Another potential boost to entrepreneurship: surging home prices. While the Great Recession left many out of work and underwater on their homes, housing prices have been increasing at record rates during the pandemic. Today’s would-be entrepreneurs have a better opportunity to borrow against their equity for startup cash, or use it as a safety net if things go wrong.
“It’s an inherently risky decision to start a new business, and when your big insurance policy, your home, lost its value, you are even less likely to take that risk,” Fikri said. “But if it’s preserved, and you feel like you can fall back on it, then hey, maybe now is the time.”
Home equity may be a more important factor in boosting business creation nationwide than in Philadelphia: About half of all homes in the city are owner-occupied, compared to nearly two-thirds nationally.
There’s also the fact that the pandemic’s complete disruption of everyday life has pushed society to rethink its norms, creating space for the new.
If you have a novel product or idea about reaching a consumer, this is an interesting time,” Schenker said. “There’s a lot of potential out there.”
Potential is what Matt Grace saw when his job as a property disposal specialist for the federal government went virtual this spring.
For the last few years, the 51-year-old Northeast Philadelphia resident had been kicking around an idea for a smartphone app that would allow landlords and tenants to communicate about rent and maintenance, but a busy schedule kept it a passion project. That changed in March.
“Instead of the commute to work all the time, I had an extra three hours to devote to it,” he said. “Then a lightbulb went off: This is the perfect virtual product for a pandemic.”
Since then, Grace has been developing the app, along with a business and marketing plan. He’s still working his government job, but hopes to have his company — called Mattmann, after his childhood nickname — in its own office within 18 months
“I always felt like I wanted to be an entrepreneur,” he said. “The pandemic allowed me to take off with it.”
Experts say it’s still unclear whether the spike in business applications will benefit the economy, locally and nationwide. It takes time for businesses to go from application to operations — a timeline that may be slowed down by the pandemic.
‘This is it’
While many people see financial opportunity in the pandemic, convincing lenders to share in that optimism can be a tougher sell.
“Without question, we are more cautious than we were a year ago,” said Jim Burnett, executive director of West Philadelphia Financial Institution, which provides loans to new businesses. “It is going to be harder for the startup to get capital.”
Temple’s Small Business Development Center is encouraging people to build business plans around low startup costs, even if that means growing more slowly.
So far, Derwood Selby has not applied for a loan, borrowing about $1,000 from friends and family instead.
On Saturday, Selby, dressed in a cowboy hat, held a soft launch for his produce stand at an outdoor market in Francisville. He pitched potential customers on healthier nutrition as they browsed his avocados, tomatoes and bottles of cilantro and red onion olive oil sourced through a local winery.
By weekend’s end, he had sold about $300 worth of goods — enough to recoup his expenses, but not turn a profit.
Selby is still mostly living off the money he saved from unemployment, skipping car payments to make it last. His business is about more than making money. Selby grew up in Francisville, and many of his first customers were old family friends there to congratulate him. Few other Black men in his community, Selby said, own their own businesses.
“To say this is my neighborhood, and I’ve got a business up and running … I’m very proud,” Selby said. “I’m not going back to work for nobody. This is it.”