How we use our yearly planning cycle to grow our company
Published 2018-11-12, updated 2023-03-21
Summary - Is your company falling short of its goals? Having a work plan created during a regular annual planning cycle will help set goals and execution.
This is the second of three pieces on how to create a solid, measurable plan for growing your company. Today, I write about the yearly planning cycle. The previous piece looked at the importance of setting a vision and a mission for the company. The final piece will set out a series of steps for turning the long-term vision for your company into a measurable plan for the coming year.
Even though the new year does not start until January 1, there’s something about the fall that speaks to new beginnings. Kids go back to school and people come back from vacation, ideally rested, energized, and ready to jump back into the fray.
Though our fiscal year, like the calendar year, does not begin until January 1, we also start thinking about new beginnings every time the falls rolls around.
That’s because fall marks the beginning of the yearly planning cycle for our annual work plan. We start preparing it in September so that it’s ready to implement in the new calendar year.
Let me share our cycle, and how we use it to drive our growth. Without proper planning, a company will have a hard time meeting its objectives.
I have found that there are three natural phases that occur throughout the year:
- Plan and prepare (September through December)
- Execute (January through May, and September through December)
- Reflect and recharge (June through August)
In addition, we have a rolling, three-year vision for the company. This allows us to create long-term goals and plug them into the annual work plan as needed. We work on it throughout the year. I will discuss the rhythm the three-year plan further down.
1. Plan and prepare (September through December)
There are three parts to the plan-and-prepare part of the cycle.
- First, with the help of the management team, we debate, discuss, and align on the long-term vision and objectives of the company and then set measurable goals (we use objectives and key results, or OKRs) for the coming calendar year.
- Then, each department develops tasks that will help the company meet its objectives.
- Finally, we build the financial and resource model required for the tasks assigned.
The executive kicks things off by looking at the company’s long-term goals and vision, and doing a SWOT analysis (strengths, weaknesses, opportunities, threats) of the current situation.
We’ll often have an off-site, moderated strategy session. Having a moderator allows everyone to participate without having to worry about running the meeting. Plus it helps avoid going off on useless tangents. If an idea comes up that could pull us down a rathole, the moderator is able to park it for discussion when we’re done with the essential stuff.
The executive always has in hand a three-year vision for where the company is going (more about that later). And in the initial phase of the planning cycle, the executive looks at the three or four things (the main objectives) the company needs to focus on in the coming calendar year to turn elements of that long-term vision into reality.
When we consider objectives, we always make sure they are measurable. For example, if our vision is to be “the world’s ecosystem for metrics and KPIs” (key performance indicators), then one measure might be getting a minimum of 500,000 unique visits to our website each month.
Whatever the objectives the management team sets, at this point the measurable key results are always high-level, and as few as possible.
Then we see how each department can contribute to achieving the high-level results.
To go back to the example of 500,000 unique visits to our website, Development might say it can help achieve that goal by creating a viral loop that sends customers back to the website. Marketing might propose a campaign and/or content that drives traffic. And so on for each department.
Once each department has weighed in with a proposal, we look at what financial resources are needed for them to act.
This is where reality kicks in: Is the plan too costly? What is the confidence of exceeding the plan? What needs re-evaluating?
In any event, all the components of next year’s calendar plan – what it entails, what resources it needs and how results will be measured – have to be in place before the end of the current calendar year. In fact, the complete plan has to be ready soon enough so that the board can advise and approve it before it takes effect.
A word about December...
In theory we don’t need to have next year’s work plan ready until December 31.
The reality is that for many companies, including Klipfolio, December is a strange time of year.
Personal life and business life collide, as people prepare for Christmas, go to parties and perhaps make holiday travel plans while rushing to complete current projects, hit revenue targets and clear the decks for the following year.
My rule for December is simple: To minimize panic, make sure everything important is done before the Yuletide season kicks in. That includes next year’s work plan.
2. Execute (January through May and September through December)
There are three distinct components to this part of the work plan cycle:
- Communicate the plan to employees.
- Coordinate things so that it rolls out smoothly.
- Tweak as needed.
We start each calendar year by communicating to employees our objectives and expected results for the year.
In addition to knowing what they are expected to do, everyone needs to understand why we are doing it. The more employees understand why they are given a specific task, the more they feel they are contributing to the success of the company. I’ve written previously about this.
We make sure Klipfolio’s mission and vision are always visible to employees. We frequently talk about the initiatives that support our objectives at all-hands meetings. And then, each department will communicate to its members what objectives it will execute on.
As the projects and initiatives gets going, it’s very important to have a coordinated roll-out.
The customer doesn’t care about our departments or our teams; what the customer wants is a delightful journey from A to B.
It’s very easy for different departments to march to a different beat, so up-front and continued coordination of overall execution is essential. Think of a story being written by multiple authors. Even if the story gets told, inconsistency in tone, tense and person may leave readers very confused. We want everyone and every team thinking of the entire customer journey.
One way to do that is to set short-term objectives.
While the company as a whole might measure its goals on an annual basis, departments need to measure them at much shorter intervals to make sure they are on track.
Development, for example, works in two-week sprints: planning, developing, testing, and a retrospective. It’s the right cadence for them and very common among agile development teams.
Finally, we tweak our projects as needed.
Because we’re always measuring results, we can correct our course fairly quickly. In addition, we take time to learn from each thing we execute. We ask why did it work (or not work)? Why did customers like it (or not like it)? And we always ask: Are we on the right track?
3. Reflect and recharge (June through August)
For many businesses, things slow down a touch during summer. Up to one-quarter of our staff can be on vacation at any one time in the summer months, and a similar number of our customers are usually on vacation as well.
If things are going to slow down, take advantage of that time to reflect and recharge.
We often plan a mid-year strategy session in the summer, and I encourage everyone to take the time to think about the future when things are less hectic.
The three-year plan
Gord Wyse, our new Chief Financial Officer, has made a point of reminding us that long-term planning has to be worked into the yearly cycle.
That means having a rolling three-year plan that lays out the direction the company wants to move in and acting on parts of it each year.
Work on the three-year plan has its own cycle.
The plan, once created, should be reviewed annually near the end of the first quarter. That means taking time to review the company’s vision and mission, and asking: Three years down the road, where do we want to be as a company? For example, do we want to serve a new market or develop a new product line?
In the second quarter it’s time to start fleshing out those goals by asking what big, multi-year initiatives do we have to put in place to achieve our long-term goals? How will those initiatives help us achieve the long-term objectives defined in Q1?
By the fall, as we start working on the annual plan for the coming year, we should be asking what initiatives we can undertake in the coming year to help us achieve our long-term objectives. And from then on, elements of the long-term plan get incorporated into goals for the coming year.
In Gord’s view, the most common mistake start-ups make is not having given enough thought to the long-term things they need to keep progressing on – things that don’t have an end result in the current year.
In other words, if you don’t take time to think freely and creatively about how you are going to leap-frog your competition, you will have a hard time doing so.
One final word to the wise: The best-laid plans will almost never execute smoothly. Circumstances will inevitably change. Recognize that whatever you’ve planned, you will always be reassessing.
Allan Wille is a Co-Founder and Chief Innovation Officer of Klipfolio. He’s also a designer, a cyclist, a father and a resolute optimist.
Promoting data literacy with metrichq.org and the power of AI
By Allan Wille, Co-Founder — October 12th, 2023
SaaS Finance Metrics Cheat Sheet
By Emily Hayward — May 11th, 2022
The Power of Words
By Holly Ebbs — August 12th, 2020
Six Tips to Stage your Company with Confidence
By Mike Pascoe — June 30th, 2020