Kris Snyder founded the growth advisory firm Impact Architects and has coached 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, including making an Annual Planning Meeting agenda.
Every organization of a certain size (maybe about $500,000 of revenue or more) will eventually need to start planning annually. As your organization grows, it will become more and more difficult for just three people sitting around a table to make all the decisions.
You and your Senior Leadership Team (SLT) need to be able to provide a framework for how the upcoming year will look. 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 that works for them, here’s how I run my clients’ Annual Planning Meetings:
Step One: Get Perspective on the Past, Present, and Future
The SLT 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 predict our performance will change in the next year?”
The answers to these questions are going to take the shape of an 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 there's 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. Ninety’s Meetings tool will then allow you to review this data in a structured way so nothing slips through the cracks.
Step Three: Propose Goals (but Wait, You’re Not Done!)
Once we have those measurables, now we’re going to ask:
- “What does the future look like?”
- “What are the goals?”
Even when the revenue, budget, and profits are agreed to and we’ve got these overall goals, there’s still not enough definition yet! So once that annual meeting of the SLT has happened, we then turn to the department heads 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 finance 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
Once they've seen 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 Meeting agenda.
Essentially, each department head is going to tell the SLT, “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 finance teams are going to give each department some guidance and guardrails. Then they’re going to let the department heads come back and explain 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 finance and leadership teams. The finance department and leadership team will then give them feedback, too.
When the department heads have reconvened with leadership and agreed to goals — especially 90-Day Goals, or Rocks — that are SMART (Specific, Measurable, Achievable, Relevant, Time-bound) as well as defined departmental budgets, the annual plan becomes formalized.
Creating an Annual Plan is Important, but Then You Have to Follow Through
An Annual Planning Meeting is both an agreement and an 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 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 Ninety.io, 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.
