Annual business planning versus continual planning – which is best?
For many businesses, 2021 has been another year of disruption, requiring carefully thought-out plans to adapt on the fly. Which begs the question, how should you plan for 2022? Should you stick with the traditional, annual business planning exercise, or give the increasingly popular ‘continuous planning’ approach a try?
What is continuous planning?
It’s simply a rolling approach to business planning – where you spread the strategic decision making, budgeting and forecasting across the whole year. In practice, this means having a simpler, less detailed plan that is revised, most commonly, once a month. This is in contrast to the traditional, annual planning process, where goals, budgets and forecasts are set in stone for the whole year.
Continuous planning is still fairly new, and isn’t nearly as established as annual planning. But it’s gaining traction, largely because of COVID-19.
Looking at the pros and cons
Annual planning is the well-established norm for good reason. It enables you to think long-term, and provides a tried and trusted framework for accountability. Everyone knows what the business is aiming for and is empowered to play their part. The main downside to this approach, as highlighted during the pandemic, is that annual plans can quickly become obsolete.
Continuous planning, on the other hand, allows your business to be more agile and rapidly respond to change. It also spreads the time and effort that goes into planning across the year (which may appeal if the phrase ‘business planning’ fills you with dread!). But there are potential downsides. For one thing, you risk losing sight of long-term goals. What’s more, having to continually revise and agree plans can lead some teams to feel less empowered.
So which is right for you?
Both approaches have their ups and downs, so only you can decide how best to plan for your business. You may even try a hybrid approach, where you create a simplified annual plan, and then revisit the plan on a monthly basis.
Ultimately, while both methods are different, the end goal of business planning is always the same: to provide your business with a workable roadmap. A good plan aligns people in the business around specific goals, defines what success looks like, and determines who is responsible for delivering what. So long as you keep that in mind, there’s no reason why you can’t take the best bits from both approaches.
Here at Jupp Castle, we’re helping our clients plan for a successful 2022. Book a free chat with us to discuss your business plan.
(Photo by Paulius Dragunas on Unsplash)