Scenario Planning Tips & Why It’s So Crucial to Business Success

“Luck is what happens when preparation meets opportunity.”

This insight from Roman philosopher Seneca still rings true today, especially in business. While many businesses focus on short-term wins, the most successful look further into the future. The proof? Companies that prep for the future are 33% more profitable than those that don’t.

To produce these benefits, scenario planning is a powerful strategy that predicts potential outcomes, anticipates challenges, and keeps you ahead of the competition, no matter what the future throws at you.

This article discusses this strategic initiative in more detail, including real-life examples, and a clear step-by-step process you can follow to look into the crystal ball of your business.

TL;DR — Key Takeaways

• Scenario planning is a proactive strategy businesses use to explore and prepare for different possible futures.
• Scenario planning is more important than ever due to technological advancements, climate changes, economic downturns, and other factors.
• A good scenario planning process includes six key steps: identifying driving forces, defining critical uncertainties, developing different scenarios, analyzing their implications, creating action plans, and, lastly, monitoring and updating the scenarios.
• Common scenario planning mistakes? Avoid planning too far ahead, adding too many variables, planning only for the best- and worst-case scenarios, and not assigning ownership for the main scenario tasks.

What does scenario planning actually mean?

Scenario planning is a strategic methodology that businesses use to prepare for multiple future events. Instead of asking, “What will happen?” it asks, “What could happen, and how will we respond?”

The approach has its roots in military strategy, but futurist Peter Schwartz, a former Shell executive, is credited with introducing scenario planning to the business world in the 1980s. As global resources came under pressure, he recognized the need for companies to challenge their assumptions and build strategies that withstand uncertainty.

“Scenarios are the most powerful vehicles I know for challenging our ‘mental models’ about the world and lifting the blinders that limit our creativity and resourcefulness.” — Peter Schwartz, The Art of the Long View

At its core, scenario planning helps you:

• Identify driving forces
• Determine critical uncertainties
• Create multiple scenarios
• Test strategies
• Plan responses

Scenario planning example

Imagine you have a CRM tool for your real estate business, and want to use scenario planning to understand what would happen if a new competitor disrupts the market. The different scenarios would include:

• Best-case scenario: You quickly identify the competitive threat, adjust your pricing, and double down on brand loyalty and customer service to retain market share.
• Worst-case scenario: The competitor’s innovation shakes up the market and pulls customers away. In response, you invest in product upgrades, launch new features, and shift focus to niche segments with little presence, carving out a new competitive edge.
• Moderate scenario: The competitor gains traction, but your company differentiates through product quality and brand trust. You roll out targeted marketing campaigns and loyalty programs to reinforce your value and keep customers engaged.

Why scenario planning is becoming increasingly important for business success

Scenario planning gives your business a structured way to navigate uncertainty. It helps leadership plan, prioritize long-term strategy, and make faster, more confident decisions. All of these benefits are vital in 2025.

💹 Economic conditions shift overnight

The market is more uncertain than ever, no matter where you are and what you do. In April 2025, the United States imposed tariffs on imported goods, driving up costs, increasing inflation, and potentially unemployment rates, among many other things.

Companies that map out economic scenarios in advance are in a stronger position to adapt. Whether that means adjusting pricing, restructuring costs, or pausing expansion, the planning is already in place.

🦾 AI is changing how work gets done

Artifical intelligence is already reshaping entire industries. Leaders like Bill Gates claim artificial intelligence will replace a variety of roles, from teachers to doctors, within the next 10 years.

This kind of disruption isn’t something you can wait to address. Scenario planning helps teams think through how emerging technologies could affect talent needs or customer expectations (and what to do next).

🌪️ Climate risks are now business risks

In 2024, average global temperatures exceeded the 1.5°C threshold identified in the Paris Agreement as a critical limit. Since then, extreme weather events such as severe droughts, deadly floods, and powerful cyclones have become more frequent and severe.

Climate-related disruptions must be accounted for in any serious business plan, including how they impact your supply chain or energy consumption. When you forecast future scenarios based on environmental risk, your teams have a framework to stay operational and responsive.

Equally, when big opportunities arise, scenario planning lets you foresee possible outcomes so you know which route to take.

When scenario planning works: Shell and the 1973 oil crisis

In 1973, a global oil crisis forced companies to cut production and raise oil prices. While many struggled, Royal Dutch/Shell was prepared. Since the late 1950s, Shell had been gathering historical data and exploring long-term possibilities through “long-range studies.”

By 1965, these had evolved into structured scenario planning exercises, each simulation forecasting different possible futures for the oil industry. One possible scenario predicted a major supply disruption. Acting on that, Shell switched to producing light fuels, helping them become one of the few companies that made it through the oil crisis.

When scenario is missing: Kodak’s decline

Kodak dominated the global camera and film market for much of the 20th century, but its downfall began long before digital photography took over. In 1975, Kodak’s engineer created the first digital camera. Instead of exploring what the innovation could mean to the company and the broader industry, leadership decision-makers shelved the idea.

Meanwhile, competitors like Canon, Sony, and Fuji leaned into the digital shift throughout the 1990s. By the time Kodak entered the digital market in the early 2000s, the company was already behind. It filed for bankruptcy in 2012.

Toggl’s step-by-step scenario planning process

Toggl has been around since 2006, and we’ve weathered a few storms. As a remote company in an age when remote work wasn’t yet popular, scenario planning has been key to how we’ve grown and built resilience across multiple product lines and markets.

Here are some of the practical ways we use scenario planning.

Step 1: Identify driving forces

Good scenario development requires looking into internal and external factors that could impact your operations.

External factors

Use a PESTLE analysis to organize the external forces that could shape your future:

• Political factors:
  Consider how changes in government policy, trade regulations, or tax laws could affect operations.
  Example: A new regulation on carbon emissions may impact logistics and supply chain strategies.
• Economic factors:
  Evaluate market conditions like inflation, interest rates, and employment levels.
  Example: An economic downturn could reduce consumer spending, forcing you to adjust pricing or inventory.
• Social factors:
  Look at evolving demographics, values, and consumer behavior.
  Example: A growing preference for sustainable products may push you to change suppliers or product design to become more environmentally friendly.
• Technological factors:
  Assess how innovations or automation could disrupt current processes or create new opportunities.
  Example: The rise of generative AI may change how companies approach customer support or content creation.
• Legal factors:
  Keep track of changes in laws that could impose restrictions or open new markets.
  Example: New data privacy laws such as GDPR might require updates to CRM systems or marketing consent policies.
• Environmental factors:
  Consider factors like climate change, resource availability, and environmental regulations.
  Example: A drought affecting crop supply might disrupt a company’s food manufacturing pipeline.

Internal factors

Internal factors reflect your organization’s current capacity, limitations, and readiness to respond to change. They’re equally important as external factors when assessing the potential future of your business outcomes.

• Team capacity and skills:
  Understanding your workforce is essential for assessing how well your business can respond to future challenges.
  Example: If your scenario involves adopting new technology, but your staff lacks technical expertise, you must plan for hiring or training.
• Operational efficiency:
  How smoothly your internal systems can determine whether you can handle disruption or growth.
  Example: A company with outdated manual processes may struggle to pivot quickly in a crisis or expansion scenario.
• Technology and infrastructure:
  Your existing tech stack can either support rapid adaptation or become a barrier to change.
  Example: A business running on legacy systems may face delays in rolling out new services or meeting compliance needs.
• Financial health
  You need a clear picture of your financial position to assess risk and prepare realistic responses.
  Example: A financially healthy company might pursue growth in a high-risk scenario, while another may need to focus its financial planning efforts on cost-cutting and survival.
• Company culture and adaptability:
  The mindset and morale of your team will significantly impact how quickly and effectively your organization responds to change.
  Example: A rigid, top-down culture may resist strategic pivots, while an adaptive culture thrives on testing and iteration.
• Leadership and decision-making structure:
  Scenario planning requires timely and informed decisions, so it’s critical to understand how decisions are made and who makes them.
  Example: Companies with decentralized decision-making might be more agile in complex scenarios, while centralized ones may act more consistently but more slowly.
• Brand reputation and customer loyalty:
  Your public perception can influence what you can get away with during uncertainty.
  Example: A strong brand might retain customers even through major changes, while a lesser-known one may struggle.
• Innovation pipeline:
  Your ability to generate and implement new ideas determines how well you can seize opportunities or mitigate risks.
  Example: If a scenario suggests a market shift, a business with a healthy R&D function can pivot faster.

Step 2: Define critical uncertainties

Critical uncertainties are events or shifts that are both high-impact and highly unpredictable, such as sudden major changes in regulations or large fluctuations in demand. These variables dramatically alter your business’s future, but you can’t control or forecast them with precision.

Here’s what critical uncertainty looks like in different industries:

• Retail: Shifts in consumer spending due to inflation or economic downturns
• SaaS and tech: Introduction of new data privacy or AI regulations
• Manufacturing: Disruptions in global supply chains due to geopolitical events
• Finance: Unpredictable changes in interest rates or monetary policy
• Healthcare: Regulatory changes affecting insurance coverage or service models
• Energy: Government incentives or penalties related to green energy
• Education: Uncertainty around funding models or enrollment trends

Step 3: Develop scenarios

Based on your findings, develop plausible scenarios — fully structured stories telling you what could happen based on different outcomes. When doing a scenario analysis, most businesses focus on three possibilities:

• Best-case scenario: Everything goes in your favor. The market conditions are ideal, risks are minimal, and growth accelerates.
• Worst-case scenario: Key uncertainties break against you. Disruptions happen, resources dry up, and tough decisions are required.
• Moderate scenario: A realistic middle ground where some challenges emerge, but they’re manageable with the right adjustments.

Example of a startup preparing for Series A funding

Imagine you’re leading a growing SaaS company gearing up for a Series A funding round. The outcome of that round is your critical uncertainty; after some careful brainstorming, you’ve mapped out three possible scenarios:

• Best case: The funding round exceeds expectations. The team expands rapidly, enters new markets, and fast-tracks product development.
• Worst case: The funding is delayed or falls through. The company pauses new initiatives, cuts nonessential expenses, and pivots toward bootstrapped growth or alternative funding sources.
• Moderate case: Funding is secured but below your desired target. Growth continues at a steady pace with more conservative hiring and rollouts.

Each scenario outlines what might happen and what the business will do if it does.

The former CEO of Intel, Bob Swan, said: “Scenario planning is not just about preparing for potential downsides; it is about equipping organizations to act on strategic opportunities and mitigate risks to the long-term strategy and vision.”

Planning tools like Toggl Track can operationalize your scenarios by showing how your team spends time and effort across each scenario. You can:

• Set up separate projects for each scenario (e.g., “Scenario A: Aggressive Growth,” “Scenario B: Lean Plan”)
• Track time spent on related planning, resource modeling, or research tasks
• Use tags to categorize activities by team, focus area, or priority level
• Analyze reports to compare how much effort is going into preparing for each path in a given time frame

Step 4: Analyze implications

Next, you’ll learn how each possible scenario impacts your organization’s goals, resources, and day-to-day operations. This lets you move from hypothetical business planning to real-world consequences. Here’s what to assess:

• Strategic management goals: Would your company’s objectives and goals need to shift? Are timelines for product launches, revenue targets, or market entry still realistic?
• Resources: How would each scenario impact your available budget, tech infrastructure, or partnerships?
• Team operations: Would staffing levels need to change? Are some teams under- or over-resourced in specific scenarios?

Example of a SaaS startup facing different funding scenarios

Best-case scenario (oversubscribed investment round)

• Goals: Accelerate hiring and product roadmap
• Resources: Increase marketing and R&D budgets
• Team: Build out sales, customer success, and development teams at a fast pace

Moderate scenario (partial funding)

• Goals: Maintain steady growth with new targets
• Resources: Prioritize spending on core features and key hires rather than investing in new ventures
• Team: Maintain lean operations with careful hiring

Worst-case scenario (no funding)

• Goals: Shift from growth to survival and a focus on retention and sustainability
• Resources: Freeze budgets, look for alternative funding or partnerships
• Team: Pause hiring, potentially reduce headcount, and redistribute existing roles

Step 5: Create action plans

The penultimate step of the process is to develop a clear action plan for each possible outcome. The plan should describe what to do and precisely when to take action, with the help of triggers, actions, and owners:

• Triggers: What signals that a scenario is unfolding?
• Actions: What happens when it does?
• Owners: Who is responsible for what?

Example of a SaaS startup translating scenarios into action

Best-case (oversubscribed round)

• Actions: Begin hiring for main roles, expand marketing efforts, and accelerate product roadmap
• Triggers: Signed term sheet above $5M; board approval for hiring plan
• Tasks: Post five new roles, allocate $50K for user acquisition, initiate MVP for premium features

Moderate-case (partial funding)

• Actions: Prioritize critical hires, trim marketing spend, focus on improving the core product
• Triggers: Signed term sheet under $3M; revenue growth below 10% QoQ
• Tasks: Freeze all nonessential roles, reallocate retention campaign budgets, and delay the beta launch

Worst-case (no funding)

• Actions: Pause hiring, cut operational costs, explore revenue-based financing
• Triggers: 90 days with no investor commitments; burn rate exceeds runway projections
• Tasks: Notify vendors of spending reduction, shift focus to upselling current customers, and explore grant programs

Step 6: Monitor and update

With your action plans set in place, don’t wait for the future to unfold. Circumstances change, and real-world developments can turn something unlikely into a matter requiring urgent attention.

As the CEO of JLL recently said, “I talk to people who say this is the worst time ever, and my next meeting could be with somebody who says this is the best time ever. We will see some of our best deals ever over the next 12 to 24 months.”

Example of a SaaS startup tracking and updating its strategy

For our tech startup preparing for different Series A outcomes, this would involve:

• Watching for key signals: Review investor responses, burn rate trends, and revenue performance weekly
• Adjusting action plans: If investor interest stalls or a trigger threshold is hit (e.g., runway drops below six months), the team should pivot to the worst-case playbook
• Updating scenarios: If a new opportunity arises (like a potential acquisition or government grant) that could open up an entirely new path, the company can add or revise scenarios accordingly

Toggl products can help here, too.

• Toggl Track’s reporting features monitor the time and resources dedicated to each scenario or task. These spot underinvested areas and confirm your team is executing on the right plan.
• Tags and custom fields track which scenario a task belongs to and generate reports to compare how priorities shift over time.
• With Toggl Focus, teams can block out time specifically for strategic reviews, planning updates, or course corrections, so scenario adjustment becomes part of the regular workflow rather than an afterthought.

Common mistakes leaders make with strategic planning

Figuring out different scenarios for the future of your business is incredibly valuable, but only when you avoid some common curveballs:

Planning too far ahead

Long-term thinking is at the heart of scenario planning, but pushing too far into the future can be a trap. As Oliver Baxter of Herman Miller’s Insight Group puts it:

“Sometimes when we’re discussing futurology or scenario planning, we can get too caught up thinking ‘What’s the next big thing? What’s coming down the line?’ In history, sometimes we jump too far ahead and miss some of the little things along the way.”

He points to a famous example: in 1969, humans landed on the moon. But it took another two years for someone to put wheels on luggage — an everyday problem hiding in plain sight. The lesson? Not every leap forward needs to be dramatic. Small, incremental improvements can reshape the business landscape just as much as moonshots.

The solution: Balance big-picture thinking with grounded, near-term planning. Build scenarios around the next 6–24 months, then revisit and revise frequently. If you’re always planning for the far future, you may miss what’s already happening in front of you.

Overloading scenarios with too many variables

Millions of factors and variables could impact any given scenario, and you’d struggle to predict some of them. After all, who would have believed a global pandemic was on the menu in 2020?

Adding too many variables can make scenarios overly complex and difficult to interpret or act upon. Teams may drown in the details and fail to focus on the most important strategic insights.

The solution: Keep scenarios focused on a few key drivers of change. This is typically a handful of variables like market demand, technology disruption, or regulatory shifts. For example, instead of trying to model 10 different economic indicators, prioritize the top ones that have the biggest potential impact on your business.

Planning only for worst-case or best-case scenarios

Focusing only on the extremes can seem attractive, but it misses the possible scenarios that happen in the middle.

The solution: Include several plausible scenarios, including moderate or mixed outcomes. Scenario planning is most powerful when it helps teams navigate uncertainty, not just survive disasters or chase ideal conditions for growth.

As the former CEO of Cisco said, “We’re going to go into an economic slowdown… So companies have to prepare for a bumpy landing, do scenario planning, and be prepared to act with agility,” which means that every company should prepare for multiple scenarios at any point in time.

Neglecting to assign clear ownership for scenario tasks

The difference between proper scenario planning work and a scenario planning exercise is assigning stakeholders. Even well-designed plans can fail if no one is accountable for executing or monitoring the response when a scenario starts to play out.

The solution: Assign roles and responsibilities for every scenario outcome. Clarify who will monitor indicators, trigger action plans, and communicate changes. Tie these responsibilities into your regular workflows.

For example, you can use Toggl Track’s team features to assign specific scenario tasks to individuals (e.g., “If supply chain delays increase by 15%, Alex monitors and triggers vendor switch protocol”). Add descriptions and comments in task timers so everyone stays aligned and accountable.

How Toggl enhances scenario planning

Toggl Track is an excellent piece of software to help your scenario planning efforts, especially if your data is scattered across different tools and platforms.

With Toggl Track, you can…

• Use time tracking for tasks related to scenario planning to find out how efficient your teams are
• Create reports that show how productive individuals and teams are and which resources they spent across different plans
• Create collaboration dashboards displaying what everyone does at any given point in time

Toggl Focus then comes in to finish the job. You can use this tool to make critical decisions and minimize distractions. With the scenario action plans ready, Toggl Focus lets you execute them properly by prioritizing what matters.

Focus on what matters

Scenario planning helps you prepare for uncertainty instead of winging it. It’s a structured process that readies you for anything in your country, industry, or business environment.

Get started today by analyzing your driving forces and setting a strong foundation for your scenario planning efforts.

Toggl Track delivers key insights about how you spend time in your business. Talk to our sales team today to find out how our time reporting features can help you and how they fit into the rest of the Toggl tool stack.