Plan for uncertainty. Decide with confidence.
Scenario Planning Guide
A practical, executive-ready guide to building repeatable scenario workflows — from defining scenarios and modeling assumptions, to publishing board-ready outcomes and operational playbooks. Designed for CFOs, CEOs, Boards and Finance teams who need fast, defensible decision inputs.
Why scenario planning matters
Scenario planning transforms uncertain futures into actionable choices. Rather than relying on a single forecast, you model multiple plausible futures (base, upside, downside, shock) and define trigger-based actions.
Reveals vulnerabilities
Identify risks before they hurt cash and valuation.
Aligns leadership
Define contingency steps and thresholds with clear ownership.
Improves financing and treasury
Optimize fundraising timing, covenant headroom, and capital allocation.
Creates audit-ready rationale
Produce defensible decisions for boards and investors.
Who should use this guide
What a scenario planning framework looks like
Frame the question: What decision are we preparing for? (e.g., extend runway, raise bridge, accept offer)
Define scenarios: Base, Upside, Downside, Shock(s). Make assumptions explicit.
Model impacts: Revenue, margin, cash, capex, hiring, debt service, and valuation.
Assign probabilities & timelines: Likelihood and horizon for each scenario.
Derive actions / playbooks: Triggers and step-by-step responses (hire freeze, pricing changes, bridge raise).
Govern & publish: Versioned snapshots with CFO sign-off for board circulation.
Monitor & update: Weekly/monthly cadence with alerts for trigger breaches.
Standard scenario types
Base case
Expected path based on plan and current trends
Upside
Faster revenue, improved conversion, or accelerated enterprise deals
Downside
Revenue shortfall, higher churn, slower sales cycles
Shock scenarios
Macro events like rate spike, FX crisis, customer loss, supply chain failure
Hybrid / Contingent
Combinations (e.g., downside + FX shock) to measure compounding risk
Scenario inputs & assumptions
Common input groups:
Best practice: keep assumptions granular, source-linked, and owner-assigned (who owns the assumption & why).
Modeling approaches
Driver-based modeling
Map revenue and costs to observable drivers (customers × ARPA × retention). Best for transparency and sensitivity.
P&L-to-cash conversion
Run accrual P&L then convert to cash via working capital dynamics for mid-term horizons.
Direct cash modeling
Required for 0–90 day runway precision (collections & disbursements by day).
Probability-weighted scenarios
Assign likelihoods and compute expected outcomes for planning capital needs. Tip: use hybrid models (direct for near-term, driver-based for mid-term).
Step-by-step playbook
Step 1 — Scope the decision
Define the decision and timeline (e.g., ‘Do we freeze hiring if runway < 90 days within 3 months?’). Set acceptance criteria for each scenario.
Step 2 — Identify key drivers
List 6–10 critical variables that move the outcome (bookings velocity, churn, large customer risk, capex).
Step 3 — Create scenario assumptions
Document precise deltas per scenario. Example: Downside = -30% new bookings, +5% churn, DSO +10 days.
Step 4 — Build scenario models
Build base model and apply scenario deltas. Output: runway, covenant headroom, valuation impact, KPI deltas.
Step 5 — Define triggers and actions
For each scenario, define immediate actions and staged actions (30/60/90 days).
Step 6 — Sign off & publish
CFO approves scenario snapshot; publish board one-pager; archive versions.
Step 7 — Monitor & iterate
Automate alerts; check triggers weekly; update probabilities and assumptions on new data.
Scenario template (text) — quick reference
Example scenarios
Example A — Base
Assumptions: bookings growth +12% Y/Y, churn 4% monthly, DSO steady.
Outcome: runway = 14 months; valuation midpoint increases 10%.
Example B — Downside
Assumptions: bookings -30% vs plan, churn +3pp, receivables delayed 15 days.
Outcome: runway = 4 months; trigger → hire freeze, vendor renegotiation, pause marketing.
Example C — Shock (rate hike + FX)
Assumptions: interest expense +30% on variable debt; FX reduces revenue by 10%.
Outcome: debt covenant breach in 2 months; trigger → immediate lender notice and remediation plan.
Playbooks & action steps
Triage (0–7 days)
Pause discretionary spend; identify top 5 savings; negotiate 30–60 day vendor terms.
Stabilize (8–30 days)
Launch targeted revenue recovery; prioritize collections; implement hiring pause.
Recover / Finance (31–90 days)
Open bridge financing conversations; implement restructuring; prepare investor packet.
Governance & cadence
Daily: treasury monitors cash and high-risk receivables; immediate alert if trigger nears.
Weekly: FP&A updates near-term scenario and checklist; publish top 3 risks to leadership.
Monthly: CFO publishes signed scenario snapshots for board pre-reads.
Quarterly: strategic scenario review aligned with planning and fundraising calendars.
KPIs to track
Tools & automation
Connectors
Bank APIs, billing systems, CRM pipelines (Stripe, QuickBooks, HubSpot).
Modeling
Driver-based models with parameterized inputs for fast scenario toggles.
Alerts
Automated notifications when triggers are within threshold.
Audit & sign-off
Version control and CFO sign-off workflow (QuantCore™ provides built-in controls).
Integration note: Push scenario-selected comps from QuantTerminal™ to QuantVal™ to estimate valuation shifts; push valuation outputs into QuantCore™ board one-pagers.
Common pitfalls & how to avoid them
Vague assumptions
Quantify deltas and attach data sources
No owner for triggers
Assign named owners and deadlines
Too many scenarios
Limit to 3–5 actionable scenarios
Failing to tie to cash
Always show cash & covenant impacts
Not updating
Automate cadence and alerts
Communication best practices
Publish a one-page scenario brief: headline outcome, key assumptions, top 3 actions, required approvals.
Use a consistent language and template so boards can compare snapshots month-to-month.
Mark scenario probability and last-updated date prominently.
For external communication (investors/lenders) include provenance and sign-off.
Example board one-pager structure
Case study (short)
Context: SaaS startup with 10 months runway; major customer churn risk.
Action: Ran downside scenario (-40% ARR, +15 days DSO).
Result: Identified 3% cash-saving levers extending runway to 6 months and secured a $1M bridge within 21 days.
Templates & assets to offer
SEO content strategy & internal linking
Target pages to link to: Cash Forecasting Guide, 409A Valuation Guide, QuantCore product page, QuantVal service, QuantTerminal.
Content cluster ideas: “How to build a downside scenario in 48 hours”, “Scenario planning for fundraising”, “Top 5 scenario triggers investors watch”.
Schema: add HowTo schema for the step-by-step playbook and FAQPage schema for the FAQ section.
FAQ
Turn uncertainty into decisions.
Run a scenario planning session with QuantPillar — get a signed board-ready scenario snapshot and a prioritized playbook.