When Business Slows Down: How Employers Can Protect Their Teams During a Government Shutdown

When the federal government shuts down, it doesn’t just affect federal employees — it hits thousands of private businesses that rely on government contracts, grants, or regulatory approvals. The slowdown trickles down to small firms, contractors, and service providers, forcing leaders to balance empathy for their teams with the reality of disrupted cash flow.

With the October 1 shutdown now stretching on, many organizations have found themselves caught in limbo: payments are delayed, approvals are paused, and projects that once kept staff busy are on hold. Even if your company isn’t a federal contractor, your clients might be — and that can quickly affect your revenue stream.

1. Lead with clarity, not panic

Employees notice uncertainty before it’s ever announced. If your business is slowing down, start with honest communication. Explain what’s happening in the broader economy, how it may affect the company, and what steps leadership is taking to safeguard jobs and benefits.

“Leaders should provide clarity, compassion, and contingency planning,” says Jennifer Schielke, CEO of Summit Group Solutions. Transparency builds trust, even when the answers aren’t perfect. Silence, on the other hand, breeds speculation and fear.

2. Protect payroll and benefits first

Your employees’ financial stability is the foundation of your business. Before cutting programs or freezing hiring, explore short-term liquidity options. Consider delaying non-critical expenses, drawing from reserve accounts, or talking to lenders about bridge financing. The goal is simple: keep paychecks and health benefits flowing.

For employers who sponsor benefits, a shutdown period is also a chance to re-evaluate plan design and funding flexibility. Partnering with an independent benefits advisor — like Benton Oakfield — can help identify cost-containment strategies, carrier grace periods, and temporary contribution adjustments that keep employees covered while easing cash pressure.

3. Use downtime to strengthen resilience

When projects pause, leaders often see an unexpected window to invest in internal operations. That might include cross-training staff, updating compliance files, refining standard operating procedures, or digitizing HR and benefits administration workflows. Small improvements made during the slowdown can pay huge dividends once business ramps back up.

It’s also a good time to conduct a “benefits continuity check” — confirm your team’s contact info with carriers, test EAP and telehealth access, and verify that your benefits technology or payroll integrations can handle temporary disruptions. These small audits prevent administrative headaches later.

4. Support employees under stress

Financial anxiety, especially when paired with national uncertainty, can erode productivity. Encourage use of Employee Assistance Programs, credit-union financial counseling, and community resources. Some employers even organize group sessions with financial advisors to help staff budget through potential delays in overtime or contract work.

“Communicate and exercise generosity toward the frustrations that your people may experience,” Schielke advises. “Even small gestures of understanding go a long way when employees feel unmoored.”

5. Plan for the next disruption

No one knows when the next shutdown or funding lapse will hit — but we can plan for it. Businesses that survive these cycles tend to maintain three things: liquidity, lender relationships, and reliable information. Build a folder (digital or physical) with key contacts, vendor terms, and resource links you can reference quickly.

At the same time, use this experience to re-examine dependencies. If more than 25% of your revenue comes from government-related work, it may be time to diversify your client base or create service tiers that can continue independently of federal timelines.

The Benton Oakfield Perspective

At Benton Oakfield, we help employers design benefit programs and contingency strategies that keep teams protected through volatile periods — from government shutdowns to inflation surges. Our mission is to help businesses stay resilient, compliant, and compassionate, no matter what Washington does.

Whether you’re reviewing your benefit costs, preparing a communication plan, or just trying to steady the ship, you don’t have to do it alone. Reach out to our advisory team to learn how a proactive benefits strategy can help your business weather uncertainty with confidence.

Because when your people feel secure, your company stays strong — even when the government doesn’t.