Understanding the risks and arming yourself with Strategic Intelligence can give businesses a competitive advantage during a government shutdown.
The government shutdown has been averted for 45 days. But instead of sitting back and waiting for the next ball to drop, smart investors are preparing for what’s ahead.
If there is a shutdown, any business that deals with employees of the USG or that operates in areas heavily populated by government employees – military bases, NASA facilities, civilian operations – will see immediate impact. Restaurants, retail operators, day care facilities, dog walkers, and others in those areas will face immediate hurt as government employees brace for a potential shut down. Government employees are already saving pennies in anticipation of weeks, or months, without a paycheck.
Even outside those bubbles, there will be impact. If you think a shut down won’t hurt because you aren’t a government employee, you need to think again.
Small businesses are at risk. The White House warned that Small Businesses will face hardship if the Federal Government shuts down, saying it would cause would have “devastating consequences for small businesses and needlessly undermine America’s economic progress.” The White House estimates small businesses would lose access to $100 million in loans per day if the government stops working.
That will have its own ripple effect, curbing hiring and spending by small businesses.
Additionally, small businesses with exposure to the US Government will face delays in processing payments and delivering products and services.
There is also risk to the average consumer.
Food inspections and hazardous waste inspections may stop, raising the risk to the public. The Center for Science in the Public Interest (CSPI) warns that routine inspections by the U.S. Food and Drug Administration will stop, “escalating the chances of food contamination or other hazards impacting public health” and urges the government to come to an agreement to avoid risks to US consumers.
Air travel may also face problems. CNN noted that while air traffic controlers and TSA employees are technically “essential” and will continue working, they will not get paid until after the impasse is resolved. That raises the risk of “calling out” because employees are working but not receiving pay, which happened during the 2018 shutdown. Lack of workers will cause long delays and will cost the travel industry as much as $140 million per day.
Rather than wait for the shutdown, businesses can take the opportunity now to gather strategic intelligence to examine supply chains, customer base, expenses, and other areas with exposure to the government or government employees and try to shift or diversify before the crisis hits.
If businesses wait until the shut down is a reality, they are too late. It will no longer be possible to pivot if the shutdown is a reality.
And remember, “never waste a crisis.” For companies looking for a competitive advantage, the crisis is likely to hit cash-strapped or single-customer companies harder than others. This could create acquisition prospects that previously would not have considered selling.
Like all things, the key is having accurate data to make decisions, and to know information before an event happens.