Council Post: How To Develop A Business Planning Rhythm

Tedd Long is the COO of MCAG, Inc., a revenue recovery consulting firm that empowers businesses to capture every recoverable dollar. 

“How did it happen? We were growing every year. How did we not see this coming?” These are questions often asked by business leaders when their enterprise falls into a growth trap after a few years of consistent progress. Leadership teams get too comfortable, and the business plan gets stale. The emphasis on growth overwhelms the business with more work but smaller margins. In my opinion, the solution lies in adopting a clearly defined planning rhythm to stay on top of the challenge of when to grow and when to scale your business.

An effective business planning rhythm does not have to be time-consuming or difficult to execute, but it does take some discipline to get your team to adjust its focus away from day-to-day activities to refine your longer-term goals and objectives. At minimum, a leadership team should meet monthly to discuss any roadblocks and report progress made on financials, outcome measures and detailed action plans established during quarterly planning meetings. These quarterly meetings should be driven initially by broader plans developed during an annual planning conference. In short, an ideal rhythm should include an annual planning conference, quarterly calibration meetings and monthly updates.

In my case, I meet with our leadership team in late December for two days to clarify our future goals and review and refine our mission, vision and core values. We begin our annual review by going over industry research reports, company financials and the results of an annual year-end survey of the leadership team members’ views on the past year and their forecast for the coming year. I’ve learned that many executives get nervous when forecasting the future, and that’s totally understandable. After all, even with the best research and sage insight, it is still a guess. But winning in business is about making hard choices, and to succeed you have to decide where you’re going before you can plan and take the next step. This is when your team has to answer vital questions such as if you should grow or scale, build or buy, spend or save.

After discussing the market research, financial reports and survey results, I lead the team in a discussion focused on the desired outcomes and direction we should take in the coming year. It’s important to do this first because it will color and inspire the rest of the planning meeting. Once we gain consensus on our short-term plans, we refine our long-term mission, vision, core values and purpose statement. Granted, I understand that some business leaders have relegated these often-misunderstood areas to their marketing or branding teams, but I’m old school. I believe these are essential elements of an effective annual planning process, and they are owned by the leadership team. They set the foundation and serve as a compass for growing and shaping the business.

So, after firmly establishing our foundation with our team, we do an annual scan of our strengths, weaknesses, opportunities and threats before moving into defining a list of key thrusts for the coming year. These are a handful of priorities for the next year that support the desired operational and financial outcomes discussed earlier. Things like an increased share of a particular market, a profitability number for a specific product or service line, or the optimization of an internal resource become the basis for assigning out initiatives and help drive quarterly accountabilities and new KPIs.

At the conclusion of our annual planning meeting, we produce a one-page plan we call our North Star that has three areas of focus: our foundation (mission, vision, core values), our scan (SWOT analysis) and our plan (financial goals, key initiatives and quarterly accountabilities). We calibrate this plan each quarter and assign new quarterly goals and objectives that map out the path of progress to achieve the annual targets. Monthly meetings concentrate on quarterly assignments and address any problems that prevent us from making good progress. It’s a simple, straightforward rhythm, and everyone on the leadership team takes ownership in the process.

This business planning cycle can allow the flexibility to change course at regular checkpoints and transparently link your planning with budgeting. At the same time, by embracing this regular cadence, your team can consistently address important questions that help identify the risks and opportunities that define your growth strategy.

Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?