Not all small businesses are alike - most should disappear

“Government shutdown threatens small businesses

Reliance on contracts, fewer reserves put firms at risk

By Tania Anderson

Mar 08, 2011

A potential government shutdown has been delayed until mid-March, but that doesn’t mean that government contractors -- particularly small businesses -- have stopped preparing for the possibility that their biggest customer will close up shop. 

While most government contractors will be affected in some way by a government shutdown, it’s thought that small businesses will feel the greatest impact because many rely on the government for all of their annual revenue and have less cash flow and fewer resources. 

Several small-business contractors that generate the majority of their revenue from government work are coming up with plans for how to deal with the potential loss of revenue, as well as what to do with scores of employees who can’t do the work they were hired for. 

“How do we recover the loss of revenue?” asked Tony Jimenez, president and CEO of MicroTech, a company based in Vienna, Va., that generates 80 percent of its revenue from government contracts. “It’s a constant situation of Democrats and Republicans trying to teach each other a lesson, and government contractors are suffering.” 

Small businesses have little to go on in terms of knowing whether and for how long the government will stop working. But they do know that nonessential contracts will stop and the work they do that requires supervision by a government employee will also stop if that government employee has been furloughed. 

Ideally, many say they’d like to keep employees on the payroll but can’t do it if the funds aren’t there. So, do the contractor’s employees get furloughed? Are they forced to take their paid vacation time? Are there other projects for them to work on?  

One of the biggest fears small businesses face is that good employees, forced to take vacations or get furloughed, might decide to leave. 

“If we lose employees, then it’s very hard to bring them back and go through the security clearance process again,” said Jay Challa, chairman and CEO of Ace Info Solutions Inc., based in Reston, Va.  

Challa said his firm, which has about 20 government projects active right now, will consider letting employees continue working at government sites that don’t require a government supervisor. 

Another option is to allow the employees to take on nongovernment work, such as research projects and proposal writing. Challa said the company will also use the time to make sure employees are caught up on certifications. These measures will allow employees to still be paid and not have to use up any vacation time.”