Lessons From A(nother) Government Shutdown
..........and other challenges
As of the time this blog is being written (02/10/2019), Senate talks have stalled and a second federal government “shutdown” is looming. This just 16 days after the previous one lasted 35 straight days (from midnight on December 22, 2018, until January 25, 2019).
Now even though providers may not be directly impacted by a government shutdown (thank God neither are Medicaid or Medicare), there can still be indirect consequences. How? Small Business Association (SBA)-guaranteed loans aren’t processed, any of your essential third party vendors who have large federal government contracts or depend on federal employee foot traffic (Employment Assistance programs with a large federal employee client base) may struggle and their services decrease or cease, travel plans may be impacted due to TSA-related problems, just to mention a few.
The key takeaway here is to treat these government shutdowns as opportunities for preparedness training for other emergencies your business may face. Just like you prep for natural disasters, you should prepare for unexpected financial/corporate challenges. Let’s review a few crucial points.
Make sure you have back up plans for mission critical third-party vendors. That vendor could suffer reverses, simply cut ties, or otherwise curtail demand and hurt a small business.
Lesson: Ensure you have policies and procedures as well as verified evidence of ability to supply from alternate vendors. Remember to keep this information up to date! There is little worse than believing you have a back up only to find out in a crisis the vendor you’re depending on went out of business 2 years ago.
This is the big one. The SBA’s SCORE.org recommends that at all times each business should have 3 – 6 months of cash reserves to cover expenses in a cash-like vehicle or something that is FDIC insured where you can easily access it and you don’t have to go through a lot of loopholes. The exact amount varies depending on the specific company. During the government shutdown, some small businesses failed to receive SBA loan proceeds and could not move forward. Other businesses impacted by the shutdown tapped into or even tapped out of their lines of credit.
Lesson: Small businesses always need to have access to essential cash that is available during times of slow or no revenue. This can be a business savings account or a solid line of credit. This will allow you to pay the rent, insurance, taxes, as well as to continue wages to employees without using cash advances on credit cards or scrambling to find money to pay your obligations.
If you are impacted by a corporate challenge or directly or indirectly, by a shutdown, you need to inform your stakeholders: employees, vendors, and perhaps the guardians/legally authorized representatives of the people you serve. Mike Murphy, of Leadership IQ, in his article in Forbes encourages leaders to do the following. Communicate – with simplicity and clarity – your company’s policy for getting through the challenge, your intent to live up to your values, and what to expect as things (hopefully) get back to normal and you rebuild for the future. Communicate regularly and consistently, and ensure that your leaders are conveying the same messages. The last thing our employees need during this already-confusing time is conflicting messages or gaps in our communications. One thing is for certain, human beings are “meaning-making” machines and will make meaning out of silence, miscommunication, or communication gaps. Get ahead of their questions and concerns to avoid misunderstanding and unintended consequences.
In uncertain times, there’s a natural tendency for leaders to shy away from employee interactions. It’s perfectly understandable; after all, everyone expects leaders to be in complete control and to have all the answers, but during tough times, it’s easy to worry about losing that control.
Strong leaders need to push through this, because when people are scared, they need positive human interaction. Leaving employees alone with their thoughts, to ruminate and perseverate, is a recipe for increasing their anxiety.
Again from Mike Murphy’s article, Alba Aleman, CEO of Citizant says”during a crisis……the collective intelligence of an informed team where trust and candor are valued far exceeds any solutions that I could devise in isolation” (inserted italics are mine). Yes – your employees can help you figure things out.
Times of crisis enable employees to regain a sense of control and ownership by allowing them to engage directly with leaders on problem solving tasks and meaningful contributions. ‘What’ we do today and ‘how’ we do it, will have a lasting impact on our workforce and our culture for many years to come. Every day that goes by, the situation becomes more dire and our options become more limited. Having the support, trust, and confidence of our workforce as we make difficult decisions keeps us authentic with ourselves and our values.
Plus, let’s not forget that during times of stress, our ability to think creatively is likely going to be diminished. So getting more brains involved in developing solutions to these dire circumstances will almost certainly generate better solutions than we could have ideated alone.
If you’re one of the few leaders that practices these secrets, you might actually come out of your corporate challenge considerably stronger than you went in.
Lesson: To quote the Good Book “Iron sharpeneth iron”. Pretending to have all the answers doesn’t equate to actually having them. Someone on your team may have the insight your business needs to survive and thrive. Unaddressed problems can quickly escalate into irretrievable catastrophes. So don’t hide – lead..….that’s what leaders do.
As a potential second shutdown looms, let us take the time to review lessons learned and how we can grow in order to be better positioned for similar disruptions in the future. Here’s a final quote from Sun Tzu “In the midst of chaos there is also opportunity”. Carpe diem folks!