The B2B Leader’s Guide to Strategic Business Planning

B2B-strategic-planning-guideHave you done your annual planning yet? If not, don’t worry. There’s still time!

Typically, in companies where their fiscal year aligns with the calendar year, annual planning will begin in October for the year ahead. However, it’s certainly not unheard of to still be planning for the year ahead into Q1, or even later. Sure, if you get to the end of Q3 and don’t have a plan put together yet, it’s probably best to just move on and start planning for the following year! But otherwise, planning will still offer significant benefits even if you start it late. Going through the steps involved in the planning process is valuable in and of itself, independent of the actual plan you put together. All the different types of data you need to gather to create a plan will give insight into how well your company is performing and what the industry is looking like overall. This broader perspective is extremely valuable to have regardless of when you get the plan put together because it will equip you to make the ongoing tweaks and shifts needed now to be set up for success later. For these reasons, planning helps organizations run more smoothly and improves their ability to grow over time.

But how should leadership navigate the nuances of B2B business planning?

In this guide we will discuss what the ideal planning horizon is for your organization, when longer-term strategic planning is beneficial, how to overcome today’s biggest planning challenges, what kinds of resources you will need to succeed, how to identify valuable opportunities, and when to deviate from your plan to change course. We will even reveal the biggest secret that today’s top leadership teams use in their business planning process!

Join us as we discuss and dissect all things B2B planning!

Understanding a Typical Planning Horizon

Most businesses utilize a 12-month plan to guide their overall efforts because that fits with tax planning and aligns with the needs of the professional advisors that they rely on most heavily (accountants, bankers, etc.). However, this planning horizon may vary based on:

  • Industry

Ex. Manufacturing operations are heavy on capital expenditures, so they need longer term planning horizons than some other types of companies – perhaps 5-10 years.

  • Business Goals or Business Model

Ex. A professional services company looking to increase market penetration by adding lines of business may need a longer planning horizon to accomplish this objective effectively through ongoing professional development – perhaps 2-3 years.

  • Team Function

Ex. Sales planning will look different compared to R&D and overall revenue growth planning.

Engaging in Long-Term Planning

Every business should have a longer-term vision to accompany their 12-month plan. That doesn’t necessarily need to be an in-depth strategic plan, but you need something to point to so you can understand if the business is heading in the right direction. Some business leaders will call this their “north star” or “guiding path.” But regardless of what you call it, the idea is the same – an overarching idea of which direction to go and a sense of what the path there will look like in terms of milestones and metrics.

To do this, some companies will put together a detailed 3-year, 5-year, or 10-year strategic plan. Do you need this kind of structured longer-term planning? Or is a more informal long-term plan enough? It depends on your specific business – your unique challenges, your current business stage, your goals, and many other factors as well.

Broadly speaking, you don’t necessarily need a formal long-term plan. In fact, some of today’s fastest growing mid-market companies don’t have a long-term strategic plan because they understand that planning horizons have shrunk over the years as the business landscape has moved into more of a Just-in-Time approach. However, you need a general idea of where you want to go even if it’s just in terms of revenue goals. This will help to shape your ongoing efforts and give you something to measure against when determining if you need to tweak your execution or pivot your efforts entirely.

Overcoming Planning Obstacles

Regardless of the time horizon, effective business planning faces three main obstacles:

  1. Time Constraints

In fast-paced industries it can be difficult for leadership to carve out the time needed to plan, causing it to get relegated to the backburner where it can go cold and be forgotten about entirely.

Time is the one resource that you can’t just get more of, so leadership teams that are severely pressed for time will need to find ways to work more efficiently so they can free up the time needed for planning.

  1. Data Limitations

Not having the right information available at your fingertips is also a planning killer. The right data, both in terms of accuracy and timeliness, is crucial to effective planning.

This is one area where AI can really help! Since gathering data to make good decisions makes up about 90% of the planning process, using AI in this capacity has the potential to greatly reduce how long planning takes. Additionally, using AI to aggregate numbers can improve the accuracy of the data input that you need to generate a reliable plan output.

  1. Mindset

Organizations often struggle with making planning decisions because they are unwilling to change. However, a key part of the planning process is relying on the plan once it has been created. If your plan is built on reliable data, you need to trust it when it comes time to make strategic decisions even if they feel uncomfortable. This is one area where an objective third-party can help. Leaning on your board or directors/advisors or CPA or bringing in a revenue consultant can offer some objective perspective to help provide clarity.

Organizations that simply do not value planning as part of their culture will need transparency of leadership communication to change the mindset around planning. Leadership will need to model the behavior that they want to see – “walking the walk, not just talking the talk,” so to speak. They will need to rally those under them around the benefits that planning can offer across the organization by demonstrating value in a way that is meaningful to each group and helps drive the organization towards its long-term vision. If this does not come naturally, executive leadership training can help business leaders develop that ability.

The Secret to Effective Planning

With those key obstacles out of the way, the last thing to do is to make it fun – this is the secret to effective planning! If planning is a chore, no one will want to do it and the resulting plan will suffer. Take the steps needed to avoid making planning drudgery. Get your team out of the office and structure it in a way that makes people want to participate and ensures everyone feels heard. Of course, small and mid-sized companies won’t have the same level of resources to devote to something like this as large companies will, but they can still make it fun by bringing in a speaker and offering food and beverages to employees. As a leader, utilize your head of HR or hire a consultant to help you create an event that makes people eager to engage with the process.

Securing Planning Resources

Effective business management hinges on having accurate data to utilize throughout the entire planning process from building the initial plan to modifying it in response to market conditions and ongoing business performance. However, data is not the “be all end all” because planning also needs the right people to succeed. Typically, this will include some mix of a visionary, a data person, a process person, and a people person. Together, this key group of people will need to take a proactive, forward-looking, and forward-thinking approach to create a plan that will withstand whatever is coming next.

Of course, having a plan doesn’t mean much if the business doesn’t have the financial resources to execute on it. Appropriate budgeting should set aside money to not only carry out the plan as is, but also capitalize on unexpected opportunities. The reality is that you simply can’t know everything that may be coming down the pipeline, so recognizing that when putting together the budget is an important step in being able to effectively seize growth opportunities when they arise.

Identifying and Seizing Opportunities

Being able to evaluate whether something is truly an “opportunity” versus just a “possibility” is the hallmark of a great strategic plan. The plan creates a lens through which you can evaluate every possibility that’s presented to you to determine whether it’s an opportunity or not. With a strategic plan in hand, you can ask whether the option in front of you fits within that plan and whether it will help get the company closer to achieving its goals. If it’s a match, it might be an opportunity worth pursuing, but it will still need careful financial consideration before moving forward.

Knowing When to Change Course

One of the key advantages of planning is that it can serve as a guide to help you understand when your organization needs to change course. Too often leaders will change course because they get distracted by something shiny or they fear falling behind so they just copy whatever a competitor is doing, only to have it negatively affect profitability and revenue. Having a plan helps mitigate this risk because strategic changes will be evaluated in conjunction with that plan.

When leadership can see that over time the strategic plan isn’t getting the organization where it should be, changes can be made to keep the company on course. Leaning on the plan in this way allows for incremental changes to keep the company’s performance in line with its goals so that huge strategic shifts aren’t needed to try to get it back on track. Instead, each month, each quarter, and each year business performance will be measured against previous periods and compared to specified milestones to analyze the results across KPIs.

This requires that you have a short list of KPIs (Key Performance Indicators) that are essential to your organization’s strategic vision so that you can adequately measure performance across the criteria that matter most. Some common B2B KPIs include revenue, gross profit, net profit, COGs, and overhead. Choose actionable KPIs that can be compared, easily obtained, and reviewed regularly. The goal here is to use the fewest KPIs possible so that you can close the books each month and then quickly and effectively gauge how well the company did in the month or quarter prior to identify trends and know what needs your attention. Failing to take this approach opens your organization up to the possibility of getting so far down the hole that you won’t be able to dig yourself back out.

Some business owners will tell you that the 6-month mark is the critical cutoff for a company. They will recommend that at the mid-way point in the year you should reevaluate your strategic plan entirely if you aren’t seeing the results you wanted. However, that is often too shortsighted because if the 12-month plan you made was sound to begin with, you should continue to operate it against it for the entirety of the year. Throwing it out and starting over is a waste of time and can pull the company in the wrong direction because it’s hard to even see the results of some of your highest potential efforts in such a short time.

However, if you notice that numbers are trending downward over the course of several months, you’ll want to try to get to the bottom of it. If you can’t figure out where the fundamental mismatch is between what you want to be happening and what is actually happening, you may need to bring in a trusted advisor to figure out what isn’t working.

To nail down B2B strategic planning, lean on a revenue expert for the help that you need. A fractional Chief Revenue Officer (CRO) can provide the guidance that you need to make plans for the coming year and adapt them to seize opportunities as they arise!

At Resultist Consulting we work with B2B organizations that need help developing strategic plans and making the difficult decisions needed to grow profitable revenue year-over-year. Find out more about how we can come alongside your organization today!

Topics: B2B Planning