Four lessons from the government shutdown

The government shutdown may only happen once every 20 years, but it taught some important business lessons that are timeless.

The recent government shutdown was as difficult on employees as it was on businesses.

Employees are responsible for the success of any company, large or small, so it is incumbent upon executives to help as much as we can when their jobs and incomes are threatened. If there’s anything positive to take away from the recent government shutdown, it’s that companies can be far better prepared if there is a next time.

We’ve all had a wake-up call.

There are at least four things small-business executives should do even before the first hint of trouble. I realized their importance in the second year of our small business when we had a new contract that required adding employees.

I started to wonder: How would I make payroll if the client didn’t pay us on time? Were we providing the employees with the right benefits packages, and could we afford them? Such thoughts made me realize that if a contract were terminated prematurely or if a project were curtailed because of spending cutbacks, we had to have a plan.

I’ve discussed this topic with other small business owners, experts in our field, bankers and attorneys. Even as our company continues to grow, the four critical criteria remain valid:

1. Have enough cash reserves to fall back on when situations like government shutdowns occur.

2. Have adequate lines of credit to ensure that payroll and payables are on time and that business operations continue without financial effects on employees and contractors.

3. Have strong transparent communications with management, human resources and employees. Our HR team and I took all the necessary steps, including weekly companywide emails, to ensure we were communicating how we would handle the shutdown to minimize any impact on employees’ work and incomes. We even have a plan to allow employees who need time off but don’t have enough accrued PTO to draw from our executive staff pool of donated PTO days. Finally, the executive team voluntarily went without pay during the government shutdown.

4. Have good legal and financial counsel. Although most executives try to read and follow government rules and regulations, it’s extremely challenging to decipher legal language. It’s in the company’s best interest to seek legal counsel to help interpret laws to ensure everyone in the company upholds them. An incorrect interpretation could have adverse effects on the entire organization.

Finally, it’s always helpful to reach out to other business owners and seek their advice - we all understand the universal pain of a government shutdown. Ask how they’re preparing, and solicit their suggestions.

 Following these steps will mitigate the effects of a potential future industry crisis on your employees, and on your company.