Key Takeaways from EPI's Small and Micro Business Report

Last updated: June 27, 2024

The State of Small and Micro Businesses in RI: Top 10 Takeaways

  1. With slightly more than a million people, Rhode Island is home to over 100,000 businesses. Four out of five of these businesses have no employees, meaning that most business owners have no employees besides themselves. 
  2. Micro businesses — generally defined as those having 10 employees or fewer counting the owner — constitute 93.9% of all RI companies. Counting micro business owners and their employees together, 130,699 individuals had a source of income through micro businesses. 
  3. Small businesses, including micro businesses, have a great impact on the state’s economy. Using the Small Business Administration’s definition of fewer than 500 employees, small businesses in Rhode Island account for 98.9% of all businesses in the state and employ 51.2% of the workforce. Even using a more modest definition of fewer than 100 employees, small businesses in Rhode Island make up 98.3% of all firms and employ 36.9% of the workforce. Furthermore, there is important geographical diversity across Rhode Island’s small business landscape. 
  4. 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. 
  5. Businesses owned by White men are more likely than other businesses to have employees and are presumably larger even among small businesses. This suggests that targeted financial and technical assistance may help minority and women entrepreneurs scale up their businesses. 
  6. Legislation enacted in 2023 sought to increase — from 10% to 15% — the percentage of state contracting dollars going to certified Minority Business Enterprises (MBEs) and Women Business Enterprises (WBEs). A goal of the law was to ensure that half of the money overseen by the Department of Administration’s Division of Equity, Diversity, and Inclusion would go to WBEs, regardless of the race or ethnicity of the owners. The data shows that half of the MBE/WBE dollars have gone to businesses owned by White women. 
  7. Every year in Rhode Island, tens of millions of dollars — if not hundreds of millions of dollars — are spent on economic development, workforce development, and business support. Typically, individuals from historically disadvantaged communities are not in the rooms where the decisions are made to allocate these funds. An increase is needed in cultural awareness and focused outreach to small and micro businesses in the communities in which they live and are building their businesses. In addition, many small business owners and aspiring business owners of color feel alienated and do not trust people and institutions holding power and money. 
  8. Many small and micro business owners and entrepreneurs earn modest or low incomes and share the same economic hardships as low- and modest-income workers. In 2018, self-employed Rhode Islanders with their own incorporated businesses had median income of almost $54,000 and those self-employed Rhode Islanders with unincorporated businesses had median income of almost $33,000. For a four-person family in 2018, this income amounted to 214% and 130% of the Federal Poverty Level, respectively. While some business owners earn high incomes, the median income numbers mean that half earned below these amounts. 
  9. Care economy work is crucial because it makes all other work possible, and more women-owned businesses are in the care economy than in any other sector. Businesses relating to healthcare, childcare, and other social assistance work constitute the fifth-largest sector for all RI industries — nearly 2,200 firms in 2021 — but employ more workers than any other sector: 83,336 in 2021. The fact is that many Rhode Islanders work in this sector and will be needed and will continue to work in this sector for us to function as a society. 
  10. Several entities, both government and nonprofit, provide helpful resources for various aspects of running small businesses. However, there has long been a need for a detailed, comprehensive map or guide to help existing and prospective small and micro business owners. Many people have also called for the creation of a “one-stop shop” for entrepreneurs to create or expand their businesses — a single place to identify and begin to access all the available and relevant technical and financial assistance. The Office of the Secretary of State appears to be on the verge of providing this valuable resource. 
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