Planning for and analysis of different scenarios is essential for all businesses to ensure their future success – performing ‘what if’ scenarios can help business owners to better understand each financial decision or investment.
Scenario planning is a financial modelling tool that can be applied to all types of financial projections in any industry sector and can be used to define any uncertainties that may arise and develop reasonable scenarios to overcome them.
What Are the Benefits of Scenario Planning?
Some of the main benefits of scenario planning include:
- You can plan for challenges and possibilities and meet your company’s growth objectives.
- You can remove some of the uncertainty from your finances while providing the flexibility to take advantage of opportunities.
- A finance provider is more likely to fund your project if you can demonstrate that you have considered various key scenarios and their potential impacts.
- You can identify trends and driving forces.
- You are more proactive and resilient to sudden changes.
- You can attract investors.
- You can produce accurate budgets and forecasts.
‘What if’ planning enables you to run scenarios using both real time and historical data.
In addition, by using appropriate software, you can identify future risks in minutes rather than waiting months, such as budget shortfalls and inefficient processes, which enables you to make quicker decisions without the need for endless meetings and discussions.
By using cloud technology, you can forecast forward with relative ease and plan for outcomes which directly impact the financial health of your business, such as:
- ‘What will happen to my results if I take on an additional member of staff?’
- ‘How will winning this new major contract with a customer impact my business?’
- ‘I have a price increase from my suppliers – how will this impact my profitability?’
Conclusion
‘What if’ scenarios can help you to plan and make better decisions which will benefit your business.
It is the most reliable indication of what can be achieved and can be the key to future success.
How Can We Help You?
Our Business Advisory experts have a wealth of experience in advising clients on which scenarios they need to focus on to improve their business performance.
We can help you achieve operational and financial success, enabling you to grow your business.
For help or advice, please contact Lee Sugden, Director, on 0161 761 5231 or email theteam@horsfield-smith.co.uk.
