As one of America’s oldest cities, Philadelphia has a rich, storied tradition and a business culture that follows, with high premiums on relationships and authenticity. Juxtaposed to this is an invigorating, innovative business set where small businesses and incubators are driving tomorrow’s advantages. Read on as we explore what makes business in Philly unique, interesting and sometimes challenging – and what companies there need and should expect from their fractional or part-time CFOs.
Traditional and Tomorrow’s Businesses in Philadelphia
Philadelphia is uniquely situated geographically, with 40% of the US population within an eight hour drive. Additionally there are multiple business and commercial access points, like two Class 1 freight railways, three shipping points, five international airports within a 90 minute drive. That’s a lot of business flowing in and out of Philadelphia pretty constantly.
Naturally, Philadelphia’s position as one of the oldest cities in the US means some of the nation’s oldest businesses are here too. There’s a thriving manufacturing sector as well as a significant presence of global businesses in life sciences and healthcare industries.
Yet, there’s an eye for innovation in Philadelphia. In just the last five years almost $5 Billion in Venture Capital investments have been made in biotech, healthcare, drug development and more. There’s an energetic incubator community in Philadelphia and an exciting technology sector.
Business in Philadelphia is Shaped by Social Factors
Where other major cities in America might be spread wide and far – think Los Angeles – Philadelphia is situated more like older old New England cities – more condensed and dense rather than sprawling. This has made for a patchwork of businesses and non-businesses existing throughout neighborhoods.
There are many small businesses in Philadelphia – 76% of companies have fewer than 100 employees. Larger companies, however, have a much larger share of the total employee base in Philly: 15% of businesses employ more than 60% of the total workforce here.
Small businesses in Philadelphia are 33% more likely to sell their products only locally, rather than nationally, and 34% more likely to sell to end users or consumers rather than as part of a supply chain.
The “hidden” business is the “non-employee” businesses like contractors, freelancers and single proprietors. In Philadelphia there are four times as many non-employee businesses as there are businesses with employers.
One reason for this sometimes more insular business position in Philadelphia is socio-economic. Philadelphia has a higher poverty rate than other similar cities, which impacts all manner of business trends and practices.
The Role of the CEO in Business in Philadelphia
Put all this insight together and it means Philadelphia has a 20% lower level of small business owners per capita, relative to peer cities. This results in a relatively sparse ecosystem of businesses for folks to patronize and find jobs with, for banks and investors to help grow, and for communities to rely on for tax revenue. The insular nature of most of the area’s small business patterns makes for a very involved local business network, and reinforces the value of having and cultivating relationships. The flipside of these local networks is, because these relationships can be so strong, “outsiders” have a hard time getting in – meaning the local networks don’t get refreshed with new talent, ideas and capabilities.
This can cause problems for business leaders because they don’t know what they don’t know. It’s tough for service providers because they can’t break into the network to employ some influence. This all makes for less innovation, little strategic planning for growth or succession and limited employment opportunities.
The most effective CFOs in Philadelphia have to know all this, understand it, and learn to manage and even leverage these complexities. The CFO has to develop their local networks, grow their recognition, credibility and authority in the area, and become among the trusted, valuable voices.
There is a distinct advantage in Philadelphia for the fractional or part-time CFO, especially as among a network of other capable CFOs like at ProCFO Partners. Because each CFO can leverage the skill sets and experience of the entire team we can avoid the negative impacts of a more myopic view those “entrenched” in the Philly business scene might not even understand they’re experiencing. We can bring fresh eyes and minds to Philadelphia business challenges while also being a strong, stable and long-time citizen of the city and its businesses. For Philadelphia business leaders this creates the best of all options – stability and familiarity of long-time trusted relationships combined with fresh new perspectives, wider relationships and broad experiences.