San Diego-based Ron Putman, regional developer for Maui Wowi Hawaiian, a franchise of cart-based smoothies and coffee, has been hit by the partial shutdown.
As the government reopened after a 16-day partial shutdown, small-business owners have a message for Washington: Thanks. Sort of.
"The damage has already been done," said Ron Putman, an entrepreneur in San Diego. While the government was shuttered for more than two weeks, the region's annual Miramar Air Show was canceled. That left Putman — operator of a franchise cart business that sells coffee and smoothies — standing idle.
He had 16 cases of perishable bananas ready to go, 20 gallons of brewed coffee and no customers to serve. "I found out the air show had been canceled from my friend, who saw it on the news," Putman said. "I thought he was joking."
The air show had brought in as much as 20 percent of his annual revenue, when the economy was pumping five years ago. "It was just a shock for all the vendors there, setting up tents" this year, said Putman, regional developer for Maui Wowi Hawaiian.
For businesses across the nation, Wednesday's deal to reopen the government and extend its borrowing authority is getting scant cheers from Main Street. While the agreement brings relief for furloughed workers, many smaller merchants are wondering what's fundamentally changed with the fiscal deal. A reopened government doesn't mean business owners will get refunds for lost revenue, or other costs incurred during the stalemate.
Many small-business owners are bracing for more government-related uncertainty including Obamacare deadlines.
"You're constantly trying to stay ahead of what the government is going to do, but nobody knows, so we just push forward," said Bryan Scott, owner of Barn Light Electric. The Titusville, Fla.-based manufacturer of porcelain lighting includes online customers in the Northeast. On Oct. 1, day one of the shutdown, their online orders tumbled 70 percent before eventually recovering.
"The mood has been up, then down," Scott said. "It has just been a roller coaster."
During the partial shutdown, there's been an absence of government statistics to gauge the economy. But other data already suggest a growing tab related to the shutdown.
While small-business owner sentiment dipped in September, there was a "drop in outlook for future economic conditions," according to the National Federation of Independent Business, or NFIB. That suggests many owners are keeping an eye on Washington, D.C., said NFIB chief economist Bill Dunkelberg.
The September reading also showed owners expecting business conditions to improve in six months tumbled 10 percent compared to August. That pessimism about future business conditions was the largest factor contributing to September's optimism reading.
Beyond Main Street, consumers already have been curbing spending due to the partial government closure, according to two new surveys. And the National Retail Federation, which represents large and small retailers, has been especially vocal about the shutdown's wake.
"As we head into the holiday shopping season, retailers and consumers need stability and certainty from policymakers in Washington and assurance that the economy will not implode due to their actions or more important, lack thereof," according to the NRF statement. "This new norm of legislating from crisis to crisis is no way to govern."
American taxpayers ultimately may have to foot the bill for rebooting a partially closed government, a tricky and pricey proposition. Plus the shutdown could also have lingering consequences on the U.S. government's ability to borrow money.
Despite the uncertainty, leave it to nimble entrepreneurs to pivot — with or without the government's help.
CrackedMacScreen is a Washington, D.C., small business run by brothers Trevor and Colin Lyman. They offer affordable screen repair for Apple Mac, iPhone and related products. They recently moved business operations from their cars to a permanent space near the Dupont Circle subway stop.
When the partial shutdown hit, idle furloughed workers began tackling errands — including fixing mobile devices. Business has been brisk. "They have time to get it done," Trevor Lyman said.
But the brothers aren't resting on their laurels as the nation's capital returns to business. They're ramping up GadgetWraps, a new business that features accessories for smart watches. Their new online customers are from around the world — not local residents, who may get hit by more furloughs or uncertainty down the line.
"We're just trying to spread out our risk," Trevor Lyman said. "You need to ask, 'What do we need to do now in case this happens again?' And you know it will happen again."
Meanwhile, in Florida, Barn Light Electric owner Scott got an unexpected break on contractors due to the shutdown. Scott is building a 10,000-foot addition. His contractor, whom Scott recently booked, had lost seven jobs at the nearby Kennedy Space Center. "They relocated a crew to our site ahead of schedule," he said.
The bottom line is that drawn-out uncertainty, including the shutdown, continues to reverberate on Main Street. October's small-business optimism reading is expected to reveal the full effect of the partial shutdown on small businesses, which has remained cautious throughout the recovery. Entrepreneurs have been reining in costs and wrestling with the Affordable Care Act — not creating Main Street jobs in droves. That missing trend has been a traditional driver of past economic recoveries.
Just ask Preston Starr. He owns a Hungry Howie's pizza franchise in Douglassville, Ga., and is trying to open a second outlet in Smyrna, closer to Atlanta. That second location has been selected, equipment has been purchased and permits are in place. A management team is on standby and Starr wants to hire up to 25 workers.
The only thing holding him back has been the Small Business Administration, which had been closed. Starr needs key loan-related signatures. Even with the government restarting, Starr said he will not open his second outlet by Halloween — one of the most popular days for pizza orders, along with the Super Bowl.
Between the signed lease and other holding costs including delayed construction, Starr said the partial shutdown has cost him roughly $25,000 so far. "I can't get that back," Starr said.
The Wall Street-Main Street disconnect 5 years after the crash
States hurt the most by the government shutdown
Debt default damage already unfolding
First published October 17 2013, 8:01 AM