Jul 13, 2025
The FP&A Circle is a startup-friendly financial planning cycle that mirrors the Plan-Do-Check-Act approach. It helps founders align strategy with execution, monitor performance, and make timely adjustments. In this article, we break down the FP&A Circle and why it’s essential for startup success.
What Is the FP&A Circle?
The FP&A Circle is a systematic approach to financial planning and analysis that ensures an organisation’s financial strategies are aligned with its objectives and continuously improved based on performance feedback.
It mirrors the Plan-Do-Check-Act (PDCA) cycle, and here's how it maps out:
Plan (Strategic Financial Planning):
Just like in PDCA, the FP&A Circle begins with setting clear financial objectives and building accurate budgets and forecasts.
Do (Execution & Allocation):
This stage is about implementing the plan:
Allocating resources (capital, team, tech) according to the budget.
Executing strategies to hit your goals (e.g., launching a marketing budget to target a new customer segment).
Monitoring cash flow and ensuring sufficient liquidity.
Check (Performance Monitoring & Variance Analysis):
Track your progress by:
Continuously measuring performance against your budget.
Conducting variance analysis to understand the differences between budgeted and actual results.
Checking key financial metrics regularly to assess business health.
Act (Adjustments & Optimisation):
Refine and improve by:
Adjusting your strategy based on what’s working or not.
Reallocating resources for better results.
Updating forecasts based on new market data or operational insights.
Why Should Startups Implement the FP&A Circle?
Strategic Alignment:
FP&A connects financial actions with broader company goals. It not only keeps you on track, but also acts as a mirror and compass—helping you assess if you're heading in the right direction and how to adjust.
Risk Mitigation:
A well-functioning FP&A cycle helps you anticipate and mitigate risks early.
For example, in a SaaS startup, shifting from monthly to annual billing can significantly impact cash flow. FP&A helps plan such moves with foresight.
Performance Optimisation:
By continuously analysing both financial and non-financial performance, startups can refine their strategies, improve operational efficiency, and maximise growth potential.
FP&A isn’t just for large corporates — it’s a critical tool for startups.
Using the FP&A Circle gives founders a clear, structured way to align financial plans with strategic goals while staying adaptable in a fast-changing environment.
It’s about being proactive, spotting risks early, and constantly improving.
In the next articles in this series, we’ll break down each part of FP&A with hands-on guidance for founders looking to build financially smart startups.
