If you haven’t started your budgeting and planning process for 2007, 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:
• Annual budget…this should include the following components:
– Revenue plan
– Cost of revenues and expense plan (includes staffing plan for upcoming year)
– Capital expenditures plan.
• Variance report.
• Trend analysis (current and five year trends).
• Cash flow projection.
Operating plan
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 2007 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 2007 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 2007 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 2007 financial and operational goals.
Develop departmental plans…planning template
Distribute a planning worksheet to each department head. For a sample planning worksheet, go to my Web site (www.mydlachmanagement.com)and download the worksheet…Planning for growth in 2007 under the Tools tab.
The following is a simple but meaningful template 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
• Identify the critical goals and/or priorities that support the achievement of the 2007 financial and/or operational goals.
People priorities
• Identify the staffing needs (staffing plan) that support the achievement of the 2007 financial and/or operational goals.
• Identify your employee development and retention priorities and action plan summary.
Process priorities
• Identify the process priorities that support the achievement of the 2007 financial and/or operational goals.
Technology priorities
• Identify the technology priorities that support the achievement of the 2007 financial and/or operational goals.
Greatest obstacles and/or inefficiencies
• Identify the greatest obstacles and/or inefficiencies negatively impacting your departments’ ability to achieve their performance goals for 2007.
Top priorities
• Considering the above, what do you suggest should be the top 90 day priorities for your department in preparation for achieving the 2007 financial and/or operational goalsω
Once your leadership team has gained consensus with regards to the collective 2007 operating plan, be sure the following is true:
1. The collective plan, when executed properly, supports the achievement of the financial goals of the organization.
2. Every person in your company is aware of and understands the operating plan for their particular department.
3. Every person in your company is aware of the key priorities contained within each of the other departments’ operating plans.
4. Key Performance Measures (KPM’s) have been established according to each planning category (where appropriate).
5. At the appropriate intervals (daily, weekly, 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 2007, and your fiscal year is aligned with the calendar year, then you are officially behind in your 2007 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.
