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Should Your Business Engage in Scenario Planning?

May 18, 2020 12:30:00 PM Cheryl Coyle Budgeting, Financial Management, Profitability, Cash Flow

scenario planningYou may have heard people talking about scenario planning given the current state of the business environment. Should you be scenario planning? Before deciding whether you should, or should not, allow me to explain what it is.

In broad terms, scenario planning is the process of creating varying courses of action to implement based on potential events, or scenarios. The purpose of scenario planning is to provide a bigger picture wherein you see specific market trends and uncertainties.

Scenario planning is a creative process beginning with the current reality and determining what you should do depending on a variety of plausible scenarios.

Potential scenarios include:

  • Market or demographic changes
  • Product or service offerings from competitors
  • Supply chain issues
  • Technological advances
  • Employee related changes
  • Global disease or pandemic (this was a common scenario before COVID-19)

The practice of scenario planning allows you to see how changing specific inputs, such as cheaper materials or additional human resources, affect outcomes such as cost or delivery of the product or service.

Key Steps

There are eight key steps to scenario planning. They are:

  1. Identify focal issue or decision
  2. Identify driving forces
  3. Rank importance & uncertainty
  4. Flesh out scenarios
  5. Select indicators for close monitoring
  6. Assess impact for different scenarios
  7. Determine and evaluate alternative strategies

You can use our Simple Scenario Planning worksheet found here.

Not a Solo Project

Scenario planning is normally best done in a group. Your group should consist of knowledgeable and engaged members of your business. The diversity of viewpoints brings out valuable information that you may not have considered if you performed this exercise alone.


Although scenario planning can be time-consuming it should be a continuous process given the change of market conditions. It is not a “one and done” type of exercise.

Need Help?

We have a unique position of seeing how different businesses handle market volatility and capitalize on new trends. Visit us at to see how we can help you navigate the evolving marketplace.

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Cheryl Coyle

Written by Cheryl Coyle