Is Rhode Island Really That Bad a Place to Start a Business?

Is Rhode Island Really That Bad a Place to Start a Business?

A Closer Look at Rhode Island’s Ranking as the Worst State for Business Startups

Rhode Island, known as the Ocean State, has recently found itself at the bottom of WalletHub’s annual ranking of the best and worst states to start a business in the United States. This ranking has sparked a debate about the state’s business environment, access to resources, and overall cost of doing business. However, it’s important to consider the nuances and limitations of such rankings before drawing definitive conclusions. This article delves into the factors contributing to Rhode Island’s low ranking and explores different perspectives on the state’s business landscape.

Access to Resources: A Silver Lining for Rhode Island
WalletHub’s study analyzed 25 different metrics across three categories: business environment, access to resources, and business cost. In terms of access to resources, which includes factors like financing availability and higher education access, Rhode Island fared relatively well, ranking 21st in the country. This suggests that the state offers entrepreneurs valuable resources to support their business ventures.

Business Cost: A Challenge for Rhode Island
When it comes to business cost, which encompasses metrics such as taxes and office space expenses, Rhode Island ranked 40th. This indicates that the state may pose financial challenges for startups and small businesses. However, it’s worth noting that recent tax relief initiatives proposed by the Governor may improve this aspect of the business environment.

Business Environment: Rhode Island’s Achilles’ Heel
The business environment category, given twice as much weight as the other categories, examines metrics like average workweek length and job growth. Unfortunately, Rhode Island ranked last in this category. The state’s poor performance in job growth and other related factors may be contributing to its unfavorable ranking. However, it’s important to remember that rankings like these do not capture the full story and should be taken as one piece of the puzzle.

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Weight of the Study: Considering Multiple Perspectives
While WalletHub’s ranking places Rhode Island at the bottom, other studies offer different perspectives. Forbes Advisor ranked Rhode Island in the middle at 23rd place, suggesting a more nuanced evaluation of the state’s business landscape. Additionally, U.S. News and World Report ranked Rhode Island as the 9th best state for businesses in 2023, indicating that the state has its strengths in certain areas.

Rhode Island’s Response: A Catalyst for Improvement
Matthew Touchette, the director of public affairs for Rhode Island Commerce, acknowledges the value of rankings as a guide but emphasizes that they should not be the sole determining factor for entrepreneurs. Touchette highlights that rankings can serve as a catalyst for leadership to address weaknesses and create a better business environment. He also points out that recent tax cuts and proposed initiatives aim to enhance Rhode Island’s appeal to businesses.


While WalletHub’s ranking places Rhode Island at the bottom of the list for starting a business, it’s crucial to consider the multiple perspectives and limitations of such studies. Rhode Island’s access to resources and ongoing efforts to improve the business environment indicate that the state may offer opportunities for entrepreneurs. Rankings should be used as a starting point for evaluation, but a comprehensive understanding of the local business landscape is essential for making informed decisions. Rhode Island’s ranking serves as a call to action for leaders to address weaknesses and create an environment conducive to business growth and innovation.