3 scenarios business plan

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Start » strategy, scenario-based business planning: what it is and how to use it.

To minimize negative consequences your business could unexpectedly face, think about creating a scenario-based plan.

As a business owner, it's important to prepare for as many possible roadblocks as you can before you encounter them. By anticipating changes or challenges in your business's environment, you will help set yourself up for success.

This preparation can be achieved through scenario-based planning — in other words, thinking through different potential obstacles and creating actionable strategies to handle them.

What is scenario-based business planning?

Scenario-based business planning involves imagining scenarios about your business's future and anticipating any potential realities or challenges.

Jinny Uppal, a board advisor and consultant for startups and small businesses, noted that this isn't an exercise to forecast what will happen — instead, it helps business owners prepare for a broader set of possibilities.

"It's not a tool to predict the future, but a methodology to plan a set of controllable actions for an unpredictable future," said Uppal, who is on the leadership team of the Harvard Business School Club of New York's Recover and Rebuild Initiative , which provides pro bono consulting and coaching to small businesses. "During fast-changing, uncertain times like now, scenario-based planning can help a small business move from a 'reactionary' to more of a 'proactive' mode of operating."

[Read: How to Write a Business Plan During a Pandemic ]

Scenario-based business planning begins with identifying external factors that could significantly affect your business, said Uppal. For instance, in the current pandemic, these factors may include virus case volume, vaccine availability, lockdowns, fiscal stimulus support and trade and economic policy considerations. From there, you can map out possible "scenarios" or outcomes that could stem from each factor.

"By thinking through multiple possible outcomes and a high-level action plan for each, your business can build a far more robust and consolidated plan compared to one that is either too pessimistic or too optimistic based on one set of assumptions," Uppal told CO—.

Uppal noted that this process is straightforward enough to be done "on the back of a napkin" and is applicable to any business, regardless of size or sector. Your scenario assumptions can be translated into profit and loss and cashflow projections that can be built in simple Excel spreadsheets.

"It is important to build in timelines for the scenarios since that will impact the cashflow," she added. "One idea is to build scenarios for 6-, 12- and 18-month timelines with assumptions on revenue and any outflows due to new investments being made during that time period."

[Read: How to Start a Business Without a Lot of Money ]

During fast-changing, uncertain times like now, scenario-based planning can help a small business move from a 'reactionary' to more of a 'proactive' mode of operating.

Jinny Uppal, board advisor and startup/small business consultant

Tips for scenario planning

Brainstorm potential obstacles with your team.

Talk to every member of your team at different levels and ask to brainstorm scenarios that could affect your business. Think about the lifecycle of your products, how politics affects your industry, outside analyses of your industry and whether technological advancement could improve or make obsolete your services.

Instead of trying to plan for every potential scenario, Uppal recommends keeping it simple and evaluating no more than three scenarios during this exercise.

Identify driving factors and uncertainties for each scenario

Once you've decided on the three scenarios to plan for, focus on three to four specific factors or trends that might impact each one, said Uppal. Think about not only how your individual business is affected, but what forces affect suppliers, customers, competitors, your employees, shareholders and the government.

"Include factors that seem distant now but may impact you in the future," Uppal advised. "For example, will a continued deterioration in U.S.-China relations disrupt your supply chain?"

Develop plausible scenarios

With your team and the proper data, discuss and play out these scenarios. Think about when and why they could occur and what you can do to minimize the risk if the issue does come up.

If you're not sure what's truly plausible and realistic versus what's in your imagination, Uppal advised turning to trusted colleagues for their insights before taking information reported by self-proclaimed "experts."

"Ask a trusted partner or mentor to help you develop a fact-based matrix of possible outcomes," she said. "I highly recommend not taking advice from so-called forecasters or experts. That may lead to excessively optimistic or pessimistic scenarios."

Reevaluate and update your strategies accordingly

Scenario-based business planning should be a continual, ongoing process. Evaluate your assumptions regularly update them according to changes in the market, new technology and the growth and development of your business.

"[This] is not a one-and-done activity," said Uppal. "Revisit the scenarios and plans every month [or] every quarter. Adjust plans if significant new information becomes available." [Read: 4 Smart Ways to Pivot Your Business Model Now ]

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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Anticipating Change: A Practical Guide to Scenario Planning

Scenario planning is an important tool for making decisions in uncertain situations. It helps businesses anticipate various outcomes, evaluate responses, and prepare for both positive and negative possibilities. In this blog post, we’ll explore why scenario planning is valuable, look at its different types, and share practical tips on using it effectively.

What Is Scenario Planning?

Scenario planning is a strategic method used in decision-making when facing uncertainty. Decision-makers use this approach to anticipate a range of potential outcomes, both positive and negative, and prepare for them. Essentially, it’s a way of foreseeing different possibilities and making informed choices.

By visualizing potential risks and opportunities, individuals and organizations can take proactive measures, rather than merely reacting to unexpected events, to navigate through uncertain circumstances.

Scenario planning originated in the U.S. military as a way to make better strategic decisions. The military started using it by envisioning different future situations up to 20 years ahead. This helped them plan and prepare for various possibilities. Eventually, businesses adopted this approach, finding it useful in dealing with uncertainties. Today, scenario planning is widely used across different industries as a key part of making strategic decisions.

Why is Scenario Planning Important?

From anticipating potential outcomes to evaluating responses, scenario planning provides an integrated approach to dealing with uncertainty. Here’s why scenario planning, a proactive strategy to improve decision-making by reducing reliance on reactive measures, is an important tool for organizations:

Anticipation of outcomes : Scenario planning helps decision-makers foresee potential results.

Response evaluation : It enables the evaluation of responses for both positive and negative scenarios.

Integrated approach : Beyond financial planning, it offers a comprehensive strategy for addressing uncertainty.

Visualizing futures : Businesses can visualize diverse representations of their future based on market assumptions.

Proactive decision-making : It facilitates proactive decision-making, reducing reliance on reactive responses to unforeseen events.

Types of Scenario Planning

There are several types of scenario planning that provide decision-makers with versatile tools to anticipate, strategize, and adapt to various future possibilities.

1. Exploratory scenarios

• Focuses on a wide range of potential future situations.
• Explores different possibilities without specific predictions.
• Helps in identifying unexpected challenges and opportunities.

2. Normative scenarios

• Involves creating scenarios based on preferred future outcomes.
• Guides decision-makers in working towards specific goals or objectives.
• Aims to shape a desired future rather than merely preparing for it.

3. Timeframe-based scenarios

• Considers scenarios within specific timeframes (short, medium, long term).
• Enables organizations to tailor strategies to address immediate and future challenges.

4. Best and worst-case scenarios

• Examines extreme outcomes, both positive and negative.
• Prepares organizations for the most favorable and challenging circumstances.
• Increases resilience by developing strategies for various extremes.

5. Quantitative scenarios

• Involves numerical data and modeling for scenario development.
• Utilizes statistical methods to assess probabilities and potential impacts.
• Particularly useful for financial planning and risk assessment.

6. Qualitative scenarios

• Focuses on narrative descriptions and qualitative factors.
• Emphasizes understanding the context and nuances of potential future situations.
• Well-suited for industries where human behavior and qualitative factors play a significant role.

How to Use Scenario Planning

The scenario planning process provides a structured approach to anticipate various potential outcomes and strategically plan for them. Here are the steps of the scenario planning process.

Step 1: Define the purpose and scope

Clearly articulate the objective of the scenario planning process and the specific decision or area it will address.

Step 2: Identify key factors

Determine the key variables and factors that significantly impact the situation or decision at hand.

Here you can use mind maps or fishbone diagrams to visually represent the interconnected key factors.

• Ready to use
• Fully customizable template
• Get Started in seconds

Step 3: Gather information

Collect relevant data and insights related to the identified key factors. Use internal and external sources to ensure a comprehensive understanding.

Here you can use flowcharts or data flow diagrams to map the sources, flow, and interactions of information, creating a visual guide for gathering relevant data.

Step 4. Brainstorm scenarios

Engage a diverse group of stakeholders in generating a range of possible scenarios. Encourage creativity and exploration of both optimistic and pessimistic outcomes.

Use mind maps or a brainstorming board to capture and organize ideas generated during brainstorming sessions, fostering creativity and categorization.

Step 5: Define scenarios

Develop detailed narratives for each scenario, outlining the sequence of events and their potential impacts. Make sure each scenario is internally consistent and logically plausible.

Step 6: Assess likelihood and impact

Evaluate the likelihood of each scenario occurring and assess its potential impact on the organization. Consider a quantitative or qualitative approach, depending on the nature of the scenarios.

Use a probability-impact scenario planning matrix that can help visualize the likelihood and impact of different scenarios.

Step 7: Prioritize scenarios

Rank the scenarios based on their relevance, likelihood, and potential impact. Focus on a manageable number of scenarios to facilitate strategic planning. Here you can use a prioritization grid to systematically evaluate and rank scenarios based on predefined criteria.

Step 8: Develop strategies

Create strategies and action plans for each prioritized scenario. Tailor responses to leverage opportunities and address challenges presented by each scenario and determine the resources, timelines, and responsibilities required to implement the identified strategies. Create an action plan to outline specific actions, resources, and timelines for each prioritized scenario.

Step 9: Monitoring and review

Continuously monitor external and internal factors that may affect the scenarios. Regularly review and update the scenarios and strategies as new information becomes available.

Step 10: Communication and collaboration

Communicate the scenarios and corresponding strategies effectively throughout the organization. Encourage collaboration and input from relevant stakeholders.

After implementation, analyze the outcomes and learn from the scenario planning process. Use insights gained to refine future scenario planning efforts and improve organizational resilience.

Essential Questions to Ask for Effective Scenario Planning

The following questions are designed to spark thoughtful discussions and help organizations explore a range of possibilities, ensuring a comprehensive and strategic approach to scenario planning.

Anticipating change
Critical assumptions
External influences
Alternative futures
Key risks and opportunities
Interconnected scenarios
Early warning signs
Stakeholder perspectives
Resource allocation and constraints
Learning and iteration
Strategic agility
Collaboration and alignment

Scenario Planning Best Practices

Follow these best practices to maximize the effectiveness of scenario planning and modeling, leading to more informed decision-making in the face of uncertainty.

• Involve key stakeholders : Engage a diverse group of key stakeholders, including representatives from different departments and external perspectives. This diversity ensures a holistic exploration of scenarios.
• Identify key drivers and uncertainties : Systematically identify the key drivers and uncertainties that could affect the organization. Focus on factors both within and outside the organization’s control.
• Develop plausible scenarios : Create possible scenarios that cover a wide range of possibilities. Include both optimistic and pessimistic scenarios to explore potential opportunities and risks.
• Use multiple models : Use a variety of modeling techniques, including quantitative and qualitative approaches. Combine financial models, trend analysis, and other relevant methodologies to capture different aspects of the scenarios.
• Ensure data quality : Check and make sure the quality of data used in the modeling process. Accurate and reliable data is crucial for generating meaningful insights.
• Integrate historical data : Incorporate historical data into your models to provide context and help validate assumptions. Analyzing past trends can improve the accuracy of future projections.
• Iterative approach : Adopt an iterative approach to scenario planning and modeling. Regularly revisit and update scenarios based on new information, changing conditions, or organizational learning.

When to Use Scenario Planning

Scenario planning is a versatile tool that can be applied whenever there is a need to proactively explore and prepare for different future possibilities in a structured and strategic manner. Here are some situations where using scenario planning is particularly beneficial;

Strategic planning

Scenario planning helps anticipate and prepare for a range of possible futures during strategic planning. It improves the strategic decision-making process by considering different external and internal factors.

Market entry or expansion

Scenario planning helps assess the potential challenges and opportunities in different market scenarios, for example, before entering new markets or expanding existing operations, especially in unfamiliar or volatile environments.

Long-term planning

For long-term planning, especially when the business environment is characterized by significant uncertainties. It allows organizations to explore alternative futures and build strategies that are adaptable over time.

Innovation and research

When developing new products or services, engaging in research and development, or exploring innovative initiatives. Scenario planning can highlight potential disruptions and guide innovation efforts.

Major policy changes

When anticipating or responding to major policy changes, regulatory shifts, or geopolitical events that could affect the industry or the organization. Scenario planning helps with understanding the implications of such changes.

Technological disruptions

In the face of rapid technological advancements or disruptive innovations within the industry. Scenario planning helps organizations prepare for the consequences of emerging technologies on their operations and market dynamics.

Exploring business model changes

Before implementing significant changes to the business model. Scenario planning helps assess the viability of different business model alternatives and their implications.

How to Use Creately to Streamline Scenario Planning

A visual collaboration tool like Creately can improve the effectiveness of your scenario planning projects by providing a digital platform to collaborate, brainstorm, and visualize complex information.

Virtual scenario boards & real-time collaboration

Create workspaces dedicated to scenario planning. Share them with stakeholders to collaboratively work on scenarios, eliminating geographical constraints and facilitating real-time updates.

Conduct collaborative workshops or brainstorming directly on the platform, integrating Creately’s plugin for Microsoft Teams.

Leverage commenting for ongoing communication. Team members can provide feedback, ask questions, and engage in discussions related to specific elements on the visual collaboration platform easily with contextual comments.

Assign tasks directly on the platform and track their progress. Make sure that responsibilities related to scenario planning, such as data collection or strategy development, are clearly defined and monitored.

Easily export and share the scenario planning board with stakeholders. This could be in the form of presentations, PDFs, or other formats, improving communication and dissemination of scenario insights.

Simple visual tools

Creately’s drag-and-drop functionality makes it easy to move, rearrange, and organize elements on the canvas. This makes it simple to modify scenarios, reorganize key factors, or adjust visual elements.

You can also use virtual sticky notes, mind maps, flowcharts, etc. to visually identify and organize key drivers and uncertainties and categorize and prioritize the factors that will shape the scenarios. And get a headstart with 1000s of templates related to scenario planning.

Use prioritization grids, emojis or dot voting to facilitate prioritization. Team members can vote on specific scenarios or elements, helping to identify the most critical aspects that require further analysis or attention.

Import and embed external content

• Import and embed external content such as market reports, graphs, or images directly onto the canvas. Use integrated notes and data fields for shapes to store additional details pertaining to them. This ensures that the scenario planning board is a comprehensive repository of relevant information.

In conclusion, scenario planning is a helpful tool for organizations to handle uncertainty and make smart decisions. By thinking about different possible futures, considering different factors, and creating flexible strategies, scenario planning helps organizations be ready for change. It’s not just for crises; it’s a way to plan for the long term, manage risks, and make smart decisions. Using scenario planning encourages a forward-thinking mindset, helping businesses prepare for challenges and take advantage of opportunities in a constantly changing world.

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

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Amanda Athuraliya is the communication specialist/content writer at Creately, online diagramming and collaboration tool. She is an avid reader, a budding writer and a passionate researcher who loves to write about all kinds of topics.

Scenarios in Strategic Planning: Full Guide with Examples

Scenario planning helps organizations increase business resilience and prepare for future challenges. Learn how to formulate different types of scenarios and align them with overall strategy. 

Key topics of the article:

What is Scenario Planning?

• The Role in Strategic Planning and Risk Management

Could We Be Better Prepared for Covid-19 with Scenario Planning?

The steps of scenario planning.

Examples of the Scenarios:

Formulating Business Continuity Scenarios

Formulating high-priority scenarios, formulating scenarios for monitoring.

Scenario planning is a disciplined way to formulate strategic hypotheses in the context of existing driving forces and their uncertainties .

It helps to:

• Better prepare organization for the new challenges, and
• Increase general business resilience – the organization’s ability to better adapt to the ever-changing environment.

The Role of Scenarios in Strategic Planning and Risk Management

Any strategy is based on hypotheses and scenarios. What value does scenario planning add to strategic planning?

With scenario planning, we are trying to get a broader picture of the hypotheses by extrapolating the existing driving forces and creating plausible scenarios.

From the viewpoint of the strategic planning process, scenario planning can be used in the strategy formulation step 1 (step 2) together with other frameworks that help generate strategic hypotheses.

The same broad picture of hypotheses helps to understand the risk landscape better. Diverse scenarios and simulations via wargaming 2 help to create more detailed risk models and risk mitigation plans.

In addition to the obvious strategy analysis function, properly implemented scenario planning with early sign indicators, prevention, and response plans starts playing the role of a strategy description tool. This is reflected in the position of scenario planning in the frameworks ecosystem diagram .

By definition, scenarios are about plausible future states related to the expected business trajectory of the organization. In this sense, scenario planning belongs to the segments of decomposition by time perspective and decomposition by cause-and-effect logic.

Have a look at the PESTEL analysis article published right before Covid-19 became a pandemic. Some of the mentioned trends were:

• Political stability
• Economic growth, inflation rates, exchange rates
• Workspace and lifestyle changes
• Climate changes, natural disasters

There was no “Covid-19” mentioned (although at that time, there were some serious warnings coming from Asian countries). Still, with those general trends in mind, any organization could start scenario planning by asking a number of “what if…?” questions:

• What if the political regime changes in the country we are working with? What would be early signs of this? What could be our mitigation strategy?
• What if the inflation rate rises? What financial indicators could predict this? How would it affect our financial sustainability?
• What if our best talents prefer to work from home to achieve a better work/life balance? How would we communicate? How would we measure their performance?
• What if a natural disaster happens tomorrow? What is our business continuity plan?

With scenario planning based on the findings of PESTEL analysis, it looks like we could have scenarios for around 30% of the challenges that we faced during the pandemic and afterwards.

Here is a three-step approach to scenario planning by the BSC Designer team:

• Step 1 . Breakdown Driving Forces into Uncertainties
• Step 2 . Formulate scenarios and classify them into three groups
• Step 3 . Formulate response plans and quantify scenarios

Step 1. Breakdown Driving Forces into the Uncertainties

Identify the driving forces for your organization by using:

• PESTEL analysis to analyze the external environment
• Five Forces to analyze the competitive landscape

The global driving forces need to be broken down into more specific uncertainties relevant for your organization. Let’s use our PESTEL template to practice it with some driving forces.

Driving Force: Climate Change

In the latest IPCC’s Assessment Report 3 , several climate change scenarios were presented. In essence, the report discusses different warming scenarios depending on the decarbonisation efforts.

The mentioned scenarios will have a direct impact on the energy industry. For other industries, a complex idea of climate change needs to be decomposed into specific consequences relevant to specific regions and business environments.

A starting point would be to look at the Global Change Research Program or the web of  European Commission , where some specific consequences of climate change are outlined:

• Extreme weather,
• Heat waves,
• Forest fires,
• Increasing ocean acidity.

Beyond the obvious impact on agriculture, climate change will affect:

• Supply chain ,
• Air quality
• Water quality, and

With these ideas in mind, instead of focusing on climate change in general, your team can focus on a few uncertainties that are most relevant for your region or industry .

Alignment with Sendai Framework

The Sendai Framework for Disaster Risk Reduction 4 was adopted by 187 countries. Designed for national governments and local authorities, it also stresses the need to incentive businesses to invest in risk reduction and business continuity planning.

Re-Use Risk Model

The adoption of the Sendai Framework by city or regional authorities includes risk assessment (see Priority 1: “Understanding Disaster Risk”). Organizations can update their risk models to incorporate the risks addressed by the local implementation of the Sendai Framework.

Align Scenario Planning

The Sendai Framework encourages authorities to incentivise sectors of business to align their scenario planning with resilience building (see Priority 2: “Strengthening Disaster Risk Governance to Manage Disaster Risk”).

The alignment can be affected:

• At the governance level ,
• Through specific risk reduction initiatives, or
• By aligning with “Build Back Better” recovery programs.

Driving Force: Remote Work

Remote work is here to stay 5 . In 2021, we saw that:

• 40+ countries introduced special visas for digital nomads
• Many countries introduced new legislation to regulate remote work
• Most countries, for example, Spain, focused their legislation on domestic remote work

What are the future challenges of remote work? According to the KPMG report 6 , one of the emerging trends is the cross-border remote working arrangements .

• Allowing an employee to work from home is not the same as offering the same person to work from another country.

Is this uncertainty relevant for your organization? In our case (we are a team of remote specialists), the broad driving force “remote work” can be projected into a specific uncertainty of “cross-border remote work.”

Driving Force: Cybersecurity Threats

Cybersecurity is another emerging trend. How can we break down this broad driving force into something more specific?

Here are the typical cybersecurity threats we discussed in the previous article:

• Cyberattacks
• Insider threats
• Data corruption

Depending on the data flows in your organization and underlying IT infrastructure, you can pick a few relevant uncertainties. For example, a ransomware threat looks relevant for any organization.

Ransomware is still a very broad uncertainty. For example, its more specific projection could be the uncertainty associated with cloud deployments being the target 7 of ransomware attacks.

Step 2. Formulate and Classify Scenarios

Once the general threats are projected into uncertainties, we need to better formulate the scenarios and agree on how to manage them.

Describe Scenarios as Stories

Shell was one of the pioneers in the large-scale application of scenario planning for business. There are many things we can learn from them, and probably the most important one is that possible scenarios formulated as stories work better. Those scenarios are easier to explain and immediately capture the attention of your team.

Besides formulating basic scenario as:

Ransomware attack on our cloud deployment

think about the story that stands behind this scenario:

“One day, you are trying to login into your online account, and it returns a strange error… Your customers start sending you reports about problems with the service. You are on the phone with IT specialists, but they say that it looks like they don’t have access to … ”

Scenarios in the form of stories are much easier to “sell” to the key stakeholders .

Three Types of Scenarios

Scenarios vary in their urgency and probability. We classify scenarios into three categories:

Scenarios related to business continuity.

High-priority scenarios that resonate with existing strategy and can be implemented right now as a new strategic hypothesis.

Scenarios for monitoring – important scenarios, but without clear alignment with current strategy.

One scenario might fit all three categories. For example, ransomware attack:

• The scenario is obviously related to the business continuity
• The best practices for prevention of ransomware attacks will be an excellent strategic hypothesis for existing cybersecurity strategy, so it fits the second category as well
• Certain parts of ransomware scenarios should be monitored – the new policies of the law enforcement authorities as well as new scenarios of the attacks – the monitoring category

Step 3. Formulate the Response Plan and Quantify Scenarios

Different types of scenarios require different ways to formulate response plans and quantify them. Below, you will find our suggestions for:

• Business continuity scenarios
• High-priority scenarios
• Scenarios for monitoring

Disaster recovery or business continuity planning focuses on scenarios that might affect critical functions of the organization. The potential threats , in this case, are rapidly developing natural disasters, cyberattacks, resource outages, etc.

We explored business continuity management in detail in another article. Below, I share some general ideas.

Business Impact Analysis

Business continuity planning starts with business impact analysis . In simple words, we need to identify disruptions that could possibly affect our organization, identify the key operations affected by those threats, as well as critical recovery time.

The specific threats, in this case, depend on the nature of your business. A common starting point are:

• Cybersecurity risks
• Natural disasters
• Terrorist attacks

Your team can quantify the threats according to their:

• Probability
• Early warning time
• Overall risk priority

Business Continuity Strategies

Once the threat is described, we need to define several plans:

Continuity	Describes what we do to ensure the delivery of	Access critical data using an isolated system
Response	Describes what we do in case we were not able to a disruptive event
Recovery	Describes what we do to get back to

We are now prepared for a case of a risk event occurring. Additionally, we can discuss how to prevent such events or minimize their impact.

Prevention or risk mitigation	Describes what we do to the disruptive event

Quantification of Business Continuity: Readiness Indicators

Compared to other types of scenarios, the business continuity scenarios typically occur immediately or with a short early warning period. While there are no specific early sign indicators, there are certainly some leading factors that predict the readiness of your organization for a scenario.

For example, we discussed some of the leading indicators in the article about cybersecurity :

• IT infrastructure complexity
• Data scheme complexity

By quantifying these leading factors, we can define the readiness indicator for the business continuity scenario.

Quantification of Business Continuity: Lagging Indicators

Additionally, we can quantify recovery plans with some lagging indicators. For example, for a cybersecurity attack, we can track:

• Time to recover from backups
• Time to restore the transactions lost between the last backup and attack
• Estimation of direct and indirect loss

These metrics will help your team to better prioritize their efforts.

Wargaming and Gap Analysis

Compared to other types of scenarios, business continuity scenarios involve fewer uncertainties. The nature of such scenarios is better studied. For example, we might not know where and when the next hurricane will hit, but we know what a hurricane is, what kind of damages are expected, and what we can do to minimize damages.

The business continuity plan can be tested via simulations of the scenarios or wargaming , where the rules of the “game,” as well as expected outcomes, are defined.

For example, what if your company becomes a victim of a ransomware attack? What data can be effectively restored from a backup? Run the simulation of attack to find the gaps and improve weak points.

After testing the scenarios, we will have additional data for the readiness indicator .

You can find more specific examples for managing business continuity scenarios in the article dedicated to the topic.

High-priority scenarios don’t have such a dramatic impact on critical business operations like business continuity scenarios, but they might significantly affect the execution of existing strategy.

Strategic Hypothesis

Our goal is to align a high-priority scenario with existing strategy. To do this, we convert scenarios into a strategic hypothesis.

For example, one of the actionable aspects of remote work driving force is the need to access the performance of the remotely working team because the existing ways to track the performance might not work well on scale.

Let’s use the CEO scorecard template available in BSC Designer to illustrate the alignment steps. In the Learning Perspective, there is a goal formulated as Build and maintain an engaged team.

The shift to result-based performance assessment is a good hypothesis to test for this goal.

Quantification of the Hypothesis: Impact Indicators

Typically, the high-priority scenarios already have some kind of impact on business performance. In our example, we can quantify the existing impact of the remote work scenario with these indicators;

• % of employees working remotely
• % of tasks completed on “time, in full” (compared to in office tasks)
• Mismatch between reported performance and actual performance

Additionally, we can find some process-related indicators. For example:

• % of remote team evaluated according to the new standard

The Cross-border remote work scenario that we discussed above sounds like something that we can see in the near future. We can map it in a separate scorecard with plausible scenarios.

Possible Response Plan

To define the possible way the scenario will be developed, we can speculate on the worst/best cases of developing an uncertainty and put it on scale. For example:

• Worst case: new legislation makes cross-border remote working illegal
• Best case: new legislation for cross-border remote work is accepted in many countries and provides detailed guidance

In this example, the legal landscape can be changed, so we formulate response plans for this scenario:

• Legal consultation according to the current legislation
• Update business systems to ensure cross-border clauses are added to the agreements
• Ensure compliance from the viewpoint of cybersecurity and data privacy (for example, by using the dedicated compliance scorecard )
• Educate the HR team

Quantification: Early Sign Indicators

In contrast to high-priority scenarios, most likely, we won’t find the impact indicators, as there is no impact yet. We can speculate about the possible impact, but it might be too early.

In this case, we can track the qualitative or quantitative early sign indicator . For example, we can look at the projects for new legislation that addresses specifically cross-border remote working.

Quantifying the existence and the progress of such projects directly might be time-consuming, so instead, we can find a proxy metric. Typically, the new legislation is widely announced and discussed in the press. We can quantify the number of publications with certain keywords. For example, if I search Google for “cross border remote work,” now I get just 63 results in the News section and 4460 results in classical search. There are some publications by reputable sources like PWC that confirm that the trend exists, but still, there is no sign of specific legislation coming soon.

We can use The number of keyword-specific news on the topic as an early sign indicator for the scenario. This indicator is not bias-free, but it gives us a good estimation.

Changing the Priority of Scenario

What should we do with a scenario when an early sign indicator shows that things have started changing?

Depending on the scale of changes, we have two options:

• For evolutionary changes, add the scenario as a strategic hypothesis to the current strategy, like we did for high-priority scenarios before, or
• For disruptive changes, create a dedicated strategy scorecard focused exclusively on the hypotheses of this scenario, like we did for Covid-19 .

Another possibility is that with time, the scenarios lose their relevance. For example, with transition to sustainable energy and distributed energy production, some energy-related scenarios will no longer make sense. In this case, we stop monitoring and archive them.

What’s our Resilience Level Now?

We started with a promise that scenario planning increases business resilience. A logical question would be:

What is our current level of business resilience?

Quantifying resilience, in general, doesn’t make sense. If we do so, we will find out how resilient organization is to the past challenges.

Talking about resilience, we are interested in understanding the readiness of the organization for the future challenges. We can make a reasonable assumption:

Having a diverse picture of the existing driving forces and investing time in discussing scenarios based on those driving forces increases the organization’s resilience

What’s next?

Give scenario planning a try! Reformulating a known saying … the best time to start scenario analysis was a few years ago, then the second-best time is now.

• Sign up for a free account at BSC Designer to access the scorecard templates, including 'PESTEL Analysis Template' discussed in this article.

More About Strategic Planning

• Aleksey Savkin, “Strategic Planning Process: Mission, Priorities, Goals, KPIs, Initiatives,” BSC Designer, June 18, 2019, https://bscdesigner.com/strategic-planning-process.htm ↩
• Scenario Planning and Wargaming for the Risk Management Toolkit , The Wall Street Journal, Deloitte, 2019 ↩
• IPCC’s Assessment Report , AR6 Climate Change 2022: Mitigation of Climate Change, April 2022 ↩
• Sendai Framework for Disaster Risk Reduction 2015-2030, United Nations Office for Disaster Risk Reduction, 2015 ↩
• Gartner CFO Survey Reveals 74% Intend to Shift Some Employees to Remote Work Permanently , Gartner, 2020 ↩
• Current trends in remote working , KPMG, 2022 ↩
• The Urgent Threat of Ransomware to S3 Buckets Due to Misconfigurations , Lior Zatlavi, 2021 ↩

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Scenario Planning: Strategy, Steps and Practical Examples

Scenario planning is a must-use tool for functional leaders to drive immediate actions, decisions and longer-term plans. - gartner.

What Is Scenario Planning?

Scenario planning attempts to eliminate the two most common errors made in any strategic analysis - Overprediction and Underprediction of the company's future. Most of the organizations make this error while analyzing their strategies. Even if the rate of change in our life is accelerated to a great extent, the future might not hold what we expect.

Scenario planning will help us draw a line between over and under-predictions. Scenario planning will do this by segregating our knowledge into two areas.

Things we know about

Things we are uncertain about

Scenario plans, ultimately, tell a story with many possible endings. Crafting the narrative requires a clear set of assumptions about potential business realities and ensuing outcomes.

Why is Scenario Planning Important?

Scenario planning is a valuable tool for navigating an uncertain future. It helps organizations and individuals prepare for a range of possibilities, making them more adaptable and resilient. Here's a closer look at why it's needed, its advantages, and its disadvantages:

Future is fuzzy: We can't predict what's coming, so we need to be ready for anything. Scenario planning helps us think about different possibilities.

Better decisions: By imagining different futures, we can make smarter choices now, even if things change later.

More creative solutions: Thinking about weird scenarios sparks new ideas and helps us find ways to overcome challenges.

Less risk: We can identify problems before they happen and plan how to avoid them, like fixing the roof before it rains.

Advantages of Scenario Planning:

Adaptable: We can change plans quickly if things don't go as expected.

Stronger: We can bounce back from unexpected problems.

Teamwork: Everyone works together to solve problems, building a stronger team.

Thinking ahead: We make decisions that are good for the future, not just the present.

Disadvantages of Scenario Planning:

Takes time and effort: It's like planning a big party, you need to think about lots of things.

Too much thinking: Sometimes we get stuck thinking about all the possibilities and forget to take action.

Guessing the future: We might be wrong about what happens, but it's still good to have a plan even if it's not perfect.

Change is hard: Some people don't like to change their plans, even if it's for the better.

Scenario Planning Process

There are multiple steps involved in the incorporation of a scenario planning model . Let us understand them from the step-by-step guide discussed below.

Types of scenarios:

Now that we have a brief understanding of the scenario planning strategy , let us now discuss its different types to delve deeper into this concept and its intricacies.

Operational Scenarios: These focus on the immediate impact of a specific event, like a natural disaster or a product launch.

Normative Scenarios: These focus on long-term goals and how the company wants to operate in the future.

Quantitative Scenarios: These look at best-case and worst-case scenarios using data and models.

Strategic Management Scenarios: These focus on how the company's products and services are used in different future environments.

Step 1 - Predicting future drivers:

Identify a timeframe: It's helpful to specify a timeframe for your drivers, as different drivers will be relevant for short-term vs. long-term scenarios.

Consider diverse drivers: Go beyond traditional economic factors and explore social, technological, environmental, and political drivers.

Use available resources: Use research reports, expert opinions, and industry trends to inform your driver predictions.

Step 2 - Understanding the impact of drivers on your business:

Quantitative and qualitative analysis: Utilize both quantitative data (e.g., sales figures) and qualitative insights (e.g., customer feedback) to assess the impact.

Identify vulnerabilities and opportunities: Analyze how drivers might expose your business's weaknesses and how you can leverage them for new opportunities.

Consider cascading effects: Understand how the impact of one driver might trigger a chain reaction affecting other aspects of your business.

Step 3 - Gauging the effect of future scenarios:

Develop several plausible scenarios: Don't limit yourself to best-case and worst-case scenarios. Explore a range of possibilities with varying degrees of success and challenge.

Quantify potential outcomes: Assign probabilities to each scenario and estimate their financial, operational, and reputational impact.

Conduct stress tests: Simulate how your business would react under different scenarios to identify critical vulnerabilities and response strategies.

Step 4 - Testing unfavorable outcomes even in positive scenarios:

Embrace the "black swan" principle: Prepare for unexpected events, even with positive outlooks.

Develop contingency plans: Have strategies in place to mitigate potential disruptions and adapt to unforeseen circumstances.

Foster a culture of resilience: Encourage flexibility, adaptability, and learning within your organization to navigate changing scenarios effectively.

Scenario Planning and Modeling: Best Practices

Scenario planning and modeling is a valuable tool for navigating an uncertain future. By considering a range of possible scenarios, businesses and organizations can develop more adaptable and resilient strategies. Here are some best practices for getting the most out of this process:

Focus on the right uncertainties: Identifying the key uncertainties that will have the most significant impact on your organization is crucial. Don't get bogged down in every possible event; prioritize based on potential impact and likelihood.

Keep it simple: Start with a few core scenarios that represent the most plausible extremes and potential tipping points. Avoid creating an overwhelming web of possibilities.

Embrace diversity: Involve people from different backgrounds and perspectives in your scenario planning process. This broadens your understanding of potential uncertainties and leads to more creative and innovative solutions.

Build quantitative models: Complement qualitative scenario descriptions with quantitative modeling to assess the financial, operational, and reputational implications of each scenario. This provides a clearer picture of potential risks and opportunities.

Think outside the box: Don't just focus on linear progressions of current trends. Challenge conventional assumptions and consider "wild card" scenarios that could disrupt the status quo.

Focus on actionable insights: The goal of scenario planning is not just to understand the future; it's to be prepared for it. Translate your scenarios into concrete plans and strategies that can be implemented under different circumstances.

Test and refine: Regularly revisit and update your scenarios as new information and uncertainties emerge. The future is constantly changing, so your planning process should be too.

Build a culture of resilience: Foster a culture within your organization that embraces continuous learning and adaptation. Encourage employees to think creatively and be comfortable with change.

Communicate effectively: Share your scenarios and the insights derived from them with key stakeholders across the organization. This creates a shared understanding of potential challenges and opportunities, and improves alignment of strategic priorities.

Leverage technology: Utilize scenario planning software and simulation tools to streamline the process, visualize complex scenarios, and analyze potential outcomes.

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Scenario Planning Explained: Definition, Process & Best Practices

Steve Groccia

Head of Customer Operations

There was a time not too long ago when finance teams could get away with simple scenario planning processes.

You could build basic models for base-case, best-case, and worst-case scenarios during strategic planning processes and present a conservative option for executive and board approval. And that was enough.

But times have changed, and with turbulent economic times requiring a shift in corporate strategy, scenario development has become a crucial part of planning for alternative futures.

In the wake of a global pandemic and a market downturn verging on a full-blown recession, detailed scenario planning is suddenly among your top priorities.

Now, maintaining base-case, best-case, and worst-case scenarios is table stakes. True strategic finance functions go a level deeper, running multiple what-if models on the fly and pulling levers in real time to show department heads and executives how new plans could impact runway and growth. This guide will serve as a template to help you understand how to effectively incorporate scenario planning into your strategic options.

Table of Contents

What Is Scenario Planning?

Scenario planning is the process of mapping out how different strategic plans and external forces will impact a business, showing the potential outcomes of those circumstances to improve decision-making.

Traditionally, scenario planning has applied broadly to management and executive roles as leaders try to better plan for the future. But finance teams are best suited to take on scenario planning responsibilities — especially in the midst of critical uncertainties about future market conditions.

In the context of finance, scenario analysis is the process of building out new models to show how strategic decisions will impact financial efficiency and company growth. Those models include tweaks to various financial assumptions and operational drivers to help the business make more data-driven decisions about the company’s future and inform budgets and annual operating plans .

4 Types of Scenario Planning (and Why You Shouldn’t Worry About Them)

Because the term “scenario planning” is so broad, you’ll see many guides talk about different types of scenario planning. These might span use cases from finance to more general business planning, military strategy, and geopolitical risk management.

The four most common types of scenario planning you’ll come across in business settings are:

1. Quantitative Scenario Analysis

This is the classic financial planning use case where you build models for different cases of business and financial performance. If you’ve built multiple scenarios in your annual planning process, you’ve done quantitative scenario analysis.

2. Normative Scenario Analysis

A goal-oriented form of scenario planning most popular in traditional corporate settings where you lay out where you’d like the company to be at the end of the given period. It’s a much more qualitative approach that focuses more on company vision than financials.

3. Operational Scenario Analysis

A more granular form of scenario planning that explains the possible outcomes of individual decisions or events in the short term. This is the kind of analysis you do when you build scenarios alongside individual department leaders.

4. Strategic Management Scenario Analysis

This is the kind of scenario analysis that focuses more on external factors than internal ones. You may involve industry analysts to better understand how the market is receiving your product and how roadmap decisions would impact total addressable market (TAM).

While it’s good to know what each of these types of scenario planning is, worrying about which is the “right” one won’t do you much good.

The reality is that strategic finance teams should be running scenario analyses that look more like a blend of each type (you can use scenario planning software to help with this). You need to understand the company’s numbers inside and out at the macro and micro levels. And you need to master financial storytelling to explain the “why” behind those numbers.

So, don’t worry about choosing which type of scenario planning to use — focus more on having a great process for understanding potential scenarios and their possible future financial and operational outcomes.

Plan for any business scenario. Download our financial planning blueprint.

Why scenario planning is critical for businesses.

Scenario planning elevates finance’s role as a strategic partner to executives and department leaders because it helps the business make more data-driven decisions. When you make scenario planning a continuous initiative, you’re helping the business see around corners and choose the right path to hit its goals — no matter what changes internally or externally.

On a high level, helping leaders see around corners makes it easier for you to maintain optionality as a business. But what does that really mean in practice? There are a few benefits you get from agile scenario planning that will help drive business success.

It Aligns the Business on Its Key Drivers

One of the biggest challenges you face as a finance leader is being able to translate numbers and models into a language the business can understand. Building a perfect financial model won’t do you much good if no one in the business can understand it. And with so many different financial assumptions  and inputs cobbled together to create a holistic view of the business, it’s unlikely anyone but you will understand the spreadsheet.

Scenario planning forces you to identify the key drivers of business performance. Instead of changing every input in the model, you pull a few different levers and see how they impact performance. Making small changes to key drivers will help the business understand the true financial and operational impact of its decisions.

This is important at both the company-wide level and the department level, giving you the tools to communicate effectively about what your stakeholders truly care about.

It Helps Avoid Surprises for Investors

The true value of investor updates and board meetings is the ability to tap into their experience and perspective to solve business problems. But you can’t unlock that value if investors are caught off guard by unexpected numbers every time you connect.

Strong scenario planning practices help avoid surprises for investors by proactively showing the potential outcomes of decisions. Instead of spending the majority of your time talking through what the numbers are, you can focus more on how to work through various scenarios in the months ahead.

It Shows You Different Ways You Can Extend Runway and Better Manage Cash

The ecosystem of VC-backed startups went through a golden era where growth at all costs was the norm. Funding was far too available for it not to be. But as market conditions change, sustainable growth becomes a necessity. And that means finding ways to extend cash runway  and optimize cash flow.

Your CEO needs to stay on top of two things at all times — how much cash is on the balance sheet (and how long it will last), and how to stretch the company’s cash as far as possible. Scenario planning helps you be a strategic partner in that effort. As executives look for areas to conserve cash, scenario planning allows you to show the impact of different decisions and help decide on the best path forward to safeguard the company against future events.

Build Financial Forecasts & Models with Real-Time Data

The 5 Steps of the Scenario Planning Process

You know your business could benefit from more agile scenario planning. And you know that there’s significant value in going beyond simple company-wide scenarios for base case, best case, and worst case. The next step is to build out a scenario planning methodology that works for you, your partners across the business, and the company at large.

Follow this walkthrough to better understand what goes into a best-in-class scenario planning process.

1. Collaborate with Business Leaders on which Levers to Pull

Always start a scenario planning exercise by collaborating with your business partners. You need to work together to figure out what exactly you want to dial up or dial down in the plan.

Technically, you could change any operational variable to come up with a new scenario for the business. But it would be complete chaos if you started toggling any and every lever at your disposal. Instead, focus on a couple of things:

• What can you control? You want to build models based on levers that you actually control. The scenario itself might be out of your control (i.e., what if we hit a market downturn and appetite for new software diminishes?). But things like your hiring plan are always in your control. Create a game plan around the big, controllable levers at your disposal rather than unknowns.
• How do levers match up with proposed scenarios? You can start with the end in mind with scenario planning. If you want to create a case where you miss top-line growth  goals significantly, what are the relevant levers that could make that happen? Maybe conversion rates drop, or you have attrition on the sales team, or there are product delays.

The outcomes of these conversations will help you go back to your model and start analyzing different scenarios.

2. Start with the Baseline Financial Model

The conversations you have with business partners should always be the basis for how you build your model. You want to make sure that your model goes beyond the accounting basics and breaks out the components of the business from an operational perspective.

In reality, this is more like a prerequisite for agile scenario planning than an initial step. If you try to run scenario planning processes with a high-level model that doesn’t include operational components, you’ll likely finish the exercise with simple outputs that don’t necessarily guide strategic thinking.

In that case, you’d have to go back and rebuild your model anyway to satisfy company needs. Instead, blend the financial and operational aspects of the business in one model and create the right foundation for scenario analysis.

For more info about building a flexible operating model for your business, check out this episode of The Role Forward with Jenny Jao , Head of Finance at Sprig.

3. Pull Levers in the Financial Model Based on Business Needs

The goal of your initial conversations with business leaders is to get a deep understanding of what’s important to them. That’s how you create scenario analyses that have strategic impact.

In theory, if you wanted to create a down case, you could go into your model and just cut every assumption by 20%. You’d get the right outcome, but you didn’t account for anything your partners truly care about.

This comes down to recognizing the non-negotiables for your model. For example, how does your business want to handle a down case where you hit $3.5 million ARR instead of $7 million ARR?

• Do you want to keep cash at a certain level given that outcome?
• Are you going to have to double down on retention instead of new customer growth?
• Will you still need to hire certain mission-critical heads despite a new focus on lean growth?

These types of questions will impact how you pull levers to build your scenario plan. Strong scenario planning processes always revolve around what’s important to the business, guiding you on which levers to pull to reach the intended outcomes.

4. Present Multiple Scenarios and Toggle Inputs Live

There are two primary ways you can present your scenarios to the business. The first is in the context of annual planning processes. In these cases, executives may communicate the handful of main scenarios they want you to build out, so you present different models for each set of guidelines.

The other way you can present scenarios is the more agile approach. If you build a flexible operating model, you should be able to sit down with your executive partners and live toggle different levers in a scenario. You might come to the conversation with your three basic scenarios, but you can then show executives what would happen in each scenario if you tweaked the inputs and assumptions.

Headcount scenarios are the classic example. You can build high, base, and low cases for headcount to start the conversation. But headcount is such a massive lever for your business that it wouldn’t make sense not to treat it dynamically. You can toggle inputs in each case to see how changes to strategic plans — regardless of scenario — will impact performance.

Note that one of the hardest parts of scenario planning in spreadsheets is version control. The more scenarios you build out, the harder it is to keep track of what levers you held constant and which ones you changed. Being able to lock a base case model, clone it, and mix and match different model components with a few clicks is one of the biggest benefits of adopting financial planning and analysis software .

5. Continuously Collaborate on Company-Wide and Department-Level Scenarios

Internal and external circumstances change far too quickly and often to assume the scenarios you map out at the beginning of the year will hold strong three, six, or twelve months down the line. A good scenario planning process has to account for the fact that you need to revisit and rethink your analyses continuously throughout the year to adjust tactical courses of action.

You need to revisit scenarios at both the company-wide and the department levels. At the company-wide level, you should at least be revisiting your scenarios on a quarterly basis when it comes time for board meetings. Being able to run a budget variance analysis  between your actuals and each scenario will set the stage for more valuable conversations between you and your investors.

But on the department level, you should treat continuous scenario planning as a way to collaborate more closely with business partners on operational plans.

For example, what’s the trickle-down effect of missing revenue goals on the hiring plan in customer success? The main financial model for the business may just show a reduction in headcount for CS — but does that really make sense? Discuss various scenarios with your CS leader to understand the qualitative impact of various scenarios on their strategic plans and see if there are different levers to pull that make more sense.

The more you understand the dynamics of each department, the more effective your scenario planning processes will be. Going through this process monthly or quarterly will deepen your understanding of the business and elevate your role as a strategic partner.

3 Tips for More Effective Scenario Planning

There’s no one-size-fits-all way to succeed with scenario planning. So much effective scenario planning comes down to understanding the dynamics and needs of your specific business.

But just because every scenario planning process is unique doesn’t mean there aren’t universal elements and similarities. The steps listed above cover the end-to-end process, and these three will help you take a step even further toward best-in-class scenario planning.

Run Multiple Scenarios Even When You Aren’t Asked to Do So

Traditionally, scenario planning has been such a time-consuming process that you’d only go through it if necessary. In many cases, that meant when executives asked for multiple scenarios during the annual planning cycle.

Strategic finance teams take it upon themselves to run alternate scenarios even when the business isn’t specifically asking for them. Be curious about how different levers will impact the business. See what might break the model altogether. This kind of curiosity is what helps you uncover strategic insights that make finance a driving force for business growth.

Prioritize Business Partnering Over Modeling

It doesn’t matter how beautiful or perfect your financial model is if no one in the business actually uses it. That doesn’t mean your partners should be jumping into the model and making changes themselves necessarily. But rather, it means you have to build the model according to the needs of your business partners.

Don’t start scenario planning by diving straight into your models. Always start by having conversations with business partners and gaining a deep understanding of what they need and how their corners of the business operate. That way, when you’re building the model, you’re actually creating an architecture that makes creating new scenarios a seamless process instead of having to rebuild models for every new request.

Automate the Time-Consuming Side of Scenario Planning

The only way you can make scenario planning an agile process is to get out from under the heavily-manual process of data aggregation and cleansing. Because you’re working with so much data, the process of pulling actuals from different source systems, organizing it, and tweaking it across multiple models for possible scenarios becomes more time-consuming than it’s worth. By the time you actually finish building all your models, the data is probably already stale.

Keeping up with the pace of modern businesses requires real-time data. Automate the data aggregation and cleansing side of the job so you can focus more on identifying those big levers that will make a difference in strategic action plans.

How Mosaic Does Scenario Planning

Since the market downturn that hit in mid-2022, our own approach to scenario planning has changed a bit.

Prior to the downturn, when venture capital was freely flowing, we followed a similar scenario planning structure to most startups. You go into a new year with three main scenarios — a worst case, base case, and best case. Those scenarios gave a solid overview (internally and for investors) of what we believed could happen to the business in the next 12 months.

Now, we’re being much more diligent about scenario planning, which has meant:

Generating far more scenarios upfront before narrowing down to the ones we’ll present to investors Reforecasting multiple scenarios more frequently throughout the year Running much more granular scenarios for different aspects of the business, not just the company as a whole

Let’s look at early 2023 as an example. At the time, we were in discussions with investors about raising our Series C and considering how that would impact our business.

Without getting into the model details, here’s a quick outline of the different scenario groupings we ran:

• 2023 Outlook (with fundraise): This was a collection of models that showed a worst case, base case, and best case for our business if we raised our Series C. These models included inputs for how much we would raise and modeled out headcount and GTM spend accordingly.
• 2023 Outlook (with no fundraise): This was a collection of models for a worst case, base case, and best case if the business did not raise additional funds. It included more conservative assumptions for GTM spend and headcount changes. Headcount model scenarios: Because people are the largest levers for spend in a SaaS business, we also ran specific scenarios for our headcount plans. We took our baseline 2023 Outlook model and ran scenarios specifically for low-case and high-case headcount plans to see how departmental hiring would impact the business.
• Department-level scenarios: This was especially important for our GTM functions. We ran scenarios for how changes in our marketing budget would impact the business. Where could we cut budget to reinvest in other areas without missing revenue goals? Where could we double down and have the biggest ROI? Modeling these out separately from the company-wide scenarios made it easier to understand the relationship just between GTM dollars invested and revenue growth.

The most formal part of our scenario planning took place toward the end of 2022 as we planned for 2023. However, we have revisited these scenarios at least quarterly (and often monthly) throughout 2023. Reforecasting at this rate has helped us keep a close eye on how the scenarios are playing out and adjusting to current circumstances (e.g. updating the models after we did raise our Series C).

Scenario Planning and Forecasting with Mosaic

There are two main roadblocks that will prevent you from effective scenario planning — manual data aggregation and inefficient version control in spreadsheets. Mosaic eliminates these challenges by integrating with your most critical source systems and providing a platform to easily duplicate models, tweak assumptions and inputs, and describe scenarios easily.

Traditional scenario planning and modeling could take weeks of work to complete. And even then, you might only come away with a few basic scenarios only to get a list of new requests once you present them. In Mosaic, you can create new scenarios in less than two minutes. Watch how.

Don’t let manual processes and spreadsheet limitations keep you from being the strategic partner your company’s leaders need. Reach out for a personalized demo  to learn more about how Mosaic can transform your scenario planning processes.

Scenario Planning FAQs

What is scenario planning in finance.

In finance, scenario planning is the process of collaborating with business leaders and building out models that show how changes in different variables impact future outcomes for the company. It’s an analysis exercise that finance can use to help the rest of the business understand potential future outcomes of strategic plans.

What are the steps of the scenario planning process?

The scenario planning process may be slightly different depending on the maturity of your company or the specific scenario you’re planning for. Still, there are five high-level steps you should follow:

• Collaborate with business leaders on which levers to pull
• Start with a baseline financial model
• Pull levers in the financial model based on business needs
• Present multiple scenarios and toggle inputs
• Continuously collaborate on company-wide and department-level scenarios

What is the difference between scenario planning and forecasting?

Scenario planning and forecasting are both processes that show future outcomes based on strategic plans and basic assumptions about the business. Whereas forecasting is a broad term for financial planning, scenario planning is a subset of that term, focusing on building multiple models to forecast outcomes under different circumstances.

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The 4-Step Scenario Planning Process (with Examples)

By Jason Heckl - February 11, 2021

Updated May 2023

In business and in life, things can take a turn whether you're ready or not. And that's what happened. Lockdowns, travel bans and closures have forced people around the world to rethink their business, make sharp pivots , or flounder in the face of uncertainty.

While nobody can predict the future, we can look closely at a series of scenarios that could happen in the next 2, 5 or 10 years.  The time frame you choose is up to you, but try to choose one that makes the most sense in your industry. If you're a small business, we recommend a 1, 2 or 3 year scenario plan during your offsite facilitation in order to remain agile (look at what happened in just one year).

By preparing ourselves for those scenarios before they happen, we're putting ourselves in a better position to react to what actually happens. It's important to remember that stakeholder engagement plays a significant role in scenario planning. By engaging stakeholders in the scenario planning process, we can gather insights into how different scenarios may impact them and take those insights into account when developing our strategy. 

The scenario planning process itself is a simple one, yet many people and businesses tend to overlook it. It requires dedicated time with your leadership team, along with the ability to take an honest look at your business and its environment.

Related Content: What is Scenario Planning & How to Use It  

How to Create Team Alignment and Why it's Critical in 2023

Here, we'll explain each of the 4 steps in the scenario planning process, along with some relevant examples:

Step 1: Identify Driving Forces

To kick off the scenario planning process, we'll identify the driving forces that could have an affect on your organization. To do that, we'll be using a PESTLE analysis. The purpose of this analysis is to extract as much as we can from the world around us that could impact your organization in any way. Now is the time to be thorough. For a video walkthrough: How to do a PESTLE Analysis. 

Also, keep in mind that these don't necessarily have to be negative events. Although we tend to focus on what will impact us in the worst way, it's worth considering some of the more positive factors that could still make a big impact.

Let's get started:

Political : The political section of this analysis examines anything that your government or even another government could do to impact your organization. Government regulation varies throughout the world, but this should ultimately be one of the more straightforward sections of the analysis. Here are some examples:

• your income tax rate is increased by 5% (this could also be labelled an economic factor)
• mounting 'red tape' in the industry
• the federal government has a trade war with a country you rely on for manufacturing 
• a new leader is elected

Economic : The economic factors include anything that affects you or your customers financially. These factors could be happening on a macro level if it means they trickle down to you, or they may be happening at a local level. Here are some examples:

• the price of raw materials you rely on skyrockets
• the unemployment level in your city rises
• your customers' disposable income increases
• the exchange rate between your country and another you rely on fluctuates dramatically

Social : The social section of this analysis is otherwise knows as 'Societal', and identifies any social, demographic or cultural issue or event that could impact your organization and its industry. Here are some good examples:

• the population in your target market is aging
• people are becoming more interested and engaged with health and wellness 
• because of the pandemic, social pressure causes people to stay inside
• social media influencers are heavily influencing buying choices

Technological : The technological forces affecting business have been some of the strongest ones during this past year. These forces include anything related to technology and the internet that is having an influence on your organization. Here are some examples:

• thanks to video chatting tech, people are enabled to work from home full time
• automation in your industry is increasing at an alarming rate
• the increased threat of ransomware and cyberattacks 
• global internet connectivity is making big progress

Legal : The legal factors of this analysis explore both external and internal laws, regulations, safety standards and policies that could affect the population or your organization . Here are some good examples:

• the government mandates strict business hours to slow the spread of COVID-19
• there is a COVID-19 outbreak at one of your facilities 
• new employment laws require you to pay your employees more
• sanctions ban you from trading with a certain country

Environmental : The environmental factors identify anything that's happening to your surrounding environment, geography or climate. This could be happening on a global scale or just locally. Here are some examples:

• a major weather event occurs, which devastates part of your area
• heavy pollution in the air or water
• customers are springing for renewable, recyclable or efficient products
• the global average temperature increases 

> Watch below: Scenario Planning for a Post-Pandemic Future w/Lance Mortlock from EY

Step 2: Identify Your Critical Uncertainties

Now that you've identified all of the driving factors that could impact your organization, it's time to pick out two that could have the greatest impact - these do not have to be similar. In fact, it’s beneficial if they’re very different.

Then, for each of these critical uncertainties, consider the extreme end of the spectrum for each one.

Although there are an unlimited number of possible scenarios, we recommend working through this exercise with one pair first.

Choosing just two can be tricky. If you've done step 1 thoroughly enough, you should have dozens  of driving factors to choose from. Keep in mind you can always repeat the process to end up with a variety of scenarios.

To make it easier, consider both the factors that will cause the largest impact on your organization, and the factors that are the most likely to occur in the time frame you've agreed upon.

Let's try an example. 

For this example, we'll look at a time frame of just one year . The critical uncertainties that we'll choose are: 

• stay-at-home lockdowns 
• disposable income of our customers

Interested in finding out if your team is aligned or not? Download this free scorecard to do with your team. hbspt.cta._relativeUrls=true;hbspt.cta.load(501404, 'a3efa60f-57d9-418e-af26-3d66f28cc1e5', {"useNewLoader":"true","region":"na1"});

Step 3: develop plausible scenarios.

For the 3rd step, we will be developing plausible scenarios based off of the two critical uncertainties we've chosen. In this example, our critical uncertainties are: stay-at-home lockdowns and disposable income of our customers.

The way we'll develop these scenarios is by plotting them on a simple graph with an x-axis and y-axis.

We'll choose one of our critical uncertainties, and plot both extremes on either side of the x-axis. We'll then do the same for our other critical uncertainty on the y-axis. See the example below:

After you've plotted your uncertainties on the graph, it's time to describe each of the four scenarios (quadrants). As a team, you'll want to describe these scenarios in detail and in present tense, as if you've travelled through time. You've seen the future, and you'll be able to describe it in depth. Be sure to include what life is like at the office, at home, in your business environment and your industry.

In this case, any scenario in the top-left quadrant would be the least desirable.. our customers would have no disposable income, while strict lockdowns would persist.

In contrast, a scenario placed in the bottom-right quadrant would be ideal because customers would have lots of disposable income, while the lockdowns would be completely lifted.

You get the idea. In most cases, reality exists somewhere between, and not in the extremes.

Step 4: Discuss Implications of Paths

In the fourth and final step of the scenario planning process, you'll gather your team and discuss the implications of each scenario. Clearly, the impact of scenario 1 vs. scenario 4 will be very different (shown below), but it's important to cover each scenario - even if one seems unlikely. See the graph below:

Once you've discussed the implications of each scenario, take a vote from everyone in the room, asking where they think the organization is currently , asking 'Which quadrant are we in?' and 'How close to each axis are we?'. 

When you've agreed upon where the organization is as a team, draw a line in the direction you think the your reality will move towards over your agreed upon time frame (we used one year in the example). Then, discuss what your organization can do to prepare for that reality. See the graph below for an example:

In the strategic planning process, this scenario planning exercise should be taken into consideration when developing your vision, mission and goals. Even your action plan and operations could be affected. 

To integrate scenario planning before, during, or after the strategic planning process, learn more about how our strategic planning services can help align your team around a clear strategic direction . 

For a summary of the scenario planning process, check out this infographic below:

If the years 2020 and onwards have taught us anything, it's that the future is uncertain. If your organization is looking to plan around uncertainty, find out how working with a strategic planning facilitator can help you consider various risks and scenarios throughout the strategic planning process:

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Ultimate Scenario Planning Examples | 5 Easy Steps to Drive Results

Leah Nguyen • 17 September, 2023 • 9 min read

Ever feel like the future is completely unpredictable?

As anyone who's watched Back to the Future II can tell you, anticipating what's around the corner is no easy task. But some forward-thinking companies have a trick up their sleeve - scenario planning.

Looking for Scenario Planning Examples? Today we'll sneak a peek behind the curtains to see how scenario planning works its magic, and explore scenario planning examples to thrive in unpredictable times.

Table of Contents

What is scenario planning, types of scenario planning.

• #1. Brainstorm Future Scenarios
• #2. Analyse Scenarios
• #3. Select Leading Indicators
• #4. Develop Response Strategies
• #5. Implement The Plan

Key Takeaways

Frequently asked questions, tips for better engagement.

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Imagine you're a movie director trying to plan your next blockbuster. There are so many variables that could impact how things turn out - will your lead actor get injured? What if the special effects budget gets slashed? You want the film to succeed no matter what life throws at you.

This is where scenario planning comes in. Instead of just assuming everything will go perfectly, you imagine a few different possible versions of how things could play out.

Maybe in one your star twists their ankle in the first week of filming. In another, the effects budget is cut in half. Getting clearer pictures of these alternate realities helps you prepare.

You strategise how you'd deal with each scenario. If the leads out with injury, you have fallback filming schedules and understudy arrangements ready.

Scenario planning gives you that same foresight and flexibility in business. By playing out different plausible futures, you can make strategies that build resilience no matter what comes your way.

There are a few types of approaches organisations can use for scenario planning:

• Quantitative scenarios: Financial models that allow for best- and worst-case versions by altering a limited number of variables/factors. They are used for annual forecasts. For example, a revenue forecast with best/worst case based on +/- 10% sales growth or expense projections using variable costs like materials at high/low prices

• Normative scenarios: Describe a preferred or achievable end state, focused more on goals than objective planning. It can be combined with other types. For example, a 5-year scenario of achieving market leadership in a new product category or a regulatory compliance scenario outlining steps to meet new standards.

• Strategic management scenarios: These 'alternate futures' focus on the environment in which products/services are consumed, requiring a broad view of industry, economy, and world. For example, a mature industry scenario of disruptive new technology transforming customer needs, a global recession scenario with reduced demand across major markets or an energy crisis scenario requiring alternative resource sourcing and conservation.

• Operational scenarios: Explore the immediate impact of an event and provide short-term strategic implications. For example, a plant shutdown scenario planning production transfer/delays or a natural disaster scenario planning IT/ops recovery strategies.

Scenario Planning Process and Examples

How can organisations create their own scenario plan? Figure it out in these easy steps:

#1. Brainstorm future scenarios

On the first step of identifying the focal issue/decision, you'll need to clearly define the central question or decision scenarios that will help inform.

The issue should be specific enough to guide scenario development yet broad enough to allow the exploration of diverse futures.

Common focal issues include competitive threats, regulatory changes, market shifts, technology disruptions, resource availability, your product lifecycle, and such - brainstorm with your team to get the ideas out as many as you can.

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Evaluate what's most uncertain and impactful for strategic planning over the intended time horizon. Get input from various functions so the issue captures different perspectives across the organisation.

Set parameters like primary outcomes of interest, boundaries of analysis, and how scenarios may influence decisions.

Revisit and refine the question as needed based on early research to ensure scenarios will provide useful guidance.

💡 Specific focal issues examples:

• Revenue growth strategy - Which markets/products should we focus on to achieve 15-20% annual sales growth over the next 5 years?
• Supply chain resilience - How can we reduce disruptions and ensure consistent supplies through economic downturns or national emergencies?
• Technology adoption - How might shifting customer preferences for digital services impact our business model over the next 10 years?
• Workforce of the future - What skills and organizational structures do we need to attract and retain top talent over the next decade?
• Sustainability targets - What scenarios would enable us to achieve net zero emissions by 2035 while maintaining profitability?
• Mergers and acquisitions - Which complementary companies should we consider acquiring to diversify revenue streams through 2025?
• Geographic expansion - Which 2-3 international markets offer the best opportunities for profitable growth by 2030?
• Regulatory changes - How might new privacy laws or carbon pricing impact our strategic options over the next 5 years?
• Industry disruption - What if low-cost competitors or substitute technologies significantly eroded market share in 5 years?

#2. Analyse scenarios

You will need to overlook each scenario's implications across all departments/functions, and how it would impact operations, finance, HR, and such.

Assess opportunities and challenges each scenario may present for the business. What strategic options could mitigate risks or leverage opportunities?

Identify decision points under each scenario when a course correction may be needed. What signs would indicate a shift to a different trajectory?

Map scenarios against key performance indicators to understand financial and operational impacts quantitatively where possible.

Brainstorm potential second-order and cascading effects within scenarios. How may these impacts reverberate through the business ecosystem over time?

Conduct stress testing and sensitivity analysis to evaluate scenarios' vulnerabilities. What internal/external factors could significantly alter a scenario?

Discuss probability assessments of each scenario based on current knowledge. Which seems relatively more or less likely?

Document all analyses and implications to create a shared understanding for decision-makers.

💡 Scenario analysis examples:

Scenario 1: Demand increases due to new market entrants

• Revenue potential per region/customer segment
• Additional production/fulfilment capacity needs
• Working capital requirements
• Supply chain reliability
• Hiring needs by role
• Risk of overproduction/oversupply

Scenario 2: Cost of key material doubles in 2 years

• Feasible price increases per product line
• Cost-cutting strategy effectiveness
• Customer retention risks
• Supply chain diversification options
• R&D priorities to find substitutes
• Liquidity/financing strategy

Scenario 3: Industry disruption by new technology

• Impact on product/service portfolio
• Required technology/talent investments
• Competitive response strategies
• Pricing model innovations
• Partnership/M&A options to acquire capabilities
• Patents/IP risks from disruption

#3. Select leading indicators

Leading indicators are metrics that can signal if a scenario may be unfolding earlier than expected.

You should select indicators that reliably change direction before the overall scenario outcome is evident.

Consider both internal metrics like sales forecasts as well as external data like economic reports.

Set thresholds or ranges for indicators that would trigger increased monitoring.

Assign accountability to regularly check indicator values against scenario assumptions.

Determine appropriate lead time between indicator signal and expected scenario impact.

Develop processes to review indicators collectively for scenario confirmation. Single metrics may not be conclusive.

Conduct test runs of indicator tracking to refine which provides the most actionable warning signals, and balance the desire for early warning with potential "false alarm" rates from indicators.

• Economic indicators - GDP growth rates, unemployment levels, inflation, interest rates, housing starts, manufacturing output
• Industry trends - Market share shifts, new product adoption curves, input/material prices, customer sentiment surveys
• Competitive moves - Entry of new competitors, mergers/acquisitions, pricing changes, marketing campaigns
• Regulation/policy - Progress of new legislation, regulatory proposals/changes, trade policies

#4. Develop response strategies

Figure out what you want to achieve in each future scenario based on implications analysis.

Brainstorm lots of different options for actions you could take like growing in new areas, cutting costs, partnering with others, innovating and such.

Pick the most practical options and see how well they match each future scenario.

Make detailed plans for your top 3-5 best responses for the short and long-term for each scenario. Include backup options too in case a scenario doesn't go exactly as expected.

Decide exactly what signs will tell you it's time to put each response into action. Estimate if the responses will be worth it financially for each future scenario and check you have what you need to carry out the responses successfully.

Scenario: Economic downturn reduces demand

• Cut variable costs through temp layoffs and discretionary spending freeze
• Shift promotions to value-added bundles to preserve margins
• Negotiate payment terms with suppliers for inventory flexibility
• Cross-train workforce for flexible resourcing across business units

Scenario: Disruptive technology gains market share rapidly

• Acquire emerging startups with complementary capabilities
• Launch an internal incubator program to develop own disruptive solutions
• Reallocate capex toward digital productization and platforms
• Pursue new partnership models to expand tech-enabled services

Scenario: Competitor enters market with lower cost structure

• Restructure the supply chain to source lowest cost regions
• Implement a continuous process improvement program
• Target niche market segments with compelling value proposition
• Bundle service offerings for sticky clients less sensitive to price

#5. Implement the plan

To effectively execute the developed response strategies, start by defining accountabilities and timelines for executing each action.

Secure budget/resources and remove any barriers to implementation.

Develop playbooks for contingency options that require more expedited action.

Establish performance tracking to monitor response progress and KPIs.

Build capability through recruiting, training and organizational design changes.

Communicate scenario outcomes and associated strategic responses across functions.

Ensure sufficient ongoing scenario monitoring and reevaluation of response strategies while documenting learnings and knowledge gained through response implementation experiences.

• A technology company launched an internal incubator (budget allocated, leaders assigned) to develop solutions aligned with a potential disruption scenario. Three startups were piloted in 6 months.
• A retailer trained store managers on a contingency workforce planning process to quickly cut/add staff if demand shifted as in one recession scenario. This was tested by modelling several demand drop simulations.
• An industrial manufacturer integrated capital expenditure reviews into their monthly reporting cycle. Budgets for projects in the pipeline were earmarked according to scenario timelines and trigger points.

While the future is inherently uncertain, scenario planning helps organisations to navigate various possible outcomes strategically.

By developing diverse yet internally consistent stories of how external drivers could unfold, and identifying responses to thrive in each, companies can proactively shape their destiny rather than fall victim to unknown twists.

What are the 5 steps of scenario planning process?

The 5 steps of the scenario planning process are 1. Brainstorm future scenarios - 2.

What is the example of scenario planning?

An example of scenario planning: In the public sector, agencies like CDC, FEMA, and WHO use scenarios to plan responses to pandemics, natural disasters, security threats and other crises.

What are the 3 types of scenarios?

The three main types of scenarios are exploratory, normative and predictive scenarios.

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What Is Scenario Planning And Why It Matters In Business

Businesses use scenario planning to make assumptions about future events and how their respective business environments may change in response to those future events. Therefore, scenario planning identifies specific uncertainties – or different realities and how they might affect future business operations. Scenario planning attempts at better strategic decision making by avoiding two pitfalls: underprediction and overprediction.

Aspect	Explanation
	Scenario Planning is a tool used to for various possible future scenarios or outcomes. It involves creating narratives or scenarios that explore different future environments to inform decision-making and strategy.
	– : The approach involves developing multiple, plausible future scenarios, often based on different variables and assumptions. – : Recognizes that the future is and aims to account for a range of possible developments. – : Allows organizations to to changing circumstances. – : Scenario planning typically takes a , looking ahead several years or even decades.
	– : Scenario planning is an , revisited regularly to . – : It often relies on of trends and uncertainties. – : Involves input from various departments and experts within an organization.
	– : Helps organizations better prepare for a range of possible futures. – : Informs by considering various scenarios. – : Allows for in the face of unexpected changes. – : Identifies and addresses potential .
	– : Developing and maintaining scenarios can be . – : Managing numerous scenarios can become . – : Scenarios are not predictions; they are tools for . – : Some organizations may resist adapting based on .
	– : Used by organizations to develop . – : Governments use scenario planning for . – : Applied to plan for , , and . – : Used for defense and security planning.
	– : Shell, the energy company, is known for using scenario planning to navigate the complex and uncertain energy landscape. – : Various government agencies use scenario planning to plan for the future, including disaster preparedness. – : Banks and financial institutions employ it to assess economic and market scenarios.
	– : Enhances an organization’s ability to to changing circumstances. – : Identifies and addresses potential . – : Can lead to . – : Helps maintain a in uncertain markets.

Table of Contents

Understanding scenario planning

In the context of business , a scenario is defined as the description of a possible future and how an organization might reach that future through a story.

Here, it’s important to note that the story does not describe an ideal scenario for the business .

Nor does the story predict the future.

A story is just one description of one possible future, and it includes:

• The current position of a business and the issues it is facing.
• Awareness of basic trends relating to demographics, economics, and politics. Trends must represent a global consensus in that they are based on fact.
• An analysis of key future uncertainties and how they may impact on the organisation.
• An awareness of the key local and global drivers of change and their potential impacts.

Ultimately, scenario planning attempts to address two common strategic errors in corporate decision making.

Businesses who make these strategic errors invariably have strategies that are backed up by incomplete or inaccurate stories.

Underprediction

Where businesses predict that the future will be much like the past and present.

For example, Nokia underpredicted the rise of the smartphone and how its popularity would affect their bottom line.

Overprediction

Were businesses predict that the future will be very much  unlike  the past and present.

For example, many health and technology companies in the 1960s predicted a cure for all cancers and mass uptake of flying cars bye the turn of the 21 st century. 

Implementing scenario planning

Once a business has identified the key driving forces and the uncertainties they may produce, it must develop several distinct scenarios that are most likely to come to fruition.

Workshop discussions that encourage brainstorming are effective in formulating these scenarios. 

Here is a simple step-by-step process that workshop participants can use.

Step 1: Identify the driving forces

Start by identifying possible shifts in global society, specific to their relevant market segment or industry.

Driving forces must have the potential to impact on business operations.

Step 2: Identify uncertainties

From the list of driving forces, businesses should pick three or four with the potential to make the biggest impact.

Two of the biggest driving forces of uncertainty in agribusiness, for example, are consumer demand and food prices.

Step 3: Develop plausible scenarios

Plausible scenarios are realistic scenarios.

They should have the ability to challenge a business moving forward and also have a reasonable probability of occurring in the first instance.

While consumer demand for agribusiness is a realistic uncertainty, it would be unrealistic to suggest that demand for red meat would drop to zero, for example.

Step 4: Discuss the implications

Businesses who are aware of the potential implications of their various scenarios can then start to reconsider their strategy .

They can achieve this by realigning their mission , goals, and values while still catering to every possible future scenario.

In 1980s Detroit, three of America’s largest car manufacturers imagined that oil price fluctuations and changing consumer values were their biggest potential threats.

They invested billions of dollars in infrastructure and car design and shared values of Detroit being a powerhouse of manufacturing for years to come. 

However, they did not see or plan for the rise of new competitors from Japan which ultimately led to the demise of Detroit as a car manufacturing hub.

Scenario Planning: Meta Case Study

Let’s run a scenario planning on the current market’s landscape.

Take the case of Facebook, which rebranded as Meta.

Why did it do that? What scenario did the company plan to get to that point?

We don’t know for sure what was the internal decision-making process, yet thanks to a scenario planning analysis , we can imagine how things went down.

Imagine that, as Apple implemented stricter and stricter privacy policy changes through the App Store, thus requiring users to opt-in to tracking, that brome the whole Facebook business model .

Indeed, one of the main components’ of Facebook’s advertising machine was its ability to follow you anywhere on your smartphone.

Indeed, once you signed and accepted Facebook’s terms and conditions, the company could follow you also into other activities you did with your smartphone.

For instance, let’s say you jumped off Facebook and you went on to purchase an item on an e-commerce shop, yet you didn’t finalize the sale.

Since Facebook had followed you along the way, it now knows that it might make sense to advertise the product you were about to purchase, as you didn’t finalize it.

Thus, the e-commerce company will run a pixel campaign on Facebook. It means that as you abandoned the cart, that same company can re-target you on Facebook’s feed, thus making sure that you see their product again and maybe but it!

So the above was the advertising mechanism on top of Facebook.

Once that mechanism had been broken by Apple’s policy changes since most of Facebook’s revenues came from Instagram and mobile, the company had to run a scenario planning of what would come next.

They realized that the threat from Apple was quite strong and that in a future scenario where Facebook did not own its digital advertising pipeline, that would happen again.

So they run a future scenario analysis imagining how Facebook would look like if it owned the digital advertising pipeline (let’s say if Facebook had a successful smartphone on the market).

Thus, realizing that, Facebook rebranded as Meta to try to completely pivot into a new industry, VR, where the company could try to own its distribution pipeline.

Facebook, now Meta, is doing it with Oculus, rebranded as Meta Quest!

Case Studies

Retail chain scenario planning.

• E-commerce competition intensifies.
• Economic downturn affects consumer spending.
• Increased focus on sustainability and eco-friendly products.
• E-commerce growth accelerates, impacting brick-and-mortar stores.
• Consumer demand shifts towards affordable products during an economic downturn.
• Sustainability trends lead to a surge in demand for eco-friendly products.
• E-commerce sales skyrocket, leading to store closures.
• Strategy: Rapidly expand online presence and delivery services.
• Consumer spending shrinks, affecting sales.
• Strategy: Focus on cost-cutting measures and value -based marketing .
• Consumers prioritize eco-friendly products.
• Strategy: Invest in sustainable product lines and marketing campaigns.
• Each scenario requires a different strategic approach.
• Realignment of goals: Scenario 1 emphasizes online growth , while Scenario 3 focuses on sustainability.
• Adaptation of mission : Mission statements may need to incorporate sustainability goals.

Tech Startup Scenario Planning

• Rapid technological advancements.
• Evolving consumer preferences.
• Regulatory changes in data privacy.
• Emergence of a groundbreaking technology that disrupts the industry.
• Consumer demand shifts towards more privacy-focused products.
• Stringent data privacy regulations impact business models.
• A new technology revolutionizes the industry.
• Strategy: Rapidly adapt and incorporate the new technology into offerings.
• Consumer demand for privacy-focused products grows.
• Strategy: Develop and market products with robust privacy features.
• Stricter data privacy regulations limit data usage.
• Strategy: Comply with regulations and explore alternative revenue streams.
• Different scenarios require distinct actions.
• Mission realignment: Scenario 2 emphasizes privacy as a core value .
• Goal adaptation: Goals may need to change based on the chosen scenario.

Agricultural Business Scenario Planning

• Climate change impacts on crop yields.
• Fluctuations in global food prices.
• Technological advancements in agriculture.
• Extreme weather events affect crop production.
• Food prices become more volatile due to global factors.
• Adoption of advanced agricultural technology accelerates.
• Crop yields are severely affected by extreme weather.
• Strategy: Invest in climate-resilient crops and sustainable farming practices.
• Food prices fluctuate unpredictably due to global factors.
• Strategy: Diversify revenue streams and engage in futures contracts.
• Adoption of advanced tech boosts productivity.
• Strategy: Embrace cutting-edge agricultural technology and precision farming.
• Strategic decisions vary based on scenarios.
• Mission and values alignment: Scenario 1 emphasizes sustainability, while Scenario 3 focuses on technology integration.
• Goal adjustments: Goals may need to change to align with the chosen scenario.

Key takeaways

• Scenario planning is a future planning strategy in which organizations form an idea of potential future scenarios and how these scenarios may affective their strategic objectives.
• Scenario planning is based on descriptive stories that are not future predictions but instead plausible alternate realities.
• The four-step scenario planning assists businesses in telling the difference between plausible and implausible future events and planning accordingly.

Key Highlights:

• Scenario Planning Overview: Scenario planning is a strategic approach that businesses use to envision and prepare for potential future events and changes in their business environment. It involves identifying uncertainties, developing plausible scenarios, and understanding the implications of each scenario.
• Scenario Definition: A scenario in this context refers to a description of a possible future, outlining how an organization might reach that future through a narrative. It’s important to note that scenarios are not predictions but rather alternate realities.
• Components of Scenarios: Scenarios include the current state of the business , awareness of trends (demographics, economics, politics), analysis of key uncertainties, and an understanding of drivers of change (local and global).
• Pitfalls Addressed: Scenario planning aims to prevent two strategic pitfalls: underprediction and overprediction. Underprediction is assuming the future will be similar to the past, while overprediction is expecting drastic changes that don’t materialize.
• Identify Driving Forces: Recognize shifts in global society relevant to the business sector.
• Identify Uncertainties: Select a few key uncertainties with potential significant impacts.
• Develop Plausible Scenarios: Create realistic scenarios that challenge the organization and have reasonable probabilities.
• Discuss Implications: Consider the implications of each scenario on strategy , goals, and values.
• Trigger (Apple’s Privacy Changes): Facebook’s advertising model was impacted by stricter privacy policies from Apple.
• Scenario Analysis: Facebook realized the threat from Apple’s changes and explored scenarios without owning the advertising pipeline.
• Strategic Pivot: Facebook rebranded as Meta and shifted its focus to VR (Oculus rebranded as Meta Quest) to own a new distribution pipeline.
• Scenario planning assists organizations in preparing for potential future scenarios.
• Scenarios are descriptions of plausible futures, not predictions.
• The process involves identifying driving forces, uncertainties, creating plausible scenarios, and assessing implications.

Connected Strategy Tools

Porter’s five forces.

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Scenario Planning: Advantages, Disadvantages, and Strategy

In the intricate dance of the global business arena, unpredictability is a constant companion. Companies operate in an environment rife with uncertainties, where technological breakthroughs, geopolitical shifts, and economic fluctuations can disrupt the status quo at any moment. In response to this ever-changing landscape, organisations turn to strategic management tools like scenario planning to navigate the complexities of an uncertain future. This comprehensive article delves deep into the intricacies of scenario planning, exploring its advantages, disadvantages, and the strategies that underpin its effective implementation.

Introduction: Unveiling the Essence of Scenario Planning

At its core, scenario planning is a forward-looking strategic management tool that enables organisations to anticipate and prepare for a range of possible future outcomes. Unlike traditional forecasting, which often relies on extrapolating past trends, scenario planning embraces uncertainty, encouraging organizations to envisage multiple future scenarios and craft strategies that can withstand a variety of potential challenges.

Why Is Scenario Planning Important?

Scenario planning can provide a competitive advantage by enabling leaders to react quickly and decisively — because no one has to scramble when in the midst of a crisis as potential scenarios have already been prepared for.

Scenario planning also gives executives and boards of directors a framework to make nonemergency decisions more effectively by providing insight into plans, budgets and forecasts and painting a clearer picture of key drivers for business growth and the potential impact of future events.

To find out more about Scenario Planning, and the role NetSuite plays, please contact us .

Scenario Planning Advantages and Disadvantages

Advantages of scenario planning: navigating the uncertainty.

1. Risk Mitigation:

In an ever-evolving business landscape, risk is omnipresent. Scenario planning, with its emphasis on exploring various potential futures, serves as a robust mechanism for identifying and mitigating risks. By proactively addressing uncertainties, organisations can develop strategies that enhance resilience and enable them to navigate turbulent times more effectively.

2. Strategic Flexibility:

The dynamism of the modern business environment demands strategic flexibility. Scenario planning empowers organizations to adapt their strategies to different future scenarios, fostering agility in decision-making and execution. This adaptability is a valuable asset in a world where change is the only constant.

3. Informed Decision Making:

Informed decision-making is the cornerstone of effective leadership. Scenario planning provides decision-makers with a structured framework to explore the potential consequences of different strategies under various scenarios. This depth of understanding equips leaders to make well-informed choices that align with the organization's overarching goals.

4. Improved Innovation:

The intersection of uncertainty and creativity often gives rise to innovation. Engaging in scenario planning encourages a culture of innovation within organisations. By contemplating diverse future scenarios, companies stimulate creative thinking and explore unconventional ideas that can lead to breakthrough innovations, positioning them as industry leaders.

5. Enhanced Competitive Advantage:

In a competitive landscape, the ability to foresee and adapt to changes is a distinct advantage. Organizations that actively engage in scenario planning are better equipped to anticipate shifts in the market. This foresight enables them to adjust their strategies proactively, gaining a competitive advantage over competitors who may be caught off guard by unexpected developments.

6. Stakeholder Alignment:

Alignment among stakeholders is crucial for the successful implementation of any strategy. Scenario planning facilitates communication and alignment among stakeholders by creating a shared understanding of potential future developments. This alignment is instrumental in ensuring a unified approach to achieving strategic objectives.

Disadvantages of Scenario Planning: Navigating the Challenges

1. Resource Intensive:

While the benefits of scenario planning are undeniable, it comes at a cost. Developing comprehensive scenarios requires a significant investment of time, personnel, and financial resources. This resource intensity can pose a challenge for organizations with limited resources, potentially limiting their ability to engage in thorough scenario planning.

2. Uncertain Outcomes:

The very nature of scenario planning involves grappling with uncertainties. Consequently, scenario planning may not provide clear-cut answers or outcomes. Decision-makers who crave concrete data and certainty in their strategic planning processes may find the ambiguity inherent in scenario planning unsettling.

3. Assumption-based:

Scenarios are constructed based on assumptions about future developments. If these assumptions are inaccurate or if critical factors are overlooked, the entire planning process may lead to flawed strategies based on faulty premises. This highlights the importance of rigorous research and continuous validation of assumptions in scenario planning.

4. Overemphasis on Short-Term Scenarios:

The pressure for immediate results can lead organizations to focus excessively on short-term scenarios. While short-term planning is essential, an overemphasis on immediate concerns may result in overlooking longer-term trends that could have a more profound impact on the organisation's future. Striking the right balance between short-term and long-term considerations is crucial for a holistic approach.

Types of Scenario Planning

Quantitative scenarios

Financial models that allow for the presentation of best- and worst-case versions of the model outputs. These models can be quickly changed by altering a limited number of variables/factors. Quantitative scenarios are also used to develop annual business forecasts . These models assume key variables are known and that relationships among them are fixed.

Operational scenarios

One of the most common types of scenario planning an organization will undertake internally. Operational scenarios specifically explore the immediate impact of an event. The scenario then provides short-term strategic implications.

Normative scenarios

These describe a preferred or achievable end state. These scenarios are less objective planning and more geared toward statements of goals. These goals are not necessarily about an organisational vision, but more about how the company would like to operate in the future. Normative scenarios are often combined with other types of scenario planning as they provide a summation of changes and a targeted list of activities.

Strategic management scenarios

Essentially stories that say little about the company or industry, but more about the environment in which products and services are consumed. These are often the most challenging scenarios for company leaders to put together because they require a broad industry, economic and world view. On the plus side, they give planners freedom to brainstorm decisions and a broad storytelling mandate. In some cases, companies bring in analysts or even so-called futurists .

How to Use Scenario Planning

Incorporating macroeconomic expectations into scenario planning is a common practice for CFOs aiming to establish short-term outlooks and align departmental expectations. While the fundamental principles of scenario planning remain consistent, the approach may differ across industries and businesses. To illustrate this, let's explore how two fictional companies, a healthcare technology firm named MedTech Innovations and an energy equipment manufacturer named EcoPower Solutions, would navigate scenario planning in the face of industry-specific challenges.

Company 1: MedTech Innovations

MedTech Innovations, a pioneering healthcare technology company, had been steadily advancing before facing unprecedented challenges during the pandemic. Despite lacking prior scenario planning, the CFO, drawing from experience during previous industry upheavals, swiftly took action to safeguard MedTech's financial stability.

Company 2: EcoPower Solutions

EcoPower Solutions, an established manufacturer of energy equipment, had a proactive CFO who had crafted three scenarios based on production capacity before the pandemic: green, yellow, and red. Each scenario outlined specific mitigating actions tied to order volume metrics. However, the company found itself operating in the red scenario due to a rapid decline in orders caused by the economic downturn.

Key Questions Both Companies Contemplated:

• What issue are we trying to assess?
• How far into the future are we attempting to predict?
• What major external factors will likely impact our scenarios?
• What are the crucial internal drivers that demand attention?
• What risks are associated with each scenario?

Do we possess the necessary data, technology, bandwidth, and skills to develop and maintain scenario plans?

EcoPower Solutions adapted its scenario planning based on order volume and operational efficiency. Responding to the sudden negative effects of the pandemic, the company established monthly milestones, anticipating delayed accounts receivable and reduced retailer capacity to accept products. With internal safety measures limiting warehouse operations to 60% capacity, EcoPower Solutions communicated closely with suppliers and customers, monitoring government data and industry reports to stay ahead of evolving trends.

On the other hand, MedTech Innovations faced challenges more internally focused. The leadership and stakeholders collaborated early in the crisis to develop a plan, acknowledging the unlikelihood of new business and additional funding in the near future. Their primary focus was extending financial runway by cutting discretionary costs and preparing for potential workforce adjustments.

Comparing Scenario Planning and Business Continuity Planning:

While often confused, scenario planning and business continuity planning serve distinct purposes. Scenario planning takes a long-term perspective, considering revenue evolution over time, while business continuity planning addresses immediate reactions to disasters. Both processes involve valuable collaboration among leaders, providing an opportunity to preemptively address potential risks.

MedTech Innovations anticipated that new business and funding might not materialize in the short term, focusing on extending their financial runway through cost-cutting. They assumed that recurring revenue would remain stable, planning to scale back cost-saving measures if new deals surged upon economic reopening. Any significant deviations in metrics would trigger further scenario adjustments.

In conclusion, effective scenario planning is a dynamic process that tailors strategies to the unique challenges faced by different companies, ensuring resilience and adaptability in rapidly changing environments. 

Scenario Planning vs. Business Continuity Planning

Scenario planning is often conflated with business continuity planning. While both are structured processes for helping a company navigate the future, scenario planning plays a longer game that considers revenue over time. Business continuity planning is about how your business will react to a disaster, such as a warehouse fire or earthquake.

In both processes, the journey may be as valuable as the final work product. By bringing leaders together to think through what could affect your business, you may head off potential risk.

Meanwhile, MedTech's challenges are less dependent on outside stakeholders. Its management and private equity partners met early in the crisis to establish a plan. They came to an agreement that new business and additional sources of funding aren't likely in the next few months, so the key focus is extending runway by cutting discretionary costs and being prepared to adjust headcount. The company's PE partners aren't likely to sit by and watch MedTech run out of money, but before providing additional funds, they will want to see that the company has cut wherever possible.

Leadership made the assumptions that recurring revenue would stay largely the same and new deals would surge when the economy reopens. If both hold true, they'd begin scaling back the cost-saving measures. They also added a cushion for churn, down-sells and, in the event of an extreme and protracted downturn, some mid-contract cancellations.

Any significant changes in metrics would trigger another scenario with further cuts.

Scenario Planning Work Approach

Actions to take

• Secure commitments from senior management, select team members and organise scenarios around key issues to be addressed and evaluated.
• Define assumptions clearly, establish relationships between drivers and limit the number of scenarios created.
• Make sure each scenario presents a logical view of the future.
• Focus on material differences between scenarios.
• Indicate KPIs, and refresh scenarios and update assumptions on a regular basis.

Actions to avoid

• Avoid developing scenarios without defining the issues first.
• Don't develop too many scenarios – three is a good starting point. Beginning with your best guess at how business will go, add one scenario for things going better and another for things going worse. A good starting point is 50% for best guess, then 25% for things going better and 25% for things going worse.
• Do not attempt to develop the perfect scenario – more detail does not mean more accuracy.
• Avoid becoming fixated on any one scenario.
• Don't hold on to a scenario after it has ceased to be relevant.

3 Steps to Better Scenario Planning

1. Identify critical triggers even in the midst of uncertainty :

When faced with a crisis, finance leaders quickly establish guidelines for how the organisation should respond by developing multiple scenarios. These scenarios are built on a set of assumptions around events that affect the survival of the organization and should trigger a series of actions.

In times of crisis, companies need to combine historical data with plausible outcomes to determine ramifications for each part of the organization. Scenario plans can give leaders breathing room to slow down and assess economic, political and environmental factors. These prioritized factors are a critical part of crisis scenarios.

2. Develop multiple scenarios, but keep it simple:

When building multiple scenarios, it's easy for finance teams to feel overwhelmed by the range of potential outcomes. How can anyone properly plan for so many possibilities? Simply put, you can't. That's why it's best to keep it simple. Focus on two to three major uncertainties and build scenarios from there. Finance leaders need to prioritize and develop perspectives about each of the scenarios to help the company navigate.

3. Build a nimble response strategy:

Each scenario should contain enough detail to assess the likelihood of the success or failure of different strategic options. Once this is all in place, finance leaders can create a framework that helps the executive team make decisions. Any decisions made need to be monitored in real-time so the team can be nimble in its ongoing response.

Strategies for Effective Scenario Planning: Navigating the Path to Success

1. Include Diverse Perspectives:

To ensure a comprehensive analysis, organizations should involve a diverse group of stakeholders in the scenario planning process. This inclusivity ensures a wide range of perspectives and insights are considered, enhancing the robustness of the scenarios developed.

2. Regular Review and Update:

Scenarios should not be static documents. Regular review and updates are essential to reflect changes in the external environment. This iterative approach ensure that strategies remain relevant and effective in the face of evolving circumstances, preventing obsolescence.

3. Balanced Approach:

Striking a balance between detailed analysis and creative thinking is crucial. An overemphasis on either end of the spectrum can lead to either overly complex scenarios or unrealistic assumptions, undermining the effectiveness of the planning process. A balanced approach ensures both analytical rigor and creative exploration.

4. Integration with Strategic Planning:

Scenario planning should be integrated into the overall strategic planning process. Aligning scenarios with the organization's mission, vision, and long-term goals ensures a cohesive and coordinated approach to strategic decision-making. This integration prevents scenario planning from becoming a detached exercise and enhances its impact on organizational strategy.

5. Communication and Education:

Effective communication of scenarios and their implications is paramount. Decision-makers and stakeholders should be educated on the purpose of scenario planning and how it contributes to informed decision-making. This communication fosters a shared understanding and commitment to the scenario planning process, aligning the organization's leadership and workforce.

6. Learn from Experience:

Scenario planning is an iterative process. Organizations should learn from past scenario planning exercises. By evaluating the outcomes and the effectiveness of strategies developed in response to previous scenarios, companies can refine their approach and continuously improve their strategic planning processes. Learning from experience ensures that scenario planning evolves and remains relevant over time.

Conclusion: Navigating the Future with Scenario Planning

In conclusion, scenario planning emerges as a powerful tool for organisations navigating through an uncertain future. Its advantages, ranging from risk mitigation to enhanced innovation, position it as a crucial tool for strategic management. However, acknowledging the resource intensity and addressing potential disadvantages are essential for maximizing its benefits. By implementing the strategies outlined, organizations can harness the full potential of scenario planning, transforming uncertainty into an opportunity for strategic growth and resilience. In a world where change is the only constant, scenario planning becomes not just a management tool but a strategic imperative for organizations aspiring to thrive in the face of an unpredictable future.

Contact us to learn more about scenario planning and how we can support you.

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3 Practical Examples Of Scenario Planning To Drive Results

Learn how to master scenario planning through detailed examples: workforce planning, sales capacity planning, and strategic operational planning.

Create flexible and predictable sales forecasts

There’s one constant in the business world: change.

Change can be good or bad. Either way, you’re most successful when you have a plan to take on change. Often, the best way to plan for change is by foreseeing all possible paths the future can take. This includes planning for the best case, worst case, as well as more typical scenarios.

But did you know that there’s a methodology you can adopt to envision your metrics across multiple future scenarios? This methodology is known as scenario planning, and can prove invaluable when seeking the best outcomes in a volatile environment.

Read on to learn more about how scenario planning helps turn tough situations into conquerable pathways, as well as three examples of scenario planning you can implement as a revenue or finance leader.

What is scenario planning?

Scenario planning is a methodology used to assess, predict, and plan for multiple outcomes derived from a single problem statement. The method involves adjusting assumptions, formulas, and values to produce altered sets of data as previews of future possibilities given alternate circumstances.

Key scenario planning terminology to remember:

• Your baseline refers to the current state of your data and the assumption that things will stay the same
• Your best case scenario is an optimal future state of your data where performance is better than expected
• Your worst case scenario is the circumstance where the future does not live up to expectations , resulting in missed goals and targets
• Assumptions are made each time you create a new scenario, indicating the likely change in a situation
• Forecasts are predictions of the future state of a given metric, based on historical data, assumptions, and correlated variables

With scenario planning and the scenario development process, you identify one or more key metrics for which you forecast all potential future states including your baseline, best case, and worst case scenarios, based on assumptions.

Why is scenario planning used?

Scenario planning is used by Finance, Revenue, Sales, and Human Resources, among many other business leaders, to visualize and assess all future possibilities that branch from a business objective or problem statement.

Here are a few other reasons why business leaders use scenario planning:

• Be prepared for critical uncertainties internal and external to the company
• Research multiple scenarios to solve the problem
• Risk assessment 
• Back decisions with data
• Meet cross-functional company goals together 
• Foresee the future from different angles

The benefits of scenario planning for Finance, Revenue, and HR teams

The most obvious benefit of scenario planning is the competitive edge gained by planning for all possible outcomes.

During a recession or market crash, for example, your company can quickly implement changes to the organizational structure to keep the company afloat. And during the best of times, you can leverage the momentum gained from success.

Here are some of the other benefits of scenario planning, especially for Finance, and Revenue functions:

• Easier to set goals and build an action plan to meet them
• Win buy-in from business partners and leadership
• Prep your team to achieve targets in difficult times
• Accommodate recession effects in the budget
• Efficiently manage operations and resources
• Minimize reforecasting and do-overs
• Build the optimal workforce with org charting to meet business goals

In tough times and in brighter days, the most forward-looking teams advance to the front of the race.

By employing a scenario planning methodology, you transform your strategic planning to be agile and flexible in a multitude of environments and situations.

Ultimately, the main benefit of scenario planning is the increased probability of consistent, scalable, and repeatable positive outcomes.

What are the basic steps of scenario planning?

More traditional methods of scenario planning involve several steps and a long process: starting with a problem statement or business goal and leading up to modeling scenarios across haphazard spreadsheet models.

In the modern business planning world, scenario planning is much more straightforward and usually takes four basic steps:

• Model your baseline
• Choose your metric
• Create a scenario
• Observe the results and build an action plan

Read through each of the scenario planning process steps in our step-by-step guide to scenario planning . To further illustrate how you can implement scenario planning within your organization, here are three examples of common use cases that benefit from scenario analysis:

Scenario planning steps demonstrated through examples

This section will take you through three common use cases where scenario planning can enhance the outcome of work done: workforce planning, sales & revenue planning, and strategic operations management.

Recall how scenario planning starts with a problem statement. In each of these examples, we’ll outline a problem statement and outline our assumptions, which we will then convert to scenarios. + Pro tip: check out this expert article on scenario planning steps by FP&A influencer, Asif Masani.

Fair warning: scenario planning is so crucial because it is used to answer difficult situations and make difficult decisions with big impacts. Some of the examples covered here involve very serious topics such as headcount freezing and severance. We cover these examples to illustrate how critical it is to follow best practices and use the best tools when it comes to scenario planning.

Final note, all three examples are based on mock data with no relationship or resemblance to any real-life data whatsoever. We’ll display our demo applications built within the Pigment platform.

Use scenarios to optimize workforce planning

Problem statement : what is the impact on total compensation costs with a 10% headcount reduction in Sales?

Questions like these are hard-hitting and make a big impact on everyone involved. However, these are very real actions that are at times necessary to analyze. The best way forward is to thoroughly scope out several possible scenarios before deciding on the optimal path .

To address this problem statement with scenario planning, you’ll need to look at three components:

Build out your worst case headcount reduction assumptions

In the worst case scenario, you will have to make the tough call to prevent the business from going under by reducing headcount. Within this context, narrow down your assumption to a measurable number.

Assume your product has more potential in the UK and is performing well in the region, as compared to the US. You may use this factor to determine that you want to reduce headcount by 10% in the US Sales team. Enter this assumption into your scenario planning model.

Calculate workforce strength through the headcount planning process

With the 10% US Sales headcount reduction in mind, start calculating what this will look like. To do this, you’ll want to first classify the functions that make up Sales and tally headcount under each team. Then, apply your 10% reduction to the applicable teams. The end result should look a little like this:

Here, we’re applying a 10% reduction across all functions within the Sales teams working out of the US, as our worst case scenario. It would result in 10 less headcount if this scenario were to be implemented.

Headcount reduction or hiring freeze: build the comparison waterfall

Now, you’ll want to check exactly how the assumed 10% headcount reduction will affect total compensation costs. The breakdown of costs includes the variance between baseline scenario costs and headcount reduction costs, including severance costs:

At this point, you can clearly view the variation in total compensation before and after headcount reduction. However, there’s one more factor that deserves its own scenario: hiring freeze.

Following the same steps assuming a 10% freeze in new hires instead of a 10% reduction in workforce, you arrive at the following waterfall comparison chart:

Essentially, assuming you freeze hiring instead of reducing headcount, you arrive at a comparable figure. Which indicates that you could potentially decide to freeze headcount and bridge skills gaps instead of reducing workforce strength.

Decisions like these can be made on a much more granular level when you use scenario planning on your business planning platform.

Scenarios for long-term sales capacity planning

Problem statement : what is the long term impact of baseline, best case, and worst case sales capacity on SaaS KPIs?

In this example, your aim is to determine the long-term impact of your sales capacity plan on your business KPIs such as Customer Acquisition Cost (CAC), Lifetime Value (LTV), LTV/CAC, New Logos, and Bookings. You also want to understand what business performance would look like in the best case and worst case scenarios.

Plot your assumptions: ramp time and headcount freeze

As you’ve learned through this article, we start scenario planning by mapping out our assumptions. Here, there are two main areas where you need to make assumptions: your overall ramp time across scenarios and the decision to freeze headcount in your worst case scenario.

For ramp assumptions, split the metric by sales rep role across your baseline, best case, and worst case scenarios.

Follow this up by mapping out the details of your worst case scenario - specifically, determine if there will be a hiring freeze, to calculate the impact of not growing your workforce on all your other metrics.

Remember, scenario planning allows you to test the impact of each decision in a “playground” environment. Feel free to plot as many assumptions as you need to plan for every future possibility.

Build your sales capacity and quota forecast

Now that you’ve sorted out your assumptions, you’ll want to build out your capacity and quota forecasts . This will allow you to feed your quota forecast by rep into your scenario planning model, as well as your overall forecast for FTEs and TBHs across each scenario.

Examine your what-if scenario results

Having fed your assumptions and forecasts for several upcoming years into your model, you can now view the impact on your KPIs for each: baseline, best case, and worst case scenario:

You can then modify your scenarios further on different assumptions, or make a decision based on the results of the existing what-if scenario results.

Strategic operations

Problem statement : allocate functional targets to the Product Development cost center based on Rule of 40 goals.

The Rule of 40 is a rule of thumb used mainly in SaaS to measure a company’s financial health. Essentially, this rule states that the sum of recurring revenue growth % and EBITDA margin % should be above 40% for a company to sustain long-term growth .

To solve this problem statement, you’ll examine your Rule of 40 breakdown across baseline, best case, and worst case scenarios. Follow this up with P&L targets as a % of revenue, and finally allocate targets to the cost center for all three scenarios.

Rule of 40 breakdown

As we just saw, the Rule of 40 adds revenue growth % to EBITDA margin % for a score that determines financial health. With scenario planning, you have the ability to break down your Rule of 40 components across multiple potential scenarios. This lets you quickly foresee the state of the business:

Set P&L targets by percentage of revenue

With your Rule of 40 forecasts in mind for your best case and worst case scenarios, set your P&L targets for the upcoming years. The general outcome should show you your net income and EBITDA as a percentage of revenue. In our specific example, we see that forecasted operating expenses are much higher in the worst case scenario. We’ll address this by setting lower targets for the worst case scenario.

Allocate functional targets to cost centers

In this final step, we’ll allocate targets to the Product Development department for each scenario, based on the net income forecasts calculated in the previous step. A couple things to note: in our example, we split the cost center into teams for more granularity. We also forecast the total cost across three scenarios: baseline, best case, and worst case to arrive at lower costs in the worst case scenario.

Who should use scenario planning?

Anyone within the company with a need to answer, “what if…” should use scenario planning. This methodology is the difference between speculation and purpose-driven action. Without scenario planning, companies are forced to take drastic decisions in an economic crunch that they are unprepared to face.

Truly, anyone from the CFO to the entire Revenue team can use scenario planning for endless use cases, including workforce planning , budgeting , sales performance management , or campaign measurement.

What you need to get started with scenario planning

You’ve actually taken the first step by learning all about scenario planning through examples. Dig a little deeper by understanding why it’s much better to plan scenarios on a business planning platform rather than spreadsheets .

As you advance your knowledge of scenario planning, start to identify aspects of your role that require this methodology. The easiest way to do this: start a list of all your “What if?” questions. 

No one can predict the future with 100% accuracy. But you can plan for what’s likely to happen, and for the rare unlikely possibilities that come true.

Through the scenario planning methodology, you begin to control your future by making decisions based on a 360 degree view of the world. Although you can’t change external events, you can build your strategy to react to these events, with scenario planning.

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8 Types of Strategic Scenario Planning Processes, Analysis and Examples

Scenario planning and analysis .

The ability to view the future is a superpower many in finance would love to possess. Our founders even named the company after the very desire. While you might not have the power of a magic eight ball, you can plan for future scenarios appropriately. Scenario Planning and forecasting go hand-in-hand, and are integral in the life of an FP&A professional.

Although there are many types of strategic planning processes , it is not as if you have to select and implement just one. Your planning should include multiple scenarios to prepare your company for strategic conversations and actions. 

47% of CFOs say strategic planning is the most difficult activity to integrate with financial planning, according to Gartner’s 2022 Business Quarterly Survey .

If there was ever a doubt regarding the necessity for a business to plan for scenarios, the pandemic was certainly an eye-opener. Even with accommodative monetary policies to spur and sustain growth, uncertainty and volatility remain. This is why mature finance functions embrace planning and forecasting in conjunction with accounting. The insight from various scenarios provide a glimpse into future outcomes and can dictate the actions and strategies necessary to realize those key business objectives.

Remember, failing to plan is planning to fail.

To do this, accounting and financial planning and analysis (FP&A) should work in tandem. Starting with accounting, which tracks what has happened by accumulating the facts, reconciling and ensuring the accuracy of the company’s metrics. 

Conversely, FP&A, is meant to give context to what occurred, forecast risks and opportunities, and plan for possible scenarios. To best prepare your company’s decision makers with actionable insight, your scenario planning and analysis should always include a best case, worst case and base case being the most likely outcome. In this post, we break down eight strategic planning processes finance should deliver on a regular basis.

1. Multi-Scenario Planning

FP&A is forward-looking; therefore, planning for multiple scenarios is necessary since the likelihood of only needing insight from one scenario would not be very informative. Planning is necessary to guide your company towards being proactive, not reactive to outcomes. 

A common situation you might encounter with multiple scenarios is the impact hiring a given amount of sales staff might have on new deals and revenue. For example, if it takes a new account executive three months to ramp you could model out the following scenarios a CFO or management team would be interested in: 

• What would be the potential additional revenue if three additional sales people were hired and each hit their quota after the ramp period?
• What would be the likely potential additional revenue if only two of them hit their quota?
• What would be the impact on our margin if we hired three sales people and only two hit their quota?

These questions are fundamental to the outlook of the business and how management teams approach their strategies. It’s why the best finance professionals have a business mindset to best understand the demands and implications of the scenarios. 

2. Driver-Based Planning

To establish driver-based planning in your planning and forecasting process, you need to first identify the business drivers of your company. This will vary depending on your industry and goods and services you provide, but a great starting point is to focus on financials such as revenue, expenses and cash flow. 

Driver-based planning is ideal for what-if scenario planning, where adjustments to your assumptions are reflected in your forecasts across the board. Starting at the high-level will resonate most with management, and the subsequent actions required can be strategically carried out at the department or business unit level. 

For example, making any incremental changes to your overall cost of goods sold (COGS) will have a significant impact on your margins. As your expenses decrease, your net income and margin will inevitably increase. If you were to plan for a 5 or 10 percent decrease in COGS and a 5 percent decrease in expenses, you should model out the potential increase in your margins and net income.

A centralized FP&A Platform simplifies this process greatly in comparison to Excel. Data is pulled directly from your sources of truth, such as your ERP, CRM, internal Platform and other data warehouses, and integrated throughout your metrics. The automated stitching of the data means adjustments to your assumptions are immediately realized across all of your management reports, department-level budgets and forecasts.

3. Capital Expense (CapEx) Planning

Capital Expenses (CapEx) are expenditures that are beneficial to the future of the company, but aren’t fundamental requirements. Your CapEx will vary greatly based on industry, where a CapEx example for a software company might be cloud-based infrastructure, and a manufacturer’s CapEx would be additional equipment and tools to create widgets. These indirect expenses are drivers of future growth, and these types of expenditure decisions heavily involve the finance function, which has the means to forecast the various scenarios. 

For example, the management team of a manufacturing company is considering expanding its capacity in the next quarter. One scenario to plan for is the benefit of purchasing two additional pieces of equipment to produce more widgets, which cost $100,000 each.

Assuming they are the same pieces of equipment, you can use previous revenue totals, divided by the number of pieces of equipment in operation to determine a revenue per equipment. From there you extrapolate that new equipment will add $50,000 each in annual revenue. Although it will require two years to realize an equivalent return on the costs incurred by the equipment expense, the potential net income in the following years would increase. 

It’s also important to consider the variables to operate the new equipment. Will it require additional headcount or tooling to maintain — and how might that impact margin? Is there potential for greater capacity and utilization of the equipment to maximize output? Having insight into cash flow and planning for the impact of a decision across your metrics provides the necessary clarity to ensure the most desirable outcomes for the business. 

4. Operating Expense (OpEx) Planning

As the name suggests, Operating Expenses (OpEx) are expenditures necessary for the operation of your company. Common examples of OpEx include labor costs, advertising and other direct expenses. 

Going back to our additional sales hire scenario, one operating expenditure scenario is to model how three new sales people impact our revenue to full-time equivalent (FTE) ratio. Having a strategic plan to answer a question like this is essential to understanding how certain choices might impact your company’s annual operating budget, revenue and margin. 

5. Continuous Monthly Planning

Continuous monthly planning emerged as a developing trend for Finance Functions looking to always be planning. Planning monthly is a best practice, which our finance experts suggest for most companies. We advocate for an accountability-based planning and forecasting process, in which monthly actuals are compared against the annual budget targets. Nonetheless, continuous scenario planning and forecasting should never be a replacement for an annual budget. 

As painful as the budgeting process might be for some, it is a necessity for high-performing companies to do annually. Paring an annual budget with monthly forecasting provides necessary insight into the current performance as it relates to the annual budget and holds department heads accountable. If there is a significantly slow pacing compared to the annual budget projections, budget owners can make necessary mid-year adjustments to course correct. 

None of this, however, is feasible without everyone operating from the same scoreboard. The annual budget and monthly actuals variance analysis are metrics comprising the scoreboard to ensure everyone is working towards the same objectives. 

Having trouble with a painful budgeting process that left battle scars and sleepless nights? Learn about the ways you can curate a more efficient, pain-free budgeting process.

6. Headcount Planning

Also known as workforce planning, headcount planning is necessary to determine how additional employees could impact the top and bottom line. As companies navigate hiring during The Great Resignation , where 2021 saw 47.8 million employees resign (according to The Bureau of Labor Statistics), compensation packages, benefits and total cost of employment rose as core inflation breached 8 percent. 

These calculations must be included in your headcount planning, and requires access to employee details from your HR system, like Insperity, ADP or Ultimate Software. You can leverage the current employee data to model out additional hires at comparable salaries to measure the change to the budget and expenses.  

It’s common for headcount planning to occur during the same time as the annual budgeting process, as departments might request specific hiring needs and finance teams collect the necessary information to budget accordingly. People are the foundation of any company, and hiring quality talent helps companies meet or exceed their targets. 

However, department heads aren’t always fixated on the big picture about expenses and margin. Collaborating with business units and department heads provides visibility into the outcomes of adding a specific number of employees, which will dictate strategies and hiring pipeline needs for HR to incorporate. 

7. Full-Time Equivalent (FTE) Planning

Full-time equivalent (FTE) planning is an additional layer building off of headcount or workforce planning. As companies scale, hiring additional FTEs becomes a race to keep pace with customer demand and growth initiatives. Without high-quality people managing processes, developing and executing strategies, the ability to grow is stymied. 

The most utilized metric in this regard is revenue per FTE. Revenue per FTE is calculated by: 

Annual Revenue (or trailing 12 month period) / Total number of full-time equivalent employees = Revenue per FTE

So a company with $10,000,000 annual revenue and 100 full-time employees, will have a revenue per FTE of $100,000. This metric is important for finance and management to evaluate the salary implications of new hires. Depending on the organization structure and hiring needs, some employees may fall under the average revenue per FTE, while others might exceed it. If management is satisfied with the current level, you’ll need to balance out the hires based on the salary implications, so as revenue increases, so too can your salary levels as needed. 

8. Agile Business Planning

Although last on this list, agile business planning is not just a process to include in your scenario analysis, but a mindset that should permeate through your finance function. Staying ahead of the competition is a must for any business to sustain and thrive. 

Agility is a reflection of efficiency. If you have to spend hours each day manually exporting data from various sources or chasing down system gatekeepers to get access to certain data, your ability to deliver agile planning scenarios is dramatically limited. 

When management requires multiple scenarios for a given endeavor, the longer you take to develop your models and deliver results, the longer the potential positive impact. In an ever-changing environment, you need to remain agile and flexible to quickly create multiple scenarios using reliable data as quickly as possible to facilitate decision making. 

The Data You Need, When You Need it

While multi-scenario, driver-based and agile planning seem like straightforward concepts and a goal for many, it can seem out of reach for Finance Functions that lack the resources and tools to efficiently produce scenario analysis. Unstructured data presents finance with inefficiencies, where tedious data wrangling becomes a time-consuming, mind-numbing daily routine. 

Remember, your scenario analysis is intended to inform budget owners and management teams. For your strategic planning to be actionable , it needs to be timely and the data you use must be accurate. Structured data sourced from your systems can be automatically extracted and centralized for planning in FP&A Software like the FutureView Platform, so you’re always confident you are using the latest, dynamically updated data. 

Once you have the tools to efficiently plan for and answer these questions, you can adjust the input variables as needed for repeatable processes as well as ad-hoc requests to prepare the company for any scenario. 

How to make a business plan

Table of Contents

How to make a good business plan: step-by-step guide.

A business plan is a strategic roadmap used to navigate the challenging journey of entrepreneurship. It's the foundation upon which you build a successful business.

A well-crafted business plan can help you define your vision, clarify your goals, and identify potential problems before they arise.

But where do you start? How do you create a business plan that sets you up for success?

This article will explore the step-by-step process of creating a comprehensive business plan.

What is a business plan?

A business plan is a formal document that outlines a business's objectives, strategies, and operational procedures. It typically includes the following information about a company:

Products or services

Target market

Competitors

Marketing and sales strategies

Financial plan

Management team

A business plan serves as a roadmap for a company's success and provides a blueprint for its growth and development. It helps entrepreneurs and business owners organize their ideas, evaluate the feasibility, and identify potential challenges and opportunities.

As well as serving as a guide for business owners, a business plan can attract investors and secure funding. It demonstrates the company's understanding of the market, its ability to generate revenue and profits, and its strategy for managing risks and achieving success.

Business plan vs. business model canvas

A business plan may seem similar to a business model canvas, but each document serves a different purpose.

A business model canvas is a high-level overview that helps entrepreneurs and business owners quickly test and iterate their ideas. It is often a one-page document that briefly outlines the following:

Key partnerships

Key activities

Key propositions

Customer relationships

Customer segments

Key resources

Cost structure

Revenue streams

On the other hand, a Business Plan Template provides a more in-depth analysis of a company's strategy and operations. It is typically a lengthy document and requires significant time and effort to develop.

A business model shouldn’t replace a business plan, and vice versa. Business owners should lay the foundations and visually capture the most important information with a Business Model Canvas Template . Because this is a fast and efficient way to communicate a business idea, a business model canvas is a good starting point before developing a more comprehensive business plan.

A business plan can aim to secure funding from investors or lenders, while a business model canvas communicates a business idea to potential customers or partners.

Why is a business plan important?

A business plan is crucial for any entrepreneur or business owner wanting to increase their chances of success.

Here are some of the many benefits of having a thorough business plan.

Helps to define the business goals and objectives

A business plan encourages you to think critically about your goals and objectives. Doing so lets you clearly understand what you want to achieve and how you plan to get there.

A well-defined set of goals, objectives, and key results also provides a sense of direction and purpose, which helps keep business owners focused and motivated.

Guides decision-making

A business plan requires you to consider different scenarios and potential problems that may arise in your business. This awareness allows you to devise strategies to deal with these issues and avoid pitfalls.

With a clear plan, entrepreneurs can make informed decisions aligning with their overall business goals and objectives. This helps reduce the risk of making costly mistakes and ensures they make decisions with long-term success in mind.

Attracts investors and secures funding

Investors and lenders often require a business plan before considering investing in your business. A document that outlines the company's goals, objectives, and financial forecasts can help instill confidence in potential investors and lenders.

A well-written business plan demonstrates that you have thoroughly thought through your business idea and have a solid plan for success.

Identifies potential challenges and risks

A business plan requires entrepreneurs to consider potential challenges and risks that could impact their business. For example:

Is there enough demand for my product or service?

Will I have enough capital to start my business?

Is the market oversaturated with too many competitors?

What will happen if my marketing strategy is ineffective?

By identifying these potential challenges, entrepreneurs can develop strategies to mitigate risks and overcome challenges. This can reduce the likelihood of costly mistakes and ensure the business is well-positioned to take on any challenges.

Provides a basis for measuring success

A business plan serves as a framework for measuring success by providing clear goals and financial projections . Entrepreneurs can regularly refer to the original business plan as a benchmark to measure progress. By comparing the current business position to initial forecasts, business owners can answer questions such as:

Are we where we want to be at this point?

Did we achieve our goals?

If not, why not, and what do we need to do?

After assessing whether the business is meeting its objectives or falling short, business owners can adjust their strategies as needed.

How to make a business plan step by step

The steps below will guide you through the process of creating a business plan and what key components you need to include.

1. Create an executive summary

Start with a brief overview of your entire plan. The executive summary should cover your business plan's main points and key takeaways.

Keep your executive summary concise and clear with the Executive Summary Template . The simple design helps readers understand the crux of your business plan without reading the entire document.

2. Write your company description

Provide a detailed explanation of your company. Include information on what your company does, the mission statement, and your vision for the future.

Provide additional background information on the history of your company, the founders, and any notable achievements or milestones.

3. Conduct a market analysis

Conduct an in-depth analysis of your industry, competitors, and target market. This is best done with a SWOT analysis to identify your strengths, weaknesses, opportunities, and threats. Next, identify your target market's needs, demographics, and behaviors.

Use the Competitive Analysis Template to brainstorm answers to simple questions like:

What does the current market look like?

Who are your competitors?

What are they offering?

What will give you a competitive advantage?

Who is your target market?

What are they looking for and why?

How will your product or service satisfy a need?

These questions should give you valuable insights into the current market and where your business stands.

4. Describe your products and services

Provide detailed information about your products and services. This includes pricing information, product features, and any unique selling points.

Use the Product/Market Fit Template to explain how your products meet the needs of your target market. Describe what sets them apart from the competition.

5. Design a marketing and sales strategy

Outline how you plan to promote and sell your products. Your marketing strategy and sales strategy should include information about your:

Pricing strategy

Advertising and promotional tactics

Sales channels

The Go to Market Strategy Template is a great way to visually map how you plan to launch your product or service in a new or existing market.

6. Determine budget and financial projections

Document detailed information on your business’ finances. Describe the current financial position of the company and how you expect the finances to play out.

Some details to include in this section are:

Startup costs

Revenue projections

Profit and loss statement

Funding you have received or plan to receive

Strategy for raising funds

7. Set the organization and management structure

Define how your company is structured and who will be responsible for each aspect of the business. Use the Business Organizational Chart Template to visually map the company’s teams, roles, and hierarchy.

As well as the organization and management structure, discuss the legal structure of your business. Clarify whether your business is a corporation, partnership, sole proprietorship, or LLC.

8. Make an action plan

At this point in your business plan, you’ve described what you’re aiming for. But how are you going to get there? The Action Plan Template describes the following steps to move your business plan forward. Outline the next steps you plan to take to bring your business plan to fruition.

Types of business plans

Several types of business plans cater to different purposes and stages of a company's lifecycle. Here are some of the most common types of business plans.

Startup business plan

A startup business plan is typically an entrepreneur's first business plan. This document helps entrepreneurs articulate their business idea when starting a new business.

Not sure how to make a business plan for a startup? It’s pretty similar to a regular business plan, except the primary purpose of a startup business plan is to convince investors to provide funding for the business. A startup business plan also outlines the potential target market, product/service offering, marketing plan, and financial projections.

Strategic business plan

A strategic business plan is a long-term plan that outlines a company's overall strategy, objectives, and tactics. This type of strategic plan focuses on the big picture and helps business owners set goals and priorities and measure progress.

The primary purpose of a strategic business plan is to provide direction and guidance to the company's management team and stakeholders. The plan typically covers a period of three to five years.

Operational business plan

An operational business plan is a detailed document that outlines the day-to-day operations of a business. It focuses on the specific activities and processes required to run the business, such as:

Organizational structure

Staffing plan

Production plan

Quality control

Inventory management

Supply chain

The primary purpose of an operational business plan is to ensure that the business runs efficiently and effectively. It helps business owners manage their resources, track their performance, and identify areas for improvement.

Growth-business plan

A growth-business plan is a strategic plan that outlines how a company plans to expand its business. It helps business owners identify new market opportunities and increase revenue and profitability. The primary purpose of a growth-business plan is to provide a roadmap for the company's expansion and growth.

The 3 Horizons of Growth Template is a great tool to identify new areas of growth. This framework categorizes growth opportunities into three categories: Horizon 1 (core business), Horizon 2 (emerging business), and Horizon 3 (potential business).

One-page business plan

A one-page business plan is a condensed version of a full business plan that focuses on the most critical aspects of a business. It’s a great tool for entrepreneurs who want to quickly communicate their business idea to potential investors, partners, or employees.

A one-page business plan typically includes sections such as business concept, value proposition, revenue streams, and cost structure.

Best practices for how to make a good business plan

Here are some additional tips for creating a business plan:

Use a template

A template can help you organize your thoughts and effectively communicate your business ideas and strategies. Starting with a template can also save you time and effort when formatting your plan.

Miro’s extensive library of customizable templates includes all the necessary sections for a comprehensive business plan. With our templates, you can confidently present your business plans to stakeholders and investors.

Be practical

Avoid overestimating revenue projections or underestimating expenses. Your business plan should be grounded in practical realities like your budget, resources, and capabilities.

Be specific

Provide as much detail as possible in your business plan. A specific plan is easier to execute because it provides clear guidance on what needs to be done and how. Without specific details, your plan may be too broad or vague, making it difficult to know where to start or how to measure success.

Be thorough with your research

Conduct thorough research to fully understand the market, your competitors, and your target audience . By conducting thorough research, you can identify potential risks and challenges your business may face and develop strategies to mitigate them.

Get input from others

It can be easy to become overly focused on your vision and ideas, leading to tunnel vision and a lack of objectivity. By seeking input from others, you can identify potential opportunities you may have overlooked.

Review and revise regularly

A business plan is a living document. You should update it regularly to reflect market, industry, and business changes. Set aside time for regular reviews and revisions to ensure your plan remains relevant and effective.

Create a winning business plan to chart your path to success

Starting or growing a business can be challenging, but it doesn't have to be. Whether you're a seasoned entrepreneur or just starting, a well-written business plan can make or break your business’ success.

The purpose of a business plan is more than just to secure funding and attract investors. It also serves as a roadmap for achieving your business goals and realizing your vision. With the right mindset, tools, and strategies, you can develop a visually appealing, persuasive business plan.

Ready to make an effective business plan that works for you? Check out our library of ready-made strategy and planning templates and chart your path to success.

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Scenario planning through business challenges

In a rapidly changing environment, businesses that are able to anticipate and quickly react to threats and opportunities are likely to be more resilient and successful.

The implications of the COVID-19 pandemic for economies around the world are starting to become clear, and as businesses move on from their initial fire-fighting period, attention should be starting to turn to how they can survive and then emerge from the crisis to thrive. They should be looking at how they can best leverage high-quality market intelligence and analytics to inform future strategy and decision-making.

Scenario planning has been proven to be one of the most effective management tools in well-governed businesses. Businesses who are able to learn and react at a greater pace than their competitors to the change impacting their customers, suppliers, people and investors, will have a core competitive advantage. Scenario planning has a vital part to play in ensuring that organisations in every sector of the global economy are well placed to overcome the array of possible challenges that lie ahead, while also being able to move quickly to take advantage of growth opportunities.

Futureproofing your business

While scenario planning exercises are highly useful when trading conditions are benign, they come into their own during periods of uncertainty.

Management teams that can effectively anticipate and plan for the most likely potential scenarios when their businesses are operating in highly volatile environments give themselves the greatest possible chance of being ready to adapt to changing conditions faster than their rivals.

Underpinning this agility is likely to be a carefully planned, systematic, data- and evidence-driven approach to decision-making, rather than a reliance on ad hoc predictions and the kind of assumptions that the ongoing pandemic may rapidly be rendering obsolete.

Cash management in stressed conditions

Grant Thornton’s scenario planning framework takes a step-by-step approach to helping businesses build this much-needed resilience:

Take this opportunity to build resilience

For many businesses, the current downturn in economic activity means scenario planning is more critical than ever.

A successful scenario planning exercise is not just about identifying threats and new ventures: it also provides practical solutions that allow businesses to mitigate risks, or ensure they are in the right shape to take advantage of those opportunities the moment they emerge.

By working with Grant Thornton’s advisors, businesses can draw on expert guidance and cross-industry insight in areas ranging from cash flow management and debt restructuring to regulatory compliance and operational agility.

For more information please on scenario planning speak to your local Grant Thornton advisor .

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7 Business Plan Examples to Inspire Your Own (2024)

Need support creating your business plan? Check out these business plan examples for inspiration.

Any aspiring entrepreneur researching how to start a business will likely be advised to write a business plan. But few resources provide business plan examples to really guide you through writing one of your own.

Here are some real-world and illustrative business plan examples to help you craft your business plan .

7 business plan examples: section by section

The business plan examples in this article follow this template:

• Executive summary.  An introductory overview of your business.
• Company description.  A more in-depth and detailed description of your business and why it exists.
• Market analysis.  Research-based information about the industry and your target market.
• Products and services.  What you plan to offer in exchange for money.
• Marketing plan.   The promotional strategy to introduce your business to the world and drive sales.
• Logistics and operations plan.  Everything that happens in the background to make your business function properly.
• Financial plan.  A breakdown of your numbers to show what you need to get started as well as to prove viability of profitability.
• Executive summary

Your  executive summary  is a page that gives a high-level overview of the rest of your business plan. It’s easiest to save this section for last.

In this  free business plan template , the executive summary is four paragraphs and takes a little over half a page:

• Company description

You might repurpose your company description elsewhere, like on your About page, social media profile pages, or other properties that require a boilerplate description of your small business.

Soap brand ORRIS  has a blurb on its About page that could easily be repurposed for the company description section of its business plan.

You can also go more in-depth with your company overview and include the following sections, like in the example for Paw Print Post:

• Business structure.  This section outlines how you  registered your business —as an  LLC , sole proprietorship, corporation, or other  business type . “Paw Print Post will operate as a sole proprietorship run by the owner, Jane Matthews.”
• Nature of the business.  “Paw Print Post sells unique, one-of-a-kind digitally printed cards that are customized with a pet’s unique paw prints.”
• Industry.  “Paw Print Post operates primarily in the pet industry and sells goods that could also be categorized as part of the greeting card industry.”
• Background information.  “Jane Matthews, the founder of Paw Print Post, has a long history in the pet industry and working with animals, and was recently trained as a graphic designer. She’s combining those two loves to capture a niche in the market: unique greeting cards customized with a pet’s paw prints, without needing to resort to the traditional (and messy) options of casting your pet’s prints in plaster or using pet-safe ink to have them stamp their ‘signature.’”
• Business objectives.  “Jane will have Paw Print Post ready to launch at the Big Important Pet Expo in Toronto to get the word out among industry players and consumers alike. After two years in business, Jane aims to drive $150,000 in annual revenue from the sale of Paw Print Post’s signature greeting cards and have expanded into two new product categories.”
• Team.  “Jane Matthews is the sole full-time employee of Paw Print Post but hires contractors as needed to support her workflow and fill gaps in her skill set. Notably, Paw Print Post has a standing contract for five hours a week of virtual assistant support with Virtual Assistants Pro.”

Your  mission statement  may also make an appearance here.  Passionfruit  shares its mission statement on its company website, and it would also work well in its example business plan.

• Market analysis

The market analysis consists of research about supply and demand, your target demographics, industry trends, and the competitive landscape. You might run a SWOT analysis and include that in your business plan. 

Here’s an example  SWOT analysis  for an online tailored-shirt business:

You’ll also want to do a  competitive analysis  as part of the market research component of your business plan. This will tell you who you’re up against and give you ideas on how to differentiate your brand. A broad competitive analysis might include:

• Target customers
• Unique value add  or what sets their products apart
• Sales pitch
• Price points  for products
• Shipping  policy
• Products and services

This section of your business plan describes your offerings—which products and services do you sell to your customers? Here’s an example for Paw Print Post:

• Marketing plan

It’s always a good idea to develop a marketing plan  before you launch your business. Your marketing plan shows how you’ll get the word out about your business, and it’s an essential component of your business plan as well.

The Paw Print Post focuses on four Ps: price, product, promotion, and place. However, you can take a different approach with your marketing plan. Maybe you can pull from your existing  marketing strategy , or maybe you break it down by the different marketing channels. Whatever approach you take, your marketing plan should describe how you intend to promote your business and offerings to potential customers.

• Logistics and operations plan

The Paw Print Post example considered suppliers, production, facilities, equipment, shipping and fulfillment, and inventory.

Financial plan

The financial plan provides a breakdown of sales, revenue, profit, expenses, and other relevant financial metrics related to funding and profiting from your business.

Ecommerce brand  Nature’s Candy’s financial plan  breaks down predicted revenue, expenses, and net profit in graphs.

It then dives deeper into the financials to include:

• Funding needs
• Projected profit-and-loss statement
• Projected balance sheet
• Projected cash-flow statement

You can use this financial plan spreadsheet to build your own financial statements, including income statement, balance sheet, and cash-flow statement.

Types of business plans, and what to include for each

A one-page business plan is meant to be high level and easy to understand at a glance. You’ll want to include all of the sections, but make sure they’re truncated and summarized:

• Executive summary: truncated
• Market analysis: summarized
• Products and services: summarized
• Marketing plan: summarized
• Logistics and operations plan: summarized
• Financials: summarized

A startup business plan is for a new business. Typically, these plans are developed and shared to secure  outside funding . As such, there’s a bigger focus on the financials, as well as on other sections that determine viability of your business idea—market research, for example.

• Market analysis: in-depth
• Financials: in-depth

Your internal business plan is meant to keep your team on the same page and aligned toward the same goal.

A strategic, or growth, business plan is a bigger picture, more-long-term look at your business. As such, the forecasts tend to look further into the future, and growth and revenue goals may be higher. Essentially, you want to use all the sections you would in a normal business plan and build upon each.

• Market analysis: comprehensive outlook
• Products and services: for launch and expansion
• Marketing plan: comprehensive outlook
• Logistics and operations plan: comprehensive outlook
• Financials: comprehensive outlook

Feasibility

Your feasibility business plan is sort of a pre-business plan—many refer to it as simply a feasibility study. This plan essentially lays the groundwork and validates that it’s worth the effort to make a full business plan for your idea. As such, it’s mostly centered around research.

Set yourself up for success as a business owner

Building a good business plan serves as a roadmap you can use for your ecommerce business at launch and as you reach each of your business goals. Business plans create accountability for entrepreneurs and synergy among teams, regardless of your  business model .

Kickstart your ecommerce business and set yourself up for success with an intentional business planning process—and with the sample business plans above to guide your own path.

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Business plan examples FAQ

How do i write a simple business plan, what is the best format to write a business plan, what are the 4 key elements of a business plan.

• Executive summary: A concise overview of the company's mission, goals, target audience, and financial objectives.
• Business description: A description of the company's purpose, operations, products and services, target markets, and competitive landscape.
• Market analysis: An analysis of the industry, market trends, potential customers, and competitors.
• Financial plan: A detailed description of the company's financial forecasts and strategies.

What are the 3 main points of a business plan?

• Concept: Your concept should explain the purpose of your business and provide an overall summary of what you intend to accomplish.
• Contents: Your content should include details about the products and services you provide, your target market, and your competition.
• Cashflow: Your cash flow section should include information about your expected cash inflows and outflows, such as capital investments, operating costs, and revenue projections.

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Scenario Planning ( Edexcel A Level Business )

Revision note.

Using Risk Assessment to Identify Risks

• This risk assessment is where a business identifies, evaluates and prioritises risks and the precautions that may be taken to protect against them

Hazards commonly covered by business risk assessments

Natural disasters

• Identify the types of natural disasters that could be expected to occur in a particular area 
• Assess the potential extent of the impact of a natural disaster on the business and its assets
• Estimate the likelihood of a natural disaster occurring and the potential magnitude  of its impact 
• Identify and implement measures to reduce the risk (e.g. evacuation plans)
• For example, 2022's Storm Eunice caused significant disruption to transport networks and damage to commercial property across England and was followed by a period of flooding that closed hundreds of businesses  

IT systems failure

• Information technology systems are used extensively by most businesses and an IT systems failure can have a devastating effect on a business's ability to carry on operating normally
• Malware (e.g. viruses) can infect a business's IT system and cause significant damage including loss of data and system downtime causing financial loss
• Phishing involves cybercriminals tricking employees into giving away sensitive information such as login or financial details
• A data breach occurs when sensitive or confidential data is lost due to a cyberattack, human error or negligence
• Downtime is when a system or application is unavailable as a result of hardware or software failures , power outages or cyberattacks  
• Employees who intentionally or unintentionally cause harm to the business's IT systems
• Stealing sensitive information or causing a system outage
• Employees who are not adequately trained or aware of cybersecurity best practices can pose a significant risk to the security and integrity of a business's IT systems

Loss of key staff

• Losing key members of staff can cause difficulties especially if they are unplanned (e.g. as a result of sudden illness or incapacity)
• Loss of experience and knowledge can impact a business competitive edge
• Losing a figurehead or influencer can affect the morale of remaining employees as well as the culture and direction of the business
• Business contacts and relationships with customers and suppliers may be lost

As well as carrying out detailed risk assessments, many businesses also plan for those uncertain events that can bring opportunities in a wider exercise known as scenario planning .

These businesses are in a good position to respond swiftly to external factors that operate in their favour as they have weighed up the various options in advance. 

Planning for Risk Mitigation

• Risk mitigation plans identify and assess risks and then prioritise and plan responses to those risks
• Two key elements of risk assessment plans are  business continuity plans and  succession plans

Business Continuity Plan

• A business continuity plan sets out how a business will operate following a serious incident or disaster and how it expects to return to normal as soon as possible  
• While the specific stages may vary depending on the businesses size and specific circumstances there are some common stages that are typically included in a business continuity plan

The business continuity planning process

Risk assessment Involves identifying potential risks that could disrupt business operations

This may include natural disasters, cyber attacks, supply chain disruptions, and other events that could impact the business

Impact analysis Is the assessment of the potential impact of these events on the business

This may involve identifying critical business functions and determining the potential financial and operational impact of disruptions

Strategy development Formulates the approaches to be taken to respond to disruption

This may include measures such as implementing backup systems, developing communication plans, and identifying alternate work locations

Plan development Outlines the specific steps that will be taken in the event of a disruption

This may include detailed procedures for handling different types of disruptions as well as guidelines for communication and decision-making

Testing and training Ensures that the plan is effective and all stakeholders understand their roles and responsibilities

This may involve conducting drills and simulations, as well as providing training to employees and other stakeholders

Maintenance and review Involves the regular review and updating of the plan to ensure that it remains relevant and effective

This may involve reviewing and updating the risk assessment, revising procedures and guidelines, and ensuring that stakeholders are aware of any changes

Succession Planning

• It is often used to preparing for the eventual retirement death or departure of the a senior executive and ensure the smooth transition of the business to the next generation of leadership
• While the process may vary depending on the specific circumstances of a business there are some key elements of succession planning  

Elements of Succession Planning

	to the business and comparing these to desired characteristics
	is developed of the business or establishing a management team to run the business during the interim period
	needed to take over the business and on-the-job training
	including employees, customers, suppliers, and investors
	as the business evolves over time

• Successful business succession planning can help to ensure the long-term viability of a business while also providing peace of mind to key leaders or employees as they plan for their departure

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3 Scenarios Your Business Continuity Planning Must Address

This is the 2 nd in a series of articles focusing on Business Continuity Planning – from basics to testing.  While not intended to define any standard for BCP’s, these articles should provide assistance for new Planners, and provoke the thought processes of experienced Planners.  The series began with a 7 Things Every Plan Should Contain . Next we examine the latest threats that Business Continuity Planning should address.

A Business Continuity Plan is the playbook for responding to a disruption of day-to-day operations.  It shouldn’t be a compilation of lists, it should be actionable.  Given that assumption, what should be the nature of the disruptions that are within the scope of the BC Plan?

Often, BC Plans focus on what we already know how to do: respond to things that have already occurred in the past, or to which we’ve repeatedly practiced to respond.  But like the TSA making us remove our shoes (because someone once tried to smuggle a bomb in his shoe), those “scenarios focus on what were – not what are – today’s most potent threats.

Today there are 3 main threats that all business organizations face:

• Cyber Security Incidents

Theft of data (breaches), denial of service (DoS), malware and data ransoming have become common occurrences.  It may not be a matter of if an organization is attacked, but when – regardless of the size of the organization.

Most cybercrimes are carried out anonymously.  That creates opportunity and increases the chance of occurrence. Cyber security incidents can lead to business interruptions and regulatory consequences.  Management needs data & information to make realistic assessments of the impact of cyber incidents on various stakeholders, assets and data.  Companies need crisis response or breach response plans and notification plans in addition to DR plans to assure an effective response.

• Physical Security

Denial of access, physical inaccessibility, lockdowns,  & forced evacuations result from many incidents that may not directly impact a facility of employees – but may hamper their ability to perform day-to-day operations.  When an ‘active shooter’ event occurs, many nearby facilities may be locked down or evacuated.  The same may result from bomb threats, chemical spills, train derailments, truck accidents – even civil protests and celebrations.

Traditional Loss of Facility and Loss of People scenarios often assume long-term abandonment of a building or a major catastrophe to employees, respectively.  But physical security threats – to facilities and employees – may last only hours or a day.  Planning must focus on strategies that can continue critical services, or deliver vital products despite short-term delays or manpower shortages – since those are more likely than smoke and rubble losses of facilities or employee groups.

• Supply Chain Reliability

As organizations extend their supply chains across the globe, their resilience assumes greater risks.  Business Continuity can play a larger role in mitigating the threat of disruptions of supplies – and customers.  Planning which focuses on single points of failure and over-reliance on single vendors can develop strategic responses to Supply Chain failures.

Traditional Loss of Vendor scenarios – when they are used – often focus very narrowly on business process level suppliers.  Understanding both the roles of major Supply Chain vendors – and the potential threats to their disruption – enables the development of strategies to meet their short-and long-term unavailability.

There is a long-running debate regarding the advisability of using scenarios as the basis for planning.  Each organization must make its own decision; what’s right for one may not be for another.  But when the choice is to employ scenarios as a Business Continuity Planning as a starting point, make certain those scenarios include today’s major threats – not yesterday’s.

The next blog in the series will focus on leveraging well-known strategies to create viable, sustainable and actionable Business Continuity and Disaster Recovery Plans

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New cruise terminal plan halted at Port Canaveral

PORT CANAVERAL, Fla. — Canaveral Port Authority commissioners voted to reverse its plan to add a new cruise terminal on Wednesday.

This would have accommodated large cruise vessels.

What You Need To Know

The canaveral port authority voted to reverse plans to add a new cruise terminal this comes at a time when commissioners received a letter from state leaders threatening to halt state funding the reason — state leaders reportedly say the port needs a place for everyone, and want there to be a focus on the space industry.

The change comes after commissioners received a letter from state leaders threatening to halt funding.

The reason — state leaders reportedly say the port needs a place for everyone, and want there to be a focus on the space industry.

“The letter specifically addressed the state’s disappointment in the location, and it reinforced that we are to support space and support cargo in that location,” said Micah Loyd, the chairman of the Canaveral Port Authority. “There’s no one interest, whether it be space, cargo, commercial fishing, cruising, that is more important than the other,” Loyd said. 

Chief Executive Officer for the Port Authority John Murray said the need for another cruise terminal won’t go away. But for now, he needs to keep the peace.

“We’re a very diverse port. It’s a challenge to keep all the interests happy at all times. That’s really what we do here, keep all of our constituencies happy,” Murray said. 

At Ludz BBQ, owner Brenda Bernard says her business thrives on busy port days.

While a new terminal doesn’t appear to be in the cards right now, she remains optimistic more people will still be coming her way.

“I think that is the part that is the most vital is to make sure the community, the businesses, and all the business opportunities that would have come from it still have an opportunity. It just may be some time before it takes launch and moves forward,” Bernard said.  

Sure, additional customers would be nice, she said, but Bernard is staying the course. 

“Right now, I think we’re good. I think that there’s enough to keep us afloat to do the things that we do. We’re just looking forward to capitalizing on the opportunities to continue to employ people and make sure we stay connected with our community,” Bernard said.  

Murray said he’s committed to this goal, bringing economic success to Central Florida. 

We also reached out to state leaders for comment on the decision and to obtain the letter that was sent to commissioners but have yet to hear back.

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HP OfficeJet Pro 9125e All-in-One Printer, Color, Printer-for-Small Medium Business, Print, Copy, scan, fax,Touchscreen; Smart Advance Scan, 3 months of Instant Ink included

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Brand	HP
Connectivity Technology	Wireless, USB, Ethernet
Printing Technology	Inkjet
Special Feature	2.7" Touch Screen, 250 Sheet Paper Tray, Double Sided Scanning, Auto-Document Feeder
Color	Cement
Model Name	New Version
Printer Output	Color
Maximum Print Speed (Color)	18 ppm
Max Printspeed Monochrome	22 ppm
Item Weight	20.48 Pounds

About this item

• FROM AMERICA'S MOST TRUSTED PRINTER BRAND – The OfficeJet Pro 9125e is perfect for offices printing professional-quality color documents like presentations, brochures and flyers. Print speeds up to 18 ppm color, 22 ppm black.
• UPGRADED FEATURES – Fast color printing, copy, fax, auto 2-sided printing and scanning, auto document feeder, and a 250-sheet input tray
• WIRELESS PRINTING – Stay connected with our most reliable dual-band Wi-Fi, which automatically detects and resolves connection issues
• HP APP – Print, scan, copy, or fax right from your smartphone with the easiest-to-use print app
• 3 MONTHS OF PRINTING INCLUDED – Subscribe to Instant Ink delivery service to get ink delivered directly to your door before you run out. After 3 months, monthly fee applies unless cancelled, and you save up to 50%.
• PROTECTS YOUR DATA – Built-in HP Wolf Pro Security uses a powerful suite of customizable tools that boosts security and helps keep networks protected against cyber threats and malware
• 2.7-INCH TOUCHSCREEN – Quickly navigate your printer with a large color touchscreen and a phone-like user interface
• SUSTAINABLE DESIGN – Made with more than 40% recycled plastic

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2.7" touchscreen

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60-sheet output tray

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35-sheet, 2-sided auto document feeder

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Product information.

Product Dimensions	13.48"D x 17.3"W x 10.94"H
Controller Type	Android
Printer Media Size Maximum	8.5 x 11.7 in
Power Consumption	5.06 Watts
Included Components	HP OfficeJet Pro 9125e AiO Printer; HP 936 Setup Black Ink Cartridge; HP 936 Setup Cyan Ink Cartridge; HP 936 Setup Magenta Ink Cartridge; HP 936 Setup Yellow Ink Cartridge; Regulatory Flyer; Ink Caution Flyer; Power Cord; Setup Poster; Reference Guide [For more information about fill and yield, see http://www.hp.com/go/learnaboutsupplies ]
Print media	Paper (plain)
Scanner Type	Easy slide-off glass, dual pass 2-sided ADF
Max Input Sheet Capacity	250
Max Copy Speed (Black & White)	21 ppm
Display Type	touchscreen
Compatible Devices	Smartphones, PC, Laptops
Maximum Color Print Resolution	Up to 4800 x 1200 optimized dpi on HP Advance Photo Paper 1200 x 1200 dpi input Dots Per Inch
Sheet Size	8.5 x 11;8.27 x 11.7;8.5 x 14;7.16 x 10.12;
Maximum Black and White Print Resolution	1200 x 1200 rendered dpi Dots Per Inch
Warranty Type	One-Year limited hardware warranty with option to extend to two-years with acceptance of HP+ Offer. For more information, please visit us at support.hp.com
Color Depth	24
Dual-sided printing	Yes
Maximum copies per run	Up to 99 copies
Wattage	100 watts
Initial page print time	11 seconds
Duplex	Automatic
Hardware Interface	USB, Ethernet
Ink Color	Black, cyan, magenta, yellow
Resolution	1200 x 1200
Additional Printer functions	All In One
Control Method	App
Output sheet capacity	250
Is Electric	Yes
Number of Trays	1
Model Series	9120
UPC	196337284807
Memory Storage Capacity	512 MB
Item Weight	20.5 pounds
ASIN	B0CFM82NS2
Item model number	403X0A#B1H
Customer Reviews	4.0 out of 5 stars
Best Sellers Rank	#702 in Office Products ( ) #6 in
Date First Available	January 12, 2024
Manufacturer	HP

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• HP OfficeJet Pro 9125e AiO Printer; HP 936 Setup Black Ink Cartridge; HP 936 Setup Cyan Ink Cartridge; HP 936 Setup Magenta Ink Cartridge; HP 936 Setup Yellow Ink Cartridge; Regulatory Flyer; Ink Caution Flyer; Power Cord; Setup Poster; Reference Guide [For more information about fill and yield, see http://www.hp.com/go/learnaboutsupplies ]

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The HP OfficeJet Pro 9125e delivers fast color printing, 250-sheet paper capacity, and duplex scanning and copying. It includes wireless and printer security capabilities to keep your multifunction printer up to date and secure.

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• 5 star 4 star 3 star 2 star 1 star 5 star 60% 14% 5% 4% 16% 60%
• 5 star 4 star 3 star 2 star 1 star 4 star 60% 14% 5% 4% 16% 14%
• 5 star 4 star 3 star 2 star 1 star 3 star 60% 14% 5% 4% 16% 5%
• 5 star 4 star 3 star 2 star 1 star 2 star 60% 14% 5% 4% 16% 4%
• 5 star 4 star 3 star 2 star 1 star 1 star 60% 14% 5% 4% 16% 16%

Customer Reviews, including Product Star Ratings help customers to learn more about the product and decide whether it is the right product for them.

To calculate the overall star rating and percentage breakdown by star, we don’t use a simple average. Instead, our system considers things like how recent a review is and if the reviewer bought the item on Amazon. It also analyzed reviews to verify trustworthiness.

Customers say

Customers have negative opinions about the quality of the printer. They mention that the paper tray is flimsy, the hardware is not reliable, and it looks fragile with all the plastic frame. Opinions are mixed on print quality and ease of setup.

AI-generated from the text of customer reviews

Customers are mixed about the print quality of the printer. Some mention that it's good, prints nicely, and has a lot of great features. However, others say that it didn't work properly out of the box, stopped printing due to insufficient ink, and wouldn't recognize the perfectly functional printhead installed in the printer, and was poorly designed, poorly executed, and poorly supported.

"...This one prints & scans much faster than my old 4650 or 5500 series did...." Read more

"...if you’re in the instant program, and the ink run out, the printer stops working until you order your ink, better not happen to me because I did not..." Read more

"... Good quality print . However, the face display is small than my last printer, Inkjet 8210 series...." Read more

"...After the last firmware update, my HP 8630 would not recognize the perfectly functional printhead installed in the printer; I had used my printer..." Read more

Customers are mixed about the ease of setup. Some mention it's fairly easy to set up, simple to use, and connects easily to WiFi. However, others say that it'll be a bit of a headache to set it up.

"Arrived in excellent condition and was easy to set up . Prints nicely and has a lot of great features (fax, scan, copy, etc.)..." Read more

"...The app doesn't allow to do a lot of thing, it is super simple , you can't change the settings too much, you need to do on the printer screen, you ca..." Read more

"...can even handle a few heavier weight papers, and also be easy to use and maintain ...." Read more

"...The color and black and white prints are very clear. It is pretty user friendly ." Read more

Customers are dissatisfied with the quality of the printer. They mention that the paper tray is flimsy, the hardware itself is not any sturdier than a bottom-of-the-line model, and it looks fragile with all the plastic frame. Some say that the printer is defective and that the Instant Ink website is more broken than not.

"...HP 8630, and HP 8740 is far greater than that of the HP 9015e; it feels cheap in comparison to the HP 8610, HP 8630, and HP 8740...." Read more

"...The plastic paper tray is made and feels cheap and looks like parts could break off easily so, no rough handling...." Read more

"...but I just DON'T HAVE this kind of time to invest in a poorly designed , poorly executed and poorly supported product." Read more

"...Example of HP diminishing quality control or devious marketing practices??)...." Read more

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How To Start A Consulting Business In 2024

Published: Aug 22, 2024, 5:34pm

Reviewed By

Table of Contents

1. outline your plan, 2. register your consulting business, 3. determine services and pricing, 4. build your website, 5. market your consulting business.

Those with a high degree of expertise in a particular field can leverage their knowledge to build a profitable consulting business. Whether you’re in between jobs or looking to make a change, learning how to start a consulting business is the first step to making great use of your skills. In return, you can create a lucrative business and can charge upwards of around INR 25,000 per hour–all for sharing your expertise with others. Here’s everything you need to know.

To get started, you’ll want to put together a strong business plan . While you don’t have to stick to every single thing, it’s a good idea to have guidance for your business.

The first choice to make is your business name. Since you’re starting an individual consulting business, your business name can be your personal name as a trade name or a business name. If you have a name that you want to use that feels more recognizable and eye-catching, make sure you factor the registration costs into your original budget.

If you need to design a logo, you can do that yourself or reach out to designers. The logo will help you start marketing to your target audience, whether that’s business owners or companies or individuals. If you want to consult in a certain industry, you should start building a list of contacts to reach out to when you’re ready to launch and take on new clients.

With all of this information ready to go, you can start on the administrative side of your business.

Before you start doing official business, you’ll need to register with the Ministry of Corporate Affairs as a sole proprietorship or as an LLC. You should also check to see if there are other legal requirements for small businesses in your state. If you are planning to grow the business, registering as an LLC will make it easier to track your business expenses for taxes. It can cost about INR 3,000 to INR 10,000 to register your business online, depending on the state.

If you’re starting a consulting business as a side hustle, it might be worth it to invest in a business to register your LLC for you.

Determining your rates also means determining what kind of services you want to offer. Consultants offer a variety of services. You can offer a wide range of support for a business, but do less of a deep dive. Alternatively, you can be hyper-specific in your expertise and go deep on a certain aspect of a company’s business. For example, if you’re an HR consultant, you can take a larger view of a company’s HR operations, or focus on their hiring practices for a specific department.

You should also consider if you want to take on short-term or long-term clients. Doing one-off consulting sessions is still a lot of work, even compared to long-term consulting. Your pricing strategy should reflect the amount of preparation you have to do. It also may depend on your industry to decide how you want to price your services: either a one-time payment, hourly rate or monthly retainer.

A consulting business needs a website so clients can find you easily. If a business is doing research into finding a consultant in your industry, you want your website to pop up for them. If you are familiar with SEO best practices , you can do this yourself, or hire someone to optimize your website.

Here are the best platforms for building a professional website:

• Squarespace : This platform is very user-friendly and has plenty of award-winning templates. In addition to great designs, it’s also affordable with all-inclusive plans starting at around INR 1,355 per month. However, it does lack more robust customization options for more experienced coders.
• Wix : This all-in-one website builder offers a drag-and-drop site editor, making web design both easy and highly flexible. However, it’s a bit more expensive than Squarespace with plans starting at around INR 1,355 per month.
• WordPress : The world’s most popular content management system, WordPress, is not the most user-friendly, though it is one of the most customizable and affordable options (as you only have to pay for web hosting for around INR 150 to INR 1,000 per month). It’s the best option for those who have very unique website needs or experience with the CMS.

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Building a website can seem intimidating, but many of the best website builders make it easy for beginners to create a site without any experience or coding knowledge. However, keep in mind that websites do require ongoing maintenance, so you might want to hire a virtual assistant or work some time into your calendar to do regular website maintenance and updating.

Marketing a new business can be difficult, but being diligent about finding new marketing channels and leveraging connections will make it a lot easier. Try these simple and low-cost solutions to start marketing.

• Search engine optimization to rank on Google
• Online business directories, such as Google My Business, Yelp or Yellow Pages
• Pay-per-click advertising, such as Google Ads, Facebook Ads or YouTube Ads
• Subreddits for entrepreneurs or your industry
• Slack groups for freelancers
• Find local networking groups, such as local business associations
• Participate in industry networking events

Working on this yourself, in the beginning, will require a fair amount of time, but when your business grows, you might be able to hire a social media strategist or partner to work on finding business leads.

Frequently Asked Questions (FAQs)

How can a consulting business get clients using fiverr.

Fiverr allows anyone to sign up and sell their services as a freelancer. A lot of companies looking for freelance writing, design or marketing work use Fiverr, so it would be a good place to do consulting for content strategy.

Is it possible to start a consulting business on the side?

If you are comfortable with working with a smaller number of clients and are realistic about your time, you can easily run a consulting business on the side. It’s important to be open with your clients about your time constraints to build trust.

What are some good fields to start a consulting business in?

The consulting business you start is going to be based on your strengths and skills, but some of the potential fields where you might enjoy some of the most success include public relations, publishing, human resources (HR) marketing, computer programming, career consulting, advertising and accounting .

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Kelly is an SMB Editor specializing in starting and marketing new ventures. Before joining the team, she was a Content Producer at Fit Small Business where she served as an editor and strategist covering small business marketing content. She is a former Google Tech Entrepreneur and she holds an MSc in International Marketing from Edinburgh Napier University. Additionally, she manages a column at Inc. Magazine.

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Kamala Harris has an ambitious plan to build 3 million new homes. She'll have to get through Congress and local NIMBYs first.

• Kamala Harris unveiled a housing plan that includes building three million homes in four years.
• Her plan includes tax incentives for builders to construct small and affordable homes.
• Harris' supply-boosting policies could get the most traction among Republicans, but it'll be an uphill battle.

Democratic presidential nominee Kamala Harris unveiled some of her major economic priorities in a speech in North Carolina last week.

Central to her agenda is a plan to make housing more affordable — an issue that's become increasingly urgent for millions of Americans amid a housing supply shortage and skyrocketing prices . Part of Harris' plan involves spurring the construction of lots of new housing through policy changes and subsidies. But barriers to new construction abound — from an often-gridlocked Congress to state and local leaders and communities.

Harris has pledged to build three million homes across the country during her first term as president. She wants to offer tax incentives for home builders to construct starter homes — smaller, more affordable units — for first-time homebuyers. She would also expand a current tax credit for businesses that build affordable rental housing. And Harris says she would double the Biden administration's $20 billion housing innovation fund intended to support local governments and developers looking for new ways of building affordable housing. Last, the campaign called for a reduction in "red tape and needless bureaucracy" that stalls new construction.

These three million new homes would be in addition to the homes developers would otherwise construct, The Wall Street Journal reported .

Jenny Schuetz, an expert in urban economics and housing policy at the Brookings Institute, told Business Insider that while a goal for new home construction is helpful, it's not necessarily an accurate prediction.

"There's no way that the government can guarantee X number of homes are going to get built," Schuetz said. But, she added, "putting the number out there and then marking progress is actually quite helpful."

Related stories

Aside from incentivizing new housing construction, Harris' plan includes a proposal to crack down on investors buying up homes in bulk and landlords from using rent-setting algorithms "to collude with each other and jack up rents."

The campaign also proposed expanding the Biden administration's assistance for first-time homebuyers, proposing an average of $25,000 in downpayment support for first-time buyers.

A spokesperson for the Harris campaign didn't immediately respond to a request for comment.

Harris' plan focuses more on boosting the supply of housing than the current administration has. The federal government has traditionally focused its housing policy on demand-side subsidies like housing vouchers. Schuetz and other housing experts are glad to see this shift, noting that a housing shortage is the central cause of the affordability crisis.

There is some bipartisan agreement on housing policy. At the state level, Republican lawmakers have successfully cut red tape to spur home construction. But boosting federal funding and shifting strategies won't be easy in a bitterly divided Capitol.

"Acknowledging that this is a problem isn't the same thing as saying we've got a magic wand that will allow us to solve it," Schuetz said.

Barriers to action

Most of Harris' housing plan would require support — and lots of new funding — from Congress. The WSJ reported that the tax credits for starter homes and affordable housing construction would cost about $80 billion combined. And getting Congress to agree on anything is a serious challenge.

Andy Winkler, director of housing and infrastructure projects at the Bipartisan Policy Center, noted that while there isn't much Republican support for demand-side housing policies like Harris' downpayment assistance program, some of the supply-side measures could get bipartisan backing.

He's most optimistic that expanding the Low Income Housing Tax Credit and other supply-side, tax-based policies could pass Congress as it debates tax reform in 2025. But he's skeptical the reforms Harris could get through would result in three million new homes in four years — a goal he called "pretty ambitious."

"I have trouble foreseeing a sweep election, so if either the House or the Senate has a Republican majority, I think the tax policies are where you could see the most potential," Winkler said.

On top of getting Congress on board, a Harris administration would need states and municipalities to reform many layers of land-use regulations and other housing-related policies to make way for new construction. Many of the policies that restrict housing construction — including land-use laws like zoning — are controlled by local and state governments, meaning the federal government's influence over those policies is limited.

The White House and Congress can use federal subsidies to incentivize local officials to loosen regulations and otherwise spur construction, but they can't force this action. And there is often lots of local opposition that significantly slows down or halts all kinds of development.

While Republicans in Congress might be interested in cutting red tape at the local and state levels, the devil's in the details, Winkler said.

"It's really difficult from the federal level to incentivize those behaviors," he said.

Watch: Can Kamala Harris win over Democrats after Joe Biden drops out of 2024 presidential election?

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