In times of crisis, fintech startups should take the long view instead of going dormant • TechCrunch

The fintech industry is currently facing several macroeconomic problems, including global economic inflation, skyrocketing living costs, companies reducing their workforces, and a possible recession on the horizon, not to mention the war in Ukraine. All these factors have caused fintech M&A exits to fall by 30% in Q2 2022, the lowest point since Q3 2020.

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

Hire high performing talent

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

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

Almost all founders agree that layoffs are a difficult but necessary decision to make in times of crisis, as payroll expenses can be redirected to growth or runway maintenance. But if you take the long view and look past the current downturn, it’s likely that your startup will have a higher chance of survival if you retain specialized talent. And sometimes, hiring a new employee can bring in a new perspective that can help you spot problems in your company.

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

Develop and prove the quality of your product

Crises are also times of opportunity – you just have to look carefully to spot a golden egg. Crises give entrepreneurs a chance to focus on building robust products since times like these usually highlight problems that need a viable, long-term solution, and startups can focus on building instead of relentless growth.

The brutal truth is that tough markets also clear out hundreds of startups without a solid product disrupting the market. This gives top companies a chance to develop an even more comprehensive set of products and services.

Develop a solid strategy

To run a business sustainably, entrepreneurs must lead 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 didn’t.

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

Individuals and businesses thrive in the face of 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.

Tough times allow teams that set big goals to recharge and look at things from a different angle. For example, you can as yourself: What is the unique offer of the product? What can we do to make the most of the current market? What can we do to catapult our product even further when the market recovers?

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