What happens when you start thinking ‘What if’? An introduction to scenario planning

Your clients ask 'what if' every day. Now, you can ask it too. Give your clients the data-led advice they need to make thier decisions.

Reduce business risk through scenario planning

There are enough what-if worries in our lives, everything from 'what if we don’t take action on climate change?' to 'what if I don’t make it home in time for the football?'. So, to help reduce the constant stress and uncertainty in business, we've put together this introduction to scenario planning, which should help you calm those 'what if' panics.

Scenario planning

What is scenario planning?

Scenario planning is a powerful tool in your armory. Why? Because clients love it!

It’s a valuable conversation and it’ll capture your clients' attention. Getting them talking about their business and future business plan, rather than their accounts allows them to see the practicality of your advice.

Combining different sets of assumptions allows you to predict the outcome of any changes to a project or forecast and also flag trends that could lead to problems for the client. Set thresholds with your client, so if areas of their business start to go south, you can be alerted and catch them early.

Asking simple questions as part of your usual meetings will get the ball rolling - and you will be amazed at how quickly clients get into the swing of things.

Why is scenario planning important?

We’re all told that we should be working on our business, not in it.

And this is what every business owner would love to be doing, but with so much going on, it’s difficult not to get sidetracked. So scenario planning is there to get your client ahead of the game, with a clear head.

Meeting a manufacturing business, ask about whether they expect the price of raw materials to rise or fall in the next 18 months. Feed the information into Futrli and work with your client to put together an action plan based on the best and worst-case scenarios.

They’ll be less troubled by the future, knowing they have plans in place. They’ll be free to knuckle down on what’s happening in their business right now. Should the worst happen, they have effective, data-backed plans, ready to go.

"Be warned. There’s no point in making assumptions for the year then persist on the same path when something happens. The forecast changes, and so should your scenario with it." - Hannah Dawson, Futrli CEO and Founder

What type of scenario might shake the foundations of a business?

If you're unsure about what kind of questions you should be posing to your client, here are our top examples to ask your client:

  • What if they lose their biggest client?
  • What if prices rise by X%?
  • What if they can’t collect receivables within X days?
  • What if they can collect them within X days?
  • What if they need to lower prices by X% because of competition?
  • What if they increase selling prices by X% due to e.g. new product development and decrease the volume of sales by X%?

Creating a what-if allows you to alter more than one variable within your scenario to assess the outcome. It's vitally important to know which variables you’re testing and how the results will compare to other scenarios. The best practice in this approach is to display each scenario in a unique dashboard so that all outcomes are crystal clear, and you can compare the decisions directly.

The benefit of this approach to you and your practice?

  • Client retention - clients love it and see the real effects it has on their business.
  • Client acquisition - when your clients see the practical value of your service, they’re far more likely to refer you to other businesses - and not on the basis that their tax return might be a bit cheaper.
  • More work - scenario planning naturally leads to the need for forecasting, tax planning, arranging debt, management accounts. It can be a great gateway to a full advisory package.
  • More outbound referrals - scenario planning increases your ability to refer work to banks, solicitors, finance brokers strengthening your firm's position with key refers.

The feel-good factor of scenario planning in forecasting…

To solidify just how powerful scenario planning can be, here’s an example from Phil Beavan, our VP of Sales for the Northern Hemisphere, who recalls a story from one of his clients.

“Remember when that volcano in Iceland went pop and grounded flights across Europe? I remember a story from one of my partners who frequently used scenario planning with their clients. When disaster hit, they were able to quickly contact the client’s bank and tell them exactly how much debt they would need if the situation continued for a week, ten days, two weeks, three weeks, a month, etc.

Their bank manager was speechless. And more importantly, comfortable extending the client’s debt. The client was delighted and referrals were received from both.”

Get business advice here

Our blog holds tips, how to’s and general business advice.


5 ways to sell your clients on advisory services

Accountancy firms need to act quickly to ensure that they offer their clients a range of advisory services, move with new trends, and increase revenue sources.

This is some text inside of a div block.


Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat.


5 ways to sell your clients on advisory services

Accountancy firms need to act quickly to ensure that they offer their clients a range of advisory services, move with new trends, and increase revenue sources.

Small Businesses

How to prepare your small business for MTD (Making Tax Digital)

Find out what MTD for ITSA means for you and how to MTD-proof your small business.

Futrli News

Futrli has been acquired by Sage!

Sage's acquisition of Futrli is part of its continued strategic approach to support accountants from proposal to advisory services.


What is a Purchase Order (PO) Number? Everything you need to know

PO Numbers are a crucial detail required for Purchase Orders and Invoices, helping identify and manage your customers purchase journey.


Total Cost: Formula, Definition & Examples

Identifying your Total Cost can be crucial in understanding your business's profitability. Learn how to properly evaluate your Total Cost performance.


Break-Even Point: Definition, Formula & Examples

Understanding the Break-Even Point Formula will help your business manage its costs and improve your financial future. Find out more!


Interim Invoice: Definition, Examples, and How to Use

An Interim Invoice is when you're requesting a partial payment, often for a partial delivery of a service or instalments on a large project. Click to learn more!


What is a MIS Report? Meaning, Types & Examples

MIS Report stands for Management Information Systems, it's an encompassing term for a set of reports that allow the business functions to be analyzed.


What Is Credit Control? Definition, Process & Procedures

Credit Control is the process of extending credit to make sales or services more attractive to a customer which in turn can increase sales numbers.


The Prudence Concept In Accounting | Definition & Guide

Prudence concept is a concept of accounting that increases the trustworthiness of figures reported in the financial statements of a business. Click to learn more!


What Is A Close Company? Definition & Rules

A close company is a UK-based business where 5 or fewer individual participators have ownership or control over the business. Read on to learn more!


What is the Sortino Ratio & How to Calculate It

The Sortino Ratio is a way to measure the return on investment by just looking at downside risk to better measure risk-adjusted returns.