For individuals who have experienced judicial impacts—such as those who have been arrested, convicted but not imprisoned, charged but not convicted, or imprisoned—embarking on a business venture comes with obstacles. Even if cleared of charges, an arrest can influence a customer’s decision to support a business. Entrepreneurs with felony records encounter additional hurdles, such as difficulties in renting commercial spaces for their businesses and obtaining start-up funding.
More Americans encounter these obstacles than many realize. The United States incarcerates more individuals per capita than any other country in the world, with a rate of 565 per 100,000 residents. The criminal justice system comprises numerous federal, state, local, and tribal systems. Collectively, these systems detain nearly 2 million people annually, as reported by the Prison Policy Initiative.
These statistics encompass individuals who were arrested and granted bail, those who remained incarcerated until trial, as well as those who were convicted and sentenced to jail or prison terms. This figure also includes a significant number of individuals who reoffend following prior convictions, stemming from incidents such as late check-ins with parole officers or struggles to secure steady employment.
Can I start a business as an ex-convict?
Yes, there are no legal barriers preventing an ex-convict from owning a business and establishing an LLC. In most instances, a convicted felon can act as the registered agent of an LLC, barring convictions related to fiduciary or financial matters.
If you are someone impacted by the justice system, here are nine steps recommended by business experts and returning citizens to consider when launching a business.
1. Get the right mindset
Entrepreneurs and business coaches who have experienced incarceration agree: true transformation begins when an incarcerated individual chooses to change their life.
Tim Hamilton, Chief Administrative Officer of the Prison Entrepreneurship Program (PEP) in Texas, emphasizes the importance of building character before delving into business fundamentals. By instilling values like accountability, integrity, execution, excellence, and a servant-leader mentality, the organization helps participants shift their mindset.
As one of the initial exercises, participants of the Prison Entrepreneurship Program are tasked with writing their eulogies. Hamilton prompts them to ponder, “What legacy do you want to leave behind?” This exercise encourages individuals to focus on the future and take steps towards achieving their aspirations.
Upon completing the program, PEP hosts a graduation ceremony where participants receive a certificate in entrepreneurship from Baylor University’s Hankamer School of Business. This event serves as a significant milestone, showcasing to families and friends the success of an incarcerated individual. It fosters a positive mindset shift among graduates, instilling self-belief that can benefit them post-release.
2. Be a part of your community and find mentors
PEP acknowledges the value of involving incarcerated individuals and returning citizens in the community to foster mutual accountability. By housing program participants together within prisons and offering transitional housing post-release, PEP creates a supportive network for individuals to remain connected with volunteers, peers, and mentors.
Roderick Hearn, the founder of Iron Rod Steel in Houston, Texas, and winner of PEP’s annual Barbed Wire to Business pitch competition, highlights the significance of the relationships he built through PEP. He found immense value in the support and belief of his peers and mentors. Hearn shares, “Having a group of people who know you and believe in you is crucial. Many entrepreneurs start their journey without this backing, facing skepticism and doubt. Our community of supporters is committed to our success, keeping us motivated.”
3. Learn about your field
During his time in prison, Hearn acquired welding skills. Participating in the vocational program, he earned an associate degree and gained hands-on experience at the correctional facility’s stainless steel plant. However, Hearn’s thirst for knowledge persisted beyond incarceration. Reflecting on his journey, he recalls, “I immersed myself in literature on success.”
Upon release, Hearn secured a job as a welder’s assistant and pursued side jobs to continue learning through practical experience.
4. Set goals and avoid the naysayers
While incarcerated, Hearn felt a sense of disappointment from those around him. Determined to prove himself post-release, he worked tirelessly to demonstrate his abilities and value. He shares, “I was determined to show everyone that I wasn’t finished, that I wasn’t a failure. I prepared myself to make a mark in the world. I had a vision—I’m going to get out there and prove my worth, showcase my value.”
Upon release, Hearn maintained a whiteboard in his apartment to track his self-defined success metrics. Emphasizing the importance of consistency over mere goal achievement, he advises, “Consistency matters more than ticking off goals. Stay consistent in your efforts, take things step by step, and continue learning and improving along the way.”
Entrepreneurship often attracts skeptics, especially for those with judicial impacts. Josh Nowack, the founder of Breaking Free Industries and a board member of the nonprofit Inmates to Entrepreneurs, advises discernment in choosing whose advice to heed. He warns, “Be cautious of negative voices. There will be individuals who may say hurtful things [related to your incarceration], often those closest to you. Follow your own path, trust your instincts.”
5. Name your business independently
Business instructors at Inmates to Entrepreneurs and the Prison Entrepreneurship Program counsel returning citizens against naming their businesses after themselves.
In the digital era, a simple online search can reveal mugshots or media coverage of one’s conviction upon searching their name. Opting for an independent business name enables returning citizens to create distance from their judicial past.
6. Decide how to tell your story
Justice-impacted entrepreneurs encounter a dilemma regarding addressing their past. Some wish to downplay their convictions, focusing solely on their present endeavors. Others believe embracing their second-chance stories is instrumental in attracting customers and marketing their businesses. The decision on how to approach this depends on the individual and the nature of their work.
Claudia Shivers, the founder of Queen Coffee Bean and a board member at Inmates to Entrepreneurs, recounts her experience, “Given that my case was splashed across newspapers, I chose to lead with it.” Sharing his background through his business, Josh Nowack integrates his history, especially in employing fellow returning citizens. Supporting Breaking Free Industries through a purchase extends a second chance to the founder and employees alike.
On the contrary, Lawrence Carpenter, another board member at Inmates to Entrepreneurs, has been more selective in sharing his narrative. Operating a commercial cleaning business with government and educational contracts, he prefers allowing his actions and character to speak before bringing up his background. That said, he remains transparent about his past if questioned.
7. Be passionate
Josh Nowack emphasizes the power of passion in business. He asserts, “People are drawn to passion. If you convey, ‘I’m going to revolutionize toilet cleaning with my unmatched passion,’ customers will notice and support you because of your enthusiasm.”
“Enthusiasm resonates with people. Your team and customers will reflect your enthusiasm. As the top advocate for your business, you must exude passion for what you do.”
8. Get customers
The Inmates to Entrepreneurs program directs attention to a fundamental business question: how do you earn your first dollar?
Brian Hamilton, the founder of Inmates to Entrepreneurs, emphasizes action over theoretical concerns like accounting. He states, “Instead of fixating on accounting intricacies, let’s focus on generating revenue. We prioritize this to enable individuals to provide for their families.”
Graduates of Inmates to Entrepreneurs often lean towards launching service-based enterprises like landscaping or cleaning services, offering lower entry barriers in terms of accessing customers and startup expenses.
9. Fund your growth
Securing capital for business initiation or expansion poses challenges for returning citizens. Banks may shy away from risky investments, making it tougher for individuals with criminal histories to secure loans. Many returning citizens gradually grow their businesses or seek funding from friends and family through small gifts or investments.
Hearn argues that securing substantial loans is feasible. With the backing of PEP’s Tim Hamilton and meticulous financial documentation supporting his application, Hearn obtained funding from prominent banks. Highlighting the importance of demonstrating profitability and adherence to regulations, Hearn notes, “When you show you’re making money and have a track record of profit, opportunities arise. Clarify your business operations to gain acceptance.”
For most returning citizens, approaching smaller banks may offer a more compassionate perspective. These establishments often appreciate the human element behind an individual’s past, enabling a more empathetic consideration of lending.
Fresh start business grant
Unlike traditional small business loans, grants offer aspiring business owners funding without repayment obligations. These grants serve as a vital resource for previously incarcerated individuals seeking entrepreneurial opportunities, as they originate from corporations and nonprofit organizations specifically targeting this demographic.
Here are some programs that may align with the aspirations of aspiring entrepreneurs with judicial backgrounds:
- Rise Up, Get Started Grant Program
- The Transform Business Grant
- Georgetown Pivot Program
- LEAP Virtual Entrepreneurial Academy
- Amber Grant
- NASE Growth Grant
- Bizee’s Fresh Start Business Grant
Establishing and operating a business offers judicially impacted individuals a sustainable means of livelihood, particularly for those with felony convictions. While entrepreneurship presents challenges, numerous privately-funded small business grants and resources are available for assistance.
