Economy becoming ripe for new businesses?

Kevin B. Murphy of Warwick has not only been busy setting up new incubator startup and title insurance companies; he has resurrected his dormant law firm – all in the past two months, to catch what he believes may be a wave of economic rebounding.
Last month, Murphy and his three brothers formed Hatch Entrepreneurial Center LLC in Providence to try and retain startups and prevent the “brain-drain” of talented college grads leaving Rhode Island. Murphy also launched Triton National Title Agency LLC, based in Providence, an unrelated venture that involves writing title insurance for first and second mortgages.
At about the same time, Murphy brought back the law offices of Kevin B. Murphy & Associates LLC, with offices in Providence and Warwick, which he had formed under a different name in 2008, “when the economy tanked.” He started working as principal on July 1, leaving Adler, Pollock & Sheehan in order to do so. Steadier home prices and declining unemployment suggested the economy was “starting to turn the corner,” he explained.
According to Secretary of State A. Ralph Mollis, a slight uptick in new-business formation in the second quarter, which ended June 30, may bode well for future growth, in part because it comes close to the level recorded when the economic downturn began five years ago.
In the second quarter, Mollis reported, a total of 1,909 new businesses registered with the state. The count is 34 shy of the 1,943 that registered in the second quarter of 2008, he said. However, the total is 36 more than the 1,873 recorded in the second quarter of 2012.
Urging “cautious optimism,” Mollis pointed out that this year’s second-quarter figures reflect three straight periods of second-quarter growth for the first time since his office began keeping these statistics in 2005.
“We’re very careful about reading too much into the numbers, especially in an economy that is giving mixed signals, but it’s always good to see modest growth,” Mollis said. “It’s great to see some positive numbers, especially when it comes to consecutive years and where we are compared to when this downturn started.” Since the recession took hold in 2008, the six-month period of January through June reached its height in 2012 with 3,849 new businesses formed and registered by the state, Mollis said. This year’s six-month total, however, comes in a strong second at 3,815, he said.
This quarter’s slight increase contrasts with the first quarter of 2013, when 1,906 new business entities registered with the office, a nearly 4 percent drop from the year before.
The vast majority of new business types are typically limited liability companies, or LLCs, and the second quarter proved no different, with 974 businesses being constituted as such, Mollis said. Other major types of businesses include nonprofit, business and foreign business corporations, as well as foreign limited liability companies.
The Providence office of the Center for Women and Enterprise trained 282 women between April 1 and June 30, said Carmen Diaz-Jusino, the senior program director, and of those, 120 were new-business owners working on business planning and accounting. For her office, that’s an increase of 17 percent, compared with the first quarter of 2013. She did not have data for the previous year.
“What I’ve seen a lot of is, some people are done looking for jobs [offered by an employer],” she said. “They are creating their own. We’re seeing that more and more.”
The CWE helps women start businesses, grow those businesses and connect with their peers. She could not quantify how many women started a business instead of continuing the job hunt.
CWE also helps sole proprietors, who register with cities or towns and not the state. As such their numbers are not reflected in state statistics, Diaz-Jusino said, but one woman the center helped is finding success early. Jennifer Ray of Cranston recently started Characters Café, a sole proprietorship, serving breakfast and lunch, and hosting live entertainment Friday through Sunday. Her business is affiliated with Theater 82 in Cranston, which is owned by Warwick-based Gateways for Change, a nonprofit that helps mentally challenged adults.
“It’s been unbelievable,” she said. “I never thought when we opened three months ago we would be this busy.”
In Ray’s case, timing of the economy had nothing to do with opening a new business. Rather, Gateways for Change managers sought her help in providing baked goods for a café, and she decided to open her own business rather than work for a business that they might have built.
“To put in that amount of work and not own the business wouldn’t be profitable or healthy for me,” she said.
Adriana Dawson, state director of the Rhode Island Business Development Center, said that while an increase at RIBDC in new-business formations is not quantifiable, people interviewed in intake sessions say they are feeling more optimistic about the economy.
“We have noticed more folks coming in that are exploring the trades industries – contractors, plumbers,” she said, as well as the more common restaurant and retail store owners.
Jennifer Cookke of Lincoln, a commercial developer and property manager, organizes a new LLC every time she starts a major project, such as UO Realty LLC, created this past quarter for a new medical building under construction on Eddy Street in Providence.
“In the last two years, the only growth we’ve experienced is in the medical community, whether through a hospital system or private doctors,” she said. “The medical community in the state is robust and I don’t think Obamacare will alter that. We are optimistic about Rhode Island. The regulations and some of the politics can be disheartening at times, but we remain optimistic about investing in the state.” •

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