62% of Small Businesses Impacted by Sequestration

On March 27, 2013, U.S. Women's Chamber of Commerce and American Small Business Chamber of Commerce conducted a survey on the impact of Sequestration on small businesses. The responses were broken into four categories: Negatively Impacted, Not Impacted but Worried, Not Impacted and Good for Business.

The results showed 62% told us that their businesses had already felt the affect of Sequestration.  20% said that, while they had not yet been impacted, they were worried about the impact further down the road.  Nine percent told us that they were not impacted and not worried; while another 9% told us that they thought sequestration was good for their business.  Below is a breakout of issues taken from member comments:

Impacted Negatively Citing: 62%

  • Several government projects have issued stop work orders
  • Reduced staff to part-time status
  • Layoffs
  • Federal sector business pipeline is dry; impacts our ability to hire people for projects or plan for marketing, equipment purchase and other business activities.
  • Employees declined participation in insurance plans because it is too expensive and they fear their own job may be cut soon so they are saving as much as they can right now.
  • Drop-off in sales
  • Slowed sales
  • Projects are on hold
  • Federal agency representatives’ morale is at an all time low
  • Canceled scheduled work
  • Very few new RFP’s  being posted
  • Unable to expand and hire
  • Agencies have not started acquisition planning.
  • Slow-pay:  collection from clients who depend on the government for funds.
  • While there have been requests for quotes but no orders are being placed with the prime
  • Lost work hours and had job offers put on hold or even pulled
  • Furloughs – including small business participation in furloughs
  • Contracts being cut
  • Unable to move forward with growth plans
  • Profound impact on state contracts
  • Subcontracts through federal contractors have also been affected - fewer contracts and more competition
  • Option Year executions are up in the air
  • Failure of agencies to actively plan for the reductions as soon at the sequestration deal was made
  • Lack of cash flow
  • IDIQs Canceled
  • Asked us to stop work and simply invoice for the work completed because their funds had been cut and they had no money to complete the project!

Not Impacted but Worried 20%

  • Concerned about what may happen with 2014 contracting.
  • Currently making contingency plans

Not Impacted 9%

  • Probably in six months, we will see a drop off in bids due to the sequester; I am poised to make changes rapidly with any serious or verbally potential loss of business or rates.

See Sequestration as a good thing: 9%

  • “As a firm that specializes in outplacement/career transition, we are counter-cyclical to the business cycle and will likely see increased business as a result.”
  • “We will benefit due to the fact that those government representatives making decisions on contracts will more closely scrutinize the cost for services.”
  • "I feel the sequester is a good thing.  It will weed out the worst and give the best a chance to thrive!"  If you have core capability, sustainability, and no fat, there is no worries.  As a small EDMWOSB, I feel that we will survive this cutting of the unfit!"

Solutions - We had a few firms offer up their solutions to weathering sequestration.

  • Diversify, Diversify, Diversify.
  • We are bracing for more cuts and working to get into different government work that is mandated and therefore must be funded.
  • We are working with our client agencies to assist them with how to best overcome these obstacles.


“Congress doesn’t realize that the federal government has outsourced many vital technical and professional training activities to very small businesses. This part of the federal agency budget is very vulnerable right now. “

“We believe that government spending must be significantly curtailed.  There are ways other than sequester to do this that will not negatively affect the economy.  In fact, we believe the economy can improve under other approaches.”

“We are hanging on by a thread.”


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