A looming government shutdown appears to have been averted, for the time being, partly due to Speaker of the House John Boehner's (R-Oh.) decision to resign from Congress and push through a funding bill. Now it looks like a Continuing Resolution will keep the government's lights on at least until December, but there's no guarantee that there will be any kind of agreement then to keep the government open. That's bad news for everyone, but for startup companies, it can slow down growth or even kill a company depending on the timing and how long it lasts. We took a look at why startups should fervently hope there's no government shutdown, beyond just wanting to make sure the Panda Cam stays on of course.
No New Projects
D.C. has plenty of startups whose focus on energy, transportation and other infrastructure projects serve the federal government, uses its data or fits into its work in some other way. In a shutdown, new projects, funding streams, and many grants are halted. Even temporary stoppage on new renewable energy plants or transportation infrastructure could cause problems not only directly, but with knock-down effects like less renewable energy available to be monitored or managed by a startup or a break in data sets used to help government agencies plan for future transportation systems.
Less Cash in Customer Pockets
A basic but pretty obvious impact of a government shutdown is that hundreds of thousands of government workers get furloughed. Though they may eventually get their backpay, all of those government employees will be holding their wallets a little tighter during the actual shutdown. That means they aren't spending money on goods and services, including those offered by startups. In the D.C. area, where there are so many government employees, that could potentially have a huge impact on short-term revenue. And if a company is new and fragile, it could be a death knell.
No Loans and Grants
Companies hoping to score a Small Business Administration grant or get a loan from government groups will be out of luck until the shutdown ends. Even if it had been an all but done deal, no checks are getting signed before the government reopens. If a company was expecting or relying on that money to cover vital costs like office rent or paying off a different debt, they're going to be in for a rough time. And any entrepreneurs planning to officially get their company off the drawing board will be out of luck too. If a startup is otherwise bootstrapping, those straps might just snap off.
Research and Patents Stalled
For technology startups, researching new innovations and filing patents is as essential as any other part of the business. But there's not going to be any patents filed or granted in a government shutdown, and there won't be access to the Library of Congress, the Smithsonian or any other research institution that might be useful in moving forward with your next great idea. On top of that, you'll have to worry that an unknown rival with independent funding has been able to catch up with you, leading to possible fights over patents and who owns different proprietary technology. Fights that would have been avoided if you'd been able to get into the Patent Office sooner.
