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5 Steps for a Better Planning Process

Chris Schwalbach  ·  November 29, 2021  ·  5 min

The traditional year-end strategic planning process is often described as both painful and critically important. Often, it is delayed or pushed out because “we are so busy running the business that we can’t find the time to plan”. It’s definitely a challenge.

One of the primary outputs from a planning process is the budget. In a disciplined and well-run company, the budget stands for the ‘financial plan that we’ve all agreed to’ and it is also often ‘the baseline for incentive compensation plans’ as well. Thus, it is often a super-charged part of the year.

One of the most notable challenges that we’ve seen across our many clients over the past decade is how to effectively weave together financial planning and strategic planning. It's a challenge because it becomes a “Chicken & Egg” problem.

     Chicken: If you start the strategic planning discussion with a completely blank slate of expectations, then the leadership team may flounder because there’s no guidance around "what is it we’re trying to achieve". Is next year 1.25x, 2x, or 4x of the current year? The answer is critical because it changes the strategy.

     Egg: If you start the strategic planning with a mostly baked financial plan, then it can be hard to unwind the financial plan to truly think strategically.

So, we recommend incorporating a 5-step process that helps solve for the “Chicken & Egg” problem by creating a small amount of guidance & direction prior to the strategic planning process while creating a robust process behind the strategic planning process to tie the financial pieces back to the strategy.


Step 1 - Top Level Targets

These ‘top level’ targets are an extremely high-level perspective on what the organization is looking to accomplish next year. There is nothing about the "how" this is going to be accomplished yet and only represents a starting point for the strategic planning discussion.

The high-level targets can be divided into three buckets:

      • Financial - A handful of the goals including revenue growth, margin improvement, and operating profitability goals
      • Operational - These targets represent a small group of other measures that add color to the financial goals such as balance sheet metrics that impact cash flow, client metrics, employee metrics, churn, lifetime value (LTV), and many more...
      • Departmental - Based on gross profit and operating profit targets, create crude, high-level allocations to members of the leadership team (LT) for their respective functions.

Step 2 - Leadership Team (LT) 1st Pass

So, each LT member has received a Top Level Target. Now, it’s their responsibility in this step to respond back to the CEO/CFO as to whether this allocation is going to be sufficient to achieve the Top Level targets.

Let’s look at the Company ABC example as provided to the Head of Sales & Marketing:

Top Level Targets:

      • Revenue Growth +24%
      • Margin Improvement +1.4 basis points
      • Client Growth +18%
      • Avg monthly revenue per client +16%
      • Sales & Marketing budget 9.2% of revenue

So, the Sales & Marketing leader can go back and think through what implications this 9.2% number has on their thinking, their plans, and their part of the business. They can compare to prior periods. And then, in advance of the Strategic Planning Meeting, the leader can provide some feedback to the CEO/CFO at a high level, such as:

“In my preliminary review, I think that 9.2% target is going to be a challenge for our team because of investments we probably need to make in X, Y, and Z next year to achieve this plan as well as be prepared for follow-on growth. My initial estimates look more like 10.1%.”

Note that this step is not meant to be a detailed budgeting exercise. The LT's primary objective is for the LT to take a thoughtful first pass.

Step 3 - The Strategic Planning Meeting

So, to start the annual planning meeting, now the CEO & CFO have begun with a preliminary compass bearing and feedback on where the company is headed. And regardless of the strategic planning process used (e.g. an EOS Annual Meeting® utilizing the Entrepreneurial Operating System), this 5 step process dovetails in well.

Do your Mission, Vision, Values. Review the V/TO® (for EOS® Companies). Start at the top as you normally would...

But now, as you start getting into the strategic priorities, the LT has already established some preliminary guideposts that help frame the discussion. And it’s very true that the numbers will change significantly with the discussion.

After the meeting, the CEO/CFO will make revisions and adjustments based on the planning meeting and then send the details back out to the LT so they can build their detailed budgets out.

Step 4 - Rework

In this step, each member of the LT reworks their numbers based on the strategic plan, the prioritized projects & initiatives, and their target metrics from the Annual Strategic Planning Meeting. Each LT member works with the CEO & CFO as well as other interdependent LT members during this step.

This is the point where each LT member integrates the "how we are going to accomplish the objectives" into their financial plan.

Step 5 - Finalize

Assuming the CEO & CFO have been working with the LT throughout the process, the final step brings consolidates each LT’s numbers together into one cohesive financial plan with linked targets and integrated initiatives. The CEO & CFO bring back together the entire LT to go through each part of the plan, to present, ensure buy-in, and to make sure all the pieces and parts fit together cohesively.

As there are many interdependencies across the LT and this is the final opportunity for the LT to put the story together and ensure it truly will “hold water” once the team says “Go”


There’s not a lot of rocket science here. This process is intentionally very subtle because we are not trying to change how strategic planning happens. We are simply trying to help organizations solve the "financial or strategy first" problem by applying some best practices that we’ve uncovered to help foster a more clear and communicative and effective planning process. Hope this helps.

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