Annual Planning can help you establish goals to get you and your team focused and drive accountability to achieve the results you want for your business. The process is not complicated and done properly, unleashes a mix of creativity, teamwork and discipline. This guide is a simple step-by-step playbook for developing your Annual Plan.

“A goal without a plan is just a wish.”

What is Annual Planning?

Annual Planning is a structured process where a business outlines its key objectives, strategies, and resource allocations for the coming year. It involves setting clear, measurable goals aligned with the company’s long-term vision, identifying key performance indicators (KPIs), and developing action plans to achieve these objectives. The Annual Plan establishes a roadmap for growth, ultimately driving organizational focus, accountability, and sustained progress.

Why is Annual Planning Important?

Annual Planning is important for your business because it identifies where you’re heading, and how you’ll get there.

• It keeps people aligned, focused, and energized to achieve your goals.
• It’s a roadmap that guides your organization for the coming year.
• It drives accountability to achieve the results you want for your business.

What are the Components of Annual Planning?

Annual Planning consists of the following components:

• SMART Goals.
• Strategies to achieve the goals.
• Activities, Timeframes, Owners and KPIs.
• Annual Financial Budget.

What are the Steps in the Annual Planning Process?

The following summarizes the steps in the Annual Planning process followed by a deeper dive into each one.

• Preparation.
• Previous Year Review.
• Developing Goals and Strategies.
• Creating the Financial Budget.
• Monthly & Quarterly Reviews.

Preparation

Let’s start by preparing for the Annual Planning Process. The following are a few things to consider and prepare for before you get started to make the process as efficient and effective as possible:

• Commit to Annual Planning and communicate with your team.
• Set aside dedicated time for planning…get it scheduled.
• Identify your planning team.
• Determine if you’re doing a planning session off-site if applicable.
• Assemble financials and key metrics from the previous year:
  • Revenues, Cost of Goods, Gross Profit, Overhead Expenses, Net Profit
  • Number of Projects, Clients, Locations, Units Sold, Products
• Look at your sales pipeline for the coming year to see where you are starting and identify trends.
• Identify anticipated pricing and cost changes including salaries.

Taking these simple steps will help you get started with the process.

Previous Year Review

Now, let’s evaluate your performance for the previous year. It’s important to reflect on the following sample questions to understand not only how you performed but why and what drove your results.  

• Did we achieve our goals?
• What were the successes?
• What were the disappointments?
• What lessons did we learn?
• Was there anything we didn’t accomplish to roll into the next year?

Reviewing the previous year with your team is an opportunity to celebrate successes and learn from any mistakes. You can send this list of questions to your planning team in advance of a planning session to give them time to reflect on their performance.

Developing Goals

The next step in the process consists of developing goals for the coming year. A goal is an idea of the future or desired result that a person or a group of people envision, plan and commit to achieving. 

Consider the following to brainstorm ideas for goals:

• What are the most important things that must be done next year to be successful?
  • Less is better when it comes to setting goals. Striving for at least three goals with no more than seven is best.
• Are the goals aligned with your long-term objectives?
• Evaluate your SWOT Analysis to identify potential opportunities for goals.
• Write your Goals in a SMART format (Specific, Measurable, Achievable, Relevant, Time Bound).

SMART Goal Example:

Developing Strategies

After creating your SMART Goals, the next step is developing strategies to achieve those goals. Strategies are simply the “how” and include specific actions, resources, dependencies, owners, due dates and metrics to track progress. This requires focused thinking to develop the level of detail necessary to be successful, and we highly encourage you to engage other members of your team to add their input and develop ownership.

We recommend using the following template for your Annual Plan.

Using the example, the first goal of growing your revenues 10% is not specific enough. The logical question is how will you do this? Possible strategies may include improving sales conversion (# of sales divided by qualified leads), developing a new website and exhibiting at a local Parade of Homes. These are the strategies or the “how” to achieve the goal.

Next, identify specific activities for each strategy, such as implementing a sales training program to improve sales conversion to contribute to the goal of growing revenues by 10%. From there, identify the single person who will be held accountable for achieving this goal, when it needs to be accomplished and what metric or KPI (Key Performance Indicator) will be used to track progress.

Creating Your Budget

Now that you’ve identified our goals and strategies, the final step is creating your budget for the coming year. A budget is an estimation of revenue and expenses for the year, broken down by month. Budgets are used to identify financial resources and drive accountability to achieve financial goals associated with the Annual Plan.

We recommend keeping your budget model relatively simple and offer the following summary template. It’s entirely up to you on the level of detail but consider the following elements:

• Build the Annual Revenue and Expense Budgets to Support your Goals and Strategies
• Provide Details as needed including:
  • Key Assumptions, Lines of Business, Products & Services, Customers, Headcount, Marketing Investment
  • Overhead Expenses
• Estimate Monthly Timing based on seasonality or history
  • Don’t just straight-line the numbers for 12 months.
• Make sure the Budget is aligned with the Annual Plan.

Annual Plan Monthly & Quarterly Reviews

Now that you’ve completed your Annual Plan the real work starts. Creating the document is only the first step. Using the Annual Plan to manage your business is critical to your success. Some companies complete the plan, put it on the shelf and dust it off at the end of the year to find they didn’t achieve any of their goals.

Annual Planning should be an ongoing, dynamic process not a once a year event. Things quickly change with your competitors and with your customers. You’ll need to continually review your environment and make course corrections as needed. This is what great companies do and why they are successful over the long term.

We recommend the following:

• Each month, you and your team should conduct a high-level review of your financial performance and goals. Review your goals to see if you are on track. Each owner should provide a quick update and status. If there are issues, they should discuss them with the team and identify corrective actions. How did you perform compared to your budget and discuss the reasons why…both good and bad?
• Each quarter, take more time to review your goals in more detail. Have there been dramatic changes that require changes or new priorities? We’re not suggesting throwing the Annual Plan in the trash, but of it more of a refresh and reprioritize if appropriate.
• Last, communicate your progress with the rest of the team so they are in the loop on where the business is heading and their role in achieving the goals.

Wrap Up

Annual Planning is a fluid, dynamic process. Use it to clarify your focus and prioritize what’s important to you to achieve the results you want from your business. If the process is right, there should be no surprises.

As Thomas Edison said, “Good fortune is what happens when opportunity meets with planning.” Best wishes for a successful 2025!