According to this article in the Wall Street Journal, the government shutdown is just one of many troublesome obstacles small firms have been faced with. With museum doors and park gates back open, and federal money for preschool programs flowing once again, one must remember to consider the long run repercussions of the two week federal hiatus, especially on the struggling small businesses of America. Budget cuts and market uncertainties are leading dropping revenues and ultimately layoffs, and in some cases, employees are voluntarily leaving in fear of the questionable future which makes it difficult to retain a talented and skilled workforce.
The SBA reported that there has been an 8% decline in contracts awarded to small firms from the federal government because they are consistently looking for a "lower price" rather than the best value when purchasing. Another trending disadvantage to small companies is increased competition among the number of firms allowed to bid on contracts and an increase in paperwork to prove compliance with the growing list of federal requirements. Ultimately the time and labor that is put in to preparing the proposals increased by more than 150 hours or the equivalent of 1-2 additional employees. This demonstrates that in the short and long run, average and total costs are increasing without the guarantee that the contracts will be fulfilled. This is encouraging layoffs of skilled employees, diminishing the quality of work, and requiring small firms to attempt to remain competitive by seeking work in the private sector and abroad.