What is an annual plan?

Adobe for Business Team

05-23-2025

Woman standing outside overlaid with annual planning goals and a UI element outlining new goal details.

An annual business plan is a roadmap for a company and its employees. It contains milestones that carry the plan forward through a series of smaller goals that lead to a broader vision of where the business aims to be by the end of the year.

Companies use annual business plans to adjust resources, improve performance, and reach specific goals over the coming year. Essentially, you can think of annual planning as a strategic guide for the upcoming year. It’s about shifting from a long-term vision into an actionable, short-term plan.

Whether using an annual business plan template or working from scratch, a company will review performance from the previous year to create an annual plan that gives everyone in the organization a sense of where they’re headed and how they will get there.

In this guide:

Why annual planning is crucial for businesses.

An annual business plan is a yearly plan that empowers workers to set specific business goals based on the company’s overarching strategy. It also holds teams accountable for achieving stated goals — which in turn promotes progress tracking. The annual plan connects directly to where a company wants to be in three to five years and defines what’s critical to achieve over the next year to progress toward longer-term targets.

A well-formulated annual plan also keeps internal teams working together, incentivizing them to be more productive. Additional benefits of an annual business plan include:

Aligning teams and departments towards a common goal boosts communication and camaraderie — but just as importantly it sets short-term expectations. Short-term expectations can give teams direction without being lost in the shuffle of five-year plans.

Another benefit of annual planning is that it gives you the ability to remain adaptable. With ongoing planning, you can adapt to unforeseen events, reevaluate, and tackle any changing circumstances — all without losing sight of your longer-term goals.

With benefits to team direction, market adaptation, tackling unforeseen challenges and boosting strategic execution, writing an annual plan is a must for businesses of all sizes.

Creating an annual plan: A step-by-step guide.

There are steps that teams should take before creating an annual plan that can help ensure its efficacy. Teams should look at historical data to get a baseline for setting goals in an annual plan. Reviewing previous annual plans and assessing the results can give your team guidance to create an upcoming annual plan.

Before creating an annual plan.

Creating an annual plan.

Key components of an effective annual plan.

There are many annual business plan templates you can use to make your plan. Generally, the key components of an effective annual plan consist of these elements:

Chart comparing SMART goals with stretch goals.

Creating an annual plan is easier when you use the right tools. These can include an annual business plan template that organizes planning efforts and a wide variety of software solutions for writing business and strategy plans as well as tracking goals.

Annual plan vs. strategic plan.

In the strategic planning process, an organization describes or affirms its mission, formulates a vision of what it wants to achieve over the next few years, and sets strategic priorities to help make that vision a reality.

The strategic plan works hand in hand with the annual business plan. The strategic plan provides an overarching vision of what the company wants to achieve, and the annual plan provides the nuts and bolts of the necessary work to be done over the coming year.

So, the annual business plan depends on the strategy for its priorities, and the strategy depends on the annual plan to execute its ideas about the organization’s vision, mission, purpose, and goals. Logistics, projects, resource allocation, and timing are covered in the annual plan.

Aspect
Annual plan
Strategic plan
Timeframe
Short-term; focuses on the year ahead
Long-term; provides direction over several years
Focus
Operational tasks and daily/weekly/monthly milestones
Broad vision and overarching company goals
Scope
May cover specific departments or initiatives
Encompasses the entire organization
Flexibility
More agile and adaptable to changes
Generally more rigid, though still adaptable when necessary
Review/Approval
Typically reviewed or approved by senior leadership
Usually reviewed or approved by the board of directors
Goal-setting frameworks
Uses tools like SMART goals, OKRs, and KPIs
Also uses goal-setting frameworks such as SMART goals, OKRs, and KPIs
Resource allocation
Involves distribution of resources for the year’s initiatives
Involves broader, long-term resource planning
Alignment
Should align with the strategic plan to support its long-term objectives
Sets the foundation that annual plans should support and align with

Getting started with annual planning.

Creating an annual plan is easier when you use the right tools. These can include an annual business plan template that organizes planning efforts and a wide variety of software solutions for writing business and strategy plans.

As you execute your annual plan, it’s also a good idea to rely on a work management platform with strategic planning tools that allow you to collaborate productively, create content, allocate resources, track milestones, and manage complex processes. Using features like Workfront’s scenario planner, you can simplify the annual planning process, adapt to market shifts with continuous planning, compare scenarios for risk and effectiveness, and stay ahead of the competition. Workfront Goals enables you to share, enact, and monitor goal-setting frameworks and results.

Armed with the right tools, plans, and processes, you can create a well-conceived and executed annual business plan that ensures the year ahead lives up to your expectations.

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