Franchise Outlook

Franchising and the Government Shutdown

government_shutdownWill your  franchise business plan be affected by the government shutdown? It’s possible.

The Small Business Administration is closed and won’t be signing off on new loans. BusinessWeek assembled a list of all the services the SBA won’t be providing; the short version is that they will be doing just two things:  the Disaster Loan Program and disaster-funded and investigatory activities under the office of the Inspector General. With 62% of SBA workers on furlough, loans simply aren’t being processed.

E-Verify is also offline. This is a service that helps businesses verify that workers can be legally hired. Export and import permits aren’t being furnished during the shut down either.

For franchise and would-be franchise owners, this means if you’re looking for support to build or grow a business or even just to get necessary federal paperwork processed, you’ll have to wait until Congress takes action to reopen federal services.  As we get deeper into the shutdown, other federal offices may shut down as they run out of reserve cash and workers are sent home.

Perhaps more importantly, workers on furlough will be spending as little as possible until they know when they’ll be back at work and whether they’ll be paid. In some communities, this may have a significant effect on local businesses.

No one is sure how long this shutdown will last or what effects it will have. We could see a piecemeal funding of certain government agencies, one by one, or there could be a late night vote on a whole package deal. If you’re relying on government funding and support for your franchise business plans, you might find yourself in a holding pattern for a while.

If you’ve been planning on opening or expanding your business, ask yourself if you can wait. Business opportunities often move fast but many people are currently dealing with slowed down processes because of the federal government. Working with a future landlord or business partners to try to figure out solutions while waiting on a loan may be unavoidable.

If your business model is based on revenue from federal sources that aren’t paying right now, look for other lines of revenue that you could tap into and expand while the government is shut down.

It’s business as usual for most of the country, and most licenses and paperwork for your new franchise will be state or local, not federal, so the majority of people looking into franchise business opportunities can go ahead with their plans. The shutdown can still offer a business lesson for those who aren’t relying on the federal government for loans, services, or income, though.

Every business needs a disaster preparedness plan.

Whether the disaster most likely to affect you is a government shutdown, a tornado, or bad press, you need a back up plan. Having enough capital to see your fledgling franchise through a tough time is important. Having alternate revenue streams in case your main business is affected — and that could mean thinking outside the box — is also helpful.

Having the right attitude can help, too. Worry and anger can get in the way of clear thinking and keep you from doing your best work. That could make a temporary setback into a long-term problem.

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