Diane Mastrull: Pointing out the obstacles

A diagram depicting what is required to obtain approvals for a projecting sign in Philadelphia takes up two pages of a 41-page report detailing the many ways the city is failing small businesses.

It is a dizzying display of bureaucracy with an expensive bottom line - in time and money - for small-business owners, who don't have much of either.

As the graphic lays out, the process can wind up requiring two permits from the Department of Licenses and Inspection, a review by the Arts Commission, an OK by the Streets Department, and a possible hearing by the Zoning Board of Adjustment.

Also reams of paperwork, four to 12 weeks from start to finish, and as much as $3,785, to be paid by the applicant.

It is but one of many examples the Sustainable Business Network of Greater Philadelphia (SBN) cites to support the overarching message of its just-released report, Taking Care of Business; Improving Philadelphia's Small-Business Climate:

"Philadelphia is a tough place to do business."

The report, paid for with a $75,000 grant from the William Penn Foundation, is a compilation of findings and recommendations based on interviews with more than 100 owners of small businesses, defined as having 50 or fewer employees, and support groups.

In all, SBN found, Philadelphia has 93,000 small-business owners, with 54 percent of the city's jobs created by them.

"Owners reported that only the most committed entrepreneurs would be able to form thriving new businesses in Philadelphia, in part because of the obstacles that city government places in their path," according to the report, written by Karen Black of May 8 Consulting, a policy-analysis firm in Media.

SBN contends that the job-creation numbers bear that out. Philadelphia ranked 10th among the 11 largest U.S. counties in jobs it had to offer last year: 42 jobs per 100 people, compared with 147 for New York and 116 for Dallas.

The report outlines a number of city deficiencies cited by business owners, including onerous and antiquated policies and practices on licensing, permitting, and inspections; burdensome taxes; insufficient small-business financing; and poor communication between government and the small-business community.

It even slams the requirement for a cashier's check in a number of city departments where business owners must do business.

"It's 2011, and it's time for that to change," said Leanne Krueger-Braneky, executive director of SBN, an advocacy group with more than 500 member businesses.

The report also found that the city's Community Development Financial Institutions offer one-fourth the loan capacity of the average national CDFI and that small-business support groups function without collaboration.

Little of that was disputed by Alan Greenberger, Philadelphia's director of commerce and deputy mayor for economic development.

"We're not known as a business-friendly city, and that's something we're working very hard to change," Greenberger said in an interview about the SBN report.

Among its nine recommendations, most of which SBN calls "budget neutral":

Eliminate the requirement that a start-up business pay two years of taxes up front in one payment before the business makes its first sale. (Recent amendments to the law, which would exempt start-ups from paying business taxes for two years if they employ three city residents in the first year and six by the second year are not enough, Krueger-Braneky said, because many cannot afford any hires early on.)

Increase the small-business lending capacity of Community Development Financial Institutions.

Reduce the time, cost, and confusion of obtaining city approvals.

Allow businesses to perform all routine transactions online.

Provide detailed information about small-business support services to business owners.

"Even if one thing can change, that will definitely impact the small-business community greatly," said Kayo Higashimura, owner of Hana & Posy, an eco-friendly florist and gift boutique that opened in Old City in October 2009 - after a nearly eight-week effort to get approval to hang a sign.

Noting that the report credits small business with creating more than 50 percent of the city's jobs, Skip Schwarzman, co-owner of Feast Your Eyes Catering, asserted: "It behooves everyone . . . to pay attention to this."

Progress has been made, Krueger-Braneky acknowledged. For instance, the city now offers a Business Services Center website (www.phila.gov/business) to help companies get started.

The long-awaited revisions to the 50-year-old zoning code are also a plus, she said. The section on signs will be tackled in 2012, Greenberger said.

"Our plan and hope is to work alongside the administration and City Council to enact as many of these recommendations as possible to really change the experience of doing business in Philadelphia," Krueger-Braneky said.

That is a departure from what has been SBN's primary role since its inception 10 years ago: to help foster and support businesses committed to the triple bottom line of people, planet, and profit.

"The switch for us is moving from reactive to proactive," Krueger-Braneky said, "and actually having recommendations that we now know would make a difference."

93,000

Number of small-business

owners in Philadelphia.

54

Percent of Philadelphia jobs created by small businesses.

$2 billion plus

Annual income of Phila.'s

small businesses

98

Percent of Phila.'s businesses with fewer than 50 employees.

27

Percent of small businesses

with two to 50 employees.

73

Percent of Phila.'s small-business owners

who are self-employed.

65

Percent of jobs in the city created by businesses

5 years old or less.

Figures based on 2008 data.

SOURCE: Sustainable Business Network's "Taking Care of Business" report.

Leanne Krueger-Braneky discusses how to keep small businesses in business at www.philly.com/business

Read the newly released report "Taking Care of Business," a look at ways to help Philadelphia's small business thrive, at www.philly.com/small

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at 215-854-2466, dmastrull@phillynews.com, or @mastrud on Twitter.