Annual Planning
I’ve often been asked by clients how we do our annual planning. We follow our own Outsell Growth Framework and revisit our business plan each year and each quarter on a rolling annual basis. Here’s how it works for us, and if you’d like help setting up a system like this for your data, information, and analytics business, let us know.
We set our annual plan at a quarterly off-site held each year in October, though in 2020, it was an “on-site,” and we were all in our home offices connected by Zoom. We shortened the meeting but got to the rub of the issues: external landscape, competitive landscape, our rolling plan, and what needed tuning, whether people, product, or technology. We set our goals. The outcome of that meeting was a preliminary budget for the coming year with an updated business plan driving it.
Because the fourth quarter is fluid, we revisit the plan in November to make sure nothing has changed, and the board ratifies the budget and plan on a preliminary basis. By the end of the year, all assumptions are final. We update and finalize one last time given year-end performance, and the new year’s budget and business plan are set.
In the first week of the new year, we complete all performance reviews, with all hands notified before year-end what the dates are.
The following week, we have an all-hands meeting, and we look back on the prior year and share the plans and budgets for the coming year.
In essence, the first two weeks of the new year are the weeks we look back. By the time we end our all-hands, all we are doing is looking forward and executing the new year. Quotas are finalized, commission plans are set, and commission letters go out.
We then revisit the budget and business plan assumptions quarterly and adjust them as appropriate. The meetings to do this are held right after the financial close. This is when the prior quarter’s goals are reviewed, and new ones are set. Each member of the exec team leaves that meeting knowing what’s got to be done in the coming quarter and how it ties to strategy — the business plan contains all this, and it’s our bible that gets revised as appropriate each quarter.
It runs like clockwork, and by the time we are meeting in October right after the September Q3 close, we are right back where we started, ready to plan for the coming year and repeat the process.
- Our budgets are set by the new year, built off the back of our business plan, which is a rolling two-year doc.
- The board approves these.
- Everyone is up to date by the second week of the month.
- The books close like clockwork, and we have our financial close by the sixth working day of the new month.
- Our reporting package contains KPI results and financial results, and the business plan contains goal results.
- Everything is aligned.
Plan drives budget and KPIs. Monthly reporting is the measuring stick.
I used to work for a company whose budgets for the new year were never done until March. Because of that, sales quotas weren’t either. It was nuts. This was also the company whose sales department couldn’t complete renewals on time. The backlog of past-due renewals was huge, and it too was nuts.
Basic business disciplines take just that — discipline. They require a commitment to a workflow that is set and revisited and that is agile enough to adapt to whatever comes at us. And last year a lot did. Because of this process, we were able to revisit budgets, make assumptions about sales performance and renewals, and manage costs quickly. This workflow saved us last year — it’s simple and it works.
By the time you see this, everything about 2020 will be behind us, and our entire team will be focused on the new year ahead. Budgets are final, business plans that drive it are done, performance reviews and all-hands are done. Quota and commission letters are out.
Whew! 2021, here we come!
Good luck with your new year! And while you’re at it, call us if you’d like a copy of the Outsell Growth Framework — a tried and true roadmap to growth in our industry.