With the New Year less than 5 weeks away, it is a good time to create your Annual Business Plan for 2016. You must develop an Annual Business Plan for your business regardless of its size, scope and industry. It is very important to have the plan before the New Year starts so that you and your team can hit the ground running when the New Year begins. Starting the year with out an annual business plan is like starting a trip with out knowing where to go and how to get there. Developing a robust annual plan for your business could take few hours if you already have a strategic plan and your business is well organized or it could take 3-4 weeks if you are doing this for the first time and do not have a strategic plan in place.
Start with analyzing your current year performance. Look at your key drivers for revenue, expenses and fixed costs. If you have a Strategic Plan, review this plan and identify the key initiatives and goals for the upcoming year. Download this one-page Annual Business Plan template and get started right away. If you do not have a Strategic Plan for your business or do not use this regularly as a roadmap for your business, now is a good time to develop a Strategic Plan. Download this one-page strategic plan template and get started on this right away. This will help you clarify your vision, mission as well as the long & short term goals. A good strategic plan is a solid foundation for your Annual Business Plan. Also, reassess your Strengths, Weakness, Opportunities and Threats and brainstorm what you would like to accomplish in the upcoming year.
One of the main outcome of the Annual Business Plan is to align your financial goals with the initiatives and plans across all functions such as marketing, sales, operations and engineering. Your Annual Business Plan must have the following elements that are in perfect alignment:
#1 Annual Theme
Come up with an annual theme that communicates what you want to accomplish in the upcoming year. This theme should capture the imagination of the entire organization and drive them towards a common goal. Some examples of themes are: Cash is King or Embrace the Process or Go Digital or Dominate a certain market or Launch new product category.
#2 New Product Introduction Plan
Your plan must include the New Product Introductions(NPI) in the upcoming year. Ensure you have executable project plans for every NPI along with the launch activity and desired financial outcome for each of these NPIs. The Sales & Marketing plan and the Organizational Plan should be aligned to ensure timely and successful launch of the NPIs. Consider dependencies between NPI launches as well as any legacy products that must be retired to ensure no Excess & Obsolescence.
#3 Sales & Marketing Plan
Your sales and marketing plan should be developed by analyzing your past year performance on lead generation and conversion. Clearly identify the lead generation tactics you will use to generate the desired leads to achieve the financial goals and develop a marketing calendar with this activity. Determine the marketing budget required to execute the marketing plan. Identify improvements to increase the effectiveness of your sales process to achieve the desired conversion rate.
#4 Organization Plan
Align your organization to achieve the financial, sales, marketing, operational and financials goals. Take the opportunity to make any immediate changes to your organization as well as plan for changes in the organization through out the year. This should include hiring plans, training and coaching programs to improve the skills and capabilities of your employees and a well defined Performance Incentive Plan that motivates them to accomplish your goals.
#5 Financial Plan & Budget
Based on your current year performance, economic conditions, industry growth expectations and your own growth aspirations, you should establish the revenue, gross margin and net profit goals for your business. It is important to have the detail mix of products or services that contributes to the revenue and gross margin goals. The Financial plan and Budget must be aligned with the sales & marketing plan, NPI plan and Organization plan. Break down the financial plans by month or at the least by quarter so that you can track your progress regularly.
#6 KPI Targets
Your Annual Business Plan would be incomplete with out Key Performance Indicators that measure the progress of your business towards your goals. Identify at least 5 KPIs for your business and set targets for these KPIs so that you can track your progress regularly. Assign appropriate KPIs to every one in your organization and tie the performance incentive plan to achieving these KPI targets. For more guidance on setting KPIs for your business, follow the 5 Steps to Implement a Good KPI Measurement System.
It is important to engage your team in the development of the Annual Business Plan. Set up brainstorming sessions and dedicated meetings to formulate your Annual Business Plan. Once you have the plan, make sure to communicate with all your employees and be crisp on what each employee needs to contribute and show them the monetary benefits they get as well as the potential career growth they can achieve by implementing the plan. Download this one-page template of Annual Business Plan and complete this process before your teams leave for the holidays. This will help you hit the ground running when the New Year begins.
If you have any questions or need help creating your Annual Business Plan, click here to schedule a short call at a convenient time for you on my calendar.