Goals are the driving force that pushes the business enterprise forward. Companies are incorporated with the intention of attaining certain goals which it is to be achieved in the long run. Annual business plans break up the long term objectives into smaller, attainable, and measurable goals that are to be achieved in a shorter period. The short term objectives may be set for a year or two and the method of reaching the target is well defined.

The goals are determined for the company as a whole, individuals and various groups. These objectives are measurable so as to facilitate easy evaluation of the achievement of the set limit. For creating an annual plan, the management is to decide on the goals that are to be achieved. The annual plan for the previous year must be scrutinized to monitor the effectiveness of the plan to the actual result. Failures must be evaluated and measures to correct or overcome them must be taken in the corresponding plan.

The business entity’s future is dependent on the internal and the external factors. The external factors like government regulations, market trends, general economical policies and competitive policies must be analysed on an ongoing basis to reduce or eliminate unexpected turbulences to the flow of the business. Market analysis helps to recognise the needs of the people, their purchase pattern, the role of the competitive products in relation to satisfying the customer needs and their pricing policies. Diagnosing the strengths and weakness of self and the opposition using SWOT analysis helps to understand where one stands in the present market scenario.

The annual business plan must be drafted taking into account the growing needs for talent within the organisation. Market analysis helps in the determination of the way things are to shape in future. Market analysis including a study on future innovations in technology calls for a change in the existing key skills. Man power must be recruited at the right time to avoid unnecessary delay in the flow of operations for lack of skill. A measurable objective aids in the performance appraisal of the employees by monitoring the effectiveness of the employees.

A good annual plan provides for contingencies in the form of market trends, government regulations, employee turnover, legal issues, etc. They need to provide a back up of suppliers to eradicate chances for the stoppage of work. Annual plans must provide the foundation for long term investment plans like future expansion, mergers, product expansion, etc through a demand-supply analysis. It also gives room for organisational structural changes taking into account the future needs of the company. Annual plan lays the structural framework for budgeting.

Annual plan focuses on the various aspects that have direct impact on the mission of the business. By creating measurable and attainable objectives, the annual plan helps to analyse the success of the plans by comparing it with the actual results, studies the causes for deviations, and take measures to prevent or eliminate them in future, thereby guaranteeing the success of the business enterprise.