Scenario Planning

What is Scenario Planning?

Scenario planning creates multiple versions of your financial future based on different assumptions. Instead of one forecast, you model best case, base case, and worst case to understand the range of outcomes and plan responses.

Each scenario includes a complete financial model with different growth rates, costs, and external factors.

Why Scenario Planning Matters

The future is uncertain. A single forecast gives false precision. Scenario planning acknowledges uncertainty and prepares you for multiple outcomes.

Good scenarios include decision triggers: if revenue drops below X, cut Y. If growth exceeds Z, invest in A. This turns reactive decisions into proactive plans.

Building Scenarios

Start with 3 scenarios: base (most likely), upside (things go well), downside (things go poorly). Vary the key drivers: growth rate, win rate, churn, funding environment. Include specific triggers and actions for each scenario.

Three-scenario model:

• Base case: 15% growth, current burn, 14 months runway
• Upside: 25% growth, increased investment, 10 months runway
• Downside: 5% growth, reduced costs, 20 months runway

If upside materializes, accelerate hiring. If downside, trigger cost cuts by Month 3.