Navigating Uncertainty: Lessons from an Ice Cream Vendor's Summer

Navigating Ice Cream Sales, Sun, and Setbacks

Ah, the sweet sound of an ice cream van jingling down the street! Picture this: each January, Mr. Whimsy, our friendly neighbourhood ice cream vendor, prepares for another summer of scooping joy by producing his sales forecast. With 100 days of sunshine ahead (or so he hopes), and aiming to sell 100 ice creams a day at ￡3 a pop, Mr. Whimsy knows his back-of-the-envelope math—￡30,000 in revenue sounds like the perfect summer payday.

But he also knows that running a business—especially one as weather-dependent as ice cream—comes with its fair share of twists and turns. Freak thunderstorms, equipment breakdowns, and the whims of customer demand are all lurking, threatening to melt away those profits.

Which is why Mr. Whimsy doesn’t just rely on good vibes and a sunny disposition. He’s armed with something even better: scenario planning. Using some clever number crunching (we’ll keep it simple!), he does analysis to figure out just what the summer might throw his way—be it sizzling sales or slippery setbacks. So, let’s dive into what Mr. Whimsy’s crystal ball (aka a Monte Carlo simulation) tells us about his summer ahead!

Sunny Days or Stormy Skies? The Battle for 100 Days of Sales

Mr. Whimsy starts with a solid 100 days of potential sales. But, alas, not all of these will be sunny. There’s a sneaky factor called Days Lost, which includes everything from freak thunderstorms to his beloved van breaking down.

Here’s how the numbers shake out:

On average, Mr. Whimsy loses about 4 days over the summer. Not bad, right? But in those rare, unlucky summers, he could lose as many as 25 days—that would be a quarter of his season gone!

Why might he lose these days? Well, the risks are real, and they’re not just about the weather. Here’s what’s causing the trouble:

Weather Woes: In the ice-cream business, weather is a given. Come rain or shine, you’ve got to roll with it. Bad weather has been known to cost Mr. Whimsy up to 7 days of sales over the course of a summer, but he’s a hardy fellow so usually he only misses 2 days when the rain gets really bad.

Equipment Failures: What’s worse than a rainy day? The day the freezer gives up the ghost! Mr. Whimsy knows equipment doesn’t last forever but a frozen freezer or defective dispenser could steal away up to 14 days of business if it packs in mid-summer.

Van Mishaps: Sometimes, the biggest threat isn’t the weather or the freezer —it’s the van. In the worst-case event of it being stolen or damaged (and yes, ice cream vans are hot property!), Mr. Whimsy could lose as much 21 days waiting for repairs or a replacement.

Council Clampdown! It’s not always the weather that blows the summer off course—sometimes, the biggest storm is brewing at City Hall. Every few years, the council launches some surprise clampdown on vendor regulations. Suddenly, Mr. Whimsy finds himself tangled in red tape, forced off the road for a solid 5 days while he scrambles to file the right paperwork.

Now, while each of these events could happen, it's highly unlikely they're going to happen together which is why Mr. Whimsy turns to scenario analysis when making his sales forecast. By running his trusty simulations, he can see how the various probabilities combine and he can be confident that on average he'll only lose four days, and even in the most extreme of unfortunate seasons, he would only lose around 25 sales days.

Scoops, Sales, and Sweet Success (Maybe?)

When Mr. Whimsy does get to sell, sales days can be a wild ride! Mr. Whimsy doesn’t always get prime real estate. Each week he’s assigned a location. It could be a bustling tourist hotspot or a dead-end tourist not-spot. If it’s the latter, with minimal foot traffic, he might struggle to sell half of what he expected. The simulation predicts that while on busy days he could scoop out up to 125 cones, on average he’ll serve around 87 ice creams per day. That’s down on his initial estimate but still a lot of smiles in a cone.

There’s also the issue of competition and that will impact the price he charges. If he’s the only vendor in the location, he might be able to set his prices higher and still sell plenty of ice cream. But if there are other vendors nearby, he might lower his prices to stay competitive, which could cut into his revenues. Still, most days Mr. Whimsy should see steady sales and with an expected average price of ￡2.78 per cone, things look pretty tasty.

The Grand Total: What’s in Store for Mr. Whimsy?

So, what does all this mean for Mr. Whimsy’s bank balance at the end of the summer? Across all these ups and downs, he can expect his total sales to be around ￡23,300, down on his back-of-an-envelope estimate but with the possibility of hitting ￡33,000 or more if all the positive outcome aligned. Now that would be a pretty sweet summer!

But let’s not sugarcoat it—if things go awry, Mr. Whimsy could be facing a tough season, with sales dropping as low as ￡14,500 in a severe but still plausible season scenario.

What’s the Lesson for All of Us?

Running a business, whether it’s ice cream or the latest whizz-bang fintech unicorn, means preparing for the unexpected. Mr. Whimsy knows that not every summer will be sunshine and high sales, but thanks to scenario analysis, he’s prepared. And that’s the real takeaway here: by planning for the “what ifs” using smart tools like simulations, businesses can make sure they’re ready for whatever comes their way. So to pre-empt those occasional bad times, Mr Whimsy could build up his financial reserves, and he could look at additional insurance cover for the van and equipment. Or he could go further by changing strategy, perhaps by ditching his location agent and bagging himself a summer of festival fun instead, with bumper profits to boot! And since he knows how to run scenario analysis, he can modify and re-run his model to reflect different assumptions and how these could impact his expected revenues.

What Does This Mean in Practice?

Mr. Whimsy’s ability to plan ahead gives him a clear advantage—he knows when to play it safe and when to push forward. Here’s how you can apply the same thinking:

1. Investing in New Equipment: Whether you’re thinking of upgrading your machinery, tech systems, or expanding your workforce, simulations can help you understand whether expected revenue can support the costs. What if revenues fall by 10% due to unforeseen market shifts? Do you still break even, or would that leave you in the red?
2. Launching a New Product: Thinking about rolling out a new product or service? Monte Carlo simulations can help you anticipate the best- and worst-case scenarios. If demand isn’t as high as you hoped, would you still see a return on your investment, or would that new venture become a drain on resources?
3. Handling Unexpected Downtime: Just like Mr. Whimsy’s equipment failures, your business might face unexpected breakdowns or system outages. Simulations can help you quantify how much downtime you can handle before it seriously impacts your operations. Do you have contingency plans in place to minimise disruptions, or would an unexpected failure catch you off guard?
4. Cybersecurity Threats: In today’s world, a data breach or cyberattack could grind your operations to a halt. Simulations can assess the potential impact of a cyber event—how long would it take to recover, how much would it cost, and what customer trust would you lose? Are your current defences strong enough, or is your business more vulnerable than you think?

In all these scenarios, having a clear view of the possible outcomes—both good and bad—helps you make smarter, more informed decisions. Just like Mr. Whimsy, you’ll be ready to weather the storms, dodge the breakdowns, and come out stronger, no matter what.

So, whether you’re selling ice cream, launching a tech start-up or working at a bank, get to know your risks and plan for them.

Ready to Model Your Risk Scenarios?

I've recently developed Risk Insights Explorer, a Monte Carlo simulation app that makes risk modelling accessible and practical. Whether you're managing operational risks at a bank, overseeing project delivery, or running a growing business, you can use it to understand how data-drive risk modelling supports informed decision-making.

I'm launching Risk Insights Explorer with a focus on operational risk scenarios, but I'll be expanding the dataset library based on user needs. In upcoming posts, I'll share how I developed this using AI and the practical lessons learned along the way.

Want to try it out?

The app, hosted at riskspace.com, includes a variety of datasets for quantifying risks across numerous risk scenarios albeit with a focus on operational risk. You can explore these datasets using the "Select Dataset" button. A detailed write-up on each scenario is available at riskinsights.com. Connect with me here on LinkedIn if you have a specific scenario you’d like to model or insights you'd like to discuss, I'd love to collaborate on your specific risk scenarios—please don’t hesitate to get in touch!