Sage Advice US

Annual planning: Charting the course for your business

This time of year our thoughts turn to falling leaves, warm sweaters, end-of-year rituals—and, yes, annual business planning.  It seems appropriate that as the year winds down in preparation for new beginnings, we also reflect on our business strengths and weaknesses, financial situation, and how we want to move our companies forward.

There’s been a lot of discussion in recent years, however, about the value of annual business planning. Some say companies have made the annual planning process too complicated and stringent, essentially stifling creative thinking and agility throughout the year. Others warn that it can inhibit long-term thinking because companies tend to focus only on driving results for the upcoming year. And then there is always the debate about whether annual business planning is even relevant for entrepreneurs who need to be more fluid as they continually try new things and adjust to find the right formula for success.

Despite these differences in opinions, however, most experts still seem to agree that it’s a good business practice to look up from everyday operations at least once a year to understand where you are today and where you want to be in the future.

Here’s what they say are some key elements to effective annual business planning:

As a contractor, it’s important that you have business planning in place. Lenders, investors, and sureties certainly like to see this information when they evaluate your company for financing and bonding. But even more importantly, when done right, annual business planning can set the stage for a more successful year and take you one step closer to reaching your long-term goals.