I guess if you’re going to partially shut down the U.S. government, now is the best time of year to do it.
The shutdown, which is officially entering its second full week, has cut back on the services offered by federal agencies including the Departments of Transportation, Interior, Agriculture, Commerce, and Treasury. Many small businesses not only rely on the services provided by these agencies but from the revenues that they indirectly generate. Already, some of these businesses are feeling the impact.
“This is the holiday season. I understand this,” Sam Samhori, who owns a small deli and pizzeria that caters to the lunchtime crowd near a federal office complex, told a local television station near San Francisco. “But right now it’s lunchtime and I have nobody.”
That facility has been shut this week, and because of this, he — and other small business owners who serve federal workers around the country — have seen revenues significantly drop. Samhori has cut back hours and sent employees home early.
In West Texas, the nonprofit Big Bend History Association says it will likely lose about $35,000 a week from lost sales at its bookstore because of the closing of a nearby national park, according to a Wall Street Journal report. Other businesses nearby and adjacent to similar tourist sites have also suffered room and trip cancellations.
In Washington state, the main road to an entrance at the Olympic National Park hasn’t been plowed since the shutdown and that in turn has forced the closing of local ski resorts. “This is the absolute worst time for this to happen.” Gary Holmquist, a national park liaison with the Hurricane Ridge Winter Sports Club nonprofit that runs the ski slope, told the Journal.
The federal shutdown means that approvals for permits and licenses at small businesses around the country have ground to a halt. That’s already impacted Benfield Wines, a family owned winery in Ohio whose owners are awaiting permission from the Alcohol and Tobacco Tax and Trade Bureau for a new product line.
It has also extended the waiting period for Toby McAdam, the owner of a Montana herbal company that has applied for approval from the Food and Drug Administration to sell his products. Many independent farmers are also on edge because, although the Agriculture Department has assured growers that subsidy checks and other payments would go out during the first week of the shutdown, direct payments to some of those farmers, as well as loan and disaster assistance programs, have been put on hold.
Financing is also taking a hit. A few small business owners applying for Small Business Administration-backed loans near the end of the year have seen their applications halted as a result of the shutdown. “It’s affecting us pretty deeply, and we’re having to change course because of it in a dramatic fashion,” one owner in Huntsville, Ala., told a local television station.
Reports like the above are common from around the country, but for now they’re still few and far between. That’s because the government shutdown has occurred in the middle of the holiday season where most companies — including many of my small business clients — have been either shut or working on a very limited basis.
The full effects of the shutdown, if it continues into January, will begin to become more serious, particularly for small business owners. Help from the IRS will be limited. Loan guarantees from the Small Business Administration will be held up. Passports, permits, and licenses will be withheld. Government contracts will be delayed.
More important, a continuing shutdown will begin to have a significant impact on the paychecks of federal employees who, in many parts of the country, provide the livelihood for pizza shops, repair centers, service providers, and other mom-and-pop merchants in their communities. The impact on confidence, spending, and economic output from an extended closure would affect the rest of us who run small companies.
Most experts don’t think it likely that the shutdown will continue for a very long time, and there are already rumblings in Washington of a compromise. But until that happens, let’s hope the small business owners affected — or will be affected — have squirreled away enough reserves to help navigate themselves through this unexpected and frustrating challenge.