Sensitivity Analysis Tool
Stress test your financial model with a revenue vs burn sensitivity matrix. See how changes in two variables affect runway and cash flow. Free tool.
Most founders build a financial model and hope the assumptions hold. But the best models include sensitivity analysis: a way to test what happens when assumptions change. What if revenue is 30% lower than expected? What if burn runs 20% higher? These aren't pessimistic scenarios—they're planning tools.
A sensitivity matrix shows you how runway changes across combinations of two key variables: revenue and burn. It identifies which variables matter most, reveals your breaking points, and shows investors you understand the levers that drive your business. Use this tool to stress test your model in 60 seconds.
Stress Test Your Model
Matrix Explanation
The table will show: rows = revenue change (-30% to +30%), columns = burn change (-30% to +30%)
Understanding Your Sensitivity Matrix
A sensitivity matrix shows runway (or cash flow) across different combinations of revenue and burn. Rows represent revenue change: -30% is a severe sales slowdown, 0% is your base assumption, +30% is strong growth. Columns represent burn change: -30% is aggressive cost cutting, 0% is status quo, +30% is higher-than-expected expenses.
Each cell shows your runway in that scenario. Green cells (18+ months) are safe. Yellow cells (12-17 months) require attention—you should plan your next fundraise. Red cells (<12 months) are danger zones. "Inf" means revenue exceeds burn and you're profitable.
Sensitivity Analysis Benchmarks
How to Use Sensitivity Results
Identify Your Safe Zone
Look at your baseline (0% change in both revenue and burn). This is your expected scenario. Then look at the surrounding cells. If dropping to -10% revenue and +10% burn (a modest downside) still keeps you in the green, you're in good shape. If that sends you to red, you have less margin for error.
Find Your Breaking Point
Sensitivity analysis reveals your breaking point: how much revenue can drop or burn can increase before you're in crisis? If you break below 12-month runway with just a 10% revenue decline, that's a red flag. It means your model is fragile, and you should focus on diversifying revenue or reducing burn first.
Test Different Output Metrics
You can run the sensitivity matrix two ways: runway (months until you run out of cash) or net monthly cash flow (revenue minus burn). Runway tells you planning horizons. Cash flow tells you which combinations are profitable. Both matter.
Common Mistakes in Sensitivity Analysis
Testing Unrealistic Ranges
Don't use ±50% swings unless you're in a highly volatile business. For most SaaS and services startups, ±30% revenue change is reasonable. Larger swings become academic and don't inform real decisions.
Ignoring Cost Structure Changes
This tool holds burn constant. In reality, if you're burning cash faster, you'd cut costs. A better approach: if a sensitivity scenario shows you in red, layer in your cost-cutting plan. Where can you reduce burn 20-30% in that scenario?
Not Testing Individual Drivers
Revenue and burn are summary metrics. For deeper analysis, build separate sensitivity matrices for: CAC changes (affects customer acquisition revenue), churn rate changes (affects retention), and pricing changes (affects ARR per customer). The highest-impact driver is your biggest lever.
Misinterpreting "Infinite" Runway
"Inf" means revenue exceeds burn and you're cash flow positive. But you still have operating expenses—you're not truly profitable until you account for all costs (COGS, opex, etc). Use this as a milestone, not an end state.
When to Use Sensitivity Analysis
Run sensitivity analysis when building your financial model for investors, when you're fundraising and need to show you understand your risks, when business conditions change (new competitors, market shifts, cost increases), and when deciding on headcount or spend. A quick 5-minute sensitivity check can prevent costly decisions based on brittle assumptions.
Frequently Asked Questions
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