Mastering the Business Planning Cycle: A 12-Month Calendar

“Plans are of little importance, but planning is essential.”

Winston Churchill

Churchill’s quote suggests that while plans themselves may need to change, the planning process is crucial as it prepares organizations for unexpected challenges and opportunities and forces alignment throughout the organization.

According to a 2021 report from Palo Alto Software, businesses that develop and maintain formal business plans are 30% more likely to achieve growth and meet their objectives than those without a plan. A structured planning approach provides a clear roadmap for aligning resources, setting strategic goals, and anticipating potential challenges.

This structured approach requires both strategic and business planning. Strategic planning involves setting long-term goals and determining the best approach to reach them. Business planning focuses on the specific actions and resources needed to implement the strategy. Together, they help businesses optimize resources, anticipate challenges, and align efforts to drive sustainable growth.

This article is the first of a three-part series defining a formal approach to business planning. It proposes a 12-month calendar for the annual business planning cycle, offering insights and practical steps to help tech executives drive sustainable success and stay ahead in a rapidly evolving market. The approach can be adopted by businesses in any industry or size, from the CEO down to the department manager. The series will cover:

• Developing the annual planning calendar (it starts in Q3)
• Constructing a 12-month Business Plan
• Communicating and managing the Plan

There is a school of thought that business plans and budgets should be continuous and not time-bound to a fiscal year. The trend emerged due to the dynamic nature of the markets in which we operate and the need for a high degree of agility to be competitive. The cycle proposed in this post is intended to address the need for agility while maintaining a framework for a more disciplined process.

The Planning Calendar

The financial and business planning calendar should be considered a 12-month cycle—schedule and plan activities each quarter as part of a continuous process to ensure tight operational execution. 

A 2023 survey by McKinsey & Company showed that companies with formal business plans were 40% more likely to have streamlined operations and efficient processes. The survey indicated that formal planning helps businesses identify and eliminate inefficiencies, improving operational performance.

Let’s cover the key activities in each quarter. The planning cycle for a future fiscal year (aligned to a calendar year) should start in Q3, so we’ll start there.

Third Quarter

Start the planning process in September by publishing the formal planning calendar. This calendar initiates the process with an executive planning meeting and concludes with communicating the approved budget and plan to the entire company. Publish this plan to the entire management team and set expectations for their participation. Explain the process in an All Hands communication, underscoring the “why” and providing a forum for questions and discussions.

The key event in Q3 is the Executive Leadership Planning Meeting. Set aside two days in early September and consider sequestering the team in an offsite location to ensure focus. Develop an agenda built around the goal of delivering the super-structure for the business plan for the coming year. 

It’s worth noting that an up-to-date strategic plan is a prerequisite for the meeting. Our post, “Does Your Plan Have a Strategy?” covers the difference between strategic and business planning. The Strategic Plan is a living document that should be reviewed and revised quarterly. The article also outlines approaches and tools for strategic planning.

The deliverables for the Executive Leadership Planning Meeting should include:

• Financial Model – Used for scenario planning. Robust enough to allow manipulation of top and bottom-line performance assumptions.
• Business Plan Pillars—The four to six key strategic imperatives for the company in the coming year, such as achieving top-line growth targets, establishing a partner ecosystem, improving product quality, redefining culture, etc.
• Key Initiatives and KPIs – Defining the work needed to support the plan pillars and the outcomes (KPI targets) that will represent progress.

Each executive should assemble the following analysis in advance of the meeting.

• Forecasted end-of-year outcomes on key metrics
• Trends in quarter-to-quarter performance across disciplines
• Progress on key initiatives, risks, and blockers
• Organizational plans, challenges, and risks

Typically, major questions will arise during discussions of strategic topics. Use the forum to encourage constructive debate and, if necessary, table topics for future discussion and modifications to the Strategic Plan. Resist the temptation to be too prescriptive in defining the details of these initiatives. Provide a framework solid enough for the management team to construct details within.

The graphic below provides a format and example of a the business plan pillars.

Fourth Quarter

This is the busiest and most crucial 90 days in the planning calendar. In addition to the operational intensity of closing out a fiscal year, the subsequent year plan and budget must be fully developed, approved, and communicated.

The key activities in Q4 in the order in which they should occur:

• Conduct Management Team workshops – Assemble the direct reports for the executive team for a set of workshops designed to 1) educate the team on the planning framework defined by the executive team in Q3, 2) solicit feedback on the plan and brainstorm solutions to support and potential execution risks, 3) launch the process of building detailed plans for each department, and 3) share initial department plans with the entire team to gain alignment.
• Refining the financial model – Build three versions of the plan based on a high, low, and most likely scenario of the forecasted end-of-year performance. Utilize tools like Adaptive Insights or Anaplan to facilitate dynamic scenario planning.
• Build departmental plans – Each department must have a business plan that links into the key pillars of the corporate plan.
• Present draft plan and budget – Assemble the plan and get feedback from external stakeholders (board or operating partners) as early as possible
• Incorporate feedback and finalize the plan – It may require the Board of Directors formal approval
• Communicate the plan and set OKRs for Q1 – Build a structure of cascading OKRs and populate with 90-day targets

Some points to consider:

• If you have an annual employee performance management cycle, it may make sense to integrate it into fiscal planning. This allows synchronization of individual performance feedback to be in line with organization performance and goal-setting
• Recording and managing OKRs properly can be complex and time-consuming. Many tools are available to support OKR tracking and management, and many have integrations with other business systems. For example, tools like WorkBoard or Quantive can significantly ease the complexity of tracking and managing OKRs, offering seamless integrations with your existing business systems.

The graphic below provides a template for defining the range of outcomes possible in risk-based scenario planning.

After putting in significant effort in Q4 to develop and approve your plan, you can now organize kick-off events in Q1 to communicate the plan to all employees and generate enthusiasm about the year’s strategy. This is an optimal time to achieve alignment. Make sure to cascade, explain OKRs, and establish annual performance goals.

Conducting well-run monthly and/or quarterly business reviews is a crucial discipline. The aim is to hold the reviews as near the end of the relevant period as possible (the second or third week of the following month). Q1 is an excellent time to establish the standard format and schedule for the rest of the year.

Second Quarter

In the second quarter, refine your operating and communication cadence. Many companies set up monthly or even weekly operating reviews. These reviews analyze trends in crucial metrics that affect short-term company performance. They provide an opportunity to pinpoint and address issues, make necessary adjustments, and maintain strong team alignment. Quarterly Business Reviews (QBRs) should reflect on the previous quarter’s performance against OKRs and review the current quarter’s priorities.

Keeping all employees informed and aligned with the company’s progress against the plan is crucial. At the very least, quarterly All Hands meetings should be held to review the previous quarter’s performance. Depending on the company’s size, provide Q&A opportunities during All Hands meetings or organize smaller town hall-type meetings to encourage two-way discussion.

Q2 is an excellent time to review what worked and what didn’t and iterate on strategies and technologies to keep pushing boundaries.

If things are not failing, you are not innovating enough.

Elon Musk

At the end of Q2 or early Q3, conduct a mid-year planning meeting with the executive team. In this meeting, evaluate the company’s overall performance against the original business and financial plan. Also, review the progress of key initiatives set against the strategic pillars. Use this information to make course corrections to strategy and adjust goals, priorities, or expectations for the remainder of the year. Create a formal business plan addendum that outlines any adjustments and share it across the company.

Summary and Actionable Takeaways

The 12-month planning calendar offers a structured yet flexible framework for business planning, emphasizing agility and discipline. It outlines key activities every quarter, including executive strategy sessions, departmental plan development, and regular reviews. This approach ensures ongoing alignment and the ability to make responsive adjustments, guiding the company toward its goals. The calendar reinforces the idea that planning is a continuous process essential for fostering business growth and success.

Takeaways:

1. Quarterly Anchors: Establish key activities each quarter to maintain focus and direction, such as executive strategy meetings and departmental planning sessions.
2. Regular Reviews: Schedule consistent reviews to assess progress, align on goals, and make necessary adjustments to plans.
3. Continuous Alignment: Ensure all departments are aligned with the overall business strategy, promoting cohesive efforts toward company objectives.
4. Responsive Adjustments: Stay agile by being ready to adjust plans in response to new challenges or opportunities, ensuring relevance and effectiveness.
5. Embrace the Cycle: Recognize that effective planning is an ongoing journey. Continuously refine and adapt strategies to foster business growth.
6. Goal Roadmap: Use the planning calendar as a roadmap to achieve company goals, providing clarity and direction for all stakeholders.

In conclusion, the 12-month planning calendar serves as a strategic framework for achieving business objectives and fosters an adaptive mindset crucial for navigating the complexities of today’s dynamic market landscape. In the coming days, look for the next article in the series, focusing on business plan development.

Resources

Palo Alto Software. (2021). 2021 Business Planning Report.

McKinsey & Company. (2023). Operational Excellence in 2023: Key Findings. Retrieved from