Small-business owners hurt by shutdown must blame themselves

About 10 years ago, my small business almost went out of business.

At the time, my firm was involved in a very profitable project with a very large client. Things were good then. We were incurring hundreds of hours on the job and charging our maximum rate. The client promised a long relationship.

{mosads}Then I received a call one day from the company’s controller informing me that they were having significant cash-flow troubles and would need to suspend our project indefinitely. At the time that project alone was responsible for more than half of my firm’s revenues. The effect was devastating. We almost didn’t survive. I complained about the bad luck, the unfairness, the client’s deception. But really, the fault was my own.

I thought about that experience as I listened to the testimony of a few of my fellow small-business owners this week at the House Committee on Small Business. They were complaining about how the recent federal shutdown affected their companies.

“The shutdown affected Port City by furloughing SBA staff who were working on a loan application for a new bottling line,” Bill Butcher, the founder of Port City Brewing Company grumbled. “Because of the closure we were unable to lock in an interest rate, which could increase the cost of our loan by thousands of dollars.

Butcher’s problems were understandable. And he certainly wasn’t alone. Heidi Gerding, CEO of HeiTech Services, Inc., a woman- and service veteran-owned small contracting business, complained that the shutdown had a “measurable impact” on her business and employees. 

Other stories were reported around the country about craft breweries that were unable to get the permits to ship beer, business travelers held up on the issuance of passports and delicatessen owners who saw their lunchtime business fall away because of the lack of customers from a nearby federal building.

“Unfortunately, the stories we heard today of the lasting pain inflicted by the shutdown mirror countless others on Main Streets in every corner of America,” Chairwoman Nydia Velázquez (D-N.Y.) lamented.

I certainly sympathize with these people. I really do. But funny thing, though: I just didn’t see this in my own little world. During the entire month of January, I met and spoke with many of the hundreds of small-business clients my firm serves and asked them about the effects of the shutdown.

Across the board, the response was muted. Even in my own business, like my clients, the shutdown had no impact. We continued to work on projects, send out invoices, quote new jobs and deal with the same headaches.

I don’t think my experience — or my clients’ — was the exception. In fact, I believe that the grand majority of the 30 million or so small businesses in the country were largely unaffected by January’s shutdown.

Don’t believe me? Then why were so many jobs added, particularly by small businesses? Why is confidence still so high? Why was January’s economic growth in the Midwest (of all places!) so strong? Why is the service sector up, and why are purchasing managers planning on increased buys in the months to come?

Of course, not all the economic data is so positive because that’s just the nature of economic data. But aside from the small number of businesses that were impacted by the shutdown, why did so many others seem to emerge unaffected?

Maybe it’s because they learned something that I learned a decade ago when I lost that big client. I managed my business poorly. I made errors in judgment. The largest error was putting all of my eggs in one basket.

I disobeyed the cardinal rule that so many other small-business owners I know who have been in business for many years have learned: Spread the risk. My bad management almost ruined my business.

So to Bill Butcher and Heidi Gerding and all the other business owners who were impacted by the shutdown, I can only say this: Don’t complain. Like I learned from that experience, you should learn from this experience.

Ask yourself about your business model. Think about the dangers you incur when your entire business:

• is built around one customer;
• is located in a risky place;
• involves selling to an industry that’s exposed to a significant downturn; or
• involves shipping products that are reliant on government approval.

{mossecondads}This isn’t the first time the government has been shut down and, despite the efforts of some,  it’s unlikely this will be the last. Shouldn’t you, like me, be working to diversify your business and minimize your risk? Isn’t that our responsibility?

Maya Angelou once said “If you don’t like something, change it. If you can’t change it, change your attitude. Don’t complain.” I sympathize with the predicament and the challenges faced by the many small-business owners affected by the shutdown, but they shouldn’t complain. Like me, their difficulties are not the government’s fault. They belong to them.

Gene Marks is founder of The Marks Group, a small-business consulting firm. He has written on economic and financial issues for The Washington Post, The New York Times and The Guardian. He also frequently appears on CNBC, Fox Business and MSNBC.