Strategic hibernation, a purposeful, temporary retreat from the market, according to Harvard Business Review, enables small businesses to preserve core capabilities and quickly ramp up when political conditions stabilize. This is often described as putting a business on ice or on hold until forces causing upheaval stabilize.”

Traditionally, businesses big and small respond to political upheaval in one of three ways:

Exit the market
Lobby for favorable conditions
Pivot to Conform to the New Priorities

Each approach comes with trade-offs and can limit future opportunities. Strategic hibernation offers a fourth path, as described by Christopher Marquis: maintaining a minimum viable operation to keep your options open for the future. Here’s how small businesses relying on SBIR/STTR funds to get out of R&D and into the market can apply this strategy.

1. Maintain Core Assets

Reduce expenses to the bare minimum required to “keep the lights on”. The goal here is to retain key intellectual property, key personnel, ongoing research, or a mix of these. This is a pause, not a pivot. Businesses can effectively use this approach when:

The political change is ideological and likely to reverse with a new administration.
There are promising market signals, such as international enthusiasm for your core offerings.
You have access to or can gain access to alternative funding sources.

Note: This strategy is more complex for government contractors whose products have ITAR export controls and can’t be sold outside the U.S. These companies will likely have to hibernate AND pivot to stay in business.

Action Item: Export your monthly expenses into a spreadsheet and/or AI and categorize all spending into three categories:

Required Fixed Costs (ie, software subscriptions or payroll)
Required Variable Costs (ie, taxes)
Other

From here, you can more clearly see the line items you need to cut and the ones you must protect.

2. Set Aside Time & Resources for Political Analysis

Don’t waste time waiting for a market rebound that may never come. Monitor political developments, bills passing (or not), identify key inflection points, and plan for shifting priorities. This might mean creating an independently operating subsidiary to maintain expertise and revenue streams, positioning your business to scale when the climate improves. Research shows that companies lacking political awareness often struggle; hibernation only creates an advantage if you have the external insight to spot opportunities and the internal capabilities to act on them.

Action Item: It’s not sexy, but a SWOT analysis will take most businesses a long way here. You can do one yourself in under an hour. Grab a template or draw up a quad chart with Strengths, Weaknesses, Opportunities, and Threats. Evaluate your internal strengths and weaknesses again external opportunities and threats, relative to the current state of politics, markets, and economy.

3. Be Disciplined About External Visibility

Government contractors, in particular, face a delicate balance. The players in the SBIR small business space rarely change based on the administration, making it crucial to signal enough alignment with the prevailing current administration's political priorities, without overcommitting. This challenge often arises with issues that become politicized, such as DEI, renewables, stem cell research, or crypto.

Even defense technology itself is subject to falling in and out of favor. In 2019, more than 50 Microsoft employees assigned to the Army’s IVAS program protested and some quit because they felt the contract made them “war profiteers.” In 2020, most Silicon Valley VC firms wouldn’t even hear pitches from defense tech startups. That has changed, and now most big firms want to have a defense tech company or two in their portfolio.

When it comes to these issues, many opt to stay silent, but remaining silent also carries risks: you may deter top talent, attract misaligned investors, or create internal confusion. If the changes are ideological but global interest remains, the market is likely to recalibrate rather than disappear.

Action Item: One of many benefits of freedom of speech is that you don’t have to censor your values. But while you generally can’t go to jail over a spicy take fired off on LinkedIn, it can still impact your business. Put together a one-page PR plan that outlines to your team:

Your stance on any contentious or political topic related to your business.
How and when you talk about your stance with specific language.
A high-level plan for handling backlash, including when to respond to, delete, or ignore comments.

Bottom line:

The goal is to remain intact, even if partially inactive. Do your own research and analysis on a regular cadence to determine if it’s time to pivot or act on a new opportunity created by upheaval. It’s not always the loudest voices that survive political turbulence, but rather the small businesses that navigate uncertainty with clarity, discipline, and strategic control over risk.

Get more free resources to help navigate the government shutdown and SBIR Reauthorization here.

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