Introduction

I walked out of the room dejected. I had prepared our outlook for the next five years by building out a model down to a beautiful level of detail—so much so that each individual customer rolled up to cash, revenue, retention, and usage.

Within five minutes, I was asked, “This is great, but what if we increase sales by 10%?”

By the end of the meeting, nobody was impressed.

I spent the next hour glued to my spreadsheet, rapidly altering a bevy of variables in the backend to try to answer a barrage of questions. What if sales went down 10%? What if marketing spend actually doubled? I grew frustrated. This wasn’t how my model was designed to work. I pushed back (silently), Why are these numbers being pulled out of thin air? They need to be based on specific actuals to be accurate.

The technical issue? I had constructed my scenarios from the bottom up (imagine Region → Business Unit → Country → Global). If I needed to make a change, I had to go five tabs back and increase each one by 10% or adjust which revenue stream would bear a 20% increase. This then made my sales tab wonky, as quotas and headcount didn’t match as sales headcount was modeled on actual positions we were hiring for, which threw off net income, etc.

Halfway through the meeting, I got it. The CEO just wanted an understanding of the ranges in each scenario. What would the company look like in X scenario? She wanted to establish a baseline for how good or bad the quarter (and year) might be. The specifics would come later; she just needed a sense of the range of outcomes.

From that point forward, our team started rolling out scenario-based decision-making across the company. Nearly every major decision incorporated a range of outcomes, leading to a deeper understanding of the business and smarter, more informed risks. Our rolling forecasts became accurate.

The result? Teams that understood risk and reward.

It was more standard practice than rocket science.

• Creating scenarios isn’t about predicting a single truth; it’s about showing how key levers like pricing, marketing spend, or product usage interact. Focusing on a few major variables for each decision allows the team to focus and innovate.

• Keep scenarios simple and actionable. If it takes more than 30 seconds to grasp the key drivers and results, it’s too complex.

• Use scenarios to guide go/no-go decisions with clear triggers for when to pivot or double down. The real power comes when teams can tweak inputs and instantly see how their actions matter.

The specifics:

1. The rationale for scenario planning

You will never model reality perfectly, but you can map out a range of likely outcomes. That’s the whole point of scenario planning. The key reasons it works are:

• Upside scenarios inspire. Painting a compelling vision of success motivates teams to reach for it. If everything breaks right, where will you go?

• Downside scenarios highlight risk. If things go south, how long will you have to shift gears? Planning for the worst keeps you prepared.

• Key variables become real. Digestible scenarios force the team to see how a few critical levers can make all the difference.

• “What if?” questions gain clarity. A flexible scenario framework builds leadership confidence by demonstrating that you have a handle on all the possibilities.

• Decisions gain context. Instead of debating numbers in isolation, scenarios help teams grasp the trade-offs of each choice.

This isn’t new, and yes, it takes a bit more effort. But analyzing the scenarios behind each decision helps the team understand business fundamentals at nearly any level—leading to sharper, more strategic actions.

Tip: Make it easy to update scenarios in real time so you can quickly adapt to new insights during a brainstorming session.

2. Design a central org-wide scenario

“Let’s run a scenario” sounds great until you’re buried under a tangled web of assumptions, competing variables, and outputs no one trusts. The key is to keep it simple. When designing scenarios, follow these rules:

• Change only a few variables. Pick three key drivers, max. More than that, and your insights turn into noise.

• Set the optimistic case. Assume two of the three variables improve significantly while one remains steady. This sets the upside boundary.

• Set the base case. Assume business moves forward with steady trends and one major improvement over the next quarter or two.

• Set the pessimistic case. Where’s the floor? Adjust the two biggest risks downward if all goes realistically wrong. You don’t want to come back three months later showing a performance worse than ‘pessimistic’ or you will lose a significant amount of trust.

• Tie it all together. Ideally, your scenarios should link across all key company factors. A change in one scenario should impact everything from revenue to net income where appropriate. The right FP&A tool can simplify this greatly.

Most people get this wrong by tweaking too much at once. If everything shifts, you lose clarity.

Tip: Put key variables and outcomes in a table (Y variables, X scenario #) on the front tab and place key outcomes right. If someone can’t grasp the trade-offs in 30 seconds, the scenarios are too complicated.

3. Design scenarios for each decision you model

Nearly every decision can be framed from a scenario perspective. Every decision has two competing priorities; your role is to help expose the tension. Some key examples:

• Marketing spend. Tie it to the amount of SQLs delivered, but don’t assume infinite scalability as returns often diminish at higher spend levels.

• Product usage. What drives increased engagement? It is different for each company but usually there is a clear trade-off of increased usage at the cost of time, features, marketing, or implementation? Model churn and upsell rates based on usage patterns to show the benefits.

• Pricing changes. Raising prices cuts the pipeline. Model lost volume and increased acquisition costs to determine where the real break-even point sits.

• Commission plans. Raising quotas looks great in theory, but if it tanks motivation, revenue takes a hit. Model both revenue growth and sales attrition risk by assessing the impacts of downside protection on salary.

Every decision comes with a cost. The goal is to lay it out plainly so the teams can take the right action. This is your role.

Tip: Once a decision is made, lock the assumptions. After a month, track the assumption against reality and make adjustments as needed.

4. Establish go/no-go decisions

Scenarios aren’t just theoretical, they should drive ongoing decisions and be re-assessed regularly. To make that happen, define the repercussions up front. Examples:

• If the key indicators turn towards the pessimistic scenario… What triggers a new strategy? When do you roll the change back? When do you adjust hiring plans, marketing spend, or capital investments?

• If things go better than expected… When do you double down? What metrics justify increased focus on the new strategy?

• What’s your pricing risk tolerance? How much pipeline can you afford to lose before reevaluating?

• Customer behavior shifts. If retention drops or deal cycles lengthen, at what threshold does your strategy change?

• Debt and cash flow resilience. If cash burn increases, what’s the buffer before adjusting financing strategy?

• Operational bottlenecks. If demand surges, what’s your lead time for scaling production, staffing, or infrastructure?

Scaling means getting things wrong sometimes.

Tip: Assign a specific date to reassess. Otherwise, the decision will keep getting kicked down the road.

5. Make scenarios easy for anyone to use

The real power of scenario planning? Giving others the ability to understand the trade-offs themselves. So, make it accessible by:

• Build simple drop-downs. Teams should be able to tweak key variables without needing FP&A to do it for them.

• Visualize the impact. Use clear sensitivity analyses or side-by-side comparisons so people instantly see what changes matter. A great way to do this is by creating an n x n Sensitivity Matrix. An example of this would be plotting Marketing Spend (X-axis) vs. Conversion Rates (Y-axis) to generate CAC scenarios.

• Encourage teams to test their own assumptions. In meetings, let team lead’s tweak the inputs live to build an intuitive understanding of the numbers.

• Train teams to think in trade-offs. Have them walk through different scenarios and justify why they do or don’t make sense. When you come back to review the results, walk through the scenarios again and see what was right or wrong about the original assumption.

If others can intuitively understand the scenarios that matter to their team, they will be more effective in every decision the team makes.

Tip: Push scenarios to the extreme. What happens if pricing jumps 50x? What if it drops 10%? Seeing extremes forces clarity.

In conclusion

Scenarios don’t just predict numbers, they reveal the real trade-offs behind decisions. Every business move comes at a cost. More revenue may need more resources. More risks means more variability in results. The key is ensuring everyone understands what they’re signing up for and the implications of their actions. 

By making scenario planning clearly available you’re not just forecasting, you’re giving leadership a new tool to steer the business. So, build it right. And when the CEO asks, “What if we increase marketing by 10%?”

You’ll already have the range.