• By: Adam Wire
  • February 23, 2022
Reading Time: 7 minutes
The Complete Guide to Writing an Annual Operating Plan

Annual planning requires a thorough and strategic operational strategy. Use this guide to develop the right annual operating plan for your organization.

Annual planning requires more than a strategic mind. Developing an operational plan is a critical component that can help achieve your business goals and allow your organization to flourish year over year. 

Learning how to write an operations plan is the first step to properly allocating resources like finances, strategy, and even your talent. Directing your resources to the relevant issues can help your organization from repeating past mistakes. Frequent and thorough meeting planning can help you achieve what is really important — sustainable success. 

Of course, success looks different depending on the organization, the department, and even the type of goal. The common denominator among successful outcomes for all of these categories, though, is the use of annual reports to analyze, optimize, and outline future operations. 

What Is an Annual Operations Plan (AOP)?

Even tenured business leaders may not answer the question ‘what is operational planning’ the same way as others in their organization. Keeping your leadership on the same page by collectively defining an annual operations plan for you can help create actionable steps. 

An annual operating plan is a practical document noting your financial, physical, and personnel resources to achieve a specific business goal. Annual operating plans allow you to create the day-to-day frameworks to carry out your business objectives. An annual operating plan aims to show the 10,000-foot view of how resources should be allocated and the risks that stand in the way of execution. 

Annual operating plans are closely aligned with strategic plans but contain different items. Imagine you are setting out on a backcountry hike. Annual operating plans are like the milestones marked along your map, while strategic plans are the charted course of how you will get to each one

What’s the Difference Between an Annual Operating Plan and a Budget?

An annual operating plan and a budget address financial structure, but the two have distinct differences. An annual operating plan outlines the company goals and activities, while a budget is a plan for accomplishing those goals. A budget would be how an organization determines the realistic limitations of its goals. 

What Does an Annual Operating Plan Include?

An annual operating plan must include specific items separate from logistical plans. While each one can be different, start by including: 

  • Objectives 
  • Business activities 
  • Resource requirements 
  • Timelines 
  • Monitoring methods 

Each annual operating plan that you create will be slightly different in format. Take the elements listed above as a starting point for your agenda building and add or subtract other items you may need. 

Why Making an AOP Is Important

The overall planning process is vital for any organization because simply creating it puts your organization in a position of success. Creating a set of plans and strategies through the annual planning process is valuable in and of itself. 

Creating an annual planning strategy might seem like an obvious step, but only 23% of companies do not even write out detailed plans. Taking the time to identify your goals and assets is the starting point for a successful annual operation plan.  

How to Make a Yearly Operating Plan

During the annual planning process, the primary goal is to bring the company to the same planning page for the upcoming year. When an organization creates a solid annual operating plan, they are likely to see growth and a higher return on their resource investments. 

The allocation of resources can be initially challenging to track, especially for a growing organization. An annual operating plan can help categorize the types of resources you have and identify where they will be of best use

Types of resources include: 

  • Human resources — The personnel at your organization are your most valuable resources. However, making sure they are not duplicating work is essential and achievable through a solid annual operating plan. 
  • Financial — Fiscal resources are often only addressed in department budgets in the eyes of most of your employees. Integrating an open discussion of profits, growth, and financial goals is vital for the success of your organization. 
  • Physical — Physical resources cover everything from your hardware to the location of your business to a SaaS tech stack. Noting how these play into your annual operations is crucial for your business resource allocation. 
  • Educational — A business cannot grow without new skill sets and tools. Education is your most valuable resource. It may be tempting to push education to the back burner when an organization has high demands. However, continuous sustainable growth isn’t possible without it. 

After gathering your resources, stakeholders, and strategic planning documents, start with these 8 key steps to operational planning: 

1. Set up a process 

Creating a repeatable process for meeting prep is one of the best ways to keep the overall planning process on track. When your team has a place to start and a plan to guide them forward, they will get more out of the annual planning process. 

2. Identify your roadblocks 

While outlining the process, take special note of potential roadblocks that might hinder the process. Consider the time constraints that might affect the operational planning process. What is the scope of this specific round of annual strategic planning? Finding the inhibitors early will allow you to give them the time and attention they need or alter your plan to avoid them if you can. 

3. State the business objectives 

The meat of your annual operating plan is stating the business objectives for your organization’s upcoming year. Make sure you take into account the expertise of your department heads. Aim to set realistic expectations so when board members receive the annual operating plan, they can see what you hope to accomplish and how. Business goals can be as specific as roadmaps to new product features or as broad as new customer sourcing. These goals can translate into reality with practical tools that address task management

When you set high-level goals, it is crucial for your leadership team to be on board and clear in their understanding. One tactic is to summarize the operation plan to their teams and other leaders to ensure everyone is on the same track. 

4. Review with stakeholders 

Like any system that touches multiple departments, aligning with your stakeholders is essential. An annual operating plan can only work well if all departments are on board with the goals and agree that the objectives are reasonable. Unified collaboration with stakeholders is a key step in the annual business planning process, and it is often overlooked. 

5. Map out a strategy

Your strategic plans should align with your annual operating plan without being redundant. Be careful not to go too deep into strategic planning within your annual operation plan. Consider the mile markers you want to note as part of your business process. These should be the headings you use in a strategic plan later. 

6. Set team goals 

Once you are aligned with your teams and have mapped out the milestones, it’s time to decide how to measure success. As a collective, set up parameters to measure and track the success of your goals. 

7. Bring it to the board 

An annual operating plan is a helpful way for boards to review the business goals of any company. It creates an established tangible timeline, addresses resources, and opens the door for strategic feedback. 

8. Finalize and budget 

Once your annual operating plan is complete, it is time to lay out the upcoming year’s budget. Because the annual operating plan helps you take stock in your resources, the budget allocation should be fairly straightforward from there. Wrapping up an annual operating plan shows  your organization can extend goals, action items, and well-thought-out budgets. This final step is important because it ensures the annual operating plan doesn’t fall to the wayside of good intentions. 

Annual Plan Template

While each annual operating plan is unique, it is helpful to see a template as a starting place. Each template likely needs amending to reflect the growth of your organization. For example, if you need additional room to address your resources, take the time to add that into your template. Working off an annual plan template is often helpful in keeping your team and board organized.

From Plan to Action

Learning how to write an annual operating plan is no small task. Start by making sure your collaborators are on the same page and answer ‘what is operational planning.’ Using the resources, templates, and tools around you is the best starting point to help understand the requirements and what works best for your organization. Don’t hesitate to consult several operating plan examples and cherrypick what you need from each one. 

Once your annual operating plan is complete, it is important for the action items to be communicated clearly to your board. OnBoard is a board management platform that allows for real-time collaboration and seamless task management. Schedule a demo today to see how your annual operating plan can come to life.