Scenario & Sensitivity Analysis: Plan for the Best, Prepare for the Worst

What is Sensitivity Analysis?

Sensitivity analysis measures how changes in key financial variables—like pricing, sales volume, or interest rates—impact your bottom line.

For example:

  • What happens if your sales drop by 10%?

  • How does a price increase affect your profitability?

  • What if your costs rise unexpectedly?

This type of analysis helps you identify which variables your business is most sensitive to—and where the biggest risks (or opportunities) lie.

What is Scenario Analysis?

Scenario analysis looks at multiple “what if” situations to help you understand the financial outcomes of different strategies or external events.

Common scenarios we model include:

  • Best-case, worst-case, and most-likely outcomes

  • Market downturns or economic changes

  • Changes in customer demand or supply chain disruptions

  • Launching a new product or entering a new market

This helps you prepare for uncertainty and stress-test your business model before making critical decisions.

Why This Matters To Your Business

Minimize Risk
Understand the financial impact of potential challenges before they happen—so you’re not caught off guard.

Improve Decision-Making
Evaluate your options with clarity and confidence. Scenario modelling helps you choose the best path forward.

Support Funding and Investment
Investors and lenders want to see how your business performs under pressure. These analyses show you're thinking strategically.

Build a Resilient Business
In an unpredictable market, flexibility and foresight are key. Scenario planning helps you adapt quickly and effectively.

Complement Forecasting & Budgeting
Forecasts tell you what’s likely to happen—sensitivity and scenario analysis help you prepare for what could happen.

How LM Financial Solutions Can Help

As part of our fractional CFO services, we go beyond surface-level reporting. We build custom financial models that reflect your real-world operations—and test them against a range of variables to help you make stronger, data-driven decisions.

Our services include:

  • Sensitivity analysis on key financial inputs (sales, costs, interest, etc.)

  • Scenario modelling for strategic planning

  • Break-even and stress testing

  • Integration with budgets, forecasts, and business plans

  • Visual dashboards and easy-to-understand outputs

  • Strategic commentary to guide your decision-making

  • Alignment with bookkeeping and cash flow data for accuracy

Whether you're planning for growth, managing risk, or seeking investment, we provide the clarity you need to lead with confidence.

With sensitivity and scenario analysis from LM Financial Solutions and Bookkeeping, you're not just reacting to change—you’re ready for it.

Get in touch today to explore how we can help you plan smarter and stay financially prepared for whatever lies ahead.