How to create your annual operating plan: FAQs

4 min read
Nov 3, 2022 4:16:28 PM

Brett Herkt, BoardPro CEO answers FAQs on how to create your annual operating plan

6236a6c1eb2a7da0751e6804_Brett Profile picBoardPro is proud to introduce our very own CEO and co-founder, Brett Herkt. Herkt helped found BoardPro back in 2015 to focus specifically on serving small to medium-sized businesses and not-for-profit (NFP) organisations. BoardPro is board management software that helps streamline workflows and increase the efficiency of board operations through cloud software. Accessible to every Board member, the software helps team members to stay on top of both strategic and regulatory requirements and supports the Board and organisation in building its desired future.

Prior to BoardPro, Herkt was the founder and CEO of, an execution and management reporting system that he sold to a long-term customer in 2020.

His extensive history in the industry includes management consultancy and an impressive rise through the ranks at Maxnet Limited from the general manager of operations and finance to CEO. Recounting his time at Maxnet, Herkt says, “The challenge was to develop operational discipline and guide financial survival of a rapidly growing but loss-making entrepreneurial entity with limited professional capability.” Herkt clearly embraced this challenge, as “... ​​turn-over quadrupled and profitability (EBIT) grew to 7 figures” during his tenure.

We sat down with Herkt to discuss the key elements of creating an annual operating plan. We specifically wondered about the best timeline for success when building an operating plan, as well as his top tricks of the trade.

Herkt’s position as a leader in the world of governance, coupled with his hands-on experience leading organisations to success, made him the perfect person to answer our questions. Keep reading to gain insight into this essential process and find out what exactly Herkt thinks about the oft-overlooked parts of an operating plan.

Q: In your opinion, what are the top three most important things that should be considered when creating the annual operating plan?
It’s important to ask the following questions:

  • Do I have a clear vision and purpose statement and a strategic plan that should guide my operating planning?
  • Have I got enough time to pull this together before the start of the planning period?
  • Do my managers have the capability to pull together sensible functional objectives and key results (OKRs) or will I need to help them produce them?
Q: Can the annual operating plan be edited mid-year? If so, how often does it happen?

Yes, it can and should be edited as a living document – with certain provisos. The board or other stakeholders will have expectations of outcomes for the planning period.

The plan owner (usually the CEO or equivalent) should be focused on achieving those expected outcomes, and the means should be within their discretion.

A good CEO will keep their board (and/or stakeholders) alongside them on the journey to achieving those outcomes and the course corrections required to get there.

Q: Can you give some tips on how to set realistic goals to achieve to be included in the annual operating plan?
  1. Create some healthy tension around developing goals.
  2. The CEO and finance manager might develop some targets based on historical performance and simple ratios like applying a similar growth rate.
  3. Invite line managers to create bottoms-up goals.
  4. Compare and contrast and invite the team to discuss what realistic and stretch goals might look like.
Q: What is the best way to keep track of what has been set in  the annual operating  plan?

Link high-level goals and activities into your regular reporting regime, to the board and to the business.

Q: Who should be involved in the development and creating of the annual operating plan?

It should be overseen by the CEO, driven by the line managers responsible for delivering outcomes and with opportunity for the wider team to have input and visibility.

Q: What are the most important documents that need to be looked at in order to create a stellar annual operating plan?
  • Vision and purpose statements
  • Strategic plan (see detail below)
  • Any financial constraints or mandates, such as maintaining reserves
  • The budget should be built alongside and in conjunction with the operating plan
Q: What are some of the biggest mistakes one can make when creating the annual operating plan?
  1. Starting with a budget
  2. Not involving the line managers who will deliver much of the outcomes
  3. Not having any common sense of vision and purpose or strategy
  4. Failing to establish any constraints set by the board before commencing
Q: Is there anything that is essential but is commonly overlooked when creating the annual operating plan?

A beginner’s trap I fell into as a new leader was to try and combine the strategy and operating plan into one document.

A strategy is ideally three to four pages that define a destination in, say, three years' time and broad-stroke descriptions of the top three to four things required to get there. It usually includes a SWOT analysis, so the reader knows the context for the plan and a summary of the vision and purpose of the organisation.

An operating plan is a more precise but still high-level statement of the organisation's goals and actions over the next 12 months. It is also usually broken down by organisational function. 


Where to next?
  • If you are a CEO of an organisation with revenues between $2 million and $40 million and would you like to improve your strategic and operational planning, be sure to download our guide and seven business templates -
    Eight steps to building your annual operating plan.
  • If you are interested in learning more about BoardPro, read more about our product features and customer stories here.
  • Learn more and connect with Brett Herkt here



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