Annual Strategic Planning.

A practical 10-step guide to creating your small business strategic plan for the year ahead.

In this episode, Henry Lopez breaks down how to create a clear and practical strategic plan for the year ahead, without overcomplicating the process.

Strategic planning gives small business owners a roadmap for growth, helping them stop reacting and start leading with intention.

Henry walks through a 10-step framework that includes reviewing the previous year, refining your vision, conducting a SWOT analysis, defining strategy, setting goals and KPIs, breaking plans into quarterly actions, budgeting, and executing with discipline.

He also explains why strategic planning matters even when circumstances change: “If we don’t plan, then you really have no path to follow… things will happen to you instead of you making things happen.”

This episode is designed to help you clarify where you’re going, stay aligned with your long-term vision, make smarter decisions about limited resources, and create a focused plan you can adjust throughout the year.

You’ll also learn Henry’s five best-practice tips for more effective planning, starting with basing everything on reality, limiting priorities, tracking KPIs consistently, assigning ownership, and ensuring everything leads to real action.

If you want to enter the next year with clarity, confidence, and intention, this episode provides the structure you need.

Annual Strategic Planning – FAQ:

Question: Why is annual strategic planning essential for small business owners?
Answer: Annual strategic planning creates clarity, aligns resources with priorities, and ensures the business is being led intentionally rather than reactively.

Question: What are the core components of an effective strategic plan?
Answer: Reviewing the previous year, refining your vision and mission, conducting a SWOT analysis, defining strategy, setting goals/KPIs, building quarterly action plans, budgeting, getting team buy-in, and executing consistently.

Question: How do I keep my strategic plan relevant throughout the year?
Answer: Break the plan into quarterly action steps, review progress regularly, track KPIs, and make adjustments based on real-world conditions.

Question: What tools are available to help me create my plan?
Answer: The free Annual Strategic Plan Outline, plus budgeting spreadsheets, available on The How of Business website.

Other Podcast Episodes:

Henry Lopez (00:11):

Welcome to the How of Business Podcast. This is Henry Lopez, and on this episode, I’m sharing an overview of how to create a clear strategic plan for the year ahead, something every small business owner should create annually. If you want a simple structure to guide your priorities, your budgets, and your focus for next year, then this episode should help you get your plan in place without overcomplicating the process. There’s a short and simple quote from Peter Drucker, the Late management consultant, an author on this topic of planning. The best way to predict the future is to create it. Planning is how small business owners create their future. You can find all of the Howa business resources, including the show notes space for this episode and learn more about my one-on-one and group coaching programs@thehowabusiness.com. I also invite you to consider joining the How a business community on Patreon, and please subscribe wherever you might be listening so you don’t miss any new episodes.

Henry Lopez (01:05):

Why does strategic planning matter? Often I hear people say, why should I plan when things are going to change anyway? And certainly there’s some truth to that, but if we don’t plan, then you really have no path to follow, no blueprint, no guide, and then certainly things will happen to you instead of you making things happen. So while we must adjust a plan because of the realities of what happens, that is out of our control, we need to have something to shoot for. A strategic plan, especially on an annual level, helps us stop reacting and start leading our business intentionally. It gives us and our teams clarity on the priorities for next year and where to focus our limited resources. As small business owners, really any level of business, we have limited resources, limited time, limited money. So we have to be very careful as to where we allocate those resources to get the best return.

Henry Lopez (01:56):

And so a plan shapes our decisions. It helps us with resource allocation and what initiatives, what are we going to focus on in the coming year broken down by quarter so that we can make progress towards our longer term goals. And that’s the other key thing about a strategic plan is it helps us remain in alignment with where we’re going longer term. I’m going to walk through the 10 steps or sections of what I think makes for an effective annual strategic plan. Now, you may not need all of these 10 steps or sections, so justice depending on your business or your situation, and you can download the outline, the 10 step or the annual strategic plan outline from the show notes page at the how a business.com. Step one or section one is to review the previous year. Take an honest look back at the previous year.

Henry Lopez (02:43):

So you’re typically doing this at the end of December or early January. Sometimes it takes us until January to have, for example, all of your financials. But around this period of time is when you want to look back, identify your wins, your failures, lessons learned, missed opportunities, look at all of what happened in the previous year. It’s not that we’re dwelling on the negative or what didn’t work, but we must as business owners learn from those failures and also acknowledge and learn from our successes, our wins. So review your financials, your sales, your marketing, customer feedback, team performance, all of that data and information that then will help you decide where you’re going next. That of course points to the need to have accurate and timely financials. If you’re not keeping up with your bookkeeping or you don’t have a reliable bookkeeper, that’s a problem.

Henry Lopez (03:33):

You’re navigating blind if you don’t have up-to-date financials. So I am now offering a bookkeeping service if you hadn’t heard yet the how of business bookkeeping service. So if you’re looking for a trusted bookkeeper, then I invite you to learn more about my bookkeeping service by visiting the how of business.com and see if I might be able to help you with your bookkeeping needs, previous year review, reviewing all that happened in the previous year, discussing that with your team, particularly your leadership team and your partners if you have them. That’s step or section one of an effective strategic plan. Step two is to revisit your vision and mission. I don’t want to get too hung up on the difference between vision and mission, really, in my opinion and interpretation, vision is your long-term where you’re going, and I think that for most of us as small business owners, that’s three to five years out and mission is how we do it, what we do.

Henry Lopez (04:27):

The key is, as Steven Covey said in this quote, begin with the end in mind. You want to make sure that you’re still clear, especially if you’ve got partners or other leaders that you’re clear on where you’re going. Longer term, you want to confirm and update if needed, your vision. Make sure then that the goals and initiatives that you’re going to outline and define in this plan are in alignment. You want to validate that. But the step here starts with looking at reviewing and seeing if you need to revise your vision and mission statement. Step three or section three is to complete or update your SWOT analysis, SWOT, your strengths, weaknesses, opportunities and threats. And you might do this at the company level or might do it by location or division, but you’re analyzing those things and that can lead to then initiatives, things you want to focus on.

Henry Lopez (05:21):

Of course, strengths you want to capitalize or continue to invest in, weaknesses that you might want to address in the coming year, opportunities that are available to you to take advantage of in the coming year. But this should help you guide and it’s often a great brainstorming exercise to guide, where do we go next year? What do we focus on as CEO of your business? You are ultimately responsible, you and your partners if you have them for identifying these higher level opportunities and threats and exposures. And so a SWOT analysis might be a great thing to include in your strategic plan for next year. Section four or step four is related to the SWOT analysis in some regards, and that is to identify the risks and to build contingencies, you have to analyze what are those weaknesses or threats and how am I going to prepare for those.

Henry Lopez (06:12):

When it comes to threats, that should include not just short term but longer term threats that you can identify for your business. And as I said, I think that’s one of the responsibilities that we have as the CEO of our business is to try to predict what might come our way that we should be prepared for as much as possible. Some of those could be economic, it could be regulatory, it could be all kinds of things, shifting trends, all of those things we have to think about at a high level and try to predict and anticipate as much as possible. So by identifying those risks and building contingencies, that then gets built into your plan in the way of actionable items related to preparing for or defending against these risks or contingencies. Section five or step five is to define or refine your strategy. And I think this is the section that maybe is the most challenging or most difficult, especially if you’ve not done this before, because we can get into semantics here about what the heck is a strategy.

Henry Lopez (07:13):

But the way I look at it and the way I’ve applied it is our strategy is simply the set of choices about where you will compete and how you will win. So where will you compete and how will you win next year as part of your plan? Think of it as your theory for why your business will succeed in a specific market or segment that you’ve chosen, either that you’re currently in or that you’re planning to go into next year. So a good strategy is practical but also actionable, and it should naturally lead then into the goals and action steps or objectives for the year. And you’re going to further define that in the next section of the plan, section six. But here in section five, it’s about defining or refining your strategy. And if it doesn’t translate into action, then it’s not a real strategy, it’s just theory at that point.

Henry Lopez (08:02):

So use a simple where to play, how to win framework, where are we playing? How do we plan to win or continue winning The word of play part, those are the specific customers or market or segments that you’re going to focus on, either continue to focus on or that you’re going to expand or pivot to. And how to win are the few things you’ll do better or differently than the competition. That’s what we might traditionally call our value proposition, but it’s specific to those areas that you’re going to play in. How will you differentiate yourself from the competition that probably exists in those segments or markets? And this specifically, this word of play, how to Win framework is based on an approach to strategic planning that’s influenced by the teachings of Roger Martin. Roger Martin is the co-author of the book Playing to Win How Strategy Really Works.

Henry Lopez (08:54):

So your strategy sets the target for your entire plan. It defines what winning means for your business next year. And I have more details on this in the download, the strategic plan outline download that you can get at the show notes page for this episode at the How a business. So that’s section or step five, define or refine your strategy. Before we move on to step number six, I want to invite you to join me for the next strategic planning workshop. These are live interactive sessions that I conduct, and this one, the strategic planning workshop is a 90 minute live interactive online workshop where I guide you step by step, and you end up at the end of it with at least a good first draft of your strategic plan for next year. Now, the way that I’m offering these workshops now is you have to be a member of how a business community on Patreon.

Henry Lopez (09:44):

So when you join the How a business community on Patreon, you get free access to this workshop and other workshops as well. So to learn more about the workshop and how to register for it, just visit the show notes page for this episode. I’ll have a link to it there, and I hope to see you at my next strategic planning workshop. Step or section number six to creating an effective strategic plan is your goals, your KPIs, your objectives for the year. This is probably what you’ve been doing. So this is I think, the most obvious section of any plan. What are your goals? Those high level goals, in particular, the things you’re going to measure, like total revenues or net operating margin or gross profit or number of users or number of subscribers, those key metrics that you will use and perhaps have been using to measure your progress, to measure your growth, to measure your success.

Henry Lopez (10:31):

So these are the things that you have clear and defined objectives on. They’re measurable goals that matter, that are the things that are most important, that if you achieve those things, then you will have a successful year. So you want to create them to be specific measurable goals, again, in the areas of finance, operations, sales and marketing, your team, all of those different categories, you don’t want to have too many of these, but enough that it gives you the measures that you need to make sure that you’re making progress and to have something to shoot for. You’ll monitor progress throughout the year, but then you also adjust as you need to. And then when you do define these, you need to determine how will they be calculated, how will they be tracked, how will you view them, and how often will these be updated so that you can make sure to use them effectively throughout the year.

Henry Lopez (11:18):

So setting goals, KPIs, and objectives is section six or step six to creating your effective strategic plan. Now, once you’ve got all of that content in your plan, or at least an outline of it, then we need to break it down by quarter. And it’s very simply because this is what usually breaks most plans is, and also why a lot of people decide not to plan is the valid argument that, well, I’ll put all this stuff together, have the greatest of plans, but then reality happens or something shifts or something unexpected hits me, and those plans go out the, but here’s what usually makes that a lot less likely is if you will then take your annual plan and break it down by quarter, because usually a quarter at a time from a planning perspective is both enough time to get something measurable done, but also not too long that you can’t adjust and pivot.

Henry Lopez (12:11):

And so breaking the annual plan down by quarter is a very effective way to make it a living actionable plan that allows for adjustments as reality hits throughout the year. So you’ll break each of those milestones, those initiatives, even the KPIs. This also allows you to bring in the cyclical nature that might be part of your business or industry. And you start with a very detailed plan for Q1 because you might be creating this plan in Q1, and that’s the next quarter Q1, very well defined. Maybe Q2 is a little better, but still has some vagueness to it. And Q3 and Q4 just kind of have placeholders right now. And then as you begin to get to the end of each quarter, you refine and finalize the next quarter. So that’s what allows you to make this a living working plan that adjusts to the reality of what is happening as the year progresses.

Henry Lopez (13:04):

And then remember also tied to the KPIs, but certainly here at a quarterly level is to assign ownership. If it’s not you doing everything and hopefully you’re getting to a point where it’s not, then who owns that particular action item on that plan or that KPI or that objective or a project. Keep it simple but also achievable so that you don’t become overwhelmed, and then it’s an unrealistic plan that you set up yourself to fail on. But that’s step seven, building a quarterly action plan that breaks down your annual initiatives or goals for this plan. Section eight is to budget for the plan. Now, depending on where you are in your business, this might be very simply, here’s where the major budgets are or where the money’s going to come from or what we’re going to spend on certain things like marketing, for example, or some kind of capital investments.

Henry Lopez (13:54):

But you kind of want to project where is the money going to come from and where are we going to allocate it? It goes back to, again, the point of limited resources. So where will we spend the money for maximum effect and to help us achieve our plan for the year? So what is the funding and then how are we going to allocate those funds? Again, for marketing, for your team development or adding staff technology, equipment and operations, you can download a couple of budgeting spreadsheets that I’ve created that you can use as a template. I’ve got a business expense budget template and specifically a marketing expense budget template. And you can download both of those tools from the howa business at the Sonos page for this episode, and you may not be at a point where you need to get that complicated with a detailed budget.

Henry Lopez (14:38):

And if you’re going to start for the first time, for example, with budgeting on key variable expenses, then do a select number of categories. Don’t try to do it all. What are those key categories like maybe maintenance, for example, that you want to put a number two and track and assign some level of accountability to someone on your team. That might be a place to start at a minimum though, what you’re doing in this section, section eight, budgeting for the plan is determining what are those higher level dollars? Where will that money come from, and how much money will you have to spend on some of these initiatives that you’ve identified for this year? Step nine is to share the plan and get buy-in and input. Of course, this depends on whether you’re a solopreneur right now or you have a team or you have a partner or you have a coach or a mentor, but ideally you get some input to help you validate and to challenge you as well on the plan.

Henry Lopez (15:33):

At the end of the day, you and your partners are the ones that have to make the decision on where you’re going to go, but it’s always important to get that feedback and objective input into the plan to help you make it better. And the last step 10 is about just how to execute on this. A plan should be a living document, this plan that you put together, this strategy for next year that’s tied to your long-term vision. Then again, the reason for the quarterly planning is to allow you to at least review it quarterly at a minimum and adjust as you need to from quarter to quarter so that it remains aligned with your vision that may have evolved, or of course, more importantly, with the reality of what might be happening in your environment and your market and your segment in the country, all of those different things that we may not have foreseen and you’re adjusting for those real time.

Henry Lopez (16:26):

That’s how you really make it a living plan instead of a document that you open again at the end of next year and chuckle at what you had planned to do for the year. Instead, make this a real guiding document for you that you maintain and keep active and adjust throughout the year, particularly on a quarterly basis. So here now are five best practice tips that I wanted to share with you. I’m just going to go through them really quickly. Five tips that I think help to lead to creating a more effective strategic plan. Tip number one, start with reality, not fantasy. So that’s why it’s so important to really understand what did this year do, making sure I understand the performance state of the financials and base it on reality, not wishful assumptions. Tip number two, limit your priorities. So when you get to that section about what your top priorities are for the year, limit them, especially on a quarterly basis, I would say three to five at most on a quarterly basis.

Henry Lopez (17:21):

Otherwise, you’re going to set yourself up to fail, or you’re going to spread yourself and your team too thin and not really accomplish anything of any value. So limit those priorities. The same thing with the KPIs, less is usually better. Tip number three is related to KPIs. Track them consistently. Really make this the dashboard that you use as part of determining how things are going, measuring the progress that you’re making. These should be numbers that are visible to you if daily, certainly weekly. And if you are assigning responsibility to team members or partners or other leaders, they must have those KPIs visible. They must know how it’s calculated, and they must understand how those numbers are impacted. So track your KPIs consistently. Tip number four is related to what I just said, which is a sign ownership to all of these goals. If it’s not just you, if you have a team, then make sure it’s clear as to who owns each of the goals or the initiatives or the KPIs.

Henry Lopez (18:18):

And tip number five, make it actionable. We are starting with an annual plan. Then you’re going to break it down into quarters. If we apply the EOS approach, we’re talking about quarterly big rocks, then maybe break it down by month. And certainly, as you know, I always focus on, which is weekly, that weekly rhythm of execution or those weekly big rocks. What’s most important That’s tied to overall, what are our goals and objectives for the quarter that are tied to our plan, which is aligned with where we’re going longer term? And that’s how you really get the execution that’s focused and aligned that moves the needle on growing and scaling your business. What I hope that you will take away from this episode is that planning is essential, but strategic planning doesn’t have to be complicated. It’s just intentional. You have to do it and make it practical and actionable.

Henry Lopez (19:11):

I also encourage you to download the three tools that I have available here, the outline for the annual strategic plan and the two budgeting worksheets, and then I invite you to join me for the next strategic planning workshop. Your business is not going to grow by accident. Well, maybe it will. That’s great if it does. But the reality is that strategic planning is how you’ll shift from reacting to what might happen to you to leading with clarity and confidence and alignment. When you take the time to plan intentionally and create a strategic plan, you turn that uncertainty into focused action that focuses your resources and gives your business its best chance to thrive and scale next year and beyond. This is Henry Lopez. Thanks for joining me for this episode of the How of Business. I wish you the best as you start and grow your successful and profitable small business. I release new episodes on Mondays, and you can find a show anywhere you listen to podcasts, including the How of Business YouTube channel, and at my website, the thehowofbusiness.com. Thanks for listening.