Research and analysis

Summary: Understanding self-employment for people with disabilities and health conditions

Published 15 May 2019

By Lorna Adams, Becky Cartmell, Rowan Foster, Matthew Foxwell, Leo Holker, Alex Pearson and Gill Stewart (IFF Research), Marc Cowling (Brighton Business School) and John Kitching (Kingston Business School).

This summary presents findings from qualitative research into the experience of self-employment for individuals with disabilities and health conditions – particularly the challenges experienced, and the types of support required to set-up, sustain and grow their business.

Methodology

A literature review and qualitative primary research was undertaken in spring 2018. The literature review examines recent UK and international literature and evidence on the distinctive barriers that people with disabilities and health conditions face in self-employment, the benefits of self-employment and effective support for this group. The findings were used to inform the approach taken in the qualitative primary research. This consisted of:

• 25 in-depth interviews and 2 focus groups with individuals in self-employment who were disabled or had long-term health conditions
• 10 in-depth interviews with support organisations, that people with disabilities and health conditions can receive support from in relation to self-employment
• 5 in-depth interviews with representatives from Jobcentre Plus who had provided support to individuals considering self-employment

Literature review findings

Self-employment rates are typically higher amongst people with disabilities or health conditions than amongst the general population, but disabled self-employed people face significant problems in terms of surviving the initial start-up phase and sustaining the business. This is largely due to:

• relative deficits in human capital
• paucity of networks
• access to important resources

These issues often arise because of an individual’s health which can act in a negative way on educational attendance, the ability to manage formal examinations and assessments, and more widely on building social relationships. Important resources would include savings and asset accumulation, and access to external capital markets, particularly bank loans.

Businesses run by people with a disability are disproportionately likely to be solo self-employed, run from home, and lack a growth ambition. Further, they are more likely than the general self-employed population to be concerned about:

• cash-flows
• access to finance
• premises
• pension provision

Many of these concerns relate to higher credit risk ratings linked to:

• broken labour market spells
• low paid employment
• problems managing money

Nonetheless, self-employment can provide many benefits to people with disabilities relating to increased social inclusion, and a better match between the demands of work and their abilities (for example flexibility of hours worked).

The literature review suggests that public policy can play a positive role, with human capital aspects of enterprise training and support being particularly associated with positive outcomes. Equally, there is some evidence that preferential access to public sector contracts combined with a sustained level of wide-ranging support in the formative years of a new business start provide long-lasting benefits.

Main research findings

Reasons for becoming self-employed

Most individuals and support organisations felt that it was more common for disabled self-employed individuals to have experienced being ‘pushed’ into self-employment, due to traditional employment being inaccessible to their needs, than being ‘pulled’ into self-employment by a passion or interest in a field, or a desire to work for themselves.

Typical earnings

Three main groups of individuals were identified in terms of their financial situation:

• those that were ‘struggling’ – earning less than £10,000 a year
• those that were ‘surviving’ – earning around £10,000 to £25,000 (but often at the lower end of this bracket)
• those that were ‘thriving’ (earning over £25,000 a year)

Many individuals fell into the struggling group and the surviving group, with relatively few in the thriving group. Those in the struggling and surviving groups received income from a combination of their self-employment and of some form of benefits, the latter of which was considered vital for the survival of their business.

Experience of support and advice

Family and friends were the most common source of practical support and considered vital to many individuals in keeping their business running. This support typically related both to general business assistance and mobility.

Some individuals received support through formal channels such as support workers who were either employed directly by the individual or funded by Access to Work grants.

Some individuals did not receive any support; they felt it would be useful for them, but they did not know what might be available or how to access it.

Challenges

Some of the main challenges faced by this group were similar to the challenges faced by self-employed people in general, for example accessing finance. However, the challenges were very much exacerbated by individuals’ experience of disability. Other challenges were more unique to this group. The most serious challenges included:

• a lack of confidence: some individuals lacked confidence due to experiences of being treated ‘differently’ – this meant that some individuals had difficulties explaining requirements to clients, feeling self-conscious or not going for jobs due to previous poor experiences with employers; some individuals also struggled to market themselves and articulate their worth to clients
• managing workload with a fluctuating condition: some individuals suffered from periods of pain, fatigue or poor mental health which they found difficult to predict – such fluctuating health conditions reduced their ability to plan business hours, manage their clients’ expectations and manage their workload; their fluctuating ability to work also resulted in substantial fluctuations in their income
• accessing finance and income: difficulties with managing finances and maintaining income are experienced by many self-employed people – however, disabled self-employed people faced additional challenges, and had fewer solutions available to them than non-disabled people
• accessing advice and support: many disabled self-employed individuals felt that existing support, such as Access to Work, was less suitable for the self-employed than those working in employment because their requirements were very changeable depending on the work that came in
• accessing transport: accessing transport was challenging for many including wheel chair users, people with visual impairments, those suffering from fatigue or some mental health issues

Ideal support

Self-employed individuals and support organisation representatives identified types of support that would help to overcome some of the challenges experienced by disabled self-employed people. These included:

• peer mentoring from someone with lived experience of disability: this was identified as an ideal type of support, as it would provide practical help and support on running a business, and – crucially – would be relevant to the experiences of disabled people
• centralised guidance about self-employment: individuals and support organisations were keen for a source specifically aimed at disabled entrepreneurs – this would sign-post to information and guidance about self-employment specific to the needs of disabled people, for example advice on managing a workload with a fluctuating condition, accessing finance, accessible business courses, and mentors, advisers and charities with experience of disability and self-employment
• flexible ad hoc support: self-employed disabled people suggested a service that provided short-notice, ad hoc assistance (particularly) related to physical access and travel
• finance: self-employed disabled people felt that small, interest free loans could be provided for disabled people who needed to pay for start-up costs

Conclusions

Disabled entrepreneurs may need more support than other people entering self-employment. This is because it is common for them to feel that self-employment is the only option for them, as other forms of employment are not viable. This can mean that they enter self-employment without the same amount of time to mentally and financially prepare for the transition, and so require additional practical and financial support.

Fluctuating conditions can make self-employment very difficult to manage. Periods of pain, fatigue or poor mental health which are difficult to predict can lead to fluctuating periods of work and fluctuating income. This underpinned many challenges faced by this group.

Some of the businesses run by disabled entrepreneurs are at the margins of financial viability. But generally business owners feel that being self-employed is preferable to being entirely dependent on benefits.

There is demand for support for disabled entrepreneurs that is distinct from that aimed at others in self-employment. There is particular appetite among individuals for tailored support in the form of peer mentoring, but also an information hub with information specifically for disabled entrepreneurs.

There may be a need to examine how well the benefit system supports disabled entrepreneurs as some individuals felt that they had been turned down for support because their earnings were too low to qualify as viable self-employment for the purposes of benefit assessments. However, at the same time, they felt that they were operating at the limit of workloads they could cope with.

There is demand among participants of this research for more flexible ad hoc provision of support workers and assistance with travel than is currently available through Access to work.

Read the full report Understanding self-employment for people with disabilities and health conditions.