Entrepreneurs in Philadelphia must complete a high number of steps to start their business. The city’s websites and its eCLIPSE system allow entrepreneurs to apply for nearly every license or permit online without having to mail applications or visit agencies in person, but city webpages are often disorganized, and information can be difficult to find.
In Philadelphia, the cost, delays, and complexity imposed by the regulatory process can make it very challenging for entrepreneurs to open their small businesses.
Philadelphia’s entrepreneurs face steep costs to start their businesses. For example, a restaurant owner must spend $3,160 and a barbershop must spend $2,757 before doors can open to customers. Home-based businesses cost $402 to start, mostly driven by a $207 zoning application and a $125 application for a special exemption to zoning rules; if an entrepreneur wants to serve customers at home, the costs are even higher.
Scoring three out of five on the one-stop shop rubric, Philadelphia’s eCLIPSE portal allows entrepreneurs to have a single log-in but fails to provide a user-friendly experience.
Restaurants must complete 58 steps to get started in Philadelphia, involving 10 different city and state agencies. Home-based businesses must go through a burdensome conditional use permit process if they want to have customer visits, delaying what should be a quick and easy start-up process due to not having to bring commercial space into regulatory compliance.
Starting a Business in Philadelphia: By the Numbers
We calculated this metric by totaling the fees for all the licenses, permits, and registrations each business needs to get started.
Number of Fees
We calculated this metric by counting how many fees governments impose on each business for completing registrations and paperwork.
We calculated this metric by totaling the number of agencies entrepreneurs must work with in order to get up and running—whether in the form of submitting paperwork to an agency’s staff, or in terms of abiding by regulations that an agency has promulgated.
We calculated this metric by counting the number of compliance activities each entrepreneur needs to complete in person, rather than online or by mail.
Number of Forms
We calculated this metric by counting the various forms and applications each business needs to submit
Number of Steps
We calculated this metric by totaling the discrete tasks an entrepreneur must complete to start each of the business types.
For each month that the payment of a license or permit fee is late, Philadelphia assesses interest of 0.5% and a penalty of 1% of the original fee.
The conditional use permit process for home-based businesses that want to have customers visit the home requires additional applications and approvals by the zoning department and a public hearing before the planning commission.
Otherwise accessible occupations face additional unnecessary barriers. For example, food trucks that want to vend in Center City must enter a lottery to get a spot, which can make vending in the business district of the city difficult and unpredictable. For other special vending areas, entrepreneurs must put their name on a waitlist.
State regulations can add further burdens. For example, aspiring barbers must undergo a criminal background check when submitting their occupational license application.
Accommodations for New or Small Businesses
No notable accommodations.
Officials and policymakers have the opportunity to make it cheaper, faster, and simpler to start a business in Philadelphia. City officials should:
Reduce fees and the number of steps and forms required to start a business.
Reduce the number of web pages and streamline web content.
Build more step-by-step guides for common business types integrated into the website, rather than burying this information in PDF forms scattered throughout website pages.
Remove the conditional use permit requirement for home-based businesses and allow them to operate by right without city approval.
Work alongside state officials to remove state barriers that single out returning citizens and low-income residents.
James Dupree is a world-renowned artist and long-time Philadelphian. A graduate of the University of Pennsylvania, he has showcased his art at his South Philadelphia gallery since 1982. But in 2012, the city tried to use eminent domain to seize his studio to give the land to a private developer. Fortunately, James was able to generate enormous support from his community and fans, and the city backed down—but he continued to face uphill battles with his business. James wanted to find a second building where he could work and live in the same place, which would allow him to continue to make art with relative ease. City regulations, however, only allow this arrangement in a few neighborhoods throughout the city. “The city has changed zoning in a handful of neighborhoods over the years to allow commercial and residential to be on the same property, but there are so few of these that property values have gone up a lot,” said James. That makes finding a new space for James’ gallery and home quite difficult. Roadblocks like this eventually led James to move outside of Philadelphia, to a location where he will be able to have his next gallery, studio, and home on the same property.