You have investment opportunities.
You don’t know how much to invest.
You need scenario analysis.
You need sizing strategy.
Small bets. Big swings. Scenario analysis. Your strategy.
This guide shows you how.
Investment sizing. Risk management. Scenario modeling. Your success.
Read this. Model scenarios. Size investments.
Key Takeaways
- Model scenarios—use NPV and DCF calculators to model best, base, and worst case outcomes
- Start small—test with small bets when uncertainty is high or learning is needed
- Go big—commit heavily when confidence is high and opportunity is clear
- Use DCF for valuation—use DCF Calculator to value opportunities before sizing
- Balance portfolio—mix small bets and big swings to balance risk and return
Table of Contents
Why Sizing Matters
Sizing determines risk and return.
What happens with wrong sizing:
- Too small: Opportunities are missed
- Too large: Capital is at risk
- Resources are wasted
- Growth is constrained
What happens with right sizing:
- Opportunities are captured
- Capital is protected
- Resources are optimized
- Growth is accelerated
The reality: Sizing enables success.
Modeling Scenarios
Model multiple scenarios:
Best Case Scenario
What to model:
- Highest revenue projections
- Lowest cost assumptions
- Fastest growth rates
- Best outcomes
Why it matters: Best case shows upside potential.
Base Case Scenario
What to model:
- Expected revenue projections
- Normal cost assumptions
- Typical growth rates
- Most likely outcomes
Why it matters: Base case shows expected results.
Worst Case Scenario
What to model:
- Lowest revenue projections
- Highest cost assumptions
- Slowest growth rates
- Worst outcomes
Why it matters: Worst case shows downside risk.
Pro tip: Model scenarios. Best case, base case, worst case. Scenarios show range of outcomes. Use our Net Present Value Calculator for each scenario.
Starting Small
Start with small bets:
When to Start Small
When to test small:
- High uncertainty
- Learning needed
- Unproven opportunity
- High risk
Why it matters: Small bets reduce risk.
Benefits of Small Bets
What benefits:
- Lower risk exposure
- Learning opportunity
- Flexibility to adjust
- Ability to test
Why it matters: Benefits enable smart scaling.
Scaling Up
When to scale:
- Small bet succeeds
- Confidence increases
- Opportunity proves out
- Risk decreases
Why it matters: Scaling captures upside.
Pro tip: Start small. Test when uncertainty is high, learn from results, scale when proven. Small bets reduce risk.
Going Big
Commit heavily when appropriate:
When to Go Big
When to commit heavily:
- High confidence
- Clear opportunity
- Proven track record
- Low risk
Why it matters: Big swings capture big opportunities.
Benefits of Big Swings
What benefits:
- Capture full opportunity
- Competitive advantage
- Faster growth
- Higher returns
Why it matters: Benefits enable transformation.
Managing Risk
How to manage:
- Use scenario analysis
- Build in buffers
- Monitor closely
- Have exit plan
Why it matters: Risk management protects capital.
Pro tip: Go big. Commit when confidence is high, opportunity is clear, risk is manageable. Big swings capture big opportunities.
Using DCF for Valuation
Use DCF to value opportunities:
Calculate DCF
Calculate it:
- Use our DCF Calculator
- Enter cash flow projections
- Enter discount rate
- See present value
Why it matters: DCF shows true value.
Use for Sizing
How to use:
- Value opportunity with DCF
- Compare to investment needed
- Determine appropriate size
- Balance value and risk
Why it matters: DCF enables smart sizing.
Multiple Scenarios
What scenarios to model:
- Best case DCF
- Base case DCF
- Worst case DCF
- Size based on scenarios
Why it matters: Scenarios show value range.
Pro tip: Use DCF. Calculate value, use for sizing, model multiple scenarios. See our DCF Calculator for valuation.
Balancing Portfolio
Balance small bets and big swings:
Portfolio Mix
What mix to create:
- Some small bets for learning
- Some big swings for growth
- Balance risk and return
- Diversify opportunities
Why it matters: Balance optimizes outcomes.
Risk Management
How to manage:
- Limit big swing exposure
- Diversify small bets
- Monitor portfolio
- Adjust as needed
Why it matters: Risk management protects capital.
Optimization
How to optimize:
- Increase winners
- Decrease losers
- Rebalance regularly
- Focus on best opportunities
Why it matters: Optimization improves returns.
Pro tip: Balance portfolio. Mix small bets and big swings, manage risk, optimize over time. Balance enables success.
Your Next Steps
Model scenarios. Decide sizing. Balance portfolio.
This Week:
- Review this guide
- Model scenarios for opportunities
- Decide small bet vs. big swing
- Calculate DCF valuations
This Month:
- Make investment decisions
- Size investments appropriately
- Balance portfolio
- Monitor results
Going Forward:
- Use scenario analysis regularly
- Adjust sizing based on results
- Optimize portfolio mix
- Improve decision-making
Need help? Check out our Net Present Value Calculator for scenario analysis, our DCF Calculator for valuation, our investment triage framework guide for ranking, and our 360° investment view guide for comprehensive analysis.
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Sources & Additional Information
This guide provides general information about investment sizing using scenario analysis. Your specific situation may require different considerations.
For NPV calculation, see our Net Present Value Calculator.
For DCF valuation, see our DCF Calculator.
For investment triage, see our Investment Triage Framework Guide.
Consult with professionals for advice specific to your situation.
