How Can a Felon Start a Business?

When reentering into society, one of the first steps an ex-felon will want to consider is getting a job. Felons may face many challenges when entering back into the workforce. Not all employers are open to hiring someone with a felony on record. Many states have laws that won’t allow ex-felons to work in certain fields.

One possible way for a felon to enter into the workforce immediately is to start a business. Owning a business can have many advantages. A self-employed felon won’t have to deal with an employer’s background check. The creative freedom of business ownership can be appealing to many. Business owners also often have greater freedom to plan their own schedule. There are some hurdles to deal with as a felon trying to start a business.

What Is A Business?

A business is an organization or individual that works to produce and sell products. There are different types of business structures. Below are a list of common business structures.

Sole proprietorship

A single person owns and manages a sole proprietorship.

Partnership

At least two people own and manage a partnership. The owners put in resources and have financial liability for the business.

Corporation

A corporation occurs when a group of people operate as one entity. Owners do not have financial liability of the business. There are not as many tax benefits for corporations.

Limited liability company (LLC)

A limited liability company is a cross between partnerships and corporations. It has both limited-liability and more ideal taxes.

Starting a business – The Basics

There are a few basic steps to take when starting a business.

Business concept

The first step to starting a business is coming up with a business concept. A concept involves deciding what industry you will be working in. It also involves deciding what product or service you will sell. There are many possibilities for starting up a business. Note that to start some businesses you will need a license. Be sure to look into the local laws before committing to an idea. Some examples of business concepts are listed below.

Cleaning service

Copywriting

Editing

Ghostwriting

Graphic design

Landscaping

Photography

Web design

Business name

Once a concept is established it is time to come up with a name. There are some things you want to keep in mind when coming up with a business name.

Some general pointers are as follows. It helps if the name is memorable and easy to spell. This way clients can have an easier time finding you. Be careful about picking a name that is too specific. For example, naming a business after a specific product may be limiting. Once you start to offer other products or services you may wish you chose a different name.

When you decide on a name, take the following steps. Make sure you do an internet search when you come up with a name to ensure nobody else is using that business name. Use the United States Patent and Trademark Office website search to see if your name is available for trademark. If you plan on starting a corporation or LLC, you need to search Secretary of State records for your name as well.

Business website

Once you decide on a name, it’s time to get a business website. It’s best if you can get a .com domain name with the name of your business. This will make it easier for clients to remember how to access your website. Do an internet search for the domain name before finalizing your business name.

Business logo

Once you have a business domain pinned down, put some thought into creating a business logo. A business logo helps to make your business more memorable to customers. A logo can be an image, written name, or monogram. Consider what your business values, services, or products are. Think about what images or lettering represent that. Consider what thoughts, images, or feelings you want your customers to relate to your business. Think about what type of logo might achieve that.

Business tagline

Creating a business tagline is another way to attract customers. A tagline is a short description of what your business offers. It will appear on your website, business cards, and other promotional materials. To create a tagline, describe your business in a few sentences. Then edit the sentences into one short sentence. The sentence should describe your business’s main service or mission.

Business cards

Once you have a logo and tagline, it’s a good idea to create business cards. Business cards are a quick and professional way to give out your contact information. There are a few key things a business card should include. Include the name of your company, your name, and your job title. You also want to include your logo and tagline. Last but not least, include your website and contact information such as phone and email.

Business Licensing

Depending on your business concept, you may need to apply for a business license. There are some licenses that felons might not be eligible for. It likely depends on their particular felony. For example, someone who committed a violent crime may not be able to work with firearms. The two kinds of business licenses are federal and state licenses.

Federal licenses

Federal licenses are required for the following types of businesses:

Agriculture

Alcoholic beverages

Aviation

Firearms, ammunition, and explosives

Fish and wildlife

Commercial fisheries

Maritime transportation

Mining and drilling

Nuclear energy

Radio and television broadcasting

Transportation and logistics

State licenses

State licensing laws vary from state to state. Most states require licensing for more types of businesses than the federal government. State laws for business licenses are available on official state websites.

Creating a Business Plan

Once you have the basics of your business set up, it’s a good idea to create a business plan. A business plan is an outline of your business goals and services. It can come in handy if you want to request financing from investors or business loans. There are 9 components to a complete business plan.

Part 1: Executive Summary

This section offers an overview of what your business mission and services are. It should sum up the other sections of the plan. An executive summary should be 2 pages or less in length.

Part 2: Business and Industry Overview

This section discusses what industry your business focus is. It also should explain your business’s role in the industry.

Part 3: Market Analysis

The market analysis states the market your business will target. Include the location you are marketing to. Discuss target customer demographics. This may include age, gender, education level, income level, occupation, and lifestyle. The market analysis should show that you understand your customer’s interests and needs.

Part 4: Competitive Analysis

The competitive analysis acknowledges businesses you will be competing with. This section should offer a plan for how you will break into the market. It should describe how you will offer competitive services.

Part 5: Sales and Marketing Plan

The sales and marketing plan outlines strategies such as advertising, promotion, and pricing plans. This section will highlight the value of the product or service you are marketing. It includes a sales strategy for how you will convince customers to buy what you are selling.

Part 6: Ownership and Management Plan

The ownership and management plan explains your business structure and approach to management.

Part 7: Operating Plan

The operating includes basic information about what you will need to run the business. This may include location plan, type of facilities required, equipment and employees needed, inventory needs, and more.

Part 8: Financial Plan

The financial plan outlines funding needs. A financial plan should include your business’s main financial documents, balance sheet, income statement, and cash flow statement.

Part 9: Appendices and Exhibits

The appendices and exhibits section is for any other important information. This might be photos of your product, business contracts, or other documents that support your business.

Funding

When starting a new business, it can be helpful to receive a business loan. The Small Business Administration (SBA) is a popular choice for business loans. But SBA business loans can be difficult for felons to get. This is because banks are less likely to offer financing to a criminal record. Felons who have committed a crime of moral turpitude are not eligible for loans through the SBA. The SBA is unlikely to loan to felons who have committed financial crimes. It is possible the SBA will loan to felons with other more minor offenses, but not guaranteed.

One alternative to SBA loans is private money loans. Private lenders tend to have fewer restrictions on who can receive a loan. They are more likely to loan to ex-felons or those with low credit scores.

Another option is to create a partnership business with someone who doesn’t have a criminal record. Lenders may be more likely to offer loans when one of the owners has a clean record.

Business Insurance

It is a good idea to get business insurance for your new business. Insurance will help protect your property from lawsuits. Two common types of business insurance are included below.

Liability insurance

Liability insurance protects you from financial loss related to injury, property damage, slander, errors, and more.

Property insurance

Property insurance protects you from loss or damage of your business’s property.

You can explore insurance options through the state’s Department of Insurance.

Conclusion

Starting a business is a great way for a felon to reenter into the workforce. Starting a business has many rewards including creative freedom and flexible scheduling. There are some businesses that may not be an option for felons due to licensing laws. Other small business concepts and industries are open to felons.

When starting a business it can be helpful to create a formal business plan. Submit the plan to lenders when applying for a business loan. Business loans can be hard to get for felons, but it is often an important part of starting a business. Some options include private money loans or partnering with someone without a criminal record. Business insurance is also an important step in starting a business.

By following the steps outlined in this article, a felon can start a successful new business.