There is a continual stream of decisions that every small business owner makes. And every single one of them has an impact on the financial results your business creates for you.
Just a few of these things include:
- What products or services to create.
- How to price your products or services (or how to update your pricing).
- How to go about getting customers.
- What type of customer to chase after.
- How to deliver your products and services.
- Whether or not to increase how much you pay team members.
- How you pay team member.
- How to go about creating the systems and processes for your business.
Decisions like these may seem just like ordinary business decisions that need to be made. However, they are anything but ordinary.
These types of decisions are a double-edge sword for you – full of risk at the same time they are full of potential. Full of risk because they determine how much profit and cash flow your business creates for you. And full of potential because they give you the power to combine them in ways that can create truly amazing financial results.
If you’re like the vast majority of small business owners, however, you aren’t on either edge of that double-edged sword. You probably find yourself in the middle – not creating destructive financial results, but not creating great ones either.
The chances are really good that instead of either of those extremes you are suffering from what is perhaps the most painful business malady out there – LFR.
LFR is a term that stands for what I call “Limping Financial Results.”
LFR is the frustrating and emotionally draining situation where you manage to create financial results that just allow you to “get by.” Financial results that allow you to keep your doors open, pay yourself something, and make any loan repayments as they are needed.
I call that state of business LFR because it’s a lot like if you have a sore ankle or leg. You hobble and limp along, managing to get where you’re going – eventually. But it’s slow, awkward and painful while you’re doing it.
When it comes to creating financial results, it’s much better to be like a well-trained runner. Effortlessly using full strides to get where you want to go with grace, speed, and confidence.
The key to getting your business into that state is to get rid of LFR from your business.
You can relax. Because getting rid of LFR isn’t really all that hard. Once you’ve become aware of the fact that it is affecting you, your business, and your financial results, there is a proven series of steps that you can take to destroy it.
And by following these steps you will remove LFR from your life, and replace it with the ability to confidently start creating financial results that will make you proud.
There are seven steps to destroying LFR if it is present in your business:
- Understand how your current financial results are created.
- Understand the mechanics of making money.
- Examine your current business model.
- Scenario-test your business model.
- Make changes to your business model to maximize its potential.
- Set new targets and actions for key drivers of your business model.
- Measure and compare your actual results to your targets.
Don’t worry about the details of each of these seven steps right now.
In upcoming articles, we’re going to cover each of these steps so you can learn what, exactly, you need to do each step of the way toward removing LFR from your life.
Financially Limping Photo via Shutterstock
Thanks a lot, Steve.
You provided a great list of things to think about.
Just limping by is no fun.
The Franchise King®
This is a great list of things that the average business owner thinks about on a day to day basis. And a good reminder to think about a viable long term business model when making these decisions. At The Receivables Exchange, we see companies that experience “Limping Financial Results”. We love helping companies turn their LFR into viable cash flow by helping them to finance their invoices. This can be a great help for small businesses looking to get rid of their LFR status.
This is a great article.
I think most small businesses suffer LFR because they are too busy working in the business to take time out and work on their business. As Steve says, business owners just need to step back and become a trained runner and they would easily get rid of LFR.