Scenario planning for contractors
Contractors navigate substantial uncertainty and are highly prone to disruption by economic and social trends.
Savvy construction firms are always looking to lower risk and maximize upside. With Profit Frog’s scenario planning software, you will be able to chart a course to maximum profitability, regardless of what the future holds.
What is scenario planning
Scenario analysis is an FP&A discipline that supports effective decision-making. It is based on assessing hypothetical future outcomes and preparing for eventualities. Scenario planning has been successfully employed by some of the world’s biggest and most successful companies, such as Amazon, Exxon, and Oracle.
In scenario planning sessions, executives will ask you a series of “what if” questions and explore all the possible outcomes. When done with the right tools (hint, hint: Profit Frog), scenario planning can lessen the uncertainty and increase profitability.
Scenario planning is now available at an affordable price for contractors to use. We help contractors model profitability under speculative futures and chart a course to maximum profits.
Which, of course, is the reason you’re a contractor.
Advantages of scenario planning for contractors
Scenario planning is extremely helpful for small businesses, including contractors. Some benefits of scenario planning include:
- Have a competitive advantage. Customers, partners, and employees will be inspired by decisiveness and skillfulness.
- Be assertive and move quickly. Contractors can react quickly to external events because they’ve already modeled their response and have a set plan.
- Minimize risk by never getting surprised. When a contractor is prepared for certain scenarios, they are less at risk because they can act quickly to minimize the impact.
- Maximize the upside. A contractor can become more antifragile by being ready to take advantage of opportunities introduced by change; meanwhile, spontaneous counterparts cannot mobilize fast enough to make use of the opportunity.
Become a more profitable contractor with Profit Frog
Back in the day, scenario planning was available only to top-tier corporations with the financial wizards on staff and unlimited funds. During the last couple of years, a new selection of scenario planning tools have come to market. Most of these are still catering to enterprise organizations and come with a steep learning curve.
Profit Frog is the only scenario modeling tool created for startups and small businesses. With an easy-to-use interface and the ability to dynamically plan multiple scenarios efficiently, we give you all the things you need…and nothing you don’t.
With Profit Frog, you don’t need to be an Excel wizard or have an army of MBAs. Simply follow our prompts and you’ll be modeling scenarios like a true pro.
Our scenario planning tools let you model a range of possible outcomes and impacts. Then you can be prepared for the worst-case scenarios while steering your contracting firm towards best-case ones.
- Gain confidence in your decision-making skills by preparing for things you can’t control
- Learn where to allocate resources
- Have a proactive rather than reactive orientation to the future
- Be strategically and financially prepared for a worst-case scenario
- Identify potential risks and turn them into gain
- Recognize and seize amazing opportunities
- Be ready for disruptive change and take advantage of it
Scenario Planning vs Strategic Planning
Many professionals mistake strategic planning for scenario planning, when the two processes are actually very different in orientation and result.
- Scenario planning assumes a dynamic, chaotic future and helps you plan the course to maximum profitability through all the uncertainties
- Strategic planning assumes a known future outcome and strategizes how to reach it
While strategic planning is a more static process and is disrupted by variability, scenario planning is designed to navigate variability.
Our scenario analysis is designed to be dynamically updated as conditions change. This sort of dynamic planning is much more effective and actionable than many static planning models.
Contractors that adopt scenario planning are better positioned for variability than those undertaking strategic planning alone.
Scenario planning FAQ
How to use scenario planning in crises caused by the Covid-19 pandemic?
In a world remade by the pandemic, every business or organization needs to invest in financial, strategic, and operational scenario planning. Profit Frog helps you create dynamic plans and model organizational viability across all types of scenarios, including disruptions caused by pandemics, supply chain issues, recessions, and other events.
How does Profit Frog’s scenario planning software differ from other options on the market?
Other scenario-planning software on the market is expensive and overly complex. Ours is easy to use and affordable.
How should a contractor calculate the cost of goods sold?
Cost of goods sold, also known as COGS, is an important metric developed for companies that make and sell physical products.
Since contractors are a service business, COGS calculations are a bit different than for manufacturers. But, fear not: our built-in COGS calculator will walk you through the process and give you all the tools to separate cost of goods sold vs OPEX and to track your costs effectively. What’s more, we’ll show you where your biggest levers are to increase profitability.
How do you create a scenario planning project with Profit Frog?
Profit Frog is an effective scenario planning tool that allows you to model as many scenarios as you want, easily and quickly.
- Identify scenarios you want to model
- Input actuals (data about your business) into Profit Frog
- Adjust variables dynamically to see how they influence scenarios
- Create an action plan and update it dynamically as conditions change
With a Profit Frog scenario plan, you can look at local or global scenarios through the lens of how they will impact your contracting business. You can then develop a strategy to navigate each hypothetical and maximize its upside while minimizing downside.
How does Profit Frog’s scenario planning software help my contracting firm make more profitable, more informed decisions?
When you construct scenarios in Profit Frog, you’ll be using your actual company data and then strategically altering certain variables. This will give you valuable insight into how specific factors will affect net profit—without actually having to experience the situations. You’ll use the insights gleaned from these exercises to craft a dynamic business plan that is antifragile and tailored to your goals.
How much does Profit Frog’s scenario planning software cost?
We price our software on a sliding scale based on total revenue. For custom pricing for your firm, don’t hesitate to contact us for a custom estimate.
Does Profit Frog offer free trials?
Yes, Profit Frog offers a 14-day free trial of our software.
Further reading on small business financial management
What is profitability modeling?
Advantages and disadvantages of scenario planning
Using profit and loss effectively
Why financial planning matters?
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