Philadelphia, a city with a rich Black history, is home to different entrepreneurs, but the road to starting a business is far from palatable. From hidden paperwork to delays, entrepreneurs, especially immigrants and first-generation Americans, face all sorts of hurdles before they can even get their businesses off the ground.
But it’s not just the paperwork; there is also the hurdle of getting capital, navigating a complex web of local fees and cultural barriers.
While Blacks make up about 40% of the city’s population, Drexel University data shows that only 5.4% of businesses are Black-owned.
Could this be because of the complexities that affect upcoming businesses, especially those owned by minorities?
The Bureaucracy of Getting a Business License in Philadelphia
Entrepreneurs in Philadelphia face significant regulatory challenges to get their businesses up and running. They must complete a large number of steps before even earning the first dollar from their business.
Compared to other US cities, Philadelphia is known for having a complicated and lengthy process for obtaining business licenses and permits. To be able to operate in the city, even to open a small shop, you must get a Commercial Activity License. You will have additional, more specific licenses to apply for depending on what business you have, and all these are handled by different departments.
Something as basic as a Commercial Activity License can take months to process. This may involve navigating zoning regulations, trade licenses, and other approvals, depending on the type of business.
What does it take to own a business in the City of Brotherly Love?
A report from the Institute for Justice titled Barriers to Business analyzed city codes and startup requirements for five common business types across 20 U.S. cities, including Philadelphia. The report highlighted just how intricate and challenging the startup process can be.
Each step involves separate applications, fees, and, in some cases, in-person appointments.
For example, opening a Philly restaurant is a 58-step process. Aspiring restaurateurs must fill out 17 forms, pay 11 fees, complete at least five in-person activities, and interact with 10 city and state agencies.
Another example is opening barber and beauty shops. The process involves 46 steps, 16 forms, 12 fees, eight in-person visits, and 10 different agencies.
Even starting a business from the comfort of your home comes with its own hassle. The hoops can be endless and insurmountable, especially for first-time entrepreneurs without access to lawyers or compliance officers.
Another frustrating part is looking for resources that can help you figure out what you need to kick off a business. Even with a strong desire to comply with rules and regulations, it can be hard to know which steps to take and in what order to complete them, because the government sites do a poor job of communicating requirements.
Adding to their troubles, many business owners have complained about getting bounced between agencies without clear guidance.
Also, the taxes and regulations imposed on new and small businesses in the city make it all the more difficult to do business.
According to restaurateur Juan Placencia, a seasoned business owner who has been through the business licensing process many times before and in different states, getting the needed licenses in Philly was not so easy.
“I have a little bit of a leg up, and it was still difficult for me to navigate,” said Placencia.
“One thing that I did that was very helpful for trying to navigate getting all of these licenses and permits was to find local groups and organizations that are specific to your industry or business type,” he added.
In spite of these hurdles, Black entrepreneurs in Philadelphia are thriving in the region. People like Dera Nd-Ezuma, owner of Suya Suya West African Grill, and Addie Ajayi of D’IYANU are pushing boundaries and making a name for themselves in Philadelphia.
How Philadelphia Can Make It Easier for Business Owners
To make it easier for people, especially immigrants, first-generation entrepreneurs, and small-scale business owners, to start a business in Philadelphia, the city can take several key actions:
Simplify the bureaucratic process: The city can simplify the process by first lowering fees, consolidating forms, and reducing the number of steps required to open a business.
One-stop business portal: The content on city websites should be streamlined, and the number of pages should be reduced. The city should consider creating a single online platform where entrepreneurs can complete all registrations (licenses, taxes, permits) instead of bouncing between agencies.
Clear step-by-step guides: Rather than burying necessary information in PDF forms scattered throughout website pages, it should be made available in a single location that’s easy to find and navigate. This way, aspiring business owners know exactly what’s required.
Improve communication between agencies: Ensure that the various departments involved are seamlessly integrated to prevent conflicting information and redundant submissions.
Resources that can Make the Process Easier for Business Owners
To get started visit business.phila.gov. This is your one-stop shop for resources to plan, launch, and manage your business.
To find out if your business needs a specific license, check the list of all business licenses on the City of Philadelphia’s website. The site also provides application instructions.
You can find all the business licenses you need, by business category, on the Philadelphia permit navigator. It will provide a checklist of the documents you need, including business licenses, tax documents and other certificates.
The Pennsylvania’s Business One-Stop Shop is another great online portal that helps you handle the legal and administrative side of setting up your business. Through their online portal, you can get an interactive checklist and business plan templates to help guide you through the process.
Small Business Development Center (SBDC) offers free business services to entrepreneurs across Pennsylvania, from consulting and webinars, to training on everything from marketing to financial planning. In the Philly region, Temple University and Widener University have SBDCs. You can apply for free business counseling online.
Starting a business in Philadelphia as a Black immigrant or first-gen American is not for the faint of heart. Stories of entrepreneurs quitting or relocating to the suburbs are not uncommon, simply because the process can be so overwhelming. The bureaucratic maze can leave newcomers discouraged before they even get started.
Starting a business should not have to be so draining and complicated. To truly live up to its name as the “City of Brotherly Love,” Philadelphia should ensure that those looking forward to starting and growing a business, regardless of language, background, or financial standing, have a fair shot at success.
