WBOB Original Reads

Flunking Out: Providence Earns 'F' Grade for Small Biz Friendliness

8/5/2014

"The state doesn't hinder small businesses with too many rules or regulations, but it doesn't do very much to make life easy if you are already established. If you want to bring your company to Rhode Island, they will bend over backwards to tempt you with tax credits and loan guarantees. There's not so much if you are already here." - Designer, Warren

Thumbtack.com, in partnership with the Ewing Marion Kauffman Foundation, today released new data showing that small businesses in Providence rate the city low overall and think it is too difficult to start a new business and hire new workers.

More than 12,000 entrepreneurs nationwide participated in this year’s survey. The Thumbtack.com Small Business Friendliness Survey is the largest survey of its kind and is the only survey to obtain data from an extensive, nationwide sample of small business owners themselves to determine the most business-friendly locations.

While there are various "business climate rankings" that rate locations as good or bad for business, there are no others that draw upon considerable data from small business owners themselves. This year our team was able to rate 82 cities and most states across multiple metrics that business owners say are critical to a friendly business environment.

“After a two-month survey of thousands of small business owners nationwide, the data show that Providence's small businesses see a lot of room for improvement,” said Jon Lieber, Chief Economist of Thumbtack.com. “Creating a business climate that is welcoming to small, dynamic businesses is more important than ever, and Providence still has a ways to go towards this goal.”

Some of the key findings for Providence - and Rhode Island generally - include:

Providence earned a grade of F for its overall friendliness to small business.
Providence was one of the hardest cities to start a business and hire new workers in the country.
Providence rated 80th out of 82 cities for business owners who would encourage others to start their own business.
Providence was the least friendly city in New England, behind Boston, Worcester, MA, Lawrence, MA, New Haven CT, Bridgeport CT, and Hartford CT.
Rhode Island was the least friendly state in the country, earning an F grade for overall friendliness.
The top rated cities overall were Colorado Springs, Boise, Houston, Austin, and Louisville. The lowest rated were Sacramento, Providence, Buffalo, Bridgeport, and San Diego.

“It is critical to the economic health of every city and state to create an entrepreneur-friendly environment,” said Dane Stangler, vice president of Research and Policy at the Kauffman Foundation. “Policymakers put themselves in the best position to encourage sustainable growth and long-term prosperity by listening to the voices of small business owners themselves.”

The full survey results can be seen here and include full sets of rankings for cities and states going back three years, along with dozens of easily searchable quotes from Providence small businesses.

"I think the free seminars are great and can be very helpful if utilized properly. Government should give out more assistance than they do." - Personal trainer, Providence

Survey methodology

Thumbtack.com surveyed 12,632 small businesses across the United States. The survey asked questions about the friendliness of states towards small business and about small business finances, such as:

"In general, how would you rate your state's support of small business owners?"
"Would you discourage or encourage someone from starting a new business in your state?" and
"Do you think you pay your fair share of taxes?"

Thumbtack.com and the Kauffman Foundation evaluated states and cities against one another along multiple metrics. The full methodology paper can be found here.