Annual planning has a habit of becoming a numbers exercise.
Revenue targets are agreed. Budgets are allocated. Sales targets are divided between teams. Marketing produces a calendar of activity. And everyone heads into January with a plan. But there is a difference between having an annual plan and having a business that is genuinely set up to deliver it.
A useful annual planning framework needs to connect the growth ambition of the business with the choices, capabilities and activity required to make it happen.
For founder-led and PE-backed technology businesses in particular, that means answering some fairly fundamental questions:
- Where is growth actually going to come from?
- Who are the customers we most want to win?
- Why should they choose us?
- Do we have the commercial engine capable of reaching and converting them?
- And is the organisation sufficiently aligned to execute the plan consistently?
The numbers matter. But the assumptions underneath them matter more.
Why annual plans often come unstuck
Most businesses don’t suffer from a shortage of activity. There are campaigns, sales targets, events, partnerships, content plans, account lists and new ideas. However, the problem is often the connection between them.
A revenue target may bear only a passing relationship to the size of the addressable market, historic conversion rates or sales capacity. Marketing may be working towards one set of priorities while sales pursues another. New sectors get added without anything being taken away. Before long, the annual plan becomes a collection of aspirations and activities rather than a coherent growth strategy. A good annual planning framework creates a line of sight from ambition to strategy to execution to results.
We use four broad stages.
1. Analyse: understand where you are starting from
Before deciding what happens next, establish what is actually happening now. Look beyond last year’s headline revenue number.
Where did growth come from? Which customers, propositions, sectors and channels produced the best results? Where were deals won and lost? How long did they take? Which customers expanded? Which left? What happened to average deal value and margin?
Look at the commercial engine too. How much pipeline was created? Where did it come from? Which campaigns, partnerships, referrals or activities genuinely influenced revenue? Where are the bottlenecks in the buyer journey?
And then look outside the business. What has changed in the market? What are competitors saying? How are customers’ priorities changing? Are new technologies, buying behaviours or commercial models altering the landscape?
The objective isn’t simply to report on last year. It is to identify the assumptions on which next year’s growth plan should be built.
2. Define: decide where you will play and how you will win
One of the hardest parts of annual planning is making choices. If your target is to grow by 20%, where will that growth come from? More customers in an existing market? A new sector? Greater penetration of existing accounts? New services? Higher-value propositions? Partnerships? Improved retention? Trying to do all of them usually isn’t a strategy, this is where annual planning connects directly to positioning and proposition.
You need clarity around:
Ideal Client Profile
Which organisations represent the best opportunity and why?
Differentiated position
What space can you credibly occupy that distinguishes you from the alternatives?
Value proposition
What problem are you solving, what outcome are you creating and why should customers care?
Go-to-market strategy
Which markets, channels and routes to revenue deserve investment?
Good strategy involves sacrifice. If you haven’t decided what you are not going to pursue, your focus may still be too broad.
This is the Define stage of the Growth Platform: establishing where you can play and how you can win.
3. Build: make sure the commercial engine can deliver it
A strategy is only useful if the business has the capability to execute it. This is the point at which annual planning needs to move beyond targets and into the commercial infrastructure underneath them.
- Ask what needs to be true for the plan to work.
- Do you have the right people and skills?
- Does your website and wider digital ecosystem support the proposition?
- Are your CRM, data and reporting fit for purpose?
- Is the buyer journey understood?
- Do sales and marketing agree what constitutes a good opportunity and what happens next?
- Do you have sufficient content, proof and credibility to support the sales process?
- And importantly: does the maths work?
If the revenue plan requires 50 new customers, what pipeline is needed to produce them? What conversion assumptions sit underneath that? How many opportunities need to enter the top of the engine, and does the business currently have the capacity to generate them?
This can be where ambitious annual plans often meet operational reality.
The purpose isn’t to make the ambition smaller. It’s to identify what you need to build, change or invest in to make the ambition achievable.
4. Execute and Scale: turn the plan into a rhythm
The annual plan shouldn’t be something that is produced in Q4 and rediscovered twelve months later. Execution needs cadence. Translate annual goals into quarterly priorities and measurable milestones. Create clear ownership. Establish the KPIs that tell you whether the commercial engine is behaving as expected. Then review them regularly with questions such as:
Are we generating enough opportunities? Are they the right opportunities? Are conversion rates changing? Is sales velocity improving? Which campaigns and channels are working? Where is performance falling behind the assumptions in the plan?
This isn’t simply measurement for measurement’s sake. The purpose is to create feedback loops that allow the organisation to learn and adapt. As the business grows, this also becomes an organisational challenge. Information needs to flow between teams. Decisions need clear ownership. Sales, marketing, customer success and leadership need a shared view of the plan.
Growth becomes less dependent on individual heroics and more dependent on repeatable systems, behaviours and rhythms.
That’s the Scale stage: creating the alignment and organisational maturity that make growth more predictable.
An annual planning framework should connect the whole growth platform
Seen this way, annual planning isn’t really an isolated planning exercise. It is a useful opportunity to pressure-test the whole growth platform.
Define: Are we clear about where we play, who we serve, the value we create and how we will win?
Build: Do we have the people, processes, data, digital infrastructure, content and commercial engine required to execute?
Scale: Do we have the alignment, cadence, leadership and performance culture required to sustain it?
Our annual planning framework connects the growth ambition of the business with the strategy, commercial engine and organisational alignment needed to deliver it.
Weakness in any one of these areas can undermine the annual plan.
A brilliant proposition without an engine remains an idea.
A sophisticated engine without clear positioning generates activity rather than traction.
And a strong strategy and engine without organisational alignment becomes dependent on a few people constantly pushing everything forward.
Questions to take into your annual planning process
As you build the next annual plan try asking:
- Where did our growth really come from last year?
- Which customers do we most want more of?
- What are we choosing not to pursue?
- Why should our target customers choose us rather than an alternative?
- What has to be true for us to achieve the revenue target?
- Does our current commercial engine have the capacity to deliver it?
- Which capabilities or infrastructure need to change?
- What are the handful of measures that will tell us early whether the plan is working?
- Who owns each part of the plan?
- How often will we review the assumptions behind it?
The annual revenue number is the destination. A good annual planning framework establishes whether you have the strategy, engine and organisation capable of getting there.
And that is ultimately the purpose of planning: not to predict exactly what will happen over the next twelve months, but to give the business enough clarity, focus and discipline to make better decisions as the year unfolds.
Considering a Fractional CMO?
A Fractional CMO can provide the bridge between having a growth strategy and building the leadership, team and commercial rhythm needed to deliver it.
At ReStrategy, Fractional CMO support forms part of the Scale stage of our Growth Platform. We work with founder-led and private equity-backed technology businesses to implement growth strategy, lead and mentor teams, establish greater commercial discipline and reduce reliance on the CEO.