RI Ranked Among Worst States to Start a Business in the U.S.

Tuesday, July 03, 2018


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Rhode Island is one of the worst places in the U.S. to start a business

When it comes to starting a business, Rhode Island is one of the worst states in the country.

According to a recent study completed by WalletHub, Rhode Island is the third worst state in the country to start a business, ranking 48th out of 50.

“Startups fail for different reasons, a “bad location” among the most common. Choosing the right state for a business is therefore crucial to its success. A state that provides the ideal conditions for business creation — access to cash, skilled workers and affordable office space, for instance — can help new ventures not only take off but also thrive,” said WalletHub.

RI’s Rankings:

  • 49th best - Business Environment
  • 11th Best - Access to Resources
  • 35th Best - Business Costs
  • Tied 48th - Shortest Average. Work Week


The Rankings

Rhode Island is ranked behind Pennsylvania and Vermont, who rank 46th and 47th overall.

Rhode Island is ranked ahead of New Hampshire and Hawaii, who rank 49th and 50th respectively.

The best state to start a business is Texas.

See the Rankings in the Map Below

Source: WalletHub


The Method

In order to determine the best and worst states to start a business, WalletHub compared the 50 states across three key dimensions: 1) Business Environment, 2) Access to Resources and 3) Business Costs.

They evaluated those dimensions using 25 relevant metrics. Each metric was graded on a 100-point scale, with a score of 100 representing the most favorable conditions for new-business creation.

Finally, WalletHub determined each state’s weighted average across all metrics to calculate its overall score and used the resulting scores to rank-order our sample.

Business Environment – Total Points: 50

  • Average Length of Work Week (in Hours): Full Weight (~4.17 Points)
  • Share of Engaged Workers: Full Weight (~4.17 Points)
  • Average Growth in Number of Small Businesses: Full Weight (~4.17 Points)
  • Startups per Capita: Full Weight (~4.17 Points)
  • Average Growth of Business Revenues: Full Weight (~4.17 Points)
  • Five-Year Business Survival Rate: Full Weight (~4.17 Points)
  • Industry Variety: Full Weight (~4.17 Points)
  • Industry-Cluster Strength: Full Weight (~4.17 Points)
  • Entrepreneurship Index: Full Weight (~4.17 Points)
  • Share of Fast-Growing Firms: Full Weight (~4.17 Points)
  • “Digital States” Survey Grade: Full Weight (~4.17 Points)
  • Job Growth (2016 vs. 2012): Full Weight (~4.17 Points)


Access to Resources – Total Points: 25

  • Financing Accessibility: Full Weight (~3.57 Points)
  • Venture Investment Amount per Capita: Full Weight (~3.57 Points)
  • Human-Capital Availability: Double Weight (~7.14 Points)
  • Higher-Education Assets: Full Weight (~3.57 Points)
  • Share of College-Educated Population: Full Weight (~3.57 Points)
  • Working-Age Population Growth: Full Weight (~3.57 Points)


Business Costs – Total Points: 25

  • Office-Space Affordability: Double Weight (~5.56 Points)
  • Labor Costs: Double Weight (~5.56 Points)
  • Average Annual Single Insurance Premium per Enrolled Employee: Full Weight (~2.78 Points)
  • Corporate Taxes: Full Weight (~2.78 Points)
  • Total Effective State & Local Tax Rates on Mature Corporate Headquarters: Full Weight (~2.78 Points)
  • Total Spending on Incentives as Share of GDP: Full Weight (~2.78 Points)
  • Cost of Living: Full Weight (~2.78 Points)

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