What Does the Government Shutdown Mean For Small Businesses?

BY: ON TUESDAY, OCTOBER 01, 2013

Government shutdown.

You've heard about it on the news. You've seen it on your Facebook feed. The impending sense of gloom and doom, the harsh rhetoric and everything that comes along with something as ominous as a “government shutdown.”

Wait, Haven’t We Seen This Before? 

This all seems pretty familiar, doesn't it?

The story of politicians unable to come to a deal is indeed familiar tale. Recently speaking, the current shutdown is very reminiscent of the debt ceiling breakdown of 2011 and last year’s fiscal cliff debacle. In both of those instances, a last-minute deal was struck at the stroke of midnight to avoid a shutdown. This time? You guessed it. No deal between Congress.

The result? A shutdown.

Should I Panic?

“Government shutdown” has a pretty frightening connotation to it. Regardless, we’re still here, the lights are still on and the country is still up and running. Well, for the most part.

Bear in mind that this is not the first time the government has “shut down.” The Washington Post notes the following:

“Since 1976, there have been 17 different government shutdowns. The longest came in 1995-'96 and lasted 21 days, as Bill Clinton wrangled with congressional Republicans over budget matters.”

Also noted: Social Security checks will still get mailed, and roads and hospitals are still open. The population at large will still be able to get down to business. While you don’t necessarily need to hit the panic button, consider the volumes it speaks about the animosity within our country and the fragility of our economy. Further consider that:
  • Up to 800,000 federal workers may be sent home in the event of a government shutdown
  • The Washington D.C. economy is expected to lose approximately $200 million in economic activity per day of the shutdown
  • Billions of dollars of federal contracts may be put on hold in the face of a shutdown, with many employees of contractors left hanging
The fact that the country at large is unsure about the implications of the shutdown also speaks volumes. To what degree do the government prepare for such shutdowns? History tells us that we usually hold out hope for a last-minute deal. Of course, this didn't happen. And here we are.

So, Why Did This Happen?

In short, Congress could not come to an agreement regarding how the federal government should be funded. The time to come up with a budget simply ran out on September 30th and an attempt to delay a shutdown was rejected by the Senate.

What Does It Mean for My Business?

Depends.

Many businesses will be largely unaffected beyond the doomsday rhetoric; however, there are plenty of businesses and American workers who will be taking a hit as the result of a shutdown. Arguably, our perception of the American economy in and of itself will take the biggest hit, as our lack of confidence and negativity boil in the midst of the shutdown.

What industries will be impacted the most? Beyond contractors and those in the D.C. area, tourism, energy and pharmaceutical companies took a big hit during the shutdowns in the mid 1990’s. The degree to which such industries may suffer today remains to be seen.

When Will It End?

Simply put, the shutdown will end when a deal is made. History tells us that such a deal should happen sooner rather than later, and if so, the implications of the shutdown won’t be as hard on the American worker.

The Bottom Line

Despite the gloom and doom, we've been here before and will more than likely come out without too many scratches. If nothing else, the shutdown tells us that the country still has a long way to go on the road to economic recovery and prosperity. Regardless, America’s small businesses will stand strong in the face of adversity, just as they always have.

Image via Shutterstock

About the Author

Brent Barnhart
Brent Barnhart is a regular contributor to ChamberofCommerce.com. He covers a wide variety of topics through the written word, including content marketing, Internet marketing and small business trends. ChamberofCommerce.com is dedicated to helping small businesses grow their presence on the web and facilitates connectivity between local businesses and more than 7,000 Chambers of Commerce worldwide.
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