How to Create an Annual Plan in 5 Steps

Kris Snyder is the founder of the growth advisory firm Impact Architects and has helped entrepreneurs for more than 25 years. Here, he guides you through the five steps of how to create an annual plan and how to run an annual planning meeting

This is the first blog in a three-part series on annual business planning. Subscribe below to the blog to get more annual planning advice from Kris Snyder.

Every organization of a certain size (maybe about $500,000 of revenue or more) will eventually need to start planning annually. As your organization continues to grow, there are suddenly more than just three people sitting around a table trying to make decisions. 

Together as a leadership team, you want to be able to give a framework of what the year going to be like. That’s where the two-day annual planning meeting comes in.

There are five steps —  a sequence of events that create an annual plan. And while every organization will have its own system of what works for them, here’s how I run my clients’ annual planning meetings:

Step One: Get Perspective on the Past, Present and Future

The leadership team gets together and takes a look at the overall vision. They ask things like:

  • “How did we perform last year?” 
  • “Are we on-track or off-track for this year?” 
  • “How do we think it’s going to be in the next year?”

The answers to these questions are going to take the shape of agreement on the high-level numbers, like revenue and profit. That will help you determine what the targets are going to be for the next year. 

Step Two: Set the Numbers

Next, you’re going to ask: 

  • “What are some of the outcomes?”
  • “What are our measurables?” 
  • “What are some of the activities that we’re going to do to reach these higher-level numbers?”

That starts to break down into the individual departments. If you’ve got a leadership team scorecard in Ninety and they’ve got 5-15 measurables on that scorecard, hopefully, every department is represented on there. Because that tells us if they’re on-track or off-track. 

Step Three: Propose Goals (But Wait, You’re Not Done!)

Once we have those measurables, now we’re going talk about: 

  • “What does the future look like?” 
  • “What are the goals?”

When the revenue, budget, and profits are agreed to, and we’ve got these overall goals, there’s not enough definition yet! So once that annual meeting of the leadership team has happened, we then turn to the department representatives and say, “Ok, now that you have some further guidance on our overall goals, you can go back to your teams, discuss, and then come back to us and tell us what you think you can do.” 

Step Four: Assess Budget and Feasibility on a Departmental Level

Hopefully, if you’ve got a good financial team involved, they’ve given the departments a budget template. This template will show them what they spent in the past year including: 

  • External (contractor) wages,
  • Internal wages,
  • Third-party expenses for things like hardware and software,
  • And any other previous expenses.

Seeing their historical expenses, they can now think forward to what the budget realistically needs to be in order to achieve next year’s goals. There’s typically a budgeting exercise that is now going to coincide with this department-level annual planning. 

Essentially, the department is going to tell the leadership team, “Ok, you’ve given me these goals. I’m now going to come back to you and tell you what the budget is going to look like.” 

The leadership and financial teams are going to give each department some guidance and guardrails. Then they’re going to let the department representatives come back and advocate why they need more or less. 

Step Five: Reconvene to Finalize the Annual Plan

After the departments have gone off to discuss and plan out details internally, they will then come back and give feedback to the financial and leadership teams. The financial department and leadership team will then give them feedback, too. 

When the department representatives have reconvened with leadership and have agreed to goals that are S.M.A.R.T. (Specific, Measurable, Attainable, Realistic, Timely) as well as defined departmental budgets, the annual plan becomes formalized.

Creating an Annual Plan is Important, But Then You Have to Follow Through

It’s agreement and alignment for the next year. It’s team health. And then it’s execution. 

It’s great to have goals but if we don’t have the discipline to achieve them, then it doesn’t really matter much. 

Kris-SnyderKris Snyder is driven by his passion for working with entrepreneurs. After 25 years of building and leading five entrepreneurial companies, in 2018 he founded a growth advisory firm called Impact Architects where he serves as the Managing Partner.

Additionally, in 2019, he began working with, a company focused on supporting the same target market by providing business operating system software, where he serves as the Head of Finance and Partnerships. 

Subscribe below to our blog to get help with annual planning, goal-setting, task-tracking and more!