Scenario Planning: Modeling Best Case, Worst Case, and Reality
Stop guessing about the future. Build financial models that show you what happens if X, Y, or Z changes.
Your CEO asks a simple question at the board meeting: “What if Facebook ad costs go up 30%?”
You freeze. You don’t actually know. You’ve never modeled it.
You guess: “Probably… we’d make less money?”
Your board member responds: “By how much? 5%? 50%? Should we hedge against this?”
You don’t have an answer. So, you move on to the next agenda item, and nobody sleeps well that night.
This is the problem with flying without a forecast.
You’re running a business making daily decisions (spend more on ads? hire more salespeople? raise prices?) without understanding the downstream impact.
Scenario Planning fixes this. It lets you model “what if” questions and see the consequences before they happen.
The Three Scenarios
We build three scenarios for every business:
1. Best Case Everything goes right. Your ads convert better than expected. Your retention improves. Market tailwinds help you.
2. Base Case (Most Likely) Things go as expected. Your metrics stay roughly constant. You execute decently.
3. Worst Case Things get harder. Competitors undercut you. Privacy changes hurt your tracking. Economic downturn hurts demand.
Each scenario answers the same question: “If this happens, what’s my revenue, margin, and runway?”
Building the Model
Let’s walk through a real example. You run a SaaS product with $2M annual revenue.
Base Case Assumptions:
- Current MRR: $166k
- Monthly churn: 5%
- Monthly new customers: 40
- Average customer value: $4,150/year
- CAC: $1,200
- LTV:CAC ratio: 3.5:1 (healthy)
- Operating expenses: $800k/year (payroll, marketing, tools)
- Gross margin: 75%
From these assumptions, we project 12 months forward:
| Month | MRR | ARR | Net Change | Cumulative Churn | Profit |
|---|---|---|---|---|---|
| Jan | $166k | $1.99M | +$3k | -$8.3k | +$45k |
| Feb | $169k | $2.03M | +$3k | -$8.5k | +$48k |
| Mar | $172k | $2.06M | +$3k | -$8.6k | +$51k |
| Apr | $175k | $2.10M | +$3k | -$8.8k | +$54k |
| May | $178k | $2.14M | +$3k | -$8.9k | +$57k |
| Jun | $181k | $2.17M | +$3k | -$9.1k | +$60k |
| Jul | $184k | $2.21M | +$3k | -$9.2k | +$63k |
| Aug | $187k | $2.24M | +$3k | -$9.4k | +$66k |
| Sep | $190k | $2.28M | +$3k | -$9.5k | +$69k |
| Oct | $193k | $2.32M | +$3k | -$9.7k | +$72k |
| Nov | $196k | $2.35M | +$3k | -$9.8k | +$75k |
| Dec | $199k | $2.39M | +$3k | -$10k | +$78k |
In the base case, you grow from $1.99M to $2.39M ARR. You’re profitable. Life is good.
But now, let’s stress-test it.
Worst Case: What If Facebook Ad Costs Triple?
You’re currently spending $50k/month on Facebook ads and acquiring 30 new customers per month (CAC = $1,667 per customer).
What if Facebook ad costs went to $5 CPM instead of $2 CPM? (This is a real possibility; it happens during competitive periods like Q4.)
Your CAC would triple: $5,000 per customer.
Your LTV:CAC ratio drops from 3.5:1 to 1.2:1. That’s unsustainable.
You’d have to either:
- Stop acquiring customers via Facebook (new customer acquisition drops to 10/month)
- Cut product prices (customer LTV drops from $4,150 to $1,500)
- Find a different acquisition channel (takes 2-3 months to build)
Let’s model the worst case: You stop scaling via Facebook. New customers drop from 40 to 10/month.
| Month | MRR | ARR | Net Change | Cumulative Churn | Profit |
|---|---|---|---|---|---|
| Jan | $166k | $1.99M | -$3k | -$8.3k | +$45k |
| Feb | $163k | $1.96M | -$3k | -$8.2k | +$42k |
| Mar | $160k | $1.92M | -$3k | -$8.0k | +$39k |
| Apr | $157k | $1.88M | -$3k | -$7.9k | +$36k |
| May | $154k | $1.85M | -$3k | -$7.7k | +$33k |
| Jun | $151k | $1.81M | -$3k | -$7.6k | +$30k |
| Jul | $148k | $1.78M | -$3k | -$7.4k | +$27k |
| Aug | $145k | $1.74M | -$3k | -$7.3k | +$24k |
| Sep | $142k | $1.71M | -$3k | -$7.1k | +$21k |
| Oct | $139k | $1.67M | -$3k | -$7.0k | +$18k |
| Nov | $136k | $1.63M | -$3k | -$6.8k | +$15k |
| Dec | $133k | $1.60M | -$3k | -$6.7k | +$12k |
In the worst case, you’re declining. ARR drops from $1.99M to $1.60M. You’re still profitable, but the trajectory is concerning.
Your board sees this. They say, “We need to reduce burn.” You cut marketing spend (which accelerates the decline). You cut staff. You become a walking zombie.
Best Case: What If Everything Accelerates?
Now let’s flip it. What if:
- Product-market fit improves (churn drops to 3%)
- Word-of-mouth kicks in (new customers grow to 60/month)
- Enterprise deals start closing ($15k+/month customers)
| Month | MRR | ARR | Net Change | Cumulative Churn | Profit |
|---|---|---|---|---|---|
| Jan | $166k | $1.99M | +$10k | -$4.98k | +$50k |
| Feb | $176k | $2.11M | +$10k | -$5.28k | +$60k |
| Mar | $186k | $2.23M | +$10k | -$5.58k | +$70k |
| Apr | $196k | $2.35M | +$10k | -$5.88k | +$80k |
| May | $206k | $2.47M | +$10k | -$6.18k | +$90k |
| Jun | $216k | $2.59M | +$10k | -$6.48k | +$100k |
| Jul | $226k | $2.71M | +$10k | -$6.78k | +$110k |
| Aug | $236k | $2.83M | +$10k | -$7.08k | +$120k |
| Sep | $246k | $2.95M | +$10k | -$7.38k | +$130k |
| Oct | $256k | $3.07M | +$10k | -$7.68k | +$140k |
| Nov | $266k | $3.19M | +$10k | -$7.98k | +$150k |
| Dec | $276k | $3.31M | +$10k | -$8.28k | +$160k |
In the best case, you’re at $3.31M ARR. You’re growing fast and profitable. You can raise at a much higher valuation.
Why This Matters
Now, when your board asks “What if Facebook costs go up?” you have an answer.
“In our worst case, we decline to $1.6M ARR, but we’re still profitable. We have options: reduce burn, find new acquisition channels, or raise enterprise pricing. We’re not in danger.”
That confidence changes everything. You make better decisions because you’re not flying blind.
The Sensitivity Analysis
Beyond three scenarios, we do a Sensitivity Analysis.
This shows which assumptions matter most.
For your SaaS business, we ask:
- If churn goes from 5% to 7%, what happens? (Revenue drops $150k)
- If CAC goes from $1,200 to $1,500, what happens? (Profitability drops $80k but still sustainable)
- If product costs increase 20%, what happens? (Margin compresses by $240k)
By ranking these, you see what to obsess over.
In your case: Churn is your biggest lever. A 2% improvement in churn is worth $300k in ARR. So, you invest in customer success and retention rather than wasting money chasing new customers.
Building This Into Your Automation
We integrate scenario planning into your monthly dashboards:
Every month:
- We update assumptions based on actual data
- We rerun all three scenarios
- We flag if reality is trending toward worst-case or best-case
- We highlight which assumptions shifted the most
Example: In January, you projected best case of $3.31M ARR. But by March, churn is running higher than expected (6% instead of 3%). We update the model. Best case is now $3.05M.
You see this trend early. You can decide: Do I hire more customer success reps to fix churn? Or do I accept lower best-case scenario?
Without the model, you’d discover this problem in Q4 when it’s too late.
The Pitfall: Analysis Paralysis
One warning: Scenario planning can become a trap.
Some founders obsess over the model. They adjust assumptions constantly. They run 50 different scenarios trying to find the “right” one.
But the model isn’t the goal. The goal is to understand your business enough to make good decisions.
We recommend:
- Run your three scenarios (best, base, worst) once per quarter
- Update assumptions based on real data (not guesses)
- Make one key decision per quarter based on the scenarios
- Move forward
Don’t optimize the model forever. Build it, learn from it, decide, execute.
The Takeaway
You’re already running scenarios in your head. You’re just doing it badly.
“If we raise prices, maybe we lose some customers, but we make more money.” That’s a scenario.
“If we hire a sales rep, we can add more enterprise customers.” That’s a scenario.
The difference is that by modeling it, you see the actual numbers instead of guessing.
We build this into your system so you don’t have to hire a financial analyst. Every month, you get updated scenarios. You see your odds of success.
That clarity is worth more than any campaign tweak you could make.