Jaime Medina
The answer? All three.
As we approach 2026 budget season, it’s the perfect time to revisit this question. The truth is, one single set of numbers can’t serve three different purposes: setting internal goals, making operational decisions, and securing funding.
The optimistic scenario is there to set goals. It should be ambitious yet achievable, the kind of target that makes you pop champagne at the end of the year if you hit it. This is particularly relevant for sales teams, where targets are meant to be challenging and aspirational. When shared company-wide, this often becomes the general objective for everyone.
The realistic scenario is for decision-making. It’s great to set bold goals, but should you make that hire or commit to a new expense based on those targets? This is where realism matters, the scenario the CEO would privately bet on. There’s always debate around whether this or the optimistic version should be the official plan presented to the board. Some prefer realism to avoid disappointment; others believe ambition is what drives alignment.
Then there’s the pessimistic scenario, and this one is for financing. What if growth slows? What if a key hire leaves? What if an external event throws off the roadmap? This scenario is what the CFO needs to build around when planning for non-dilutive financing or public funding. Of course, it can’t be the official board plan, it’s not the level of performance we’d call a success, but it’s essential for risk management.
Our mantra is simple: aim for the optimistic case, operate based on the realistic one, and fund the company for the pessimistic.
That said, we know opinions differ, and if not managed well, tracking against three scenarios can become complex. But mindset matters. Understanding that one financial model can’t answer three different strategic questions is key to sound financial planning.
