What is an Annual Strategy? (and How to Make One)
Last week, I shared the insides of Ellevated Outcomes: how we did against our 2023 strategy and our simple, to-the-point 2024 strategy. I often say that the word “strategy” is thrown about too flippantly. Everything is strategic-this or strategic-that. And on top of it, I offer: not many people know what strategy actually means. So today, I’d love to answer the question: What is an annual strategy? And share step-by-step how you can make one for yourself this year.
First: here is my all-time favorite definition of strategy. And like anything I say that is smart-sounding, they’re not my words, ha! I first heard this definition when I was on the Global Strategy & Operations team in my former career, from my then-boss Jim Williamson. He’d say:
Strategy is the allocation of scarce resources to the highest priorities.
Pause and really let it sink in.
And I believe: there is no one with scarcer resources and more shiny objects trying to distract them, than creative small businesses. And therefore, the right structure, helping one focus on their most imporant priorities, is a gift to the successful Small Business CEO. Over the course of a year, a world of freedom and creativity will unlock, if you make (and execute, of course) an annual strategy. Here’s how…
Preparation
To begin, I have three important suggestions. I realize that they’ll take some planning and coordination to pull off. But they’re important and can be the key to some pretty masterful insights, so give them a shot:
- Take time “off” to do this work. Don’t juggle your everyday work while you’re planning your strategy. The point is to pull out of the weeds for a few days and see the business from a bird’s eye view (or a CEO view, you might say). Staying in the minutiae clouds our creativity. If you need help with this, I happen to know of a great OOO template…
- Remove yourself from your normal environment. If you can pull it off, a trip away is fantastic. Staying in a local Airbnb for a few days is another great option. Or being most realistic for most people, you can get a day pass, for a few days to a co-working space. If you’re in Nashville or NYC, I can’t recommend The Malin enough (I am literally in The Malin, as I type this! And it’s pictured throughout this post).
- Take 3 days. You will be amazed at the vastness of work we can accomplish with focused time and space.
Day 1: Update Your Future 3-Year Goals & Reflect on Last Year
1. Do a personal check-in.
I like to start with the personal side of things. After all, if you’ve started a business, chances are that part of your motivation was to live a certain way. Let’s not lose sight of that! I used to be really into writing out my personal vision and goals (if you’re interested in that path, Lululemon has a fantastic set of worksheets).
But lately, imagery has resonated more with me. You can cut out images from magazines, use Pinterest, Canva, or a digital vision board.
Then, move onto your business.
2. Revisit your business’s vision, mission, and values.
Does anything need to be refreshed or tightened up? Which of your language resonates with people, internally and externally? What are examples from the past year where your company really lived out its mission and values? When did it fall a bit short? Over the past year, did you move closer to – or further away from – your lofty vision?
3. Temperature-check your current reality.
E-Myth has some great tools to help you pinpoint how you’re working day-to-day, and find areas for improvement. A couple sample questions to answer:
- What do I want my business to look, act, feel, and perform like?
- What parts of my business model (e.g. marketing, finance, technology, product, etc.) need to shift, in order to make my business feel the way I envision?
4. Set a high-level, 3-year goal (then 3 more).
Contrary to my analytical nature, I like using steps 1-3 to make an intuitive 3-year goal. If you’ve completed the “warm up” that I suggest, you’ll be surprised how well and naturally the goal setting will flow.
Ensure that your guiding goal is SMART and high-level.
Then, break it down: what 3 things must happen, to reach that goal? What parts of your business model need to change or improve? These become your priorities.
5. Review last year’s goals.
Go through each section and compare the plan to what actually happened. Then, reflect on what you’ve learned and will adjust, going forward. I like to make a simple grid with 3 columns:
- Original goal
- What actually happened?
- “So what?” In other words, what did we learn, and what adjustment will I make, going forward?
Sidenote: at this point, I’m sure you see why I suggest a few days. This was just day #1. You’ll be excited and exhausted. It’s deep thinking and a lot of work.
Day 2: Create Next Year’s Strategy
Okay, hopefully you got some good sleep last night because this is where ideas will meet action. Generally, day 1 is all about ideas; they’ve been lying dormant in our hearts. And now it’s time to get questions, pushback, and buy-in from our heads.
1. Flesh out your 3 year goals.
Our ending point from yesterday was a 3 year goal, with more 3 specific goals (priorities), cascading from it. These answer the question: “What has to happen, to make my overarching 3-year goal come true?”
2. Work back to 1 year.
As you break down the “big” 3-year goal into more medium-sized ones, you should be able to see a natural time or dependency progression, allowing you to work backwards and reveal your most important 1-year goal.
3. Then, break that 1-year goal into 3 smaller goals.
As a general rule, I say that these goals should fit into one of the Ps: people, product, placement (i.e. marketing), process, and/or profit. They’re surely all connected, but remember: the key is simplicity, so there should be no more than 3 priorities.
Therefore, your takeaway for day 2 is: 3 refined and concrete, SMART goals for the next year. Here’s an example:
By December 31, 2024 make $500,000 revenue with a diversified product mix. Products generate $400K and services generate $100K.
- Marketing: Increase lifetime customer value and new customers by 25%. Double clients for services.
- Product & Pricing: Eliminate smallest product line and reallocate resources 80/20.
- People: Redesign the org chart and fire/hire, to put the right people in the right seats.
Day 3: Action Plan
Hopefully it’s starting to make sense, how iterative and natural this process can be, with the right space and attention. Each step is a building block upon the last.
But since ideas are nothing without action, this last day is critical (but where most people lose steam). Please don’t be one of those people… you’ve got this. Don’t let all your hard work and brainpower go to waste!
1. Build next year’s timeline.
Literally, draw out a timeline, quarter by quarter, month by month. The inputs to your timeline come from breaking down your 3 priorities into projects and actions that will ladder up to your goal.
Following the above example, we have 3 projects for each priority (Marketing, Product, & People) – so 9 projects in total. As a sample, our 3 Marketing projects are:
- Digitize the customer after-care experience and market it, with an email drip campaign.
- Develop and distribute physical marketing pieces that will reach not-yet residential customers, who are new to town, as well as their centers of influence.
- Implement a Business Development practice to meet new and stay-in-touch with commercial centers of influence.
Schedule your projects and the work to complete them on the calendar. Literally, schedule them.
2. Plan what you need, when, and how you’ll celebrate.
As you look out over the next year, work through each month and list:
- What are the major milestones?
- What are the dependencies to hit these milestones? If the dependency is a biggie (like finding the perfect hire), what’s the backup plan?
- What resources do I have, and what do I need?
Then finally (and most importantly), how will we celebrate when we reach our goals? And please let me admit: I often fall down here for myself and Ellevated Outcomes. Calling out this personal weakness to try to improve for myself in 2024!
If you’ve made it through this entire article, thank you! I know that it’s a long one. It’s sort of like the annual strategy work itself: it’s really hard work that’s not visible to the outside world.However, here’s what I guarantee you: the time that you invest in an annual strategy is an investment that will pay for itself in the short and long-run. An annual strategy will fill you with the focus, energy, and clarity of a confident Small Business CEO.
