Scenario Planning Methods

"Should we hire or should we cut?" is a question I'm hearing often from small business owners right now, which is fair given the mixed economic signals. Some clients are seeing their best quarters ever. Others are watching pipelines thin out. Everyone seems to be asking, "How do we plan for what we can't predict?" This is where scenario planning becomes your survival tool; not just hoping for the best, but modeling the reality of different futures. Here's what we walk our clients through: 🌳 The Growth Scenario: For example, if revenue is expected to be up, we’re looking at potential team expansion and higher overhead. Looking at what that does for cash flow given the changes to expected expense changes. 🌱 The Steady Scenario: Where flat growth is expected and we plan to maintain current team, we’ll want to optimize margins and prepare for inevitable per team member increases. There will likely be some percentage increase YOY but we expect the core costs to stay the same. 🍃 The Contraction Scenario: On the other hand, if revenue is expected to go down, we want to look at strategic cuts that allow the team to run efficiently while preserving cash. For our clients, this is usually a mix of team, professional services, and travel. We also want to ensure that the resources kept are used efficiently. Each scenario gets its own financial mode where we map out cash flow, runway, and break-even points for 3, 6, and 12 months ahead. The command center for this? Fathom. We've been using Fathom since the beginning of Little Fish Accounting and it lets us build the scenarios in real-time with clients, showing exactly how each decision ripples through their financials. No more spreadsheet gymnastics or gut-feeling guesses. Ultimately, the founders who survive uncertainty aren't the ones with crystal balls—they're the ones with clear models and decisive action plans. And we're glad to be the builders 🧱

Do you have a DOOMSDAY version of your forecast? 😱 If not, you may be caught off-guard if things don’t go according to plan Scenario planning is not a nice to have when forecasting… it’s a MUST have. The future is filled with uncertainties, and your job is to keep track of what your business can look like under each scenario so that you can plan accordingly. But how do you prepare different versions of your forecast? Here are the 4 most common ways that I see 1️⃣ CREATING DIFFERENT WORKBOOKS This is how I see most people do scenario planning. They have one forecast…and then another for a rainy-day scenario. Or maybe they have one version that they use for planning (conservative), and one that they use for fundraising (aggressive). This method works for 1 reason - it’s simple to set up. Just take your workbook, make a copy of it, and change all of your inputs. There’s just one problem…this becomes a nightmare to manage, as you now have multiple versions to update. That’s why I’m a much bigger fan of option 2… 2️⃣ DYNAMIC DROPDOWNS What if you had 1 workbook with a simple way to toggle on different scenarios? Now you have only 1 source of truth, but that 1 source of truth can be transformed for different scenarios as you select your dropdown. I love this approach because it’s not too much work to set up once you have a proper lookup formula in place *(note: you are forbidden from using VLOOKUP here, or anywhere else).* 3️⃣ SCENARIO MANAGER This is a cool feature in Excel that few are aware of. Rather than editing just one cell, you can edit however many cells you want with a predefined set of inputs. Simply hit Data > What-If Analysis, and select Scenario Manager 4️⃣ DATA TABLES Want to take your scenario planning to a new level? With Data Tables, you can view the outcome of all scenarios in 1 VIEW 🤩 I love this approach because it gives me strong visibility in all scenarios, rather than forcing me to toggle ot each scenario. The only limitation is that it can slow down your workbook, so select “partial” or “automatic except data tables” in your calculation options === So which version is best to use for scenario planning? To me, it doesn’t matter which you use…what matters is that you keep track of all scenarios and review your performance as close to real time as possible - the quicker you get insights, the quicker you can take action! How do you do scenario planning? Let us know in the comments below 👇

How prepared is your business for unexpected financial challenges? Imagine: You’re reviewing your company’s credit metrics, and things seem stable until they aren’t. In one scenario, Cash flow dips for the first time in four years. Why? A hefty investment in fixed assets eats into reserves, pushing cash into negative territory. In another scenario, Things get even more precarious. Key financial ratios, like debt service coverage and the current ratio, drop below covenant thresholds, signaling trouble ahead. This isn’t just about numbers on a balance sheet; it’s about the resilience of your business. What happens when your capital asset turnover ratio takes a hit? How do you handle rising debt levels or shrinking cash reserves? These aren’t hypothetical questions; they’re real challenges many companies face when navigating uncertain times. A study by McKinsey found that companies with robust scenario planning frameworks are 30% more likely to navigate economic downturns without breaching debt covenants. The takeaway? Financial foresight isn’t just a nice-to-have it’s essential. Scenario analysis helps you stress-test your financial health against various possibilities, from modest downturns to extreme cases. By exploring these "what-ifs," you gain a clearer picture of your vulnerabilities and can plan accordingly. Maybe it's about holding off on a big investment or renegotiating terms with lenders. The goal isn’t to avoid risk entirely (which is impossible) but to anticipate it and respond proactively. How is your company preparing for its downside scenarios? Let’s discuss how you approach financial resilience in a world full of uncertainties. #Finance #ScenarioAnalysis #BusinessResilience

What should founders do right now to prepare for the ramifications of a #tariff war? Jeff Burkland (CEO and founder of Burkland, which serves as a fractional CFO to 800+ startups) and I sat down to discuss this exact question on Friday. Here's an actionable playbook for #founders to navigate the coming uncertainty: 1) Meet with your top 5-10 customers: Understand how they're adjusting plans. Are they reducing spending? Which areas are highest at risk? 2) Assemble your crisis leadership team: Schedule a meeting early this week to ensure alignment and readiness for swift decision-making. 3) Build scenario plans now: What if you only achieve 50% of your revenue targets this year? Where would you need to cut if you wanted to add 6 more months of runway? 4) Rethink your product roadmap and marketing strategy: Can you introduce features that save your customers money or make your platform essential in tougher economic conditions? 5) Diversify your pipeline: Given the broad reach tariffs can have, we still don't fully understand which companies might be most exposed. Expand your outreach across different sectors and geographies (US and international) to minimize exposure to concentration risk. This moment feels reminiscent of early COVID-19, but there's a crucial difference - government action could rapidly shift the landscape again. This means we need to be prepared for multiple scenarios. Don't underestimate the potential impact of this evolving #macroeconomic climate. Use this weekend wisely - your startup will thank you.

A lot of teams fall into the same trap: they take the 𝘗𝘭𝘢𝘺 𝘵𝘰 𝘞𝘪𝘯 framework — with its famous five questions — and try to "fill in the blanks" to create strategy. But here’s the problem... 𝐘𝐨𝐮 𝐜𝐚𝐧’𝐭 𝐠𝐞𝐭 𝐭𝐨 𝐚 𝐠𝐫𝐞𝐚𝐭 𝐬𝐭𝐫𝐚𝐭𝐞𝐠𝐲 𝐣𝐮𝐬𝐭 𝐛𝐲 𝐚𝐧𝐬𝐰𝐞𝐫𝐢𝐧𝐠 𝐟𝐢𝐯𝐞 𝐪𝐮𝐞𝐬𝐭𝐢𝐨𝐧𝐬 𝐨𝐧 𝐚 𝐬𝐥𝐢𝐝𝐞. What’s missing is 𝘵𝘩𝘦 𝘱𝘳𝘰𝘤𝘦𝘴𝘴 — the structured, imaginative, rigorous work of making real choices. That’s where the 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐲 𝐂𝐫𝐞𝐚𝐭𝐢𝐨𝐧 𝐏𝐫𝐨𝐜𝐞𝐬𝐬 comes in. 🧩 Here’s how it works: 1. 𝐒𝐭𝐚𝐫𝐭 𝐰𝐢𝐭𝐡 𝐚 𝐒𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐀𝐬𝐬𝐞𝐬𝐬𝐦𝐞𝐧𝐭 What outcomes are you producing? What behaviors are driving them? What implicit choices are shaping those behaviors? 2. 𝐃𝐞𝐟𝐢𝐧𝐞 𝐖𝐡𝐚𝐭 𝐁𝐞𝐭𝐭𝐞𝐫 𝐋𝐨𝐨𝐤𝐬 𝐋𝐢𝐤𝐞 Describe a future that is better — not perfect. What behaviors need to change? What’s your aspiration from the customer's perspective? 3. 𝐈𝐝𝐞𝐧𝐭𝐢𝐟𝐲 𝐭𝐡𝐞 𝐂𝐨𝐫𝐞 𝐂𝐡𝐚𝐥𝐥𝐞𝐧𝐠𝐞 Which actions are most critical to success — and what’s blocking them? 4. 𝐆𝐞𝐧𝐞𝐫𝐚𝐭𝐞 𝐏𝐨𝐬𝐬𝐢𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬 Ask: “How might we overcome this challenge?” Don’t jump to one answer. Build multiple strategic options — each with its own internal logic. 5. 𝐃𝐞𝐯𝐞𝐥𝐨𝐩 𝐅𝐮𝐥𝐥 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐲 𝐒𝐜𝐞𝐧𝐚𝐫𝐢𝐨𝐬 Take each promising idea and flesh it out into a coherent cascade of choices (Where to Play, How to Win, Capabilities, Systems). 6. 𝐀𝐬𝐤: 𝐖𝐡𝐚𝐭 𝐖𝐨𝐮𝐥𝐝 𝐇𝐚𝐯𝐞 𝐭𝐨 𝐁𝐞 𝐓𝐫𝐮𝐞? For each scenario to work, what assumptions must hold? Don’t ask if they are true yet — just identify them. 7. 𝐓𝐞𝐬𝐭 & 𝐑𝐞𝐟𝐢𝐧𝐞 Which assumptions are uncertain? What barriers need to be broken? What experiments or pilots could reduce the risk? 8. 𝐌𝐚𝐤𝐞 𝐚 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐂𝐡𝐨𝐢𝐜𝐞 Based on evidence and logic, choose the best path now. Also define what might change that choice — and install early-warning flags. 9.𝐀𝐜𝐭𝐢𝐯𝐚𝐭𝐞 𝐈𝐭 Translate the choice into actions, behaviors, and downstream decisions. This is where strategy turns into reality. ⚠️ 𝐊𝐞𝐲 𝐢𝐧𝐬𝐢𝐠𝐡𝐭: 𝐂𝐡𝐨𝐢𝐜𝐞 ≠ 𝐀𝐜𝐭𝐢𝐨𝐧. Strategy fails when choices are made but not enacted. That’s why this process emphasizes activation and alignment at every step. This isn’t just theory — it’s a tested way to escape “me-too” strategies and build something distinctive and durable. If you want to move from PowerPoint strategy to real-world impact, this process is your blueprint. 💬 Curious how this process could work for your team or clients? Let’s talk. --------- I'm Alex Nesbitt. I help CEOs build more effective companies. ♻ Repost to help your network build better strategy.

Looming #Medicaid changes jeopardizes margin and sustainability for substantially every healthcare organization, either directly or indirectly. Looming MCD cuts will impact seniors and people with disabilities across all 50 states in substantially every #MA contract. Transcending "membership and margin," changes will impact the real members, real providers and real care which are the foundation of #Medicare success. While we await details on spending cuts and regulatory changes, here are 3 key risks to examine in depth now: 1️⃣ #MedicareAdvantage members who lose Medicaid coverage will likely see reduced #accesstocare (i.e. #CAHPS) and increased OOP costs, creating confusion (i.e. #MemberExperience) and gaps in needed services (i.e. #HEDIS and #HOS). Thought most will stay in their current plan during the initial months of lost coverage, many #SNP members will have to switch plans. #StarRatings will be impacted. 2️⃣ Providers will face new financial pressures. Providers who lose MCD revenue will face tough decisions about patient care and staffing. Change to their payor mix will shift profit pressures increasingly MA contracts to fill the gap. MA plans may face more terminations. And the simultaneous loss of indirect cost revenue from research grants will compound disruption in academic medical centers. 3️⃣ Many vendors, particularly those delivering #supplementalbenefits and #SDOH supports, will struggle as #MCD revenue shrinks. Most will have to revise business plans, revisit rates/fees and manage investors’ expectations. MA plans need to assess business continuity risks among their vendors, identifying areas where shuttered vendors may result in failed #CMS #Compliance. What Can You Do Right Now? ✅ Instead of waiting for clarity from Washington before taking the next steps, use the next few months for accelerated preparation. ✅ Identify At-Risk Members who may lose Medicaid coverage. - Create outreach and education plans to guide them through the transition. - Customize support for those you can retain and those who will have to switch. - Tailor 2025 #RiskAdjustment and Stars activities accordingly. ✅ Strengthen Provider Alignment. - Talk with providers and create collaborative contingency plans. - Prepare to amend 2025 and 2026 contract terms, incentives and #VBC criteria as soon as the 2026 #FinalRule and MCD cuts are known. - Ensure adequate staffing in provider-facing and contracting teams to execute quickly. ✅ Scrutinize Your Vendor Network. - Communicate to all vendors the expected impact within your membership. - Request operational response plans from all critical vendors. - Collaborate with key vendors on rapid solutions, focusing on those who can align with Dr. Oz’s vision of sustained engagement using #AI and digital tools. ✅ Act now. Find wasteful, redundant and low-ROI spending that can be repurposed rapidly to protect your members, your providers, and your performance. #WhatGotYouHereWontGetYouThere #LetsRoll ⭐

AI doesn't wait for your yearly review. Neither should your strategy. Static roadmaps are being replaced by living, evolving systems. The shift isn't about more meetings or bigger decks. It's about embedding agility into the core of how strategy is created, tested, and refined in the age of AI. Here are 13 ways leaders are leveraging AI to shape their strategic planning: 1/ Real-Time Monitoring Systems ↳ AI-powered dashboard integration ↳ Automated trend detection 💡Pro tip: Set up 15-minute daily stand-ups focused solely on emerging AI trends. 2/ Rolling Quarter Framework ↳ 90-day action sprints ↳ Monthly strategy refinements 💡Pro tip: Keep 70% of resources committed, 30% flexible. 3/ Scenario Planning Networks ↳ Multiple future state mapping ↳ Risk-opportunity matrices 💡Pro tip: Create 3 scenarios for every major decision: baseline, accelerated AI adoption, and disruption. 4/ Digital Twin Strategies ↳ Virtual strategy modeling ↳ Quick iteration cycles 💡Pro tip: Test strategic changes in digital environments before real-world implementation. 5/ Adaptive Team Structures ↳ Fluid role assignments ↳ Skills-based reorganization 💡Pro tip: Rotate 20% of team members quarterly across departments for fresh perspectives. 6/ AI Intelligence Streams ↳ Automated competitor analysis ↳ Market sentiment tracking 💡Pro tip: Set up AI alerts for both direct competitors and adjacent industry innovations. 7/ Micro-Learning Systems ↳ Just-in-time training ↳ Adaptive learning paths 💡Pro tip: Schedule 20-minute weekly team sessions on new AI tools. 8/ Decision Velocity Framework ↳ Rapid testing protocols ↳ Fast-fail mechanisms 💡Pro tip: Define your "reversal cost threshold" - the point at which a decision needs more review. 9/ Stakeholder Feedback Loops ↳ Continuous alignment checks ↳ Dynamic priority adjustment 💡Pro tip: Create a weekly survey that takes less than 30 seconds to complete. 10/ Resource Fluidity Models ↳ Dynamic budget allocation ↳ Skill-based resourcing 💡Pro tip: Keep 25% of your innovation budget unallocated for emerging AI opportunities. 11/ Crisis-Ready Culture ↳ Rapid response protocols ↳ Distributed decision rights 💡Pro tip: Run monthly "AI disruption simulations" with different teams leading each time. 12/ Data-Driven Pivots ↳ Automated trend analysis ↳ Predictive modeling 💡Pro tip: Define specific metrics that automatically initiate strategy reviews. 13/ Continuous Communication ↳ Strategy visualization tools ↳ Real-time progress tracking 💡Pro tip: Use AI tools to create strategy briefings under 2 minutes. The most resilient teams aren’t the ones with the perfect plan. They’re the ones built to adapt in real time. Continuous strategy isn’t a trend; it’s the new baseline for staying competitive in an AI-driven market. Which of these shifts are you implementing? Share below 👇 _____ Follow Carolyn Healey for more AI and leadership content. Repost to your network if they will find this valuable.

In today's unpredictable market, long-term digital infrastructure investments can feel daunting. Yet, inaction means missed opportunities. From my experience as both an operational leader and Chief Strategy Officer at Frontier Internet, I've learned that the most effective way to navigate this fog is by embracing strategic optionality – turning uncertainty into a distinct advantage. It’s how we’ve executed multi-billion-dollar investments even amid rising rates and inflation. Here’s our five-step approach: 1. Anchor on an inevitable strategic opportunity area (SOA): What essential role will your digital infrastructure play, and how will it meet that need better than any other option? At Frontier, we’re focused on gigabit fiber, the most future-proof technology for high-speed, low latency connectivity. Demand is rising across residential, business, and wholesale—so we’re building now to prepare for what’s next. 2. Focus on scenarios, not forecasts: Rather than betting on a single future, prepare for a spectrum of possible scenarios. This reveals how your investment performs under various market, regulatory, or technological shifts. At Frontier, we rigorously stress-test our plans across a range of scenarios—cost shocks, adoption curves, competitor moves, and more. It’s helped us remain resilient during challenging macro conditions. 3. Treat strategy as a series of real options: We break big investments into smaller, optional commitments. This empowers us to invest "as late as possible" in heavy infrastructure, preserving flexibility and managing “stranded cost”. A great example: we explored a potential off-balance sheet JV structure as an alternative path. We believe creating optionality helped maximize shareholder value without locking us into one outcome. 4. Embrace speed as a superpower: Foster rapid learning by initiating smaller, reversible "probes" or pilot projects. Before scaling a city-wide fiber build, we pilot in a neighborhood or business park to test assumptions and fine-tune our model. These small tests create big strategic clarity. 5. Diversify your portfolio: Every infrastructure bet carries risk, so don’t make just one. At Frontier, we’re building in 170+ metro areas simultaneously, spreading execution risk across geographies, labor markets, and regulatory environments. Uncertainty doesn’t have to be a deterrent. With the right approach, it can become a catalyst for smarter, faster, more resilient growth. What uncertainties are you having the most challenge grappling with? Which of these concepts resonate most with you? #DigitalInfrastructure #Strategy #CapitalPlanning

A perspective gained from decades of corporate governance and policy work: Most organizations view new laws and regulatory changes through a narrow lens of compliance. This limited focus is costing them significant market opportunities. The pattern is consistent across industries:  Legal and compliance teams mobilize, resources shift to meet requirements, and the broader strategic implications get overshadowed. But the most successful companies think differently. They ask deeper questions: ↳ How will this reshape customer behavior? ↳ What shifts might happen in our supply chain? ↳ Where are the new competitive advantages? ↳ What market gaps might open up? Real example: One of my clients turned a major regulatory shift into a complete market advantage. While competitors rushed to comply, they reimagined their entire business model. The result? They didn't just meet new requirements. They emerged as the market leader. When new laws are written and passed and regulations change, entire markets reshape. The winners aren't just the most compliant – they're the most strategic. #BusinessStrategy #Leadership #Innovation #CorporateStrategy

Chevron Ruling: Opportunities and Risks for Senior Healthcare As a follow-up to a prior post, The recent Chevron ruling and in the Loper Bright case (adding) could change the regulatory landscape for Medicare Advantage (MA) and CMS. As key stakeholders in senior care, we can proactively respond to these changes. Here are some ideas on how we as an industry can seize opportunities and address risks: Opportunities: 1. Legislative Advocacy: Lobby for clearer legislation supporting MA plans and reducing ambiguity. 2. Policy Influence: Collaborate with policymakers to draft regulations aligning with our goals and seniors’ needs. 3. Enhanced Compliance: Develop robust compliance programs and invest in training to maintain high standards. 4. Strategic Litigation: Challenge state and federal authority and form alliances with other MA organizations or key constituents applying to the Administrative Procedure Act (APA). 5. Innovation: Use regulatory clarity to innovate and differentiate services, focusing on quality care. Risks: 1. Legal Challenges: Ongoing challenges and changes may create an uncertain environment and increase compliance costs. 2. Operational Disruption: Frequent policy changes may disrupt operations and strategic planning, especially for companies with multiple product lines and not a singular consumer focus. Proactive Strategies: • Monitoring: Establish teams to track regulatory developments ( associations such as AHIP). • Scenario Planning: Prepare for different regulatory outcomes. • Engagement with CMS: Maintain dialogue with CMS to influence policy collaboratively. • Member Communication: Keep members informed and prioritize their interests first. • Challenging Unfair Regulations: Proactively challenge unfair state and federal regulations that negatively impact our ability to serve seniors effectively. By leveraging opportunities and mitigating risks, we can navigate the regulatory changes effectively and maintain our strong position in serving seniors. Working together, we ensure a supportive regulatory environment for high-quality care. #regulatorychanges #chevronruling #medicareadvantage #protectingseniors