Business Plan
Take time to prepare for the coming year
If you haven’t started your budgeting and planning process for next year, and your fiscal year is aligned with the calendar year, then you are officially behind in your business planning process. The proper planning for an upcoming year requires much thought, time and energy in order to ensure you have a business plan that, when executed properly, supports the achievement of the financial and operational goals of the organization. The following are a few of the items that need to be discussed and incorporated into a formalized annual business plan.
Financial planning and reporting
Unless you are the tiniest of companies, well under $1 million in revenue, be sure you work toward developing and using the following financial planning and reporting tools:
First, create an annual budget. This document should include the following components:
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Revenue plan
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Cost of revenues and expense plan (includes staffing plan for upcoming year)
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Capital expenditures plan
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Variance report
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Trend analysis (current and five year trends)
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Cash flow projection
In addition to developing your financial planning and reporting tools, you will need to develop an operating plan by department. When all departments’ operating plans are properly developed, aligned with company goals, and executed properly, the collective operating plan should support the achievement of your yearly corporate goals.
The following is a simple planning approach that you can use within your company enabling your managers to build a simple but meaningful business plan for the upcoming year. Here’s how this works.
Collaboration and alignment
Involve each department head in creating the annual operating plan. Start by discussing key financial and operational goals in advance so the management team has had an opportunity to absorb, debate and ultimately agree upon the appropriate set of goals and objectives for the upcoming year. Once all of the departmental plans are complete, have each department head develop and present their plan to the entire leadership team. The goal is to discuss, debate, challenge and ultimately gain consensus with regards to the critical priorities that will ultimately support the achievement of your organization’s financial and operational goals.
Planning template
The following is a simple approach providing any leadership team with the basic planning categories as the foundation for creating a company’s annual plan by department.
Critical goals and/or priorities:
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Identify the critical goals and/or priorities that support the achievement of the future financial and/or operational goals.
People priorities:
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Identify the staffing needs (staffing plan) that support the achievement of the upcoming financial and/or operational goals.
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Identify your employee development and retention priorities and action plan summary.
Process priorities:
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Identify the process priorities that support the achievement of next year's financial and/or operational goals.
Technology priorities:
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Identify the technology priorities that support the achievement of the upcomingfinancial and/or operational goals.
Greatest obstacles and/or inefficiencies:
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Identify the greatest obstacles and/or inefficiencies negatively impacting your departments’ ability to achieve their performance goals for next year.
Top Priorities
Considering the above, what do you suggest should be the top 90 day priorities for your department in preparation for achieving next year's financial and/or operational goals? Once your leadership team has gained consensus with regards to the collective operating plan, be sure the following is true:
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The collective plan, when executed properly, supports the achievement of the financial goals of the organization.
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Every person in your company is aware of and understands the operating plan for their particular department.
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Every person in your company is aware of the key priorities contained within each of the other departments’ operating plans.
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Key Performance Measures (KPM’s) have been established according to each planning category (where appropriate).
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At the appropriate intervals (daily, weekly, and monthly), review each department’s performance according to the operating plan (periodic review).
This ensures each department’s operating performance is in alignment with the identified goals and/or priorities. If your leadership team is not willing to, or not disciplined enough to conduct regular periodic reviews, then consider skipping the planning process altogether as it will be of little value without a disciplined performance review process in place.
Remember, if you haven’t started your budgeting and planning process for next year, and your fiscal year is aligned with the calendar year, then you are officially behind in your planning. The proper planning for an upcoming year requires a lot of thought, time and energy in order to ensure you have a business plan that, when executed properly, supports the achievement of the financial and operational goals of the organization. Feel free to call or write if you have questions about the planning process.