By ETHAN HARTLEY Thinking about opening a business? A recent report indicates you might want to do it somewhere other than Rhode Island, as Wallethub's 2019 Best Places to Start a Business" study found the Ocean State to be dead last overall when"
Thinking about opening a business? A recent report indicates you might want to do it somewhere other than Rhode Island, as Wallethub’s 2019 “Best Places to Start a Business” study found the Ocean State to be dead last overall when considering each state’s business environment, access to resources and the costs associated with doing business.
The study attempted to analyze all 50 states and rank them based on three different criteria, as outlined in the lead, which encompassed 26 total metrics – including small business growth, the five-year survival rate for small businesses, ability for businesses to receive financing from banks, corporate taxes and the overall cost of living.
The study found Rhode Island to have the 50th ranked (worst) business environment. This ranking was formed through compiling 13 different metrics, one of which is the average workweek in each state. Interestingly, Rhode Island got last in this category despite having, on average, the second shortest average work week among all states. The other 12 metrics include things like the number of “engaged” (read: happy) workers and the average growth of business revenues.
For its “access to resources rank,” Rhode Island was ranked in the middle of the pack at 24. This rank was assessed via six metrics that included the ability for businesses to access loans, the amount of human workers available and the state’s share of college-educated workers.
Lastly, Rhode Island ranked 36 out of 50 in the “business costs” ranking, which encompassed metrics such as the affordability of office space and labor costs, in addition to the cost of insurance for employees, as well as corporate tax rates and how much the state spends on incentives for new businesses to come to the state.
Little Rhody may be at rock bottom according to the study, but it’s not exactly an outlier among its neighbors. The study seems to indicate a heavy bias or some data-driven component that places states in the Northeast at a competitive disadvantage. Of the states listed in the bottom 10 in overall ranking, nine of them are located in the Northeast, including New Jersey, New Hampshire and Connecticut in the bottom five with Rhode Island. Massachusetts was ranked 36 out of 50, while Texas earned the top spot as most friendly to new business, according to their analysis.
As might be expected, those in the Rhode Island business community took exception to the bottom ranking.
“I disagree with that,” said Lauren Slocum, president and CEO of the Central Rhode Island Chamber of Commerce. “Anyone who wants to open any business, regardless of the industry, the service or the product, needs to determine a few things and need to do their research.”
Slocum said that a successful business has more to do with the preparation and work put in by the business owner than the state they decide to open up shop in. She said it’s crucial for a business owner to decide what they are trying to get out of that business. Are they trying to make a living for themselves and their loved ones? Are they simply trying to pull in some supplemental income? Either goal will have totally different approaches and needs.
At the same time, Slocum said that collaboration needs to happen between the state and local municipalities to ensure that business regulations are as uninhibited and straightforward as possible. She believes that, in Rhode Island, the state has made strides in this area – cutting down excessive certification requirements to one streamlined document.
“I think it has significantly improved to where it has been in past years,” she said. “I think there is more work that can be done, As long as people are willing to have a conversation, things can be accomplished.”
Slocum also said that Rhode Island has unique offerings that should make it attractive to prospective business owners.
“I do think Rhode Island has an awful lot to offer, both from its size – it's a wonderful test state – it's easy in terms of transportation and accessibility,” she said. “And if you have an online business, you can sit in the woods or by the water – whichever is your preference- and enjoy all the other things Rhode Island has to offer while you run your business.”
Data used to create the Wallethub ranking was collected from the U.S. Census Bureau, Bureau of Labor Statistics, Ewing Marion Kauffman Foundation, Center for Digital Government, National Venture Capital Association, Indeed.com, Tax Foundation, U.S. Cluster Mapping Project, Deloitte, The New York Times, Gallup, U.S. Bureau of Economic Analysis, Council for Community and Economic Research, LoopNet, Federal Deposit Insurance Corporation, Kaiser Family Foundation and WalletHub research.