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          Make Your Voice Heard: Reimagining Nightlife with Corean Reynolds

          Corean Reynold was recently appointed the Director of Nightlife Economy for the City of Boston, where she brings a wealth of experience and a passion for fostering an equitable and thriving nightlife ecosystem.

          10/04/2023

          6:00pm - 7:30pm

          Roundhead Brewing Company

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          9:45am - 11:00am

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        • EQ to Elevate Workplace Well-being

          Designed for mid-level managers and supervisors, this new certificate program addresses workplace well-being through unique, innovative, and actionable methods.

          Read More
          Transformational DEI Certificate

          Join our Transformational DEI Certificate! Our comprehensive learning & development offerings are designed to connect and grow strong leaders who lead both inside and out of the office.

          Read More
          Women’s Leadership Program

          Our Women’s Leadership Program enables you to take your leadership to the next level by arming you with the most in-demand leadership toolkit.

          Read More
          Boston’s Future Leaders

          Our Boston’s Future Leaders (BFL) program provides emerging leaders with a socially conscious and civically engaged leadership toolkit, as well as the opportunity to apply their knowledge through experiential assignments.

          Read More
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          • Economic Inclusion Committee
          • Fierce Urgency of Now Festival
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          Economic Inclusion
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          Our Economic Inclusion Committee provides strategic support around research, policies, and programs that are focused on building equal opportunity.

          arrow-go
          Read More
        • ...
          Economic Inclusion
          Pacesetters

          We are developing an ecosystem of corporations and partners with the influence and buying power to transform economic inclusion for minority business enterprises (MBEs).

          arrow-go
          Read More
        • ...
          Fierce Urgency of Now Festival
          2023 Fierce Urgency of Now Festival

          The Fierce Urgency of Now Festival brings Boston’s diverse young professionals together with business leaders, organizations and their peers to build connection, advance careers and ignite positive change.

          09/12/2023 -

          09/16/2023

          Greater Boston

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          Read More
          Women’s Network

          For nearly 30 years, the Chamber’s Women’s Network has connected female professionals of all background and career levels. Today, our Women’s Network is the largest in New England, strengthening the professional networks of women each year.

          Read More
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          Read More
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Surviving a Cash Shortage

HarborOne

A business can survive for a short time with low sales or profits, but not without a positive cash balance. Cash pays the bills and allows trading to continue. If you are growing and extending credit to more customers, the need for cash can be even greater. Here are three steps you can take to ensure you have the cash you need to run your business.

I. Create a cash buffer

Internal savings

Review your budget to see where you can cut costs:

  • Get new quotes for all supplies, services, and utilities.
  • Contact existing suppliers to renegotiate lower prices and extended credit terms.
  • Implement “just-in-time” inventory methods to help reorder stock as you need it.
  • Hold a sale to move surplus stock.
  • Identify and sell underused assets—is there equipment you can rent rather than own?
  • Consider discounting your outstanding customer invoices or use a factoring company.
  • Reduce fraud and theft.

Raise more funds

Consider these moves to free up funds:

  • Develop a relationship with a decision maker at your bank and seek an appropriate line of credit financing before you need it in case a short-term liquidity issue arises.
  • Invest more of your own money in the business. Can you raise more money against an asset such as a property you own? Be sure to consult with your personal financial advisor and accountant to make sure you can afford to inject your own funds into the business.
  • Raise cash from relatives or friends.
  • Sell part of your business to key employees. When money is tight, it can increase your working capital and increase the motivation of key employees. Their money is now on the line, too.

Seek outside investors

Investors will typically want an equity stake in your business before they part with any funding. They will also want to see a clear ‘value proposition’ in the form of a business plan and full supporting financial documents before they consider supporting your business with funds. A HarborOne Bank Business Team Member can help you create a lean business plan if you don’t yet have one.

Apply for grants and subsidies

You may be eligible for government grants or subsidies. Certain industries and regions are supported by government programs. Your local Massachusetts Small Business Development Center can help you identify what you may be eligible for, and the Massachusetts Executive Office of Programs and Grants is a great resource for loan, grant, venture, and other capital programs.

Cut personal expenses

As the owner, cut down on your expenses through the business and reduce your own salary. Look at the bare minimum you’ll need for living expenses and cut your salary down to that amount. Look at what withdrawals you’ve been making from the business, especially on a personal level, and ideally eliminate them.

Extract equity from property assets

Borrow on the equity you’ve built up in property, whether it is your home, your business premises or any property you’ve invested in. If you’re confident that your growth plans will pan out, then you’ll be able to rebuild that equity.

Borrow/bootstrap assets

You don’t have to purchase all the equipment you need to get your business moving. Think about what items you might be able to borrow over the short term. Draw up a list of your asset needs and make a determined effort to borrow what you can, while shopping online for secondhand items that will save your business money. Are there people you know that are already in business who could lend you equipment or machinery long term?

Work from home

Depending on the type of business you have, you may be able to use a workspace that costs little or even nothing. Work from home using a spare room or the garage. It might even be possible to use a café or similar public place. Build up your clientele before paying expenses you don’t really need straightaway. Don’t forget many employees may prefer to work from home and be more efficient.

Bring cash forward

If you need to improve your cash flow temporarily, adjust your sales and marketing plans to suit:

  • Offer customers incentives to purchase in advance.
  • Incentivize early-payment with discounts.
  • Focus marketing on short-term lead generation rather than longer term objectives like brand recognition.

Be aware that short-term incentives should be just that: short term. Offering discounts and incentives to ease your cash flow is fine but know it erodes your profit.

II. Collaborate and partner

Teaming up with other businesses to work towards common goals is a smart way to increase capability, while sharing resources, costs, and risks. The internet has made accessing talent from around the world easier than ever.

Collaborating can help you:

  • Access new product/service lines, develop new product knowledge and reduce costs.
  • Fill expertise gaps in your business
  • Enhance capacity to bid on larger contracts.
  • Strengthen customer and supplier relationships and outsource production.
  • License their intellectual property, receive volume discounts.
  • Speed up new customer development and access new business models.

Partnering with other businesses can be formal (a contractual obligation), informal (verbal agreements), significant (sharing suppliers and long-term customers), or ad hoc (coming together as and when you need). Research and evaluate all potential partners thoroughly. Seek out companies that share your business ethic and strategy, as well as common expectations of working together.

Make sure all parties are clear about expectations – spell out roles and responsibilities like ownership, people involved, and everything in between. Working alongside another business gives you shared responsibility – as well as other colleagues to work with and rely on. Having back-up in a crisis can offer assurance to you and your customers.

III. Collect what’s owed faster

Invoice immediately

Make sure all your work is invoiced as soon as possible. With larger customers, try to get into their payment cycle or apply to be an approved supplier as soon as possible. Specify in the initial sales contract exactly what you will deliver. If you are asked to do more than the original quote, it is reasonable to negotiate additional payments If you haven’t already, sign up for accounting software to make it easier to send invoice reminders.

Connect with your bank

Develop a relationship with your bank to make sure you are getting the proper cash management services to enhance collections, save money, and earn interest on surplus funds. Your bank doesn’t have to provide you with credit to offer suggestions in these areas.

Request progress payments

When negotiating new contracts with customers be aware of setting payment terms that help your cash flow, such as deposits or progress payments.

  • Negotiate stage payments for contracts that take a long time to complete.
  • Include a regular timetable for the customer to pay invoices as part of any agreement.
  • Agree on clear milestones for the work to be completed to minimize the chance of the customer disputing any invoices.

Credit control

An efficient credit control system speeds up your cash collection and reduces bad debt. Depending on the type of business you run, you may be able to reduce the number of credit accounts you offer and if possible, avoid extending credit at all. Some suggestions:

  • Credit check all customers before you extend credit terms.
  • Control how much credit you provide and to which customers. Consider using credit scoring systems and setting appropriate credit limits for all customers.
  • Avoid giving any customer more credit than you could afford to lose if the sale turned into a bad debt.
  • Send out invoices immediately after you have supplied the goods or service. Confirm that all the invoice details were correct and that there will be no problem paying it by the due date.
  • Monitor late payments and chase them up methodically, largest debtors first.
  • If you intend to charge interest on late payments this must be stated in your terms of trade.

Using a debt collection agency or a specialist lawyer can be an effective method of dealing with non-payers. There are also software solutions that integrate with your accounting software.

The importance of multiple payment options
If you give your customers the options to pay on the spot, using the latest technology, they’re probably going to use it and enjoy the convenience. It means you do not have to spend time sending invoices and waiting for payment – the money is in your account and can be reinvested in business growth.

Payment in advance

Some businesses, such as ones operating over eBay or other auction sites, require payment in advance to provide protection against online fraud. Customers first pay the purchase price (including shipping costs) into your bank account. You then wait for the payment to clear before sending the goods or supplying your services.

Payment by installments

These can be useful if you’re working on a lengthy project, such as a building or a software development program. Payments made at keys stages of the project serve two important purposes:

  • They provide a regular cash flow to pay running costs.
  • They protect you against total loss if your client goes bust.

Normal practice is to build staged payments into contracts, based on measurable milestones.

Early payment discounts

Early payment discounts can encourage people to pay on time. They’re more useful on higher margin products or services as the discount will have less impact on your profits than thin-margin products.

Contracts and debit orders

Businesses that offer regular services such as a gym or an accounting firm can benefit from offering customers a set annual (or longer) contract. The attraction for the customer is a price that’s typically lower than paying for each visit or service.

Accepting payments securely online

Accepting online payments is beneficial in several ways, both for you and your customers. Some benefits include:

  • Less stress – it eliminates the need to worry about getting paid on time and chasing outstanding invoices. Giving customers the option to pay online means they’re more likely to pay promptly.
  • Greater convenience for your customers – online payment method options are beneficial to your customers, many of whom prefer to pay immediately.
  • Open up new markets – the ability to accept online payments also opens a whole new market of customers. If you sell physical goods, you can sell beyond your local service area.
  • Improved cash flow –By offering online payments straight away, the whole payment cycle is complete.

Final Advice

A cash crisis is one of the many hurdles small business owners encounter, but you don’t have to go it alone. Building strong relationships with your lawyer, accountant, banker, and colleagues will help you to build a strong business that can withstand difficult times. For more free business help and tools, visit HarborOne’s Small Business Hub, packed with articles, videos, templates, calculators, checklists, and case studies.

Disclaimer

For informational purposes only. There is NO WARRANTY, expressed or implied, for the accuracy of this information or its applicability to your financial situation. Please consult your financial and/or tax advisor.

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