3-Scenario Planning Framework

Running a business means dealing with uncertainty. Markets shift, customers change, and global events can throw even the best plans off course. Relying on a single forecast is risky—it limits your ability to react quickly or plan ahead.

That’s where 3-scenario planning comes in.

By creating base, best-case, and worst-case projections, you give your business the flexibility to adapt, prepare, and make smarter, more confident decisions—no matter what the future holds.

Why Use 3-Scenario Planning?

A 3-scenario framework isn’t just about protecting your downside—it also helps you spot upside and move strategically. Here's how it helps:

• Manage Risk Proactively – Know what threats are out there and plan around them.

• Uncover Opportunities – See where growth could accelerate and plan how to take advantage.

• Make Better Decisions – Evaluate choices through multiple lenses, not just one “most likely” case.

• Build Resilience – Prepare your business to weather tough situations without panicking.

• Allocate Resources Smarter – Understand where and when to invest or pull back.

• Communicate Clearly – Share possible futures with your team or investors in a structured, strategic way.

• Plan for Continuity – Ensure the business can continue even in a worst-case scenario.

Building Your 3-Scenario Planning Framework

1. Define Your Time Horizon

Pick a time frame that makes sense for your planning—usually 12, 24, or 36 months. It should match your strategic planning cycle and reflect how fast things can change in your industry.

2. Identify Key Drivers

List the internal and external factors that could significantly impact your performance. For example:

• External: Economic shifts, regulatory changes, industry disruption, global events

• Internal: Sales performance, product development, funding, marketing, team changes

3. Build Your Base Case

This is your “most likely” future—based on current trends, recent data, and realistic expectations.

• Moderate growth

• Execution of current strategy

• Normal levels of risk and opportunity

4. Develop Your Best-Case Scenario

Now imagine things go better than expected. Consider:

• Higher market demand

• Successful product launches

• Strategic partnerships or funding wins

• Favorable market or competitive shifts

Quantify how these factors would affect revenue, costs, growth, and cash flow.

5. Create Your Worst-Case Scenario

This is your stress test. Ask: what if things go wrong?

• Economic downturn

• Major customer loss

• Operational issues or rising costs

• Regulatory or supply chain disruptions

Again, quantify the impact on your core metrics.

Project the Financial Impact

For each scenario, model out key financials:

• Income Statement (Revenue, margins, expenses)

• Cash Flow Statement (Liquidity, funding needs)

• Balance Sheet (Assets, liabilities, equity)

• Operational KPIs (sales volume, CAC, churn)

You can also run sensitivity analysis to see how small changes in certain drivers (e.g. sales or churn) affect each scenario.

Analyze What’s Different—and What It Means

Compare the outcomes across your three scenarios. What’s driving the biggest differences? What are the financial and operational implications in each case? This comparison helps highlight where you need to be most flexible or where a single decision could shift the outcome significantly.

Build Contingency Plans

Your worst-case scenario should trigger action, not panic. For each major risk, plan ahead:

• Cost-cutting levers

• Backup revenue strategies

• Communication plans for your team and customers

• Funding options

• Operational shifts (e.g. slowing hiring, delaying investments)

Set Trigger Points

Define what signs or signals will let you know which scenario is playing out. These could be metrics like revenue trends, cash burn, or customer churn rates. Having clear trigger points allows you to act early—before a small problem becomes a big one.

Keep It Fresh

Scenarios aren’t one-and-done. Update them regularly—ideally every quarter or at least annually. As your business and the market evolve, so should your planning.

Integrate Scenario Planning into the Way You Work

• Strategic Planning: Pressure-test your roadmap against multiple outcomes

• Financial Forecasting: Tie scenario insights directly into your budgeting

• Risk Management: Use worst-case analysis to build real mitigation plans

• Investment Analysis: Evaluate big decisions across all three outcomes

• Stakeholder Communication: Help investors and your team understand the full picture

Be Ready for Anything

Three-scenario planning shifts your mindset from reactive to proactive. Instead of asking “what now?” when the unexpected happens, you’ll already have an answer. You’ll build confidence, flexibility, and trust—and set your SME up for smarter, stronger growth.

Even in uncertainty, you’ll know exactly where you stand—and where to go next.