Skip to content
Blog Articles

Building an Annual Operating Plan for 2023

Publish date 01 Dec 2022

Table of Content

    Our Fractional CFO Services
    Learn More
    Annual operating plan

    The beginning of the year presents an excellent opportunity to reflect on the strong and weak points of your business. By now, you’ve probably thought about areas that you want to grow, change, and improve in the new year, as well as processes that are working well and should be maintained. The best way to hit the ground running in 2023 is through careful preparation of an annual operating plan.  

    An annual operating plan, or AOP, is a practical document that defines the resources needed to achieve your company’s objectives for the year. It provides a framework for overall operations and outlines the necessary tasks to reach goals. Specifically, it should focus on: 

    • Business objectives  
    • Resource requirements, including human, financial, and physical resources 
    • Timelines 
    • Monitoring methods 
    • Logistics 

    Note that the AOP is not the same as an annual budget, though the two should work in tangent to best serve your business. The operating plan serves as a roadmap to guide the overall execution of the business, whereas the budget ensures you have financial resources to meet objectives. 

    Creating an Annual Operating Plan 

    An AOP can be made at any time during the year, but is most effective when done before the fiscal new year. That way, you can build a tangible, actionable plan to achieve new year goals as well as take advantage of tax planning strategies. Though your specific plan will vary based on your business, new year objectives, industry, and size, below are some general guidelines to follow when creating an AOP. 

    Determine Desired Outcomes 

    Before you can build an AOP, it’s first important to determine your objectives and outcomes. Where will your operating plan take the business? Some areas that you can reflect on include: 

    • Vision statement, which lays out where the company is headed in the future 
    • Mission statement, which expresses the big-picture purpose and goals of the company 
    • Core values, which dictate the main beliefs and principles of the company that should be applied to their service and product offerings 
    • Short-term objectives, which entail what the business will accomplish during the year 
    • Long-term objectives, which outline what the business will achieve over the next several years 
    • SWOT analysis, which looks at the business’ strengths, weaknesses, opportunities, and threats 

    If you’re unsure of where to begin, or the general direction you’d like your business to take, this is an ideal opportunity to bring in an outsourced CFO or business advisor. A fractional accountant can help analyze prior reporting and determine a financial action plan, including tailored budgets, updated financial reporting, and forecasts.  

    Identify Areas of Focus 

    From your desired outcomes, select which objectives that are most important to the AOP. These should be centered around short-term objectives for the year rather than long-term. Start by listing out five to ten business goals, looking specifically at individual departments or isolated areas of the business (sales, revenue, marketing, etc.). Then, list the actions required to meet those objectives. This could include, for example, implementing a better inventory management process, stronger internal controls, or increased data security. Some guiding questions could include: 

    • Which departments are performing well or underperforming? 
    • What are the primary factors affecting the bottom line? 
    • What procedures should be changed and improved? 
    • Where are the inefficiencies? 
    • Do the company’s systems need to be reevaluated? 

    Determine what the company needs to achieve during the next year and set objectives that will improve the overall performance of the business. 

    Set Key Performance Indicators 

    A key performance indicator, or KPI, is a quantifiable metric that reflects how well your company is meeting its objectives. KPIs set targets for your team as well as provide insights on the milestones toward progress. For example, if your goal is to speed along your sales process, calculating the conversion rate from leads to a close is a good KPI to employ. The AOP should detail all of the KPIs you will use to measure and achieve your objectives and set a timeline for those goals. 

    Your KPIs should be SMART—specific, measurable, attainable, timely, and relevant. Similarly, it’s wise to avoid having too many KPIs to ensure that your employees can stay on track to meet goals without becoming overwhelmed. You should, however, have at least one KPI per AOP objective to be able to measure progress. 

    Put Tracking Systems in Place 

    Ultimately, an annual operating plan is ineffective if there are no systems in place to track your business’ progress. Without having visibility into the company’s operations, you won’t know if you’re actually achieving what the AOP sets out to do. And, without accountability and frequent check-ins, employees won’t know where to focus their efforts. General tracking measures could include calendars, dashboards, or weekly meetings. For large-scale goals, it may be useful to bring in a fractional consultant to aid in a systems transition or dashboard creation. 

    Communicate and Encourage Buy-In 

    The strength of a company’s plan is connected to its execution. Whether a company has 10 or 10,000 employees, ensuring that they are represented in the decision-making process is essential. Giving employees a voice in the plan will help create buy-in. Similarly, communicating goals early and often can help keep everyone aligned. Allow individual departments to contribute to your AOP as well as to determine KPIs and tracking methods will increase the overall achievability of your company’s mission. 


    Share this post

    Recent Articles

    View All Articles
    Demystifying the Process What Happens When You Outsource Your Accounting
    Articles 11 min read

    Demystifying the Process: What Happens When You Outsource Your Accounting?

    Read More
    5 Reasons Outsourced CFOs Are More Affordable Than In-House CFOs Cover
    Articles 4 min read

    5 Reasons Outsourced CFOs Are More Affordable Than In-House CFOs

    Read More
    How Outsourced accounting support business cover
    Articles 10 min read

    How Outsourced Accounting Services Supports Businesses Growth

    Read More

    Don’t Just Take Our Word for It…
    Client Success, In Their Own Words

    The speed and efficiency in which NOW CFO stepped in and got us back on track was amazing and took a load of work off me. Their professionalism and responsiveness are first class, and I cannot recommend them highly enough. They are top notch across the board.

    alan-hill
    Alan Hill

    Director at Habitat for Humanity

    We have been overjoyed with the talent NOW CFO brought us. We did not have the staff bandwidth and they have been the perfect fit for our growing company. We were able to find the skillsets we were looking for, and NOW CFO was able to find our unicorn.

    Heath-McMillan
    Heath McMillan

    COO at CKR Financial Services

    NOW CFO was professional, knowledgeable, and courteous. They identified payroll fraud within our company, set up controls to make sure that time stealing did not continue and was instrumental in training our new admin.

    evelyn
    Evelyn Gorman

    President & CEO at GNS Electric Inc.

    NOW CFO has become an integral part of our management team. Since everything is cleaned up, we can move forward and look to the future instead of being stuck in the present. Would recommend them for any type of business.

    doug-martin
    Doug Martin

    CEO at Houston Country Community Hospital

    Because of the current economic climate, it is hard for us to retain staff who are capable of the accounting and CFO work that is needed. We would highly recommend using NOW CFO because of their superior service, value, and business acumen.

    kelcey-alison
    Kelcey Alison

    CEO at Gaming Specialized Logistics

    From the beginning of our relationship, NOW CFO has made us feel like we are in good hands. Our former bookkeepers had created a mess and NOW CFO stepped right in and learned our software and cleaned up the mess rapidly.

    Kevin-Gilbert
    Kevin Gilbert

    Office Administrator at Johnson May Law

    Over my 25-year entrepreneurial journey I have worked with many consultants, but they always felt like outsiders. NOW CFO is different and felt like part of our team. They rolled up their sleeves and pitched in wherever it was needed. PRICELESS!

    Lief-Larson
    Lief Larson

    Co-Founder & COO at JennyLife

    I am so glad we chose NOW CFO to help us with our accounting needs. Our controller level support has been phenomenal with the expertise, insights and commitment to our company. If we need anything, they are there and ready to jump in and help.

    Tiffany-Moore
    Tiffany Lacolucci

    Business Performance VP at Moore Fire Protection

    READY FOR YOUR FREE CONSULTATION?

    We provide outsourced, fractional, and temporary CFO, Controller, and operational accounting services that suit the needs of your business.

    For Faster Service 801-938-4764
    • Hourly Rates
    • No Hidden Fees
    • No Long-Term Requirements