WORKWEEK

Being a fintech founder is extra challenging these days. On the one hand, the more brutal economic environment is the best time to put your head down and build. On the other hand, founders have to pivot to prioritize profitability and sustainability at all costs. 

So for today, I’m breaking down 5 key themes that come up in conversations with founders followed by action items that will help founders not just survive, but thrive. 

Some of these insights are from a lineup of incredible fintech leaders including Mariquit Corcoran (Head of FinTech and VC Coverage, Independence Point Advisors), Jing Zhuang (Managing Director, Mizuho), Susan Ehrlich (Venture Partner, Core Innovation Capital), Allie Fleder (Co-Founder & COO, SimplyWise) and Miguel Armaza (Co-founder & General Partner, Gilgamesh Ventures). 

#1 Be Frugal and Cash-Conscious

It’s no secret that founders need to be mindful of their cash flow if they want any hope of long-term success. Being frugal isn’t just a great way to save money in the short-term, it’s essential for keeping a business afloat. 

After all, it’s a cold hard fact that companies often fail when they run out of cash, so it’s absolutely essential that founders prioritize capital efficiency and exercise financial discipline. 

By being mindful of cash burn and carefully managing expenditures, founders can set their business up for sustainable success. In other words, the importance of being frugal can’t be overstated!

Action Items: 

• Analyze cash flow: Regularly review and analyze your company’s cash flow to understand its inflows and outflows. Identify areas where expenses can be minimized without compromising operational efficiency.
• Prioritize essential expenses: Distinguish between critical and non-essential expenditures. Focus on allocating resources to activities that directly contribute to business growth and customer value.
• Negotiate favorable terms: Engage in negotiations with vendors, suppliers, and service providers to secure favorable payment terms, discounts, or pricing. 
• Optimize working capital: Streamline inventory management, accounts receivable, and accounts payable processes to improve liquidity and reduce cash cycle time.
• Establish financial discipline: Implement financial controls and budgetary guidelines to ensure prudent spending and avoid unnecessary expenses.

#2 Product-Led Growth

When it comes to business success, getting the product-market fit just right is undoubtedly key. As a founder, you should always be laser-focused on developing products that address the real problems of your customers and powerfully resonates with your target audience.

If you want to truly drive efficient sales, then it’s essential to know what your customers need and to create solutions that will bring tangible value. Plus, investing time and resources in product-led growth strategies can often be the difference between success and failure. 

With a well-honed product-market fit, you can set your business up for long-term success and reap the rewards of your hard work. In order to ensure your fintech venture reaches success in the long run, it is essential that you take proactive steps to put your product in the best position possible.

Action Items: 

• Schedule customer discovery sessions: Gain insight into customer needs through customer discovery sessions, you can have open and candid conversations to uncover unmet demands and identify potential areas of improvement for your product. 
• Analyzing the feedback and iterating: You can refine your product and align it more closely with customer needs. In addition, investing in strategies that leverage your product as the primary driver of growth, such as free trials, freemium models, and other value-added features, can help to incentivize customers to adopt and evangelize your product. 
• Track key performance indicators: KPIs can provide insight into the impact your product is having on customer acquisition, retention, and satisfaction.
• Establish a culture of continuous improvement: It is important to create an environment that supports experimentation and innovation, allowing for rapid iterations based on customer feedback and market insights. 

#3 Stay Focused on Your Value Proposition

It’s easy to get swept up in the fast-paced, shiny-object-filled entrepreneurial world and forget why you started this crazy journey in the first place. Staying focused on the core value proposition and unique offering of your business is essential for success. 

Don’t be tempted to chase every single new trend and opportunity that comes your way, no matter how enticing they may seem. 

Instead, stay true to your mission and keep a clear focus on your customers’ needs – that’s the solid foundation you need to make your business thrive.

Action Items: 

• Define and refine your core value proposition: Clearly articulate the unique offering and value your business provides to customers. Continuously assess and refine it to stay relevant.
• Prioritize customer needs: Regularly engage with your customers to understand their evolving requirements and pain points. Tailor your offerings to address these needs effectively.
• Resist the allure of every new trend: While the entrepreneurial world offers numerous opportunities, avoid chasing every shiny object. Evaluate new trends and opportunities carefully, ensuring they align with your core mission and add real value to your customers.
• Maintain a laser focus on your mission: Continually remind yourself and your team of your overarching mission and stay committed to it. Let it guide your decision-making and strategic direction.

#4 Embrace Capital Efficiency and Realistic Growth:

Founders are constantly in a delicate dance between driving growth and being mindful of capital efficiency. As investors become more savvy, it is increasingly important for founders to demonstrate that their growth plans are not only ambitious, but achievable. 

A substantive understanding of the market and a clear path to revenue growth must be established, and the cost of customer acquisition and the scalability of operations must be taken into consideration to build a sustainable business. 

After all, a solid foundation is essential if you plan on scaling your business to the stratosphere.

Action Items: 

• Thorough market research to gain an understanding of customer preferences, behaviour and competition.
• Identify opportunities for growth and establish a revenue generation plan with key milestones and timelines. 
• Optimize the cost of customer acquisition by experimenting with different channels and tactics to work out which ones are most effective. 
• Prioritize scalability by leveraging technology, automation and streamlined processes.
• Measure and track key metrics such as customer lifetime value, churn rate and return on investment to make sure your growth strategy is on track. 

#5 Maintain Competitive Advantage and Differentiation:

In order to stand out in a crowded market, it is important to conduct a thorough competitive analysis to evaluate the landscape and identify direct and indirect competitors.

By understanding their strengths, weaknesses, and positioning, you can define your own unique value proposition – what sets your business apart from the rest. 

It is essential to validate the defensibility of your advantage to ensure that your competitors can’t replicate it too easily, giving you a strong market position. 

Action Items: 

• Tell a compelling story to effectively communicate how your unique competitive advantage solves customer pain points and provides a superior solution. 
• Tailor your investor pitch to highlight your unique advantage and how it translates into long-term success and increased investor returns. 

In an uncertain business environment, being proactive and tactical with your decisions can be the difference between success and failure. 

As a founder, embracing financial discipline, focusing on product-led growth, staying true to your value proposition, prioritizing capital efficiency, and maintaining competitive differentiation are key strategies to ensure your company’s growth and long-term sustainability. 

After all, they say fortune favors the bold, and in times of uncertainty, those who remain focused on actionable strategies will come out on top.

So, keep your eye on the prize and don’t be afraid to make bold decisions. It just may be the key to success.