As a business strategist who specialises in helping micro business owners with annual planning, I’ve…
If you’ve heard me or other business experts talking about how you should be doing annual planning for your business and thought to yourself, “What are the benefits of annual planning?, then you are in the right place. As the Annual Planning Queen I get asked a lot about the benefits of annual planning, especially as a micro service business. There are specific reasons why it’s a smart business decision to move beyond monthly planning, or quarterly planning, and plan for the whole year ahead. Keep on reading to find out what the benefits of annual planning are.
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What is annual planning?
Annual planning is the process of setting a business’ goals for the year ahead and then mapping out how, over the 12-month period, those goals will be achieved based on the resources the business has access to. During the annual planning process, you’ll create an annual plan, but annual planning is about more than just creating the document. A properly structured annual planning process will see you reviewing the past year, setting goals, making key strategic decisions and then creating the annual plan document.
THE BENEFITS OF ANNUAL PLANNING
Now that we’re all on the same page about what annual planning is, let’s dig into the benefits.
1. It gives you the opportunity to define what success in your business looks like (so you don’t chase after someone else’s version)
There is no one version of success, but if you don’t define what success in your business looks like then the reality is you’ll accidentally start working to someone else’s version of success. Success for some business owners means turning over a specific revenue figure, growing your team to a certain size, winning awards, opening an office, expanding into another location or taking on investment. But what does success look like for you?
Annual planning allows you the opportunity to define what success in your business looks like. It’s that definition of success which will determine the goals you set and work towards. This should mean you can stay focused on what matters and not wake up in 6 months’ time and realise you’re working towards a version of success that isn’t even important to you.
2. You can make better financial decisions
A key part of annual planning is to do financial forecasting. Once you’ve got a plan for the year, you should map out what money you expect to bring into the business and the money you expect to spend. Doing this over a 12-month period is better than looking at a month or quarter for multiple reasons. If you plan for just a month or a quarter, then the likelihood is you’ll fall into the trap and just working out the average from the past and using those figures as a starting point. But the average isn’t helpful in this instance. When you forecast over 12 months and properly take into consideration fluctuations, it will help you identify possible cash flow issues sooner rather than later.
Also, looking at your finances on an annual basis makes it easier to make better tax decisions. Obviously, this depends on where you and your business are based (and you should always talk to your accountant and / or financial advisor) but in a lot of instances to make the best financial decision from a tax perspective you can’t look at an isolated month or quarter. Instead, you need the 12-month view.
3. It makes maintaining year-on-year growth easier
Year-on-year growth is not guaranteed. Just because this year was better than last year doesn’t mean next year will automatically be better. To continue seeing year-on-year growth you have to really understand what has caused the growth originally and estimate how that type of growth can continue. Sometimes you can simply keep on doing the same thing, but not always. Annual planning gives you the opportunity to look at how you’ve gone over the last year and question whether if you continue will you still grow.
Year-on-year growth can only be analysed when you compare a whole year against another year. You can have a year where a quarter performed worse this year than last, but overall there was still growth. That’s why looking beyond the quarter and at the whole year is vital if year-on-year growth is what you’re aiming for.
| CREATE A STRATEGIC PLAN FOR YOUR BUSINESS OVER THE NEXT YEAR – IN JUST ONE DAY!
I’m the Annual Planning Queen and I specialise in helping micro service-based business owners plan for the year ahead. By booking a Strategy Day with me, I’ll ensure you have a powerful and productive annual planning experience where we consider all the major elements to ensure you can achieve your goals for the year ahead. All you have to do is secure your date, block it out in your diary and get ready to be guided through my signature annual planning framework that guarantees that, by the end of the end of our time together, you’ll have a clear roadmap to achieve your goals and be excited for the year ahead. For all the information and to book a Strategy Day click here. |
4. You’ll be able to be more intentional with your marketing
Another key part of annual planning is to look at your marketing. But whereas when you are looking at marketing for the month ahead you are likely to get sucked into “what should I post?”, when you look at the year ahead you can be much more intentional about what marketing is happening when. For example, if you know an offering in your business that is always popular at a certain point in the year you’ll be able to plan for that. Or if there is a time of the year when sales are notoriously slow then you can plan for how you’ll address that in the year going forward. It is useful if you are going to take part in any seasonal campaigns such as Black Friday and Cyber Monday.
Annual planning will enable you to map out your launches and campaigns to maximise opportunities, and also drive demand during notoriously weaker periods of time. But in addition to know what will be happening with your marketing on the outside it also gives you the opportunity to think what needs to happen behind-the-scenes beforehand.
When you think about your marketing on a quarterly or annual basis then making decision around investing in software, hiring people, doing content/photography shoot etc is viewed differently. You’ll be able to look at the return on investment differently and see the value it could bring to your business over the longer term.
5. You can do a proper review of the (past) year
Whilst I would love it if every micro business owner was on top of reviewing how their business was performing all year round, I know that isn’t the reality. When you’ve got so many hats to wear in your business, the likelihood is that reviewing how your business is performing isn’t a top priority. Annual planning, when do right, gives you a moment to properly review the (past) year. In my annual planning process, I refer to this stage as REVIEW AND REFLECT. The point is that the data is reviewed and then the business owner also reflects on their experience. This process ensures the changes (positive and negative) across the year are captured, and the business owner really reflects on how they feel in the business. This is vital if you want to build a business that continue to get better.
6. It will help you to make better, and faster, decisions throughout the year
As a business owner, you are constantly having to make decisions. There are usually multiple ways to achieve anything and so often there are multiple ways you can be spending your time, money and other people. Annual planning will help you to make better, and faster, decisions. In the annual planning process you’ll have made some key decisions. You’ll have set goals and worked out what your business growth strategy is. This means as the year rolls by and you have to make decisions you can make decision based on if it is helping you get closer or further away from your goal, and if it is supporting or diverting from your chosen strategy. That helps you to make decision faster, and since they are connected to a strategic decision you’ve already made, they’ll be better decision.
7. It makes you feel and operate like the CEO you are
I’m a big believer that being the CEO of a micro business is harder than being the CEO of a big business (I’ve written about why that is true here). One of the reasons is that when you are the CEO of a micro business, you don’t have much time to be the CEO. Not only does that mean it’s hard to do the work required to grow your business, but it also means you can end up being frustrated and feeling like you aren’t being a good CEO of your business. Annual planning is a great opportunity for you to feel and operate like the CEO of your business. You’ll be reviewing past performance, setting goals fir the future, making decisions about what the business will and won’t do, creating forecasts and deciding what to monitor going forward. Doing all of of things, especially when you have a dedicated CEO Day for your annual planning, will mean you feel like a proper CEO who is taking the future of their business seriously.
| BE THE CEO YOUR BUSINESS NEEDS. CREATE A PLAN FOR THE YEAR AHEAD.
I’m the Annual Planning Queen and I specialise in helping micro service-based business owners plan for the year ahead. By booking a Strategy Day with me, I’ll ensure you have a powerful and productive annual planning experience where we consider all the major elements to ensure you can achieve your goals for the year ahead. All you have to do is secure your date, block it out in your diary and get ready to be guided through my signature annual planning framework that guarantees that, by the end of the end of our time together, you’ll have a clear roadmap to achieve your goals and be excited for the year ahead. For all the information and to book a Strategy Day click here. |
8. You’ll be able to take more time off and get better work-life integration
So far, all of the benefits of annual planning have been focused on the business, but annual planning can benefit you as the business owner too. The stats around how much time a small business owner takes off are depressing to say the least, and a major benefit of annual planning for the business owner is that it will help you to take more time off and have better work-life integration across the year.
When I help business owners with planning, I ensure they’ve thought about the number of hours they want to work in the business, how they’d like their working week/month/year to be, and how much time they want to take off. Saying that you want to take the whole of August off, only work term-time or work a 4-day week is one thing, but when you annual plan, you can design your year so that is a possibility.
For example, if you want to take a whole month off, you’ll need to think about the implications of that. Does that mean you won’t make any income in that month? Does that mean you’ll return to no business or a quieter business? Do you need to have other people working in the business whilst you are away? Annual planning gives you the opportunity to think about all these things and then plan for them.
The 3 key ingredients for effective annual planning
Not all annual planning is created equal. As the Annual Planning Queen, I have helped hundreds of business owners with annual planning and there are 3 key ingredients for effective annual planning.
1. A dedicated extended period of time (ideally a day)
Firstly, you want to have an extended period of time to plan. A day is ideal. In big businesses, it is very common for people to have away days for their annual planning, and that’s because it works. You want to have a extended period of time where your sole focus is being in CEO mode and planning. Put your out-of-office on. Tell your clients and team you are uncontactable. Spend the whole day on planning
2. An annual planning process to follow
You can set aside a day for annual planning and have the best of intentions, but without an annual planning process you’ll waste time and not have as effective a planning time as possible. A tried-and-tested annual planning process means you can sit down, follow the steps, and feel confident you’ve considered everything you need to.
I’ve been refining my annual planning process for year and now have a 5-step process that I know you can complete in a day and that means you walk into the new year ready to go. You can find out more about annual planning process here.
3. A planning partner
You are too close to your business. If you plan by yourself, then you are likely to make assumptions that aren’t challenged. A planning partner will not only help to call out your assumptions, but they can be a sounding board for ideas and play devil’s advocate to make your planning even stronger.
And, of course, when you book an annual planning strategy day with me you’ll get all 3. You are committing to spend the day with me as your planning partner and working through my tried-and-tested annual planning process. For all the details and to secure your day click here.
That’s it. You now know the benefits of annual planning.
As you can see, there is so much you can gain as a micro service business owner through annual planning. Setting a day aside can be difficult, but when you look at what a difference it will make to the rest of your year, surely it is worth?
If you’ve found this blog post useful, please do let me know over on Instagram or LinkedIn.
As I’ve already mentioned, I’m the Annual Planning Queen and have helped hundreds of business owners with annual planning. I have a proven process that means you can create your strategic plan for the year ahead in just one day. You can do it one-by-one with me, or multiple times a year I run group planning days. For all the information click here.
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