How Businesses Can Futureproof a Government Shutdown

By: First Union | Date:

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How Businesses Can Futureproof a Government Shutdown

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What happens when your entire business hinges on procuring federal contracts and then the federal government decides to shut down…This is a question that a number of security firms for example, that help the government with their counterterrorism agenda as well as with monitoring border issues among other highly sensitive tasks, are now having to answer. Many such companies only deal with the government, which means they have no other clients, which means they will have no incoming source of revenue once the government shuts down yet again.

Some businesses without question felt the hit during the first 35-day shutdown—the longest in this country's history. They lost millions of dollars as they bided their time waiting for things to reopen. Some even losing tens of millions. The problem that many encountered was that they were simply not used to being a commercial centered enterprise. Their primary task was to assist the federal government—their top and only consumer. Take that consumer out of the picture and it could very well spell a significant amount of trouble for the business.

So, in eyeing what could be another shutdown hot on the heels of the last one, many firms are having to stop, reevaluate and go in different, more diverse directions if they plan to survive. Otherwise, they could take another devastating hit, and this time, they may not be able to pull out of it.

What's the Backup Plan?

Many governments focused companies did, in fact, continue to pay their employees during the shutdown. When no money is coming in, however, this amounts to a fairly significant hit to the bottom line. This time they are working tirelessly to come up with a contingency plan. One that will cover expenses, payroll, ensure continued cash flow and sustain daily operations.

Some are looking to strengthen ties with their lender. Having a solid relationship with a financial institution during what really amounts to a crisis for your company is pivotal. Lines of credit, merchant cash advances, and short-term loans are all very viable options for staying afloat when the government is shut down. And given that no one knows how long it will take for the President to get his $5.7 billion for the border wall, it is even more important to look at flexible lending options that will help carry your government-centered business through.

Another option: enhancing and expanding employee training programs. You can't solely focus on the federal government when that government is not open for business. You have to diversify; expand your client base, and in doing so, prepare your staff members so that they are ready to move forward in this new direction. Offer continuing education courses, start gearing your people up to tackle new processes tailored to a more commercialized base. You might even look into other governmental agencies at the state and local levels. It's about being creative and resourceful during what could otherwise be a very lean financial period for certain organizations.

Preventing Panic

Another unique problem that the shutdown brought about for companies which deal almost exclusively with the federal government is the issue of job security. Many company owners are faced with panicked staff who are starting, more and more, to look for other jobs as they fear for their own financial future.

And when trying to rehire people, owners are finding that to be even more of an uphill battle. People want security, they want to know that they will have a job when they wake up tomorrow. The uncertain factor associated with the US government at the moment is, for some, simply too much of a risk to take.

It is important though that as a business owner you be upfront and transparent with any potential hire. You can't sugar coat it and you can't pull any punches, you can only offer your honest assessment of the situation and explain some of the steps that your firm might be taking to be able to withstand another government shutdown.

Of course, your company's mission is important to you—working with and supplying products/services to the federal government is what you are built upon after all. But you also can't afford to lose it all in light of another shutdown. We'd like to help. First Union offers a multitude of lending programs available to you for just such a contingency. If you need that cushion of cash we can help, if you need to ensure the continuation of payroll, we have programs that will cover you, and if you need money to weather this particular storm, we will work with you to come up with an individually tailored plan. Call today and be prepared for what might be coming.

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