EOS Annual Planning: How to Run the 2-Day Session

By Madhan | Founder, ShiftFocus OS

The EOS annual planning refers to more than just an annual goal-setting gathering. This is a time when the leadership of a company analyzes the previous year, verifies if the direction of the company is still reasonable, and prepares the plan for the coming year. The real test comes after this, as the company needs to be able to implement that plan regardless of the changing situation in the market and other external factors. Thus, the importance of having a solid EOS annual planning process is obvious.

EOS annual planning: Day 1 looks back, Day 2 plans forward

PART A: WHAT EVERYONE COVERS

What Is EOS Annual Planning? Annual vs Quarterly Planning

EOS annual planning is the annual leadership event that involves the analysis of the past year, renewal of the company vision, and creation of the one-year plan. The quarterly planning happens every three months and indicates the preparation for the next quarter. Annual planning looks further ahead and sets the major direction for the entire year.

Area	Annual planning	Quarterly planning	In ShiftFocus
How often	Once a year	Every 90 days	Multi-period planning (Q/H/Y)
Length	Two days	One day	Plan lives in one place all year
Horizon	3-Year Picture and 1-Year Plan	Next quarter's Rocks	Goal cascading and alignment
Main output	1-Year Plan and Q1 Rocks	Rocks for the next quarter	Every goal gets an owner and a weekly update window

Annual vs quarterly planning across one year

Who Attends the EOS Annual Planning Session and Why Offsite

The leadership team are major participants, as these are corporate-level choices. The individuals bearing the responsibility for important choices ought to assist in devising the plan.

An off-site meeting is beneficial as it eliminates usual distractions. It does not have to be costly. The place where the meeting is held should be free of any distractions to allow for thoughtful and comprehensive discussions and decision-making.

Seat	Why they are in the room	What they bring
Visionary	Owns the long-term direction	The 3-Year Picture view
Integrator	Turns the plan into execution	Last year's goals and results
Sales lead	Owns the revenue number	Pipeline and close rates
Operations lead	Owns delivery capacity	Hours, staffing, workload
Finance lead	Owns the budget	Year-end financials

EOS Annual Planning Day 1 Agenda

Day 1 concentrates on the past prior to planning for the future. The team connects, assesses the previous year’s results, discusses the state of the team, processes the SWOT and Issues List, and updates the Vision and Traction Organizer (V/TO). The goal is not rewriting all of the information, but about ensuring that the leadership agrees on the company’s path.

Day 1 block	Question it answers	Output
Check-in	How is everyone arriving?	Wins and expectations
Prior-year review	What did we hit and miss?	Results vs last year's plan
Team health	Do we work well together?	Named people and trust issues
SWOT + Issues List	What helps or blocks us?	A ranked Issues List
V/TO review	Is our direction still right?	An updated V/TO

EOS Annual Planning Day 2 Agenda

Day 2 transforms the direction into reality. The team processes the 3-Year Picture, 1-Year Plan, and Q1 priorities. The issues are addressed, action items are decided, and the team is informed of the order of actions. The basic connection is:

3-Year Picture → 1-Year Plan → Q1 priorities → execution.

The two-day EOS annual planning agenda

Day 2 block	What gets decided	Owner	Tracked in ShiftFocus
3-Year Picture	Revenue, profit, what the company looks like	Visionary	Goal hierarchy
1-Year Plan	3 to 7 annual goals	Leadership team	Annual goals with owners
Q1 Rocks	The first 90 days of work	Each Rock owner	Weekly check-ins (30 sec)
IDS + next steps	Who does what, by when	Integrator	Auto-escalation when goals stall

PART B: WHAT WE ADD

The Pre-Mortem: “It’s December 31, and We Failed. What Happened?”

Conduct a pre-mortem in your EOS annual planning session before the targets are established.

Inform your team:

“It’s December 31, and we missed out on the plan for the year. Why?” Give them a few minutes to write their responses.

Possible responses could be:

• Hiring happened too late.

• The pipeline was not strong enough.

• A big customer left.

• Delivery was unable to cope with the workload.

• There were too many tasks.

• The sales team sold work that couldn’t be done by Operations.

Lastly, use responses to identify the risks of your annual plan. This approach works in one simple way. The team highlights the points of failure before the project is approved.

The pre-mortem: six ways the year can fail

Pre-mortem answer	Early signal to watch	Check it	ShiftFocus flag
Hiring happened too late	Open roles past start date	Monthly	Deadline enforcement
Pipeline not strong enough	Qualified opportunities vs plan	Weekly	Salesforce pipeline tracking
A big customer left	Top-account health	Monthly	Automated risk alerts
Too many tasks	Rocks per owner	Quarterly	Live dependency graph
Sales sold work Ops can't do	Delivery hours booked vs free	Weekly	Risk detection 2-3 weeks early

Running It Before the Goals Are Locked

Don’t carry out the processes when the leaders have fixed their target. Instead of asking, “How can we make it to ten million dollars?” ask the question: “What should be true for the amount of ten million dollars to be realistic?” This will make your team review their sales capabilities, prices, pipeline, etc.

	Pre-mortem after goals lock	Pre-mortem before goals lock
Question asked	How do we hit $10M?	What must be true for $10M?
What the team does	Defends the number	Tests the number
Risks found	Late, at the quarterly	Early, in the session
Result	A target	A target with a plan

Annual Planning Revenue Math Check

Back-solve the revenue goal in the annual plan. For example, if the revenue target for the year is $6 million, and if the average size of the deal is $100,000, we can calculate the number of deals required as follows:

$6M ÷ $100K = 60 deals.

Now, if the closing rate is assumed to be 25%, the qualified opportunities required would be:

60 ÷ 0.25 = 240 qualified opportunities.

Now, a concrete test for the leadership team has been formed against which it can be measured. The leadership team can be expected to close 40 deals. If they are asked to close 60, it would mean that a 50% increase is expected, and the underlying cause leading to this improvement must be specified.

Back-solving a $6M revenue goal

Step	Math	Result
Revenue target	Set in the 1-Year Plan	$6,000,000
Average deal size	From last year's actuals	$100,000
Deals needed	$6M ÷ $100K	60 deals
Qualified opportunities	60 ÷ 25% close rate	240
Gap to today	60 vs 40 deals	+20 deals (+50%)

When the Number Does Not Add Up

The number of deals needed is 60, but if the current sales team does not have the capability of closing more than 40 deals, leadership will have to either recruit additional salespeople, which will lead to an increase in costs, or increase the amount of sales generated per person, or find a new marketing channel capable of delivering higher revenue, or set a different revenue goal.

Option	Cost	Must be true	Track it in ShiftFocus
Hire salespeople	Salary before revenue	Hired by Q1, ramped by Q2	Deadline enforcement
More sales per rep	Training and tools	Close rate rises above 25%	Progress tracking and analytics
New marketing channel	Marketing budget	Channel adds pipeline by Q2	HubSpot CRM integration
Set a different goal	Lower growth	Team agrees on the new number	Goal re-set with owner sign-off

Capacity Check: Do We Have the People for This Annual Plan?

Revenue leads to business opportunities. Suppose a service establishment needs to complete 600 tasks. For each one, the company requires 20 hours of delivery.

Calculation:

600 x 20=12000 hours.

One worker has roughly 1260 hours of working time per year.

Calculation:

12000/1260 = 9.5.

Thus, a business needs about ten employees to do this amount of work. Given that the company has only six employees, there is a gap in its feasibility plan. The solution may be employing more workers or changing plans and processes.

Capacity check: 9.5 people needed, 6 on staff

Hours and Hires Needed per Goal

Conduct the calculations on the efforts necessary to achieve major operational objectives.

Goal	Required Hours	Available hours	Gap
600 projects	12,000	7,560	4,440
New service line	2,400	1,800	600
Support expansion	3,000	2,200	800

The detected gaps signal that some decisions concerning staffing or processes must be made.

Goal	Gap hours	Hires at 1,260 hrs	Decision
600 projects	4,440	3.5	Hire or cut scope
New service line	600	0.5	Part-time or contractor
Support expansion	800	0.6	Process fix first
Total	5,840	4.6	Budget for 4 to 5 roles

Linking the Annual Plan to the Budget

The budget and annual plan should be in agreement. Let’s say that the expenditure for recruiting would be $180,000, for purchasing equipment it is $100,000, and $75,000 is the budget for marketing. So, $355,000 is needed for making the investments.

If there are only $200,000 provided for it, the leaders should not disregard the difference. They should determine the important investments that should be made, when, and with what expected results.

Plan vs budget: a $155K gap to resolve

Line	Amount	Share of the ask
Recruiting	$180,000	51%
Equipment	$100,000	28%
Marketing	$75,000	21%
Funded	$200,000	56%
Unfunded gap	$155,000	44%

Setting Quarter Targets for Seasonal Businesses: Why Revenue ÷ 4 Is Wrong

Ideally, annual sales for businesses that are seasonal cannot be obtained just by dividing sales over 4 quarters.

Let’s assume we are expecting to achieve sales of $4 million during the year. However, we should also take into consideration seasonality in the last four quarters: 15% in Q1, 20% in Q2, 25% in Q3, and 40% in Q4.

Quarter	Projection
Q1	$600,000
Q2	$800,000
Q3	$1,000,000
Q4	$1,600,000
Total	$4,000,000

Setting the revenue for the four quarters to be $1 million is not very reasonable.

Seasonal targets vs revenue ÷ 4

Quarter	Revenue ÷ 4	Seasonal target	Difference
Q1	$1,000,000	$600,000	−$400,000
Q2	$1,000,000	$800,000	−$200,000
Q3	$1,000,000	$1,000,000	$0
Q4	$1,000,000	$1,600,000	+$600,000

Three Scenarios: Base, Downside, Upside

It is good to develop three different scenarios before working out the annual plan.

Scenario	Expected Sales	vs Base	What leaders prepare
Downside	$3.2 million	−20%	Which spend to pause
Base	$4 million	—	The operating plan
Upside	$4.6 million	+15%	Capacity for extra demand

Base means the operating plan has been formed. Downside indicates the areas of risk. Upside represents whether there are enough resources to meet improved demand.

A Filled-In Example: A 40-Person Services Firm's 1-Year Plan

Let us examine a 40-person services firm with annual objectives:

Goal	Annual Targets
Revenue	$8m
Gross Margin	42%
Client Retention	90%
Billable capacity	7200 hours/month

When we assume the average contract price of $80,000:

$8,000,000 ÷ $80,000= 100 contracts.

By winning 25% of the contracts:

100 ÷ 25%= 400 qualified opportunities.

The team then lays out the expected course of the year:

Quarter	Main Priority
Q1	Fill in the pipeline and hire two professionals
Q2	Improve utilization and revenue
Q3	Maximize the strongest service line
Q4	Ensure retention and finish the year

In that way, Q1 plans will contribute to the achievement of the annual target without turning it into a new list of everything they would like to achieve.

Annual goal	Owner	Weekly measure	In ShiftFocus
$8m revenue	Sales lead	Qualified opportunities	Pipeline tracking
42% gross margin	Finance lead	Margin by project	Executive dashboards
90% retention	Customer Success	Renewals at risk	Automated risk alerts
7,200 billable hrs/month	Operations lead	Utilization	Momentum analytics

The 30 Days After the Annual Planning Session

The EOS annual planning session only constitutes a starting point. In 30 days, leadership has to communicate the annual plan, convert main objectives into commitments made at the level of departments, and the level of responsibility. The first month is a period when all theoretical matters get actualized. If departments understand the plan differently, the errors should be fixed as soon as possible.

The 30 days after the session

The State-of-the-Company Meeting

To successfully execute the strategic plan, it is necessary to clarify goals for the organization. This involves communicating the strategic concept to employees and answering three questions: what the organization’s goals are, their importance, and each department’s responsibility.

Question	What employees should hear
What are the goals?	The 3 to 7 goals in the 1-Year Plan
Why do they matter?	The reason behind each goal
What is my department's part?	The department priority tied to each goal

Rolling It Out to Department Priorities

It has to be taken into account that corporate goals need to be implemented on the departmental level. For example, if the company has set the goal of increasing its retention rates from 85% to 90%, the Customer Success department might be responsible for managing the renewal processes, and the Product department might be in charge of solving recurring issues. Each departmental goal should be related to the corporate plan. It is necessary to develop a timetable for implementing the plan.

Level	Goal	Measure
Company	Raise retention from 85% to 90%	Retention rate
Customer Success	Manage the renewal process	Renewals closed on time
Product	Solve recurring issues	Repeat tickets per month

Week-by-Week Checklist

In the first week, corporate goals, responsible persons, targets, and relevant assumptions should be confirmed. In the second week, corporate goals should be translated into departmental commitments. In the third week, the commencement of execution should be verified. As for the fourth week, early evidence should be reviewed to rectify vague responsibilities and unrealistic assumptions.

Week	Leadership task	Done when	ShiftFocus support
1	Confirm goals, owners, targets	Every goal has one owner	Goal templates and library
2	Translate into departments	Each department has commitments	Goal cascading and alignment
3	Verify execution has started	First check-ins are in	Structured check-ins
4	Review early evidence	Vague owners are fixed	Weekly Exec Brief

Rules for Changing the Annual Plan Mid-Year

An annual plan shouldn't undergo alterations every time a company does not meet a target. However, it needs pre-planned modifications anytime a key assumption has changed.

One can ask:

• What has changed?

• Is it significant?

• Does the original goal hold water?

• What would take its place?

Having lost a customer representing 20% of annual income is not comparable to failing to reach one monthly goal.

Situation	Change the plan?	Why
Lost a customer worth 20% of income	Yes	A key assumption changed
Missed one monthly goal	No	Normal variance
Rock behind for three weeks	No	Escalate and recover first
Market price drops for the year	Review	Revenue math may no longer hold

Checking Every Month That the Year Is on Pace

The annual objectives need to be checked regularly. Assume the annual goal is $8 million. After two months, the income equals $1.4 million.

Straight-line pace = $8 million/12 months x 2 months= $1.33 million.

So, it means that the company is doing well. However, seasonal businesses should apply their predicted curve, rather than straight-line calculations.

Monthly pace check against the annual goal

Method	Expected after 2 months	Use it when
Straight-line	$1.33M of $8M	Revenue is flat across the year
Seasonal curve	Your predicted share	Some quarters carry more revenue
Actual	$1.40M	Compare to the right method

Where ShiftFocus Shows Annual Pace Against the Plan

An annual plan can be accurate while not working well due to gradual change. ShiftFocus's technology allows businesses to track goals, ownership of tasks, developments, blockages, and indicators of execution so that management can notice when the plan goes astray. The question to ask is not merely, "Did we achieve all our annual goals?" The correct question to ask is: "Did we follow a reasonable process towards accomplishing them?"

Annual plan question	Spreadsheet or binder	ShiftFocus
Is the year on pace?	Last month's number	Momentum analytics and trend forecasting
Who owns each goal?	A name in a cell	An owner with a weekly update window
Is anything stuck?	Found at the quarterly	Risk detection 2-3 weeks early
Did someone go silent?	Not visible	Silence decays status, auto-escalation
Quarterly prep	Hours of compiling	Auto-generated Weekly Exec Brief

EOS Annual Planning FAQs

What is EOS annual planning?

EOS annual planning is a two-day planning seminar devoted to evaluating the past year and developing plans for the next one. It provides a link between the long-term vision of the company and the annual and quarterly priorities.

How long is the EOS annual planning session?

Usually, two days are given to this planning seminar: the first day is targeted mainly on review and defining the direction; the focus of the second day is on making plans.

What’s the difference between annual and quarterly planning?

Annual planning presents the main direction and goals of the year, while quarterly planning is focused more on getting updates and identifying the main priorities for the next three months.

When should we hold EOS annual planning?

Most companies conduct their annual planning meetings either towards the end of the current year or before the start of the next financial year. Therefore, it is best to conduct it at a time when the leaders have good year-end operational and financial information.

Do we need to go offsite?

Not necessarily. However, conducting the meeting offsite will allow for less distraction and better discussions. What matters more than the venue is the fact that there is protected time for the leadership team to meet.

Who should attend?

The leadership team has to take part in the meeting since it will be responsible for major company decisions. The right participants are the people who will make the decisions and implement them.

What pre-work is required?

The required pre-work includes gathering the financial results, goals from the previous year, operating statistics, customer information, staffing data, and current planning documents. All participants should come prepared to discuss the facts instead of using meeting time to gather them.

Pre-work item	Who brings it
Financial results	Finance lead
Last year's goals and results	Integrator
Operating statistics (Scorecard)	Each leader
Customer information	Sales and Customer Success
Staffing data	Operations or HR
Current V/TO and plans	Everyone reads it first

How many annual goals should we set?

Maintain the quantity at a level that would support the concentration. The EOS suggests implementing three to seven primary targets within the 1-Year Plan.

What is the 3-Year Picture?

It describes what the company should look like three years from now. It connects longer-term direction with the more specific goals in the 1-Year Plan.

How do I check that the revenue goal is realistic?

Start from revenue and work in reverse order by utilizing the average transaction value, required sales, percentage of successful deals, pipeline kind, and distribution capability. If the calculated figure serves as a basis for significant improvement in the general performance, find how this achievement could be accomplished.

How should seasonal businesses split quarterly targets?

It should be done based on historical seasonality and expected demand, not by subdividing annual revenue into four equal parts.

Should the annual plan be tied to the budget?

Yes, the budget should provide for the necessary resources for implementing the plan. Any critical discrepancy should be rectified before the execution begins.

Can we change the annual plan mid-year?

Yes, if there is a major change in circumstances affecting the original assumptions. Avoid changing the goals simply because it is hard to implement the plan.

What if we badly missed last year's goals?

It is necessary to identify the reason why. Distinguish between invalid assumptions and lack of proper execution before considering what needs to be changed in the new plan.

Can we do it without an implementer?

This is possible, but the leadership team should have enough discipline to deal with the assumptions and make difficult decisions.

How much does a facilitated annual planning session cost?

The cost cannot be determined as there is no general pricing structure. EOS Implementers determine their own fees, which means it’s best to get in touch with the facilitator to find out the price.

Can EOS annual planning be done virtually?

Yes, a virtual session can be successfully conducted if the team manages to create a distraction-free environment for the meeting.

How do we share the plan with the whole company?

The explanation should include the main goals and their significance as well as mentioning the responsibilities of each department. Employees need to understand how their jobs fit into the plan for the year.