Report: R.I. 20th best state to start a business

Rhode Island is the 20th best state for starting a new business. Wyoming is the best and Hawaii is the worst, according to a GOBankingRates study. / COURTESY GOBANKINGRATES
Rhode Island is the 20th best state for starting a new business. Wyoming is the best and Hawaii is the worst, according to a GOBankingRates study. / COURTESY GOBANKINGRATES

PROVIDENCE – Rhode Island ranks 20th best on a list of the best and worst states to start a business, according to GOBankingRates.com, a personal finance news and features website.

According to the site, GOBankingRates compiled the list following “record highs” in the amount of new businesses that have been started in the U.S. since the financial crisis.

GOBankingRates analyzed the following factors in assembling the list: Startup activity (based on the rate of new entrepreneurs, opportunity share of new entrepreneurs and density of startups), business survival rate (based on the ratio of business creations to deaths), productivity (based on per capita gross domestic product in 2015), availability of employees, education level of potential employees, business tax climate and cost of living.

Rhode Island’s startup density (61 per 1,000) and rate of new entrepreneurs (0.23 percent per month) is one of the lowest in the nation, along with Pennsylvania, Indiana and Delaware, however there is room for new businesses, as the state ranked in the top 10 among states with the highest opportunity share of new entrepreneurs (87.3 percent), or the percent of new entrepreneurs not coming out of unemployment before starting their businesses. Rhode Island ranked 45th in business tax climate.

- Advertisement -

In comparison, 15th-ranked Massachusetts scored average in business tax climate (25th), yet its $62,918 per capita GDP bodes well for productivity and it has the nation’s third-highest education level of potential employees.

Ranked 12th overall, Connecticut fares even better. Despite its high cost of living and unfriendly business taxes (44th), it has “a good supply of available employees with solid education level,” boasts the third-highest per capita GDP ($64,115) and has the fourth-best business survival rate score in the country.

According to GOBankingRates, aspiring entrepreneurs should look to Wyoming, Alaska, Nevada, Texas, Delaware, Utah, Illinois, Missouri, Virginia and Florida, which make up the top 10 states to start a business. The top 10 worst states are Hawaii, Maine, Vermont, Arkansas, Wisconsin, Maryland, South Carolina, Kentucky, Alabama and West Virginia.

Data sources included: The 2016 Kaufmann Index: Startup Activity Report on State Trends for the rate of new entrepreneurs in a given month as well as the density of startup businesses per 1,000 existing businesses; U.S. Bureau of Labor Statistics for data on the ratio of business creations to business deaths; U.S. Bureau of Economic Analysis for per capita GDP figures; DirectEmployers.org for percentage of available employees; U.S. Department of Education for employee education levels; Tax Foundation for business tax climate rankings; Missouri Economic Research and Information Center for cost of living data.

No posts to display