Insight Blog
Internal Communications in Healthcare - The Ultimate Guide and 7 Best Practices for 2023
Internal Communications in Healthcare, want to know the best practices?
Since the epidemic began, roughly 4 out of 5 persons working in healthcare find their job more difficult owing to not having enough personnel. A thorough guide on internal communication in healthcare will help you find new methods to communicate with and assist your healthcare staff.
The worldwide healthcare crisis has put a burden on services across the world. There is a severe shortage of personnel in the field, and many people have complained that it makes their regular jobs more difficult.
Additionally, the prevalence of mental health issues among healthcare professionals is on the rise. In early 2021, over half of workers reported feeling overwhelmed and weary on the job, and over half also reported experiencing emotions of worry.
Recent research shows minimal change, and many doctors and nurses are thinking about quitting their jobs or the healthcare industry altogether in the near future.
Therefore, it is critical for healthcare practitioners to have solid strategies for communicating with their staff in ways that boost morale, foster cooperation, and reduce turnover.
However, it's not simple to get the word out to medical professionals via the normal channels of internal business communication. Many may not have access to computers, making it difficult to keep up with the latest corporate news and publications.
Due to their geographically dispersed employment, even maintaining a consistent email correspondence may be challenging.
Consider this: do your medical personnel feel pleased at work, or are they close to feeling too overwhelmed to continue? It is impossible to find out without a well-thought-out strategy for internal communication.
Understanding Employee Internal Communications in Healthcare
The term "internal communications" is used to describe the many channels an organization utilizes to convey messages to its employees.
Both top-down methods, such as newsletters and emails, and bottom-up methods, such as actively listening to workers, encouraging feedback, and publicly recognizing each other's contributions, count.
Why is Internal Communication is so Important Now?
Without it, your team would be in the dark about any significant rule or regulation changes that would affect your team. It's also a way to get feedback from employees and explain to them the brand's long-term vision and strategic priorities.
Moreover, it's more important than ever to have open communication inside the company in the wake of the Great Resignation.
A well-thought-out plan for internal communication may do wonders for your business:
- Improve teamwork and productivity: This may be achieved by making team members feel that their efforts are contributing to something bigger. Participation-boosting strategies include those that provide team members a chance to share their opinions. According to research conducted by Salesforce, workers are 4.6% more likely to put up their maximum effort when they feel their ideas and opinions are being taken into account.
- Augment the work experience and increase retention: If team members are sincerely immersed in their jobs, they're significantly less inclined to seek employment elsewhere. Gallup found that highly engaged groups were almost twice as likely to remain together (54%) as those with lower levels of engagement (24%).
- Improve productivity and get to the bottom of issues more quickly: Is it preferable for your staff to work on a critical problem alone or as a team? Or would you rather them have access to a wide variety of tools and knowledgeable coworkers? When everyone on your team is on the same page, you can solve problems more quickly and streamline your operations.
- Preserve the company's resources: Poor communication may have devastating effects on profits. So, an improvement in internal communications can also save you money.
Despite these benefits, 60% of companies lack a long-term plan for internal conversation. In industries like healthcare, where many workers are not office-based, even having a plan might prove futile if it is out of date.
Traditional intranet platforms might be clunky, antiquated, and underused, and communication emails are increasingly being disregarded. In major healthcare centers, where many workers are located in different locations, these problems are exacerbated.
Types of internal communications in healthcare
The importance of internal communication in healthcare cannot be overstated for several reasons. Effective internal communication:
- Improves Patient Care: High-quality patient care depends on effective communication among clinicians and other staff members.
- Creates a Positive Work Environment: Informed and valued employees are more likely to be engaged and productive.
- Promotes Collaboration: Good communication breaks down silos and fosters collaboration between different departments and teams.
- Increases Efficiency: Effective communication reduces errors and improves efficiency.
- Reduces Costs: By avoiding errors and improving efficiency, good communication can help reduce costs.
Role of internal communications in healthcare
Internal communications in healthcare are instrumental in enhancing patient care. Clear and efficient communication among healthcare professionals, including doctors, nurses, and support staff, is imperative for delivering high-quality medical services. Timely sharing of patient information, medical records, and care plans among these professionals is essential to providing comprehensive and coordinated care, ultimately improving patient outcomes and safety.
Internal communications foster a positive work environment within healthcare organizations. When employees feel valued, informed, and included in decision-making processes, their job satisfaction and engagement levels rise. This, in turn, can lead to increased staff morale, reduced turnover rates, and a more collaborative healthcare team.
Overall, the role of internal communications in healthcare goes beyond just disseminating information; it is a vital tool for enhancing patient care, staff engagement, and the overall effectiveness of healthcare organizations.
Obstacles in Communicating Internally with Healthcare Staff
According to Gallup's 2022 assessment of the state of the global workforce, just 22% of workers are engaged in their professions, while 44% report feeling stressed on a regular basis.
The importance of employee engagement cannot be overstated, but its consequences in the healthcare industry are especially far-reaching. According to studies conducted in Victoria, Australia, a 1% increase in staff involvement is associated with a 3% decrease in hospital-acquired patient problems and a 7% decrease in the risk of patient readmission.
Healthcare companies may improve engagement and reap these benefits by cultivating a strong communication system that serves to amplify workers' voices, reflect the organization's goal, and provide each team member with a sense of belonging. A McKinsey analysis from January 2022 found that more than 30 percent of nurses had contemplated leaving their employment in direct patient care, mostly owing to feeling ignored or unsupported in the workplace, demonstrating that many healthcare organizations fall short in this regard.
It's not impossible to have productive conversations with medical professionals, but there are some significant challenges to overcome. Here's why it might be hard to get your point across.
Mobile Healthcare Staff
Healthcare personnel, who are often tasked with visiting many places or patients' homes, have limited time to keep up with the latest information disseminated by their company.
Due to the frequent travel demands of their professions, many persons neglect to regularly monitor their email, leading to the unfortunate consequence of losing crucial correspondence.
Disjointed Communication
Disjointed communication in healthcare settings is not only ineffective but also potentially harmful to patients.
One research found that poor handoffs between care providers accounted for 80% of all serious medical errors. It is also estimated that healthcare practitioners waste more than 45 minutes every day due to ineffective communication.
Such wasted time is priceless in a sector where a lack of personnel is seen by 79% of experts as a challenge.
Antiquated Technology
As a tribute to its dependability, particularly in locations with poor cellphone service, pagers are still used by approximately 80% of hospital-based doctors in the United States.
However, these gadgets are obsolete since they don't allow for two-way communication or encourage the type of culture-centric, employee-focused communication that is essential for motivating healthcare workers.
Best Practices to Engage Healthcare Workers Via Internal Communications
Although it may be challenging to get internal messaging across to healthcare workers, doing so may result in significant gains in areas such as reduced healthcare costs, better patient outcomes, and fewer nosocomial infections.
The following are seven methods for fostering communication inside a healthcare organization via internal channels:
1. Use One Communication Platform
Within the healthcare industry, several channels of interaction are in use. Monthly newsletters might be issued by email, while important announcements could be posted on bulletin boards. Medical personnel may still rely on pagers for urgent communications.
The problem with these approaches is that there is no guarantee that the intended message will be received. A policy change posted on a bulletin board, for example, does not encourage staff input since there is no opportunity for conversation or collaboration across departments. Disengagement and alienation from the company may result.
A unified communications center, such as an advanced employee intranet, may fix this. Intranets have come a long way from their clumsy beginnings in the early 2000s; today's versions have a wide range of features that serve to bring together office-based and field-based medical personnel.
2. Augment the Pager System with a Digital Application
Although pagers are widely used for urgent communication in hospitals, they do have their drawbacks. Even though they come in handy when cell service is spotty, pagers can't be used for two-way conversations. Neither are they an appropriate medium for spreading inspiring and interesting material.
The solution is to use a mobile intranet app for routine conversations and have pagers on hand for emergencies. A healthcare practitioner with access to such an app may read a curated news feed, share their thoughts, and keep in touch with colleagues from anywhere.
Consider Walmart's plan, which 2019 built an intranet and issued 740,000 staff with cell phones to enable access.
3. Personalize Communication to Prevent Information Saturation
When workers are inundated with too much data, they are more likely to tune out the signals altogether. This is particularly true for people working in the healthcare industry, where every minute counts.
Make use of audience segmentation to fight this. Make strict regulations for sharing material to guarantee accuracy and precision. While it is important for all employees to be aware of major corporate news, more specialized pieces or updates that are location-specific may be kept private.
4. Eradicate Silos for Collaborative Patient Care
When there are numerous doctors or nurses caring for a patient, there is generally very little dialogue between them.
It's possible that decisions will be made in silos without a full picture of the patient's state of health.
Instead of relying simply on email or pager systems, which are intended for rapid warnings, healthcare communication strategies must promote real-time interaction between care professionals.
5. Prioritize the Mental Health of Healthcare Workers
Recent studies show a worrying trend: a high proportion of those working in healthcare report experiencing symptoms of extreme emotional discomfort. Employers in this field have a responsibility to offer and disseminate information about accessible mental health resources since the stigma surrounding mental illness has reached new heights in recent years.
Utilizing an intranet or communication channel, discuss mental wellness practices and promote adherence. Displaying openness and caring may reassure employees that you care about their well-being.
6. Encourage and Heed Staff Feedback
Particularly in the field of medicine, top-down communication is ineffective. The key to unlocking operational savings lies with the frontline workers who see them every day. It is critical that we draw on this knowledge.
Improved patient care and lower risk are the results of healthcare workers being able to provide feedback and suggestions via an effective internal communications structure.
Offer a basic suggestion box or an easy-to-use online form on the company intranet for people to submit their thoughts. Depending on the system you choose, polls and surveys may be implemented with little to no fuss.
Not every idea can be implemented, but even acknowledging their existence may improve morale and retention.
7. Cultivate a Positive, Lively Communication Culture
To combat the problem of official information being unread by healthcare workers who are already stretched thin, internal communications must adapt to the use of social media. The keys to success in this regard are succinctness and interest. Like the enticing soundbites that do so well on social media, content should be short and fascinating, able to capture attention immediately.
Adding a little humor may go a long way toward increasing participation, so don't be afraid to throw in some friendly contests or post pictures of your pet. These kinds of activities may bring people together and give stressed-out healthcare workers a break. In addition, these kinds of events show appreciation for healthcare workers' efforts and help foster a more positive and valued team dynamic.
Essential Attributes for an Internal Communications Portal
A solid communication strategy involves many components.
One of the most important is making content that is both engaging and consistent with the brand. Equally important is setting up a structure that gets everyone working together and contributing ideas.
However, the success of these initiatives depends on a strong platform, one that is capable of bringing your employees together.
There is a wide variety of platforms to choose from, and the one you choose should fit your company's specific needs. However, there are essential features that should never be compromised.
Here, we'll outline several crucial characteristics that should factor into your decision:
An Intuitive, User-Friendly Interface
A platform's popularity among workers depends on how accessible and simple it is to use. Try to choose a platform that has an interface that is both easy to use and visually beautiful. For medical professionals, who sometimes have limited time and resources, this becomes especially important.
A Mobile Application
In order to effectively communicate with your mobile workforce, the platform itself must be designed for mobile use.
Rather than opting for a website that reluctantly adjusts to a smaller screen, you should pursue a solution that is mobile-first in design, giving a seamless experience.
Push Notifications
Information has to be disseminated quickly in the high-stakes field of healthcare.
By using a platform with built-in push notifications, you can guarantee that important information, such as changes to compliance standards or safety procedures, is sent to your team in a timely and reliable manner.
Pulse Surveys and Quick Polls
Employee engagement may be tracked in real-time with the use of pulse surveys.
They provide a dynamic prism through which to observe the core of your workforce's morale and engagement. When debating whether or not to implement new regulations, polling workers for their opinions may give rapid insights.
For healthcare personnel immersed in the very fabric of frontline operations, their opinion is crucial. They are the ones most capable of quickly assessing the viability of company strategy.
Even the busiest employees should be able to take part in these polls and surveys thanks to an easy-to-use communications platform.
Facilitating Grassroots and Cross-Sectional Dialogue
Rather than being a unidirectional order, effective communication is a lively two-way conversation. It is crucial to choose a platform that encourages communication between peers across different roles and locations in the healthcare industry, where cooperation may literally save lives.
Boosting employee agency is the goal of every platform that facilitates communication, whether for business purposes or just for fun.
Look for elements that mirror social media—such as commenting possibilities and emotive emoji reactions—to infuse a dose of passion and develop a more connected, dynamic community.
Introducing AgilityPortal
AgilityPortal provides a unified communication platform for your business, whether your employees are at their desks or in diverse healthcare locations with their patients. This platform will help your organization's members become better connected, generate new ideas, and understand its core values.
Everyone in the group has the ability to contribute to a curated news stream by sharing updates, asking questions, and praising colleagues.
AgilityPortal's built-in features for recognizing employees foster an environment where rapid, mutual appreciation flourishes. Simple surveys or polls may be taken on the platform, keeping employees interested with only a few touches of the screen.
It can be accessed easily via a mobile app, so this platform is a great way to include everyone in your company's workforce, not just those who work at desks.
Do you want to increase the impact of your healthcare teams?
Get a personalized demo to learn how AgilityPortal can boost your company's performance.
Most Popular Posts
- Employee Engagement
- Internal communications
Categories
Related Posts
Setting up a new business is no walk in the park, and when it comes to financial support small business owners often struggle to find the help they truly need.
A good question is whether you are confident your small business can survive its first five years—or even the first year. According to the U.S. Bureau of Labor Statistics, 1 in 5 small businesses fail within the first year, often due to poor financial planning and lack of strategic support.
Starting a business in 2025 means navigating a rapidly evolving economy, rising costs, and tighter competition. While passion and innovation are essential, your financial plan will ultimately determine your success.
Even the most exciting ideas can fall apart without a clear strategy for managing cash flow, expenses, and funding.
This article will guide you through building a brilliant financial plan tailored for small business success in 2025.
Whether launching a new venture or refining your current operations, you'll learn how to align your budget with your goals, forecast more accurately, and gain the financial stability needed to grow.
With the right plan, you'll gain investor confidence, make smarter decisions, and future-proof your business for the challenges ahead.
What is a Financial Plan for a Business?
What is a financial plan for a business? It's a strategic tool that helps determine whether a business idea is financially viable and provides a roadmap to maintain long-term financial health.
A financial plan is a crucial part of any business plan, offering clarity and direction as the business evolves. It typically includes three core financial statements: the income statement, the balance sheet, and the cash flow statement.
Each of these sections comes with a brief explanation or analysis to help interpret the numbers.
Together, they provide insight into profitability, liquidity, and overall financial stability—key metrics every business needs to track.
Who Needs a Financial Plan?
Financial planning isn't just for the wealthy—it's a valuable tool for anyone looking to take control of their financial future.
Regardless of your income or life stage, having a structured financial plan helps you set clear objectives, stay focused, and feel confident about your path.
A personalized financial plan offers more than just guidance—it acts as a roadmap to help you navigate major life events and unexpected changes.
Whether saving for a home, preparing for retirement, or adjusting to new financial responsibilities, a solid plan ensures you're making informed decisions.
You'll find financial planning especially beneficial if you're:
- Buying your first home or upgrading your current one
- Experiencing a significant change in income or expenses
- Starting or growing a family
- Thinking ahead to retirement and long-term savings
- Organizing your assets through estate or legacy planning
A proactive approach to your finances helps you reach your goals and builds resilience, allowing you to adapt to life's curveballs with greater ease and security.
Understanding the Role of a Financial Plan in Business Success
If you're starting a new business and wondering what a financial plan is, it's more than just budgeting—it's a strategic roadmap that outlines how your business will manage income, control costs, and reach long-term financial goals.
A financial plan brings clarity and control to your operations by linking daily decisions to your company's vision.
The importance of financial planning for small businesses cannot be overstated. According to the U.S. Bureau of Labor Statistics, around 20% of small businesses fail within the first year, often due to poor financial management.
A solid financial plan can help avoid this fate by providing insight into cash flow, funding needs, and operational priorities.
So, what is a financial plan example?
It could include projected income statements, balance sheets, cash flow forecasts, expense breakdowns, and growth targets. These documents serve internal strategy and inspire confidence among lenders, investors, and stakeholders.
A good financial plan helps businesses:
- Manage cash flow more efficiently to avoid shortfalls
- Set realistic goals and map out scalable growth strategies
- Present a strong, credible financial position to stakeholders
Ultimately, a financial plan enables small businesses to stay agile, make informed decisions, and achieve lasting success—even in uncertain economic environments.
Why Is a Financial Plan Important to Your Small Business?
A solid financial plan not only boosts your confidence in managing your business but also gives you clearer insights into how to allocate resources effectively.
It reflects a commitment to responsible spending and demonstrates your company's ability to meet its financial responsibilities.
With a financial plan, you can assess how specific decisions may impact revenue and identify when it's appropriate to use reserve funds.
Also, a financial plan is a powerful asset when presenting your business to potential investors. It highlights how your organization manages expenses, generates income, and plans for growth.
Most importantly, it provides a clear picture of your current financial position and outlines what's needed—through sales or investment—to achieve key financial goals.
Financial Plan for Beginners?
1. Develop a Sales Forecast
A critical component of any business financial plan is the sales forecast—an estimate of the revenue your business expects to generate over the next three years.
Start by building a spreadsheet that outlines each quarter of your fiscal year. Include key columns for product or service names, unit prices, units expected to be sold, and projected revenue.
If your business is already up and running, review past sales reports to identify seasonal trends or growth patterns you can use to inform future projections.
For startups without existing sales data, begin by calculating your cost of production per item or service. From there, estimate how much you plan to sell based on market research, competitor benchmarks, or industry demand.
Not confident in your manual forecasting skills? There are plenty of tools and software solutions available that can help you automate and refine your sales projections with greater accuracy.
A sales forecast estimates your future revenue and is crucial for building a solid financial plan.
Here's how to create one:
- Set up a spreadsheet to track products, prices, and projected sales.
- Use past sales data to identify trends (if your business is already operating).
- Estimate unit sales and pricing based on market research for new businesses.
- Forecast monthly revenue for the first year, then annually for Years 2 and 3.
- Use tools like QuickBooks or LivePlan to improve accuracy.
- Compare your forecast to industry benchmarks to ensure it's realistic.
This helps demonstrate your business's potential profitability to investors and lenders.
A well-prepared sales forecast isn't just for internal planning—it also builds confidence with potential investors or lenders.
It demonstrates that your business has a clear growth trajectory and can generate consistent revenue, making it more attractive for financial backing.
2. Outline Your Business Expenses
After completing your sales forecast, the next step is to create a detailed breakdown of your business expenses.
This section shows investors that your business can realistically afford to produce its products or services and maintain profitability. Ideally, your total expenses should remain below your projected revenue.
Start by identifying all your business costs and categorizing them into fixed and variable expenses:
- Fixed costs remain consistent throughout the year—examples include rent, insurance, and salaries.
- Variable costs fluctuate depending on operations and sales volume, such as marketing, shipping, or raw materials.
While some costs like production or rent may be straightforward, others—like taxes or maintenance—may require estimation.
Your expense forecast helps assess financial feasibility and ensures you're planning for both predictable and unexpected costs.
3. Build a Cash Flow Statement
A cash flow statement outlines the movement of money into and out of your business over a specific period.
It's a key component of your financial plan, as it shows whether your company generates enough income to cover its operating expenses and obligations.
The goal is to maintain positive cash flow, which means more money is coming into the business than going out. This signals healthy financial management and ensures you can pay bills, invest in growth, and handle unexpected costs.
To create a cash flow statement:
- Use historical profit and loss records to calculate incoming revenue and outgoing expenses.
- If you're a startup, make realistic projections using your estimated sales and known expenses.
- Always account for potential payment delays from clients or vendors. Adding a buffer for late invoices helps you avoid cash shortfalls.
Being conservative and realistic in your estimates helps you prepare for real-world financial conditions.
A clear cash flow projection gives investors confidence in your business's financial stability and helps you stay in control of your financial health.
4. Create an Income Projection Forecast
An income projection, a profit and loss forecast, provides a forward-looking snapshot of your business's expected revenue, costs, and net profit over a specific period. It's a crucial part of your financial plan, especially when presenting to investors or lenders who want to understand your business's long-term viability and profitability.
This document includes your projected sales, the direct costs of producing those goods or services, and your estimated operating expenses. The result is a forecast of your expected net income—essentially showing whether your business will be profitable.
If your business is already up and running, focus your forecast on the upcoming year.
For new ventures, consider projecting income over two to three years to demonstrate sustainability and growth potential.
To build an accurate forecast:
- Use sales forecasts and expense estimates as the foundation.
- Base your projections on industry trends and historical data, if available.
- Factor in seasonal variations, economic conditions, and potential business developments.
- Consider using financial forecasting software or consulting a financial advisor for added accuracy.
A well-prepared income forecast builds credibility and can significantly improve your chances of securing funding or investor interest.
Download the free financial projections template excel for a great starting poin.t
5. Build a Forecasted Balance Sheet
A forecasted balance sheet offers a snapshot of your company's projected financial position by outlining what it owns (assets) and what it owes (liabilities).
This document is essential for investors, lenders, and stakeholders to evaluate your business's financial stability and net worth over time.
Assets represent everything your business owns that has value, such as cash, inventory, accounts receivable, equipment, real estate, and intellectual property. Liabilities include financial obligations like loans, taxes, unpaid wages, or outstanding vendor payments.
To create your forecasted balance sheet:
- Start by listing all expected assets, including cash balances, office equipment, inventory, property, and receivables.
- Next, outline projected liabilities, such as credit lines, loan repayments, outstanding invoices, or payroll obligations.
- Subtract total liabilities from total assets to calculate your projected equity or net worth.
A positive balance sheet—where assets outweigh liabilities—demonstrates financial health and signals to investors that your business is solvent and capable of meeting its obligations.
Conversely, if liabilities exceed assets, it may raise red flags about your ability to manage debt.
Having a clear and realistic balance sheet projection not only builds credibility but also helps you plan for future capital needs and operational investments effectively.
Here is a simple balance sheet template excel, feel free to use this financial projections template excel.
6. Identify Your Break-Even Point
Understanding your break-even point is crucial for evaluating the financial viability of your business. It represents the level of sales needed to cover all your expenses—where your total revenue equals total costs. Only after crossing this threshold will your business begin generating profit.
Determining your break-even point gives you a clear financial target and helps you make informed pricing, budgeting, and investment decisions. It also reassures potential investors that your business can become self-sustaining within a reasonable timeframe.
To calculate your break-even point, subtract your variable costs from the unit selling price, then divide your total fixed costs by that result. The formula looks like this:
Break-Even Point = Fixed Costs / (Unit Price – Variable Cost per Unit)
For example, if your fixed costs are $100,000, and each unit you sell brings in $50 in profit after covering variable costs, you'd need to sell 2,000 units to break even.
Most successful businesses break even within two to three years. If your projections show it may take significantly longer—say five years or more—it could signal the need to reassess your business plan or reduce operating costs.
Also consider including an exit strategy in your financial plan. This helps mitigate risks and outlines a path to minimize losses should your business not perform as expected.
7. Plan for Contingencies + (contingency plan template word)
Every business faces unexpected challenges—from sudden market downturns and supply chain disruptions to equipment failure or economic shifts.
That's why it's essential to build contingency planning into your financial strategy.
A contingency plan includes setting aside a financial buffer (often referred to as an emergency fund) to cover unforeseen expenses without derailing your operations. Many financial experts recommend having three to six months of operating costs set aside as a safeguard.
Beyond savings, consider preparing alternative revenue streams or flexible cost-reduction strategies you can implement quickly if revenue drops. This might include renegotiating vendor contracts, scaling back non-essential spending, or leveraging credit lines responsibly.
A solid contingency plan increases investor confidence and gives your team peace of mind—knowing you're prepared for the unexpected.
It's not just about weathering storms, but staying agile and resilient enough to pivot when necessary, keeping your business on track for long-term success. Download out free contingency plan template word.
5 Steps of Financial Planning
1. Define Your Financial Goals
Start by asking yourself: Where do I want to be in 5, 10, or even 20 years? Whether owning a home, retiring early, travelling the world, or funding your child's education, having a clear vision helps shape your financial plan.
Break down your aspirations using the S.M.A.R.T. method:
- Specific: Clearly state what you want (e.g., "Save for a down payment on a house").
- Measurable: Assign a number or milestone (e.g., "Save $30,000 in 3 years").
- Attainable: Make sure the goal is realistic based on your income and expenses.
- Relevant: Focus on what matters most to you and your long-term lifestyle.
- Time-Based: Set a target date for each goal to stay accountable.
Use a digital notebook or spreadsheet to list and categorize your goals into short-term (1–2 years), mid-term (3–5 years), and long-term (5+ years). This will help you prioritize where to start saving and how much to allocate monthly toward each goal.
A great way to boost your financial literacy is through online MBA finance programs. These programs offer practical, flexible education tailored to real-world business needs. Whether you're planning for growth or just managing your first year of revenue, sharpening your financial skills gives you a competitive edge and a better shot at long-term stability.
2. Assess Your Risk Tolerance
Understanding your risk tolerance is essential when creating a financial plan that suits your lifestyle and goals.
Risk tolerance is your comfort level with investment ups and downs—how much loss you're willing to accept in pursuit of higher returns.
Your tolerance depends on factors such as:
- Your age – Younger individuals can typically handle more risk since they have time to recover from market fluctuations.
- Your financial goals – Short-term goals often require safer investments, while long-term goals may benefit from more growth-focused strategies.
- Your income and savings – The more financial stability you have, the more flexibility you may feel when taking risks.
- Current economic conditions—Inflation, interest rates, and political stability can all affect how much risk you're comfortable with.
Use an online risk tolerance quiz or calculator to get a quantified score. This helps align your investments with your comfort level and expected returns.
Consider this score when choosing between conservative options like bonds, balanced mutual funds, or higher-risk investments like stocks or crypto.
Understanding your risk tolerance ensures your financial strategy is realistic, sustainable, and aligned with your peace of mind—even when markets fluctuate.
3. Analyze Your Cash Flow
A solid financial plan starts with knowing exactly where your money is going.
Cash flow analysis tracks the money coming into your accounts (income) and what's going out (expenses). This step helps you identify spending patterns and areas for improvement.
Start by reviewing your last 3–6 months of bank statements.
Categorize your spending into:
- Essential expenses - Rent or mortgage, utilities, groceries, insurance, transportation.
- Discretionary expenses - Dining out, subscriptions, shopping, entertainment.
Once categorized, subtract your total expenses from your income to see your net cash flow.
Use budgeting apps like YNAB, Mint, or Excel templates to automate your tracking. Set a monthly review reminder to stay accountable.
After this analysis, you may find non-essential costs that can be reduced or eliminated. Even small changes—like cutting unused subscriptions or reducing takeaway meals—can free up cash for savings, investments, or emergency funds.
Understanding your cash flow gives you control over your finances, prevents overspending, and ensures your financial plan is based on accurate, real-world data.
4. Protect Your Assets
Protecting what you own is a critical part of any strong financial plan.
Start by calculating your net worth—the total value of your assets (home, car, savings, investments) minus your liabilities (loans, credit card debt). This gives you a clear picture of what needs protection.
Once you understand your financial standing, evaluate your insurance coverage:
- Homeowners or renters insurance for property and personal belongings.
- Auto insurance with sufficient liability coverage.
- A Personal Liability Umbrella Policy (PLUP) for extra protection in case of major claims or lawsuits.
- Life insurance—either term (for affordable temporary coverage) or permanent (whole, universal, or variable universal life), depending on your long-term needs and family situation.
- Long-term care insurance to protect your retirement savings from healthcare-related expenses later in life.
Review your insurance policies annually or when your life circumstances change (e.g., marriage, new home, children).
Speak with an independent insurance advisor to ensure you're neither underinsured nor overpaying.
With the proper protection in place, you're shielding your financial future from unexpected events—and giving yourself peace of mind.
5. Evaluate Your Investment Strategy
Your investment strategy should align with your financial goals, timeline, and risk tolerance.
Begin by identifying your approach:
- Active Investing involves hands-on management, frequent trading, and efforts to outperform the market. This strategy demands time, expertise, and often higher fees.
- Passive Investing focuses on long-term growth by tracking market indexes (like the S&P 500), often through ETFs or index funds. It typically involves lower costs and less frequent trading.
- Define your investment goals - Are you saving for retirement, a home, or college tuition?
- Consider your time horizon - The longer your timeline, the more risk you may be able to take.
- Evaluate your current portfolio - Is it diversified? Are your investments aligned with your goals?
- Rebalance your portfolio regularly to maintain your desired asset allocation.
If you're unsure which path suits you best, consult with a financial advisor or consider a hybrid approach, where part of your portfolio is passively managed and another part actively managed.
Choosing the right strategy is not just about returns—it's about aligning your investments with your life goals and peace of mind.
Key Challenges Small Businesses Face When it Comes to Financial Planning
- Unpredictable Cash Flow - Many small businesses experience irregular income streams, especially in the early stages. This makes it difficult to forecast revenue and plan for future expenses. Late payments from clients or seasonal fluctuations can leave businesses scrambling to cover costs.
- Limited Resources and Budget - Small businesses often lack dedicated financial experts or advanced tools. With limited time, staff, and money, financial planning is either put on hold or handled by someone without formal training in accounting or finance.
- Lack of Financial Literacy - Many small business owners are passionate about their product or service but may not fully understand financial statements, forecasting, or budgeting. This can lead to poor decision-making and prevent the business from growing sustainably.
- Difficulty Accessing Capital - Securing loans or investment requires detailed financial plans and projections. Small businesses that struggle to create professional financial documents may find it hard to gain the trust of investors or lenders.
- Overestimating Revenue, Underestimating Expenses - A common trap is being overly optimistic. Overestimating how much revenue will come in and underestimating how much things cost can result in shortfalls and missed targets.
- Economic and Market Volatility - Changes in interest rates, inflation, or supply chain disruptions can derail financial forecasts. Small businesses are more vulnerable to external shocks, making contingency planning even more important.
- Scaling Without a Plan - Rapid growth without financial controls can be just as dangerous as stagnation. Businesses that grow quickly may overextend themselves, take on too much debt, or fail to manage increased operational costs.
Best Tools and Resources for Small Business Financial Planning
Here's a list of some of the best tools and resources for small business financial planning, including top-rated financial planning apps that help manage budgets, cash flow, forecasting, and more:
#1. QuickBooks
Best for: Accounting & financial reporting
A go-to tool for small businesses, QuickBooks helps with expense tracking, payroll, invoicing, and generating financial statements. It also offers forecasting tools and integrates with many other apps.
Why it's great: Easy to use, scalable, and trusted by millions of businesses.
#2. Xero
Best for: Online accounting & collaboration
Xero is a cloud-based accounting software ideal for small businesses that want real-time collaboration with bookkeepers and accountants.
Why it's great: User-friendly interface, strong financial reporting features, and great for managing cash flow.
#3. Wave
Best for: Free accounting and invoicing
Wave offers free invoicing, accounting, and receipt scanning tools. It's perfect for solopreneurs and freelancers just starting out with financial planning.
Why it's great: No monthly fee, intuitive layout, and ideal for basic financial needs.
#4. LivePlan
Best for: Creating business plans & financial forecasting
LivePlan helps businesses build professional business plans and financial projections. It's a great tool if you're pitching to investors or lenders.
Why it's great: Pre-built templates, industry benchmarks, and easy forecasting features.
#5. PlanGuru
Best for: Advanced forecasting & budgeting
PlanGuru is designed for in-depth financial analytics and 3–10 year forecasts. It's more advanced than most small business tools and ideal for growing companies.
Why it's great: Budgeting, forecasting, and reporting all in one platform with powerful analytics.
Wrapping up
Financial planning isn't just for big corporations—it's the secret weapon that helps small businesses thrive.
When you take the time to understand your costs, stay informed, monitor your cash, and invest in solid systems, you set your business up for long-term success. The earlier you start building that financial foundation, the stronger your business becomes.
You don't need to be a financial wizard to make smart choices.
You just need the right mindset, some good habits, and a commitment to staying proactive. With these ten steps in place, you'll be ready to lead your business with clarity, confidence, and control.
FAQ
We think you might like to read next
Boost Warehouse Staff Productivity and How Tech Enables Faster, Smarter eCommerce Operations
Jill Romford
I am a digital nomad, lover of exploring new places and making friends.
I love to travel and I love the internet. I take pictures of my travels and share them on the internet using Instagram.
Traveler, entrepreneur, and community builder. I share my insights on digital marketing and social media while inspiring you to live your fullest life.
Comments
Ready to learn more? 👍
One platform to optimize, manage and track all of your teams. Your new digital workplace is a click away. 🚀
Free for 14 days, no credit card required.