Press Release

EPI Report Reveals the Profound Impacts and Challenges of Small and Micro Businesses in RI

Last updated: June 27, 2024

EPI Report Reveals the Profound Impacts and Challenges of Small and Micro Businesses in RI

PROVIDENCE, RI: Nearly 99% of Rhode Island businesses in RI are small businesses or micro businesses — generally defined as those having 10 employees or fewer counting the owner. In fact, 80% of RI businesses have no employees besides the owner. These small and micro businesses employ just over half of the total workforce. The care economy, despite being the fifth-largest sector of the RI economy, employs more workers and has more women-owned businesses than any other sector.

These are among the key findings of a report released today by the nonpartisan Economic Progress Institute (EPI). Written by EPI Director of Research and Fiscal Policy Alan Krinsky, The State of Small and Micro Businesses in Rhode Island takes a deep dive into many timely topics. Krinsky combed over data from the US Small Business Administration, the Census Bureau, and various other local, state, and national nonprofit organizations and government agencies to produce the report, the publication of which would not have been possible without the generous financial support of Blue Cross & Blue Shield of Rhode Island and United Way of Rhode Island.

“EPI works to ensure that working people in Rhode Island feel seen, prioritized, and supported,” said EPI Executive Director Weayonnoh Nelson-Davies, Esq. “In the same way, through this report, we are striving to make sure that small and micro business owners — thousands of whom are from Black, Latino, Asian, and Indigenous communities — feel seen, prioritized, and supported. We are very grateful for Alan Krinsky’s labor, scrupulous attention to detail, and scholarship in producing this report.”

Click here for the report.

Much of the data that Krinsky examined originated in and around the years 2019 to 2021, so the report yields insight into business behavior before and during the COVID-19 pandemic. One finding is that the number of Black-owned and Latino-owned businesses in Rhode Island grew substantially before the COVID-19 pandemic and dropped substantially during the first COVID year, whereas White-owned businesses declined slightly before COVID and rebounded slightly during the first COVID year. This suggests that White business owners were more likely than other business owners to obtain federal assistance early in the pandemic.

“The institutional racism and barriers to opportunity that exist everywhere in society don’t magically disappear when people of color start their own businesses,” Nelson-Davies said. “However, we can help Rhode Island’s micro and small business owners meet their most basic needs and thrive. We can do so in ways that pay attention to the needs and challenges of the state’s many groups defined by race, ethnicity, national origin, and more. And we can do so in equitable ways that decrease income and wealth gaps and build intergenerational wealth. Let’s get going!”

Four out of five of Rhode Island’s more than 100,000 businesses are micro businesses that have no employees besides the owners themselves. Small and micro businesses constitute 98.9% of all companies and employ 228,107 workers, which is 51.2% of RI’s total workforce. More women-owned businesses are in the care economy — meaning healthcare, childcare, and other social assistance professions — which, with nearly 2,200 firms, forms the state’s fifth-largest sector but employs more workers than any other sector.

The report notes that investing in high-tech industries and high-paying jobs of the future is a smart investment — but still too narrow a focus for state economic development and business assistance. “The truth remains that most people work — and will be needed and will continue to work — in other essential sectors of the economy, such as the care economy, for us to function as a society,” it states. “Most of the businesses operating in the care economy, as elsewhere, are small businesses. Furthermore, most care economy small business owners are women, and many are people of color, and they need greater acknowledgement, respect, attention, and support than they have traditionally received.”

The report recognizes that several entities in the state, both government and nonprofit, have helpful resources for aspects of running small businesses, but there is no single map or guide to all financial assistance (direct grants, loans and microloans, community development financial institutions, neighborhood trusts, tax credits, and help accessing capital including federal funding) and technical assistance (planning, mentoring, accounting, legal, marketing, technological, and networking). However, in response to calls for a “one-stop shop” for entrepreneurs seeking guidance to create or expand their businesses, the Office of Rhode Island’s Secretary of State appears to be on the verge of providing this valuable resource through its Business Services division. 

EPI wishes to thank the following partners who provided important research and feedback for this project: Adama Brown and Sharon Cho of United Way of Rhode Island, Carmen Diaz-Jusino of the Rhode Island Foundation, Lisa Ranglin and Kristina Contreras Fox of the Rhode Island Black Business Association, Rele Abiade of One Rhode Consulting, and Hannah Sawyer of the Center on Budget and Policy Priorities.

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