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  • Writer's pictureJeremiah Runser

What is an Annual Operating Plan and Why Every Business Needs One

An annual operating plan (AOP) is a comprehensive document that outlines your business's goals, strategies, and tactics for the coming year. It helps you align your resources and efforts towards achieving your long-term objectives, and serves as a roadmap for your team to follow.

Here's a step-by-step guide on how to create an AOP for your business:

  1. Review your business's current state: Before you start planning for the future, it's important to assess where your business is currently at. Look at your financial statements, customer feedback, and any other relevant data to get a clear picture of your business's strengths, weaknesses, opportunities, and threats. This will help you identify areas of your business that need improvement and guide your decision-making process.

  2. Set specific, measurable, achievable, relevant, and time-bound (SMART) goals: Your AOP should include a set of clear, actionable goals that your business aims to achieve within a specific time frame. These goals should be SMART, meaning they should be specific, measurable, achievable, relevant, and time-bound. For example, instead of setting a goal to "increase sales," set a goal to "increase sales by 15% within the next 12 months."

  3. Develop strategies and tactics: Based on your goals and the current state of your business, determine the strategies and tactics you'll need to implement to achieve those goals. A strategy is a broad plan of action that outlines how you'll achieve your goals, while tactics are the specific actions you'll take to implement your strategy. For example, if your goal is to increase sales, your strategy might be to improve your online presence and marketing efforts, while your tactics might include creating social media campaigns, running email marketing campaigns, and optimizing your website for search engines.

  4. Allocate resources: Determine the resources (e.g., budget, personnel, equipment) you'll need to implement your strategies and tactics. Be sure to allocate your resources in a way that aligns with your priorities and goals.

  5. Create a timeline: Outline the specific tasks and milestones you need to complete to achieve your goals, and assign these tasks to team members with deadlines. This will help keep your team on track and ensure that you're making progress towards your goals.

  6. Monitor and adjust: Regularly review your AOP and track your progress towards achieving your goals. If you're not making progress as quickly as you'd like, adjust your tactics and allocate your resources accordingly.

Creating an AOP may seem like a daunting task, but it's an essential step in ensuring the success and growth of your business. By setting clear goals, developing strategies and tactics, and allocating your resources effectively, you can create a roadmap for your team to follow and achieve your long-term objectives.


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