The Importance of Annual Planning

Usually, in the business world when we talk about plans and planning - most people automatically default to a Business Plan - that hefty document that takes 50 to 100 hours to produce. I am NOT talking about that type of planning. In fact I want you to throw that business plan out the window

I hope I haven’t ruffled too many business feathers by saying that.

While business plans are useful, when you are going for funding from a financial institution, overall, you pay big money to get them produced and most likely they sit on a shelf collecting dust never to be looked at again.

What your business needs is an operational plan. An operational plan (also known as an annual plan) is more actionable right now. It’s a much more practical approach to planning the future of your business and what most people in your business can actually work with and use.

This is a much simpler process where

1. You start with what your 12 month revenue will be for your business and work your way backwards.

2. That annual revenue is further broken down into quarterly objectives

3. These quarterly objectives will be further broken down into monthly targets

4. The monthly targets will be broken down into weekly promises

5. All the weekly promises are then further broken down into daily activities

Planning leads to a step by step process of breaking down future projections into daily actionable tasks that can be started today!

It’s necessary to have a financial sense of where you're headed and what your upcoming costs are going to be. These future projections can be based on previous experience i.e. you know every January there is a dip in sales and you plan for that or they can be created (because this is a new thing that you have never done before). Expenses can be based on historical data and any future expenditures that you are aware of. If you do not have historical data - do some research and guesstimation.

A plan does not have to start in January - you can start planning for your business at any point. When I start with my clients, it is one of the first things we look at - what are the next 12 months going to look like. Look at what metrics you want to measure - hint: measure what is important to you. Most businesses will have some common KPIs - like sales, profitability and leads. And then based on the business other variables that are important to their business success.

I trust this blog has been insightful in realizing that planning is important and should be a key part of your business activities. Go forth and prosper!