Signs of improvement in economy?

BIGGER PORTIONS: Ben Phorp, manager of Abyssinia restaurant, started the business when he was unemployed. The eatery has been a labor of love, consuming much his of waking time and his savings. / PBN PHOTO/DAVID LEVESQUE
BIGGER PORTIONS: Ben Phorp, manager of Abyssinia restaurant, started the business when he was unemployed. The eatery has been a labor of love, consuming much his of waking time and his savings. / PBN PHOTO/DAVID LEVESQUE

What do a Johnston photographer, a Westerly brewery and a Providence Ethiopian restaurant all have in common? Each was among the 6,846 new companies that braved Rhode Island’s rocky economy and went into business last year.
For the first time since pre-recession 2007, the number of new companies formed in Rhode Island grew in 2011 compared with the year before, according to a summary of filings from the secretary of state’s office.
“My husband has had this idea in his head for the last 20 years about starting a brewery; it’s just always been something he wanted to do,” said Jennifer Brinton, who started Grey Sail Brewing Co. in Westerly along with her husband, Alan. “On our 10th anniversary we said: ‘Let’s get back to thinking about the brewery.’ Last year we did it.”
From establishing a brand identity to bankrolling equipment purchases with personal savings, Grey Sail and the thousands of other new Ocean State startups face formidable challenges to just making it through to their first anniversary.
But while unemployment remains high and the economy sluggish, new business owners may take some comfort in the number of fellow Rhode Islanders who were thinking along the same lines, that working for themselves may be the best option.
But as with most economic indicators last year, the results weren’t all good.
The 68-company, or 1 percent, rise in startups came along with a 444-company, or 7 percent, increase in businesses that decided to close up shop.
Still, after the carnage of 2008, when a 9 percent decline in startups was accompanied by a 23 percent increase in closings, the figures seem to point toward some progress.
Secretary of State A. Ralph Mollis, who’s been watching the number of businesses that file required papers with his office since 2005, said the latest figures “show we have seen some improvement from 2007-2008. While we have seen some increase in the number of new businesses and, regretfully, those that closed, both are an improvement from 2008.” Mark Higgins, dean of the University of Rhode Island’s College of Business Administration, said the most encouraging aspect of the 2011 startup numbers was the 12 percent increase in foreign, or out-of-state, limited-liability companies that filed papers to do business in Rhode Island during the year, pointing to some external interest in local commerce.
“That would indicate that people doing business outside the state are now also doing business inside the state,” Higgins said. “That is a positive, but until you can find out what segment of the economy it is in, it’s tough to tell how significant it is. It could be one company setting up dozens of LLCs.”
Overall, Higgins said the modest increase in new business combined with the persistently high number of closings pointed to a regional economy mostly treading water for the past 12 months.
“I think the state of Rhode Island is still in a kind of holding pattern,” Higgins said, adding that pension reform produced some optimism in 2011 balanced out by concerns about Massachusetts casinos and municipal insolvency.
Whether they started their business to fill a gap in the market or couldn’t find a good-paying job working for someone else, the business owners who made their start in 2011 acknowledge the size of the challenges ahead.
For some, like Jerri Moon Cantone of Johnston, who started Jerri Moon Cantone Photography in July, the biggest challenge is getting name recognition without a large advertising budget or visible brick-and-mortar presence.
“I only have myself to promote myself and it is really hard to get your name out there,” said Cantone, who is working out of a room in her home that used to be her daughter’s bedroom. “I guess advertising comes back to money too.”
Like many startup owners, Cantone is juggling the demands of a fledgling business while holding onto a day job. It was only when the last of her four children left the nest that she had the time and space to give professional photography a shot. “I think it will all work out,” Cantone said. “I see myself being very successful eventually. I am enjoying the challenge.”
For Ben Phorp, the manager of Abyssinia restaurant in Providence, serving Ethiopian and Eritrean food has provided an alternative to being unemployed, which he was after being laid off from a teaching job, but leaves no time for moonlighting.
“I was unemployed and keeping an eye out for properties, the job market was tough. Angkor restaurant moved and this space opened up,” Phorp said. “I refinanced my house. It seemed like the perfect spot.”
With the initial idea that his Eritrean partners would take the business over eventually, Phorp has instead worked 20-hour days and burned through a chunk of his savings.
But the dream of starting a business that would thrive and help refugees who have settled in Rhode Island remains.
“They come here with such hope and then a lot of times their hopes are dashed,” Phorp said. “We just wanted to give them a hand starting out.”
Back at Grey Sail Brewing Co., Brinton said starting the business, while difficult, had actually been “a little bit easier than I expected,” with juggling the demands of four children and a fledgling enterprise the hardest part.
Her husband, Alan Brinton, has kept his day job as an engineer for now, but the couple sees Grey Sail becoming a moneymaker.
“Things fell into place,” Brinton said over the phone as she drove the first shipment of Flagship Ale cans up Interstate 95 to the distributor. ‘The biggest concern is the economy and putting our savings into the start of a business. That was the biggest leap to make.”
Based on Rhode Island’s dubious business reputation, Brinton said the family had considered starting up across the border in Connecticut, but the Ocean State bureaucracy hasn’t been as bad as advertised.
“You always hear these horror stories about red tape,” Brinton said. “We haven’t experienced that yet.” •

No posts to display