As the sequestration process looms over us, the well-known confrontation between Congress and the White House over the federal budget is once more on the tongues of news anchors and radio personalities across the country as the March 1st deadline has come and gone. With the sequestration in place, automatic, across-the-board cuts to government agencies totaling $1.2 trillion over 10 years, how will it affect small businesses?
Carrie Mantha, CEO of Indira, writes:
Outside those who do business with the government, I don't expect to see any direct impact from the sequester. Despite the political posturing, it appears to simply be a slow-down of projected spending growth that should not directly impact many industries. What I am concerned about are the indirect effects (as are many of the founders I speak with): Will deals be cut to avoid sequester that could endanger support for legislation that does impact us directly, like immigration reform? Will these budget and fiscal decisions lead to a weakened overall economy or weakened consumer sentiment that makes it difficult for new, high-growth business to survive? Will any deal involve increased taxes that make it difficult to hire new employees or keep my business running?
Cuts in government spending will directly affect small businesses with government contracts, or small businesses that act as subcontractors to larger firms with these contracts, like the DOD. Many of these businesses are struggling to make their next payroll and don’t have the reserves to survive a 30, 60 or 90-day delay in revenue, and will most certainly close if these contracts are terminated completely.
The future, as always, is unpredictable when it comes to business and politics. For small business owners and entrepreneurs everywhere, what does this mean for your business? Are you making any changes as a result of these cuts?