The Impact of Government Shutdown on Small Businesses

by | Sep 28, 2023 | Business Finance, Business Strategy, Resources, Small Business | 0 comments

The Impact of Government Shutdown on Small Businesses

The Shutdown and Small Businesses

The potential government shutdown threatens government workers or national parks. According to a new survey from Goldman Sachs, it poses a significant risk to small businesses in the U.S. Most entrepreneurs believe that a government shutdown would negatively impact their ventures. Small businesses, which employ nearly half of the U.S. private sector workers, are often the first to cut costs and staff during downturns.

Survey Findings

The survey conducted from Aug. 29 to Sept. 7 revealed that 91% of small business owners believe the federal government must avert a government shutdown. Furthermore, 70% said their business would be negatively impacted; of those, 93% believe their revenue would suffer. The impact of a government shutdown on small businesses is likely to be significant, especially with the current tighter borrowing conditions making it harder for them to secure additional buffers.

The Voices of Small Business Owners

The mere prospect of a government shutdown is causing stress among small business owners. Gloria Larkin, CEO of Maryland-based TargetGov, states that the situation is “unbelievably stressful.” Businesses with less direct ties to D.C. are also fearful and frustrated with what they perceive as “dysfunction.” Sari Wiaz, president of the Illinois-based toy brand Wize Choice Creations, expresses concerns about the negative impact on consumer confidence, which could lead to reduced sales of her products.

Impact on Growth and Innovation

The potential shutdown could also have detrimental effects on growth and innovation. Bill Butcher, founder of Port City Brewing in Alexandria, Virginia, highlights the risks impacting regulated industries. Government agencies must approve labels and formulas before new beer products can be sold – work that would be put on hold if federal workers are furloughed. If a shutdown occurs, he’s already making contingency plans with his management team to schedule for “lighter” staffing needs.

The Role of Small Businesses

Despite the looming threat of a shutdown, the role of small businesses in the U.S. economy remains critical. Small Business Administration (SBA) Administrator Isabella Casillas Guzman emphasizes their importance as “the job creators” and the need for stability, particularly for those businesses recovering from the heavy blow of the pandemic.

A Shift to Digital

The pandemic has also seen many small businesses shift to digital platforms. Despite the complexities involved, Guzman believes that small businesses can benefit from this digital shift and successfully navigate the more than $5 trillion global digital eCommerce marketplace.

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