Financial Planning: How the Big Picture + the Details Can Help Navigate an Everchanging Industry

Maulik Nagri, Senior Manager, FP&A 

In the fast-paced and competitive landscape of fintech, the notion of focusing solely on cash runway months can lead down a perilous road to failure: by looking at the gas gauge and not the road. Runway is undoubtedly important, but it should not be the sole determinant of your fintech business’s success, and it should not represent your plan. By neglecting comprehensive financial planning and failing to chart a clear course for the future, you run the risk of hitting the ultimate dead end in this challenging funding environment.

THE LANDSCAPE. The fintech industry is facing rapid evolution, technological progress, wide adoption, and regulatory changes. To be successful, a company needs a roadmap like a financial plan that amplifies strategic foresight and adaptability, assists in avoiding business failures, and charts its growth. Many statistics from the Small Business Administration (SBA) highlight the significance of financial planning in the highly competitive fintech landscape. SBA Data reveals that approximately 20% of small businesses fail within their first year, and around 50% fail within their fifth year. According to another survey, a staggering 83% of fintech CEOs who had a financial plan strongly recommended it to their peers. A solid financial plan is a suggested best practice but it’s also an instrument to increase the odds of business success. Investors in fintech companies are looking for more than just survival; they seek innovative solutions, scalability, and clear paths to profitability. Generally, companies with robust plans not only maintain healthy cash reserves but also attract greater funding opportunities and foster investor confidence.

TOOLS TO NAVIGATE THE LANDSCAPE. Would you travel in the Amazon jungle without a map? Would you drive through the mountains without a full tank of gas? Hopefully not. A well-laid out financial plan is a map for your business, and its runway is the gas. This comprehensive plan generally includes key elements such as a go-to-market strategy focusing on customer acquisition and profitable revenue growth, a deep understanding of unit economics, an accurate calculation of the cash required to reach crucial milestones, and a thorough analysis of sources and uses of funds. These components will not only provide a solid foundation for growth but also enable you to make informed decisions amidst the everchanging fintech landscape. What if you get lost in the jungle or the mountains – would you use your map or GPS for course correction? Absolutely. Like a map, a thoughtful plan lets you see the full picture and pivot to help ensure the achievement of planned outcomes.

THE BEAUTY OF THE LANDSCAPE. Contrary to common misconceptions, building a financial plan for your fintech company is not an expensive endeavor; rather, it is an investment in your business’s future. The true costs lay in the consequences of starting over from scratch when faced with unforeseen challenges. By dedicating time and effort to create a comprehensive financial plan, you equip your fintech venture with the tools necessary to navigate uncertainties, secure funding, and position yourself for sustainable growth.

Embrace the power of financial planning, and steer your fintech venture toward a bright horizon, and a future of innovation and prosperity. In the end, journeys are most pleasant when looking at the view rather than staring at the gas gauge.