Photo by Frederic Köberl on Unsplash

The 800,000 furloughed government employees were not the only people suffering from the latest government shutdown. Restaurants, cafes, clothing stores, car mechanics and other small businesses with regular customers from government agencies have suffered significant drops in their revenues since the shutdown as well.

However, unlike most furloughed federal workers, small business owners won’t get back any lost income when the shutdown ends. A fellow in economic studies at the Brookings Institution, Aaron Klein, explained that the lost customers who did not eat at a restaurant in January will not eat “twice as many lunches in February.” So, the affected small businesses will not be able to recover the lost revenues in January. 

So far, the government shutdown of 35 days is the longest on record. Government shutdowns are relatively rare, but they leave a lasting impact on Americans. It will have a domino and rippling affect on the economy and add to the significant unemployment numbers especially in rural areas, according to Jon Bittner, the executive director of Alaska Small Business Development Center

The 16-day government shutdown under the Obama administration in October 2013 stopped various economic activities such as job creation and trading, the release of federal business and home loans, delayed approval of regulated products and about 1.2 million unprocessed verification requests at the Internal Revenue Service.   

How to prepare for the next shutdown 

Small business owners can learn from their experiences and make the following preparations to be ready if another government shutdown were to happen.

Create a recovery plan

Small businesses should analyze and identify their strengths and weaknesses, and come up with the appropriate plan to apply in case another shutdown or disaster happens.  

Open an “emergency savings account”

An emergency savings account is necessary not only for individuals but for businesses as well. Work with an accountant or financial adviser to determine the amount needed for the emergency savings account.

Diversify customers and marketing strategy

Businesses that provide primarily to government operation or workers should seriously consider other sources of revenue. This plan may be difficult if the business is in the same building as the government office.

A business can offer discounts to furloughed employees who are still reporting for work. This will result in reduced profits but the generosity will gain the loyalty of the customers.   It may take some time for a small business to recover from the losses during the shutdown but being prepared will make it easier to deal with the next one.