FINANCIAL PLANNING
Business Decision Support
At different times, businesses have some important decisions to make. These decisions need to be made with a full understanding of your current situation to take advantage of opportunities while managing risk.
Analysis should evaluate a range of options through strategic, operational and financial lenses. This provides greater understanding of the possibilities and more confidence in the decision made.
Depending on the context, it could be useful to incorporate scenario planning and sensitivity analysis into business decision analysis.
SCENARIO PLANNING
Scenario planning is the building of alternative outlooksof the future. Undertaking this process is more relevantwhen there is a higher degree of uncertainty orcomplexity.
It allows you to look at the expected financial outcomesin each of these cases and supports early adaptivethinking to respond to the future track that eventuates.
SENSITIVITY ANALYSIS
Sensitivity analysis is a technique used to understandhow changes in key variables impact the expectedfinancial outcome of the proposal.
It involves systematically varying one or more inputvariables and observing the impact on the output. Thishelps identify which inputs are most influential and whereuncertainty matters most.
Knowing the areas of greatest sensitivity allows betterconsideration of risk and the priorities to manage toachieve the expected returns from the proposal.
This decision analysis is often used in support of loan applications, enabling you to obtain finance to achieve your business growth plans. Good quality decision analysis gives lenders more confidence to support your application.
Ready to make the best decisions for your New Zealand business? Start the conversation below.
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