A Rise In Interest Rates or a Government Shut Down?

I’ve filled my days this week with attending forums and keeping up with industry trends.  Two issues have crept into industry awareness:  1)  the Federal Reserve’s possible increase on interest rates and 2) another potential Federal Government shutdown.

What I’ve found very interesting is the Federal Reserve’s vote on the interest rate seems to be getting more press and hence more focus.  Why is that when they both will have an impact on the economy and thus an impact on everyone?  Nonetheless, the potential Federal Government shut down is not getting much press.

Having had my share of Federal Government contracts, I understand first hand the potential devastating affect another shut down can have.  Some are just now starting to recover from the remnants of the 2013 shut down.  Another shut down could put many out of work and be the end of many businesses.  Silence and ignorance on the issue certainly do not allow for proper preparation.

According to the Bloomberg Government Analysts who spoke at today’s SECAF forum, an Appropriations Bill has not yet been passed and with only nine business days remaining of the current fiscal year, this is not a good thing.  Something must be done before the fiscal year ends in order for the Government to remain operational.

There has been some behind the scenes talk about the Government extending a year long Continuing Resolution (CR).  This would in effect extend the current year’s budget through the end of September 2016.  However, the Analysts believe a year long CR would be worse than sequestration.

It appears instead of resolving the budget issue and executing an Appropriations Bill, our country’s leaders are hiding behind a debate about Planned Parenthood.  REALLY?  What about the livelihood of millions?  From what I understand, no one really wants a shut down, but no one wants to address the real issues.

So what should businesses do?

Wish for the best but prepare for the worse!

Here are a few tips to prepare just in case there is a shut down.

1.  Contact your Contracting Officers.  You want to know whether that Agency and the office you support will be impacted by the shut down, if there will be one.  You also want to know if your contract and services are considered to be essential.  If there is a shut down, only essential services will continue.  Finally, you want to determine how you will be paid if you are considered essential.  Don’t assume because you perform work, you will be paid.  Your contract provisions will need to clearly outline what you are entitled to receive.  The trick here is to communicate BEFORE October 1, 2015.  Remember, if there is a shut down, you won’t be able to communicate with your Contracting Officer until the shut down has been lifted.

2.  Communicate with your employees.  Without causing a panic, inform them of the potential for a shut down and what they can expect.  Inform them of the logistics of a shut down.  Let them know who will be your main point of contact before, during and after a shut down.

3.  Determine the impact a shut down will have on your cashflow and further determine how long your company will be prepared to pay employees.  This is a critical step.  Once mistake can make or break your company.

4.  Communicate with your bankers.  Inform them of the impact a shut down may have on your organization.  Be prepared to communicate what financing contingencies your company will need to get through a shut down.

5.  Engage your Human Resources office to thoroughly understand federal, state and local laws concerning furloughs.  When can a furlough begin?  Who will it impact?  Will furloughed employees be entitled to receive unemployment?

These are just a few things you should consider as you hope for the best but prepare for the worse.  There are other labor and non-labor law related compliance factors you must consider as well.  You can contact me directly by visiting www.AnavoTransformation.com if you need assistance.

 Carpe Diem!  Seize the day!

Lisa D. Anderson
Small Business Consultant & Growth Strategist
Anavo Transformation Solutions LLC