For some, a government shutdown starts and ends without any direct impact on their lives. For others, as well as the general economy, the impact can be far more significant. Indeed, if a shutdown lasts long enough, it can have a negative impact on the country's GDP. Here's a quick look at government shutdowns and their negative impact on businesses.
There are many potential industry concerns with government shutdowns. For some industries, like retail or restaurants, the impact of a government shutdown is largely unfelt. However, industries that are dependent on government contracts, payments, or supervision can be hurt much more substantially. No payment can be distributed, so government contractors don't get paid. This can be highly problematic for some businesses, like those that work in the defense sector.
A government shutdown can have a negative impact on more industry concerns than you might think. While social security checks were still sent out, there were processing delays. National parks and other facilities were closed, damaging the tourism industry. Had the last shutdown gone on longer, the federal judiciary would have been forced to curtail operations.
Furthermore, the longer a shutdown lasts, the greater the personal injury risk to you and your employees. Food inspections are limited, thus increasing the risk of the food supply being contaminated. Additionally, the processing of permits for a variety of industries is slowed, if not stopped altogether.
During a shutdown, millions of government employees and contractors stop getting paid. For individuals who live from paycheck to paycheck, this can be devastating. This strain is doubly problematic for non-profit agencies that are dependent upon the federal government for grants and funding. They are forced to dig into reserve funds in order to continue operating. Furthermore, when government employees stop getting paid, they stop making purchases on anything that isn’t a necessity, significantly injuring revenue streams for small businesses that depend on profits from recreational purchases.
Government shutdowns aren't just news stories about a partisan food fight. They are real problems for large swaths of the economy, and particularly for many businesses and individuals who work in the impacted fields. If you are in the industries above, you should be aware of these dangers and build strategies to mitigate your risk accordingly. Doing so can help protect you, your employees and your business from the potential problems wrought by a government shutdown.