How to improve your business by upgrading your mindset towards Annual Planning

Most annual planning is like an aimless road trip.


One where somebody says, “Hey, we have $100 – let’s take it as far as we can.” Maybe you get 30 miles, maybe you get 300. Maybe you stop at attractions, maybe you just drive straight through but you’re not really headed to a destination. There’s no point on the map you’re necessarily trying to hit. The only thing guiding your journey is your $100 budget.


That might make for a fun road trip. It doesn’t make for great business.



Re-Thinking Annual Planning


See if this is familiar – most companies start their annual planning with statements like, 10% growth over last year, or recoup sales from 2018 and grow from 7%, or be cash flow positive. Those are all great tactics. But we really need to take three steps back and ask, as leaders, what is our vision for the organization? Where do we want to go? What do we want to do? Why are we doing this? Then we can determine the goals that will get us to that vision.


Back to our road trip analogy – instead of getting in the car and putting it in DRIVE, have a purpose for going. A point on the map to guide you. Multiple points. Figure out how fast you want to drive, how many breaks you want to take, and who’s going to be in charge of what on the road trip. Now you’re moving forward with purpose.


The Leader’s Mindset for Annual Planning 


Having a visionary perspective on goal planning can be a new or underutilized approach for some leaders. It’s important to remember why you’re here. Why you: started the business, wanted to lead the team, were excited to be part of the organization. Why you’re in the driver’s seat. It wasn’t to just survive. It wasn’t to get through. You wanted autonomy, or freedom. Income potential. To affect social change. Use annual planning to reset. Use annual planning to reflect and remind yourself why you did this in the first place. If you’re a department manager, look at how you want your department to be, or how it can lead by example or guide the culture of the company. Be an illustration of great teamwork. What is your vision for your department, for your company, and for yourself?


Working Backwards from your Goals


Some companies think 10 years out with goal planning. That’s tough to realize – too much outside our control or influence can happen in ten years. It’s useful to have a rough idea of long-range goals, but thinking in five, three, and one year goals is more practical. Approach your goal as a place you’re coming from, not a place you’re going to.

          • Five year plan: Your well articulated vision, with measurable targets in mind. What incremental successes will you require to reach your long-term goals? Is a numeric goal comes up, how specifically will those goals be reached? What inspiration is required for your team to support the vision and execute the strategies and tactics required?
          • Three year plan: Think targets where, even if working towards a stretch goal, you can measure progress. To dominate the market is vague and impractical. To have a market presence in three new regions is something you can break into targets. Going green is just a phrase. Is there a green certification you’d like to achieve? Understand its criteria and what will you start, stop, and continue doing to achieve it. More measurable targets.
          • One year plan: Laser focus on what’s most obviously in front of your business. What new opportunities or challenges do you see that are informing or getting in the way of your three year and five year plans? What modifications or adaptations might be required from you or people on your team?
          • Quarterly milestones: Get specific on the milestones that will help you accomplish your one year plan. Come up with metrics that gauge your progress towards hitting those milestones. What activities should you be measuring? Who in your organization is responsible for those action items along the way?


Staying Committed to the Vision


Another hallmark of annual planning is that last year’s annual plan is often totally forgotten. Without a long range vision and discipline to stick to it, every year becomes a brand new road trip. Stay committed to your vision. This is the value of three and one year goals to support the vision, and of having measurable targets: you’ll inevitably find things are taking slower than you expected, or maybe they’ve accelerated. New challenges present themselves, or new concerns require focus. These business realities shouldn’t be distractions. They shouldn’t take a well-created vision and goal off course because the visionary work you’ve completed supports an agile, flexible approach.


Your revenue model is checking your oil. It should be reviewed annually to keep up with an increasingly quickly changing market. What you think might be a problem or opportunity might look very different a year from now. Other influencers to your revenue model – profitability for instance, and cash flow – that’s filling up the car with gas and other regular maintenance. Review monthly and quarterly to see trends or concerns that need attention to keep you on course.


Putting Annual Planning in Context


More effective, impactful annual planning is a function of context, not content. Stop saying grow by 10% as your first bullet point or discussion on annual planning. Back up and ask: What are we doing? Why are we doing it? Who is going to do it? And how are we measuring how well you’re doing? When this discovery is put in context of a vision of the founders or leaders, with buy-in from the teams and people who’ll help reach measurable targets along the way – now you’re on the road to success.




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