In times of crisis, fintech startups need to take the long view rather than hibernate

The fintech industry is currently facing several macroeconomic problems, including global economic inflation, skyrocketing costs of living, companies downsizing, and a possible recession on the horizon, not to mention the war in Ukraine. All of these factors have led to fintech mergers and acquisitions drop 30% in Q2 2022, the lowest point since Q3 2020.

This is not the first time the economic climate has deteriorated so rapidly. But when we look at the industry’s overall performance compared to previous years, the current downturn is not that different. What can founders do to help their companies thrive during this period?

Hire high performing talent

The worsening financial climate is causing leading fintech companies to freeze hiring or reduce their workforce to avoid cost overruns. The industry saw 1,619 job cuts in May compared to 440 in the first four months of the year.

Staff losses have also affected the Ukrainian startup ecosystem. More than one in ten startups in the country have had to leave their companies since the beginning of Russia’s invasion, and since then the number of businesses with up to five team members has increased, while companies with larger teams have declined.

Almost any founder would agree that layoffs are a difficult but necessary decision to make during a crisis, as salary costs can be redirected to growth or staying on track. But if you take the long view and look beyond the current slump, it’s likely that your startup will have a better chance of survival if you stick with specialized talent. And sometimes hiring a new employee can bring a fresh perspective that can help you spot problems in your company.

Ukraine has a huge pool of talent and thousands of professionals are currently looking for an exciting project to join. So instead of battening down the hatches as you face this crisis, consider an opportunity to bolster your company with dispersed, high-performing talent.

Develop and prove the quality of your product

Crises are also times of opportunity – you just have to look hard enough to find a golden egg. Crises give founders a chance to focus on building stable products, as times like these typically highlight problems that need a viable, long-term solution, and startups can focus on building instead of focusing on continuous growth.

The harsh truth is that tough markets also clear out the hundreds of startups without a solid product to crowd the market. This gives leading companies a chance to develop an even wider range of products and services.

Develop a solid strategy

To run a business sustainably, founders need to guide business development and manage risk well. That’s why in times of crisis, startups that have focused on developing solid business strategies and products usually emerge to win the market from those that haven’t.

I know it’s hard to focus on developing a strategy when there are so many external factors affecting your company. But the fact is that companies that focus on strengthening their business plan and strengthening their strategy have a better chance of recovering and coming out stronger than before compared to those that are in hibernation.

Individuals and businesses thrive in crises by managing their resources, analyzing the situation they are in, and recognizing potential opportunities regardless of the amount of noise and chaos around them.

Difficult times allow teams with big goals to recharge and look at things from a different angle. For example, you could ask yourself: What is the product’s unique proposition? What can we do to get the most out of the current market? What can we do to catapult our product even further when the market recovers?

Despite all setbacks, founders can excel in business by following three rules during a crisis: strengthen your staff, develop a better product, and work to strengthen your business strategy. Although these are not laws or panaceas for all problems, I have found them to be very effective in difficult times.

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