Philly startups in Old City get a boost

Mayor Jim Kenney announced today that the University City Keystone Innovation Zone (KIZ) received state approval to expand its existing boundaries to include the burgeoning tech community in Old City, including the area along N. 3rd Street known as “N3rd Street.”

The development is expected to bolster the growth of tech companies in Old City. The expansion would enable a new swath of startups to access up to $100,000 annually in sellable  tax credits. The state could award as much as $1.2 million in credits to newly eligible companies within the expanded zone in 2017.

According to StartupPHL, many companies who’ve been awarded the tax credits invest the funds in new workers while others purchase equipment to further develop and commercialize products and technologies.

“Thanks to this expansion, the University City KIZ will be better equipped to accommodate and support the cluster of tech startups in Old City while helping to attract and retain even more early-stage companies in Philadelphia,” said Stephen S. Tang, president & CEO of the University City Science Center.

The University City KIZ was established in 2004 by the state and the Ben Franklin Technology Development Authority. The geographically-designated zone was designed to create a “knowledge neighborhood” that develops tech-friendly business communities. Over the last 10 years, 48 University City KIZ companies have benefitted from about $8 million in KIZ tax credits. The University City KIZ is a partnership of local unviersities and private organizations.

Today’s development  is the latest in a series of steps recently announced by Hizzoner to bolster small business in the city.

During his budget address to City Council on March 3, Kenney’s proposed 5-year plan includes a reduction in the Business Income and Receipts Tax to 6.15% and including the exemption of a business’s first $100,000 in gross receipts. (The current rate is 6.39% and the exemption is $75,000.)

Kenney also proposed reducing the wage tax to 3.33% for non-residents and 3.73% for residents by fiscal year 2021, bringing it to its lowest rate since 1975. The mayor also proposed a $1-million increase in the Commerce Department’s Economic Stimulus Program.

The mayor said the tax reductions and additional stimulus funding would not happen unless Council passed a proposed soda tax. (More on that in a subsequent post.)

 

 

Tax Tips for Small Businesses

The National Small Business Association recently conducted a survey in which owners reported having to spend an average of 40 hours preparing and filing their taxes. About 25 percent of those surveyed said they spent at least three weeks per year on tax preparation.

The time and paperwork occupied with taxes means less time is devoted to the actual running of these businesses.

National Funding, one of the largest private lenders of small-business loans, has created a free tax e-book for small business owners. The company, which has provided more than $1 billion in capital for over 20,000 businesses nationwide, said its goal is to equip owners with information that helps them prepare their financial documents prior to filing their federal tax return.

“National Funding created the online tax guide to empower and educate small-business owners about their taxes,” said David Gilbert, founder & CEO of National Funding. “Many of our customers reach out to us about needing funding for tax payments this time of the year, so we hope this book helps them save money and clear up confusion about the complex and ever-changing tax regulations.”

The 23-page e-book includes helpful tips and real-life examples such as:

  • Checklist–documents needed prior to filling out a tax return or meeting with a tax professional
  • Tax form chart–shows what tax forms are required for the four types of small businesses (Sole Proprietor, Partnership, S Corporation and C Corporation)
  • Deductions–shows what business expenses can and cannot be deducted
  • Explanation of Section 179–this section became a permanent tax rule this year that allows business owners to deduct the cost of equipment purchases or leasing payments up to $500,000.

To view or download the e-book, visit http://www.nationalfunding.com/landing/small-business-tax-prep-guide.

Loss of Forbes Under 30 Summit a Black Eye for Philly

I’m still fuming about how Philadelphia managed to lose the annual four-day millennial entrepreneur-fest last week after hosting it the previous two years. Organizers said they were decamping to Boston in October after they were unable to reach an agreement with the city to commit $2 million in private sponsorship to the event.

A spokeswoman for Mayor Kenney told The Philadelphia Inquirer that the fundraising potential for the Forbes’ event looked difficult because a lot of would-be donors were already being “tapped” to help support the Democratic National Convention here this summer.

The Greater Philadelphia Chamber of Commerce said the Kenney administration did not reach out to it, according to the Inquirer.

In any case, the ball got dropped. Do you mean to tell me that Comcast, venture-capital firms and other tech-centric businesses in the region couldn’t have come up with $2 million? Seriously? Are we that lame we can’t support a political convention and the Under 30 Summit in the same year?

So, now Boston will get to host the summit, which will bring together more than 1,000 of the country’s most important young entrepreneurs and game-changers. “The collaboration of the Mayor, the Governor, Boston’s business and tech community, as well as our distinguished academic institutions, made this possible,” said David Fialkow, managing director of General Catalyst Partners, is a Forbes’ press release.

While Philly dithered, Boston collaborated. At a time when Philadelphia’s startup community is taking root and millennials are repopulating the city, the summit–which features an agenda of panels, TED-style presentations, keynotes and a global competition for young entrepreneurs–would have been really valuable exposure.

Consider the 2014 Under 30 Summit in Philadelphia, where Peter Thiel and Sara Blakely gave speeches. Thiel is arguably the most disruptive thinker in America who co-founded Paypal and was the first investor in Facebook. Blakely is the founder of Spanx and became a billionaire by age 40.

You can’t quantify the value of hearing directly from people like that, and I doubt that Thiel or Blakely spend much, if any, time in Philadelphia.

I mean, why would you want to attract the young, brightest entrepreneurs to your city from all over the country to hear from the likes of Peter Thiel and Sara Blakely. Philadelphia isn’t on the radar screen of national tech media that follow tech-savvy cities such as Boston which, by the way, has a much more robust and significantly better funded startup scene than Philadelphia.

So, yeah, I think losing the Under 30 Summit is a big deal. Boston ate our lunch, goddamnit!

It speaks volumes that Philadelphia still needs to change perceptions about itself. The summit helped to do that. The Forbes’ brand reaches more than 80 million people worldwide with its business message, which could have helped raise more awareness and buzz about the tech/startup scene in Philadelphia. After being the Summit’s inaugural host in 2014 and again in 2015,  Philadelphia should have “owned” it for years. Such things can be hard to measure but are often invaluable in the long term and probably worth far more than $2 million.

 

 

 

 

 

Her Startup Helps People Cope With Downsizing And Relocating From Larger Homes To Smaller Ones

Mischa Greenberg, 60, of Penn’s Landing, is Founder of Moves-Made-EZ.  Greenberg started the business after being laid off as a sales rep for the pharmaceutical firm Novartis. The business assists people with the often daunting task of downsizing and relocating from larger to smaller homes. She started the business in 2015.    

Q: How’d you come up with the idea?

A: I knew my career in the pharmaceutical business was winding down and I had given a lot of thought to what I would do after I got the golden handshake. I had been doing what I’m doing now for friends and family my whole life. There were three missions I wanted to achieve with a company: one, I wanted it to make a difference in people’s lives, two, I wanted to do something physical where I wasn’t tied to a desk, and three, I wanted to do something that would have a positive impact, even if small, on planet Earth.    

Q: The startup money?

A:  My next-door neighbor runs the Women’s Opportunities Resource Center and I took a course through the WORC and wrote a business plan. The startup costs were insignificant other than the insurance, car insurance, creating an LLC and becoming a member of the National Association of Senior Move Managers. My business takes very little overhead, boxes and tape. It was probably about $6,000.  

Q: What’s the biz do?

A:  It’s residential downsizing, staging and repurposing for older adults and baby boomers. I go to people’s homes, help them sort out every cup, saucer, parachute, belt, piece of art. Then I figure out what goes to eBay, Craigslist, what’s donated to charity, what goes to the new home, what goes to children that live out of state. Then I get it sorted, packed, hire movers, oversee move day, unpack everything, make the bed and put the toothbrush in the toothbrush holder. So it’s complete relocation services although most clients choose segments of that, depending on what their need is. The moving is all subcontracted, so I don’t have movers, and I usually suggested taking three bids and the moving doesn’t run through my business at all. Depending on the client, I may also subcontract junk removal services, which doesn’t run through my business. I arrange all these things, handle the appointments, am there to meet these folks, but the costs of these services don’t flow through my business.  

Q: How’s the biz model work?

A: I charge $50 an hour. A three-bedroom house not belonging to a hoarder would cost about $2,500 on average. I’ve had clients moving from 8,000-square-foot homes to 900 square feet of assisted living. Each move is unique but a big component in the time factor is the emotional adjustment. There are some people who want to tell me the story of every tsotchke or belt buckle or photo and while I work hard to focus on the tasks at hand I also think it’s important for me to listen and give them the respect because I think it’s cathartic for people who are seeing these heirlooms for the last time. They want to share the stories. Also, it’s not unusual for children to pay my fee and take care of the move and dispose of stuff they don’t want.

Q: The value prop? Competitors?

A: There’s significant competition in this area but I’m the only member of the National Association of Senior Move Managers in the city of Philadelphia. What differentiates me is my location, I’m the Center City person, and I also understand the particular needs of Center City, the narrow streets, the loading docks, how big a truck can turn from Delancey on to 2nd Street. I’ve also spent a lot more time marketing my services to the realtors of Center City who are learning about this option for their clients and are understanding how helpful I can be in getting them to the settlement table in an empty house. Also, a lot of my clients are moving into continuing care facilities and they’re dealing with morbidity and it’s very emotional and they really need someone who’s sensitive to that. 

Q: Your customers?

A: A typical customer is middle-aged or older, mid-to-late 80s. The vast majority of my clients are moving from a larger space to a much smaller space, they can be singles or couples, and almost all of my clients don’t want stairs.  Most of my referrals come from realtors, but I do a lot of marketing and networking. Last year, I had about 30 clients, although not all at the same time. I’ve had everybody from an elderly woman who went to her doctor from her home and was not well and was told she would have to go directly to assisted living right from the doctor’s appointment. So each client has a unique situation.    

Q: The biggest challenge?

A: Keeping up with the demand. I have to plan and find staff and you have to have the right people for the job. I need people who understand the difference between an inexpensive piece of china and an expensive piece and how to handle it and have a level of sophistication.

Q: How big a biz?

A: I have three part-time employees at the moment but I expect to add more this year. It’s not always me sitting there in the client’s kitchen sorting through the forks and knives, although I manage and oversee every move. I’m not doing this for the money, I’m doing it out of passion.        

Q: What’s next?

A: My business is growing fast and I foresee increasing it by 50 percent this year, in addition to adding staff. There’s a very large competitor on the Main Line who’s got 45 employees and 10 trucks and she’s tried to hire me many times.  Most people who work in this business are part-time because it’s generally pretty seasonal or cyclical and you don’t necessarily have work until the work comes in.