Welcome to our new weekly podcast segment with Gene Marks. In the first episode of this series, Gene talks about what business owners should do in case of a government shutdown.

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Hey everybody, this is Gene Marks and welcome to The Hartford Small Biz Ahead podcast. This is my weekly podcast where I talk about certain issues and things that are going to be affecting you as a small business owner. And today I wanted to talk about government shutdowns. Now we might find some time between now and the middle of October, or even sooner that the government itself has to shut down. And there are lots of reasons why that is going on. The issue is this you’re running a small business. We’ve been through this before. I mean, governments have shut down. We had back in 2019, 2018, 2013, 1996, 1995, and at least three other times since 1980. So this really isn’t a new phenomenon. And when you speak to most, when I speak to most of the politicians that I interview and economists that are out there, many of them say, “Hey, this is all about politics and things are going to be worked out.”

And ultimately the government will get back up and running and that’s likely to happen again this year. But listen, depending on the industry that you’re in, depending on the type of business that you run, you might be seriously affected by a government shutdown. So my advice to you, if you’re listening to this now and we’re still open, but the shutdown itself is looming, is you need to prepare for that in advance. You need to start thinking ahead as to what you would do. Now, listen, let’s first of all, talk about who these shutdowns would likely impact, okay? I mean, if you have federal contracts, if you’re a subcontractor to a company, say in the construction business or any other type of service business that might have federal contracts involved. When the government gets shut down for whatever reason, those payments stop. It’s not as if they don’t continue later on and catch up, but it could be weeks or months before those payments are resumed.

So if you’re in the area where you’re providing research or consulting or delivery or transportation or technology or landscaping, construction work to a government entity or any agency, or even if you’re subcontracting to a government services provider, you might have your cashflow from that contract stopped for a while. So be aware of that. If your business is located around a federal facility, then you could be very well impacted as well. Here in Philadelphia, where I’m recording this, we have a big federal building down on Arch Street in center city, and there’s a big veterans administration center that’s right outside the city and another federal building in Allentown, Pennsylvania. Well, the workers around there, if whoever is still coming into work right now, if those facilities are shut down because of a government shutdown, then all of the surrounding businesses that are impacted by those facilities are going to find their revenues significantly drop off a cliff.

So these are people that provide lunches or services, restaurants, dry cleaners, stores that are in the area, as well as any other small businesses that provide direct services to those employees, landscapers for examples or window washers, they’re going to have a problem. Now, if you’re a business that operates, say in the travel industry or in the tourism industry, and it might be related to some type of federal government area. Again, here in Philadelphia, we’ve got the Liberty Bell, but there were other parts around the country, national parks will be closed as well. You are going to find yourself having big impact because of that. If you are relying on immigrant workers or people that need certain visas to come in and work, if you’re in a seasonal business or a business, that employees, that type of worker, you might have a problem hiring those workers because all the services that are available from the government to give them those visas are going to be shut down.

So that’s another area that you need to be aware of. Other things to keep in mind, if you’re relying on the government to do certain things that you never really thought twice about, like say you’re planning on traveling internationally as a lot of countries are opening up now and you need a passport or need to get your passport renewed. Well, guess what? You could be out of luck if the government shuts down. If you’re waiting for a safety inspection from OSHA, because of some new building that you’ve opened and you can’t be, get to work before OSHA signs off on it, that could be a problem for you. If you’re waiting on a federal court case to be resolved or a regulatory clearance on a product or a patent approval, even if you need help from the internal revenue service, all of those agencies will stop, which means you won’t be able to get those services.

And finally there’s financing. So a lot of us have been getting financial aid in the forms of loans or even grants from the Small Business Administration. Just be aware that if there is a government shutdown, the SBA will stop, which means that all the processing for these loans and these grants, even for disaster aid, any other assistance you might’ve been getting for COVID, any working capital loans or long-term financing that you were getting from the SBA, all of that is going to halt when there is a government shutdown. So if you think that your business is in any one of these areas and you think you might be affected by it, then let me give you some advice, some things that you want to do, okay. So for starters, you’ve heard of some of the services that are going to stop passport, immigration, IRS, SBA. If this date is looming, you want to do everything you can to push those services forward. If you are putting off a call to the immigration service or to the IRS on a tax question, don’t put it off any longer, get it done sooner rather than later.

And if you’re waiting for things like inspections or regulatory approvals, talk to the agency that you’re dealing with and do whatever you can to try and push those services ahead. Number two, if you’re thinking of traveling particularly overseas, you want to make sure that you’ve got your passports together and you want to allow yourself extra time. And that extra time will also apply here in the US. Let’s not forget that, even though the TSA, the Transportation Safety Authority Administration, the TSA. If they’re operating, they are going to have some cuts in their workforce as well as even flight traffic controllers. There will be some disruption, even in our internal domestic air travel. And you’ve got to leave some extra time.

Very, very importantly, though, of course is now is the time to double check your cash. The longest government shutdown on record was 35 days in 2018 to 2019, before that it was 21 days. I mean, maybe this one will be shorter. Maybe it won’t be shorter, but going without cash flow from an existing customer, particularly if it’s a big government customer and then you’re relying on those payments. I mean, that could be potentially crippling if those completely freeze up for the next 30 days. So you really want to make sure that you’ve lined up your source of capital. You’ve checked your overhead. You’ve met with your bankers. You’ve counted up your savings. You’ve prepared for the fact that worst case scenario, if my revenue really was disrupted for 30 or 45 or even 60 days, where am I going to go to get the cash to keep my business running, very, very important, okay.

Listen, if history is any indication, these things will ultimately get resolved. Politicians, they don’t want any shutdowns any more than the people that they serve. There’s an election coming up next year. No one in Washington wants to be remembered as being part of a political party that threw it to actions brought about prolonged economic harm to voters, particularly small business voters. And when the government eventually does reopen all the back payments and payroll due will be made whole. But until that happens and while the theater in our nation’s capital plays out, it’s important that your business is prepared for the worst. Hope this information helps. Look forward to coming back to you next week with another topic to help you run your business. My name is Gene Marks, and if you need any other advice and good information and tips and content for running your business, please visit us at www.smallbizahead.com. This is Gene Marks for The Hartford. We’ll see you again next week. Take care.

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