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Who's Starting Up While the Government Shuts Down?

Mark Marich

Look around and you will find a number of articles on the effects of the political stalemate / government shutdown on entrepreneurs. For “small businesses”, the effects are quite clear, mostly relating to government contracts (more than half the federal spending would go through federal contracts before the shutdown) and Small Business Administration (SBA) loans. In addition, with 62% of the SBA’s staff furloughed, all counseling is on hold until the government is back up and running. The suspension of these contracts, loans and services represents an immediate “brake” on the economy. 

In terms of young, growing companies, the effects are less obvious but probably even costlier in the long run. For example, the prolonged debate around appropriations and the debt ceiling are putting the immigration debate on the back burner (e.g. the Startup Act 3.0 is still waiting to fight its way in Congress). The political delay in solving this and other issues that would impact potential high-growth, high-impact entrepreneurs (e.g. health care for entrepreneurs) could have costly long-term effects because they inhibit the ability of firms to grow and create jobs, or even start.

Innovation also suffers. It is estimated that the FDA furloughed about 45% of its staff and this means that it will only be publishing regulations that are related to "imminent threats to the safety of human life or protection of property." In the mean time, many innovations stay on lab shelves instead of going to market. Some of these might be the companies that are supposed to lead the healthcare revolution. 

Many other good ideas, with lots of promise to enhance productivity, have had to delay launch plans and were forced to find non-government related ways to get funding to get off the ground. Luckily, the U.S Patent and Trademark Office (USPTO) has enough funding from last year to keep operating at normal capacity for up to four weeks.

Have you been furloughed? This might your chance to network and take entrepreneurship lessons. Washington DC’s 1776 entrepreneurship campus is working to host a furlough networking event and offer furloughed workers free online classes to take advantage of their downtime.

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