibility of the business must be assessed in the context of the product/service, target market, competition, and market trends. Evidence of market demand includes: an existing customer base, letters of intent to purchase the product/service, customer surveys, and demographic and industry data. An independent assessment may also be obtained to evaluate the demand for the proposed business.

Personal Credit/Financial Solvency

The degree to which the individual demonstrates the ability to maintain a positive credit rating. In evaluating a negative rating, consider:

  • Reason for poor credit rating (e.g., disability-related issues);
  • Patterns of indebtedness or bankruptcy (frequency/recurring problem, duration of indebtedness, length of time since last credit problem); and
  • Evidence of recent solvency.

Scoring

After recording the scores for each factor, multiply the score by the normalized weight and record the weighted score. (The normalized weight is a statistical expression of the relative weight of each factor.)

Add the weighted scores to obtain the total score. Discuss the results with the client or applicant.

The following issues should be considered in evaluating the total score:

  • A total score of 61 to 100 suggests that the individual and/or proposed business possess the characteristics which contribute to a successful business operation. 
  • A total score of 41 to 60 suggests that the individual and/or proposed business possess some of the characteristics which contribute to a successful business operation, but may require additional skill-building or planning. 
  • A total score of 0 to 40 suggests that the individual and/or proposed business do not possess the characteristics which contribute to a successful business operation,

Client Initial Assessment

Client/applicant’s Name: ______________________

Client Initial Assessment Form
Attributes/Factors Normalized Weight  Score  Weighted Score
1. Management Exp./Skill  .218 x ____    
2. Commitment / Desire .226 x  ____
   
3. Technical Skill/Work Exp. 
.166 x ____
   
4. Market Demand 
.236 x ____
   
5. Credit / Financial Solvency 
.154 x ____
   
    (Sum of all weighted scores) Total Score ____
 


Scores are not to be used in isolation or as the sole indicator of whether a business enterprise vocational objective is appropriate. All scores should be reviewed in the context of other evaluations, including functional evaluations, business feasibility studies, and market analysis.

Scores of 60 or lower may serve as the basis for additional planning. The Business Assessment Scale can identify areas where the client needs to gain experience or make other changes before he/she is prepared to start and run a business successfully. Applicants may be able to improve their ratings by resolving credit problems, gaining work experience, and acquiring management expertise.

1994, B. Goodman, R. Herzog. Used with permission from the authors.


Chapter 4 Self-Employment Assessment Study Guide:Business Assessment Scale

  1. List 4 reasons for conducting assessments as part of the self-employment process.

  2. Most of the assessments for evaluating self-employment potential are _________. 

  3. Why are business development and marketing professionals concerned about using many of the available tests for determining self-employment potential?

  4. List and explain 3 advantages of using the Business Assessment Scale in the self-employment process.

  5. The Business Assessment Scale should be used twice in the self-employment process. When? and Why? 

Study Guide Answers: Chapter 4 - Business Assessment Scales


July 1998, 1st Revision June 1999, 2nd Revision February 2001