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Annual Planning with OKRs Process Template

This process template describes how to perform an annual forecasting with OKRs.

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Annual Planning with OKRs Process Template

This process template describes how to perform an annual forecasting with OKRs.

Annual Forecasting Process

What is Forecasting?

Forecasting is an essential part of running a successful small business. By projecting future revenue, expenses, and other financial metrics, small businesses can better understand their financial position and make informed decisions about how to allocate resources and plan for the future. Forecasting can also help small businesses identify potential risks and opportunities, and make adjustments to their operations to maximize profits and minimize losses.

Why Do We Forecast Annually?

Forecasting business performance on an annual basis can be beneficial for a number of reasons:

  1. Planning: An annual forecast can help us plan for the future by providing a roadmap for the coming year. It can help us set goals, allocate resources, and make informed decisions about investments and expansion.
  2. Monitoring progress: An annual forecast can serve as a benchmark against which to measure actual performance. By comparing actual results to the forecast, we can track its progress and identify any deviations from its plan.
  3. Communicating with stakeholders: An annual forecast can be used to communicate our plans and expectations to stakeholders such as investors, lenders, and employees.
  4. Identifying trends: An annual forecast can help us identify trends and patterns in its performance over time. This can be useful for spotting opportunities and addressing any potential problems before they become major issues.

Overall, an annual forecast can help our business stay on track and achieve its long-term goals by providing a clear picture of its expected performance and a plan for how to achieve it.

How to Forecast

It's important to note that forecasting is not an exact science, and it involves making educated guesses about the future based on past performance and other relevant data. As such, it's important that the person preparing the forecast has a good understanding of the business's financials and industry, as well as the ability to analyze data and make informed assumptions.

  1. Gather all relevant data on the business' past financial performance. This includes income statements, balance sheets, cash flow statements, and other relevant financial reports.
  2. Identify the key drivers of our financial performance, such as sales volume, cost of goods sold, and overhead expenses. These drivers will be used to create the forecast.
  3. Based on the data and key drivers identified in the previous steps, develop a forecasting model that projects future financial performance. This model should take into account any known or anticipated changes in the business environment, such as changes in the economy, competition, or regulations.
  4. Once the initial forecast has been developed, it should be reviewed and refined to ensure accuracy and realism. This may involve adjusting the model to account for any errors or biases, or incorporating additional data or assumptions.
  5. Once the forecast has been finalized, it should be implemented by making any necessary changes to our operations or financial plans. This may involve adjusting budgets, setting new targets, or making other changes to ensure that the small business is positioned to achieve its forecasted financial performance.
  6. The forecasting process should not end once the forecast has been implemented. Continue to monitor our actual financial performance and compare it to the forecast to ensure that the forecast remains accurate and relevant. If necessary, the forecast should be adjusted as needed to reflect changes in the business environment or the small business's operations.

Tips for Presenting an Annual Forecast

Here are some tips for presenting an annual forecast to stakeholders:

  1. Present the forecast in a clear and concise manner, using graphs and charts to illustrate key points. Avoid using jargon or technical language that may be confusing to non-technical stakeholders.
  2. Identify the key drivers of the forecast, such as revenue growth, cost controls, and market trends, and explain how they will impact the business's performance.
  3. Explain the assumptions and methodology used to create the forecast, and be open to questions and feedback from stakeholders.
  4. Be honest about the risks and uncertainties that may impact the forecast, and explain how the business is planning to mitigate them.
  5. Explain how the forecast supports our long-term vision and how it will help us achieve our goals.
  6. Make sure you are well-prepared and confident when presenting the forecast to stakeholders. Practice your presentation in advance, and be prepared to answer questions and address concerns.


What Does OKR Stand For?

"OKRs" = Objectives and Key Results.

Basically, OKRs are a framework for setting and achieving goals. They are used to align the goals of the business, teams, and individuals, and to track progress and measure success.

Objective: What Are Our Goals?

An objective is what you want to do. It describes your mission-supporting goal and sets a deadline for achieving it. Let’s think of objectives as the highest priorities your team needs to accomplish in the next 30-90 days.

Objectives are meant to align us all so that we are working toward the same goal (and so we all know what that goal is). They are a rallying point for the team and something we will continue to refer to when we are working to make sure that what we are doing is taking us closer to accomplishing that objective. This is also a tool to increase autonomy on the team — if you know what the objectives are, you should be able to decide the priority of what you are working on.

Key Result: How are We Accomplishing Them?

Objectives must be paired with a roadmap that will help you know whether or not you’re on the path to meeting your goals — that roadmap is your key results.

That’s probably the simplest way to think about key results: They are the benchmarks you can measure that track your progress toward the objective. Typically, there are three to five key results per objective. There should be no more than five measurable, unambiguous time-bound key results per objective.

What Makes Good OKRs

When you are coming up with your key results, you should not be able to complete all key results without completing the objective. If you set your key results correctly, there should be NO chance that you didn't accomplish the objective when you complete your key results.

OKRs represent meaningful change, improvement and growth. For that reason, they can often seem like they’re asking for extraordinary, above-and-beyond performance. That’s a good thing!

When we talk about OKRs, we’re talking about inspiring accomplishment. Big things like:

  • Introducing disruptive innovations.
  • Establishing differences between you and your competitors.
  • Being recognized as an industry leader in your category.

So, if you take a look at your OKR and they seem to be describing incremental change or “gimme” goals, you may need to think bigger.

Also, OKRs point out what we need to do next. It should be clear whether or not our team is meeting the criteria for success!

Using OKRs for Annual Planning

Why We Use OKRs For Annual Planning

We use OKRs in our annual planning process because they provide a clear and structured approach to setting goals, and they help to ensure that our efforts and resources are focused on achieving our strategic objectives.

How To Facilitate Annual Planning ORKs

Here are the steps for facilitating annual planning with the OKR framework:

  1. Review the strategic goals and objectives of the business, and identify the key areas that will be addressed in the annual planning process.
  2. Invite the appropriate stakeholders to participate in the annual planning process, and provide them with an overview of the OKR framework and its benefits.
  3. Facilitate the development of objectives and key results for each of the key areas, using a participatory and collaborative approach that engages the stakeholders and encourages their input and ideas.
  4. Review and refine the objectives and key results, ensuring that they are clear, measurable, and achievable.
  5. Communicate the objectives and key results to the appropriate teams and individuals, and provide them with any necessary support or guidance to help them implement and track their progress.
  6. Monitor and evaluate the progress of the objectives and key results, and provide regular feedback and updates to the stakeholders.
  7. Adjust and refine the objectives and key results as necessary, based on feedback and changes in the business.

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