Guest Post: the following post is a sponsored guest post by Brex. All views and opinions represented in this post are the views and opinions of Brex and do not represent those of 500 Startups or any of its staff or affiliates.
During an economic downturn, companies must make each dollar take them as far as possible. Brex Employee No. 1 Larissa Maranhao Rocha and Head of Relationship Management Lucas Fox recently sat down to discuss the ways businesses can manage runway, build relationships, and strengthen their position during crises, providing the following five takeaways:
- Use data to pinpoint opportunities and limitations
The first step to optimizing anything is to know how to measure it. Metrics allow you to accurately identify where leads and sources of spend are occurring, what’s making a difference for your company, and which channels and campaigns are working. Approach every decision scientifically, and implement metrics across all teams and departments – including recruitment and customer experience. Test customer acquisition strategies across all channels to determine and measure what works, and assess CAC regularly, basing your strategy on numbers like conversion and expense. Rather than expansion at all costs, focus on sustainable growth – and don’t underestimate the power of re-negotiation. As you scale, a solid and reliable measurement infrastructure will make it very easy to approach vendors, demonstrate impact, and propose new contracts to reflect changes. Keeping your data updated and organized can make it easier to re-negotiate when you need to, keeping your business moving forward.
- Organize expenses and build a strong financial infrastructure
Although often overlooked by growing companies, financial organization is critical to sustained growth. Establish a strong financial infrastructure from day one to generate visibility and control over expenses in a way that isn’t time-consuming, and bolster it with a competent and centralized finance team. A solid foundation is much easier to establish when a company is young, and becomes invaluable down the road – especially during challenging times. Centralize spend onto one card or form of payment to quickly identify inefficiencies and overlaps, and refer back to your measurement infrastructure often to identify where to cut. Assess channel and segment operations regularly, and ask yourself, “Given today’s reality, if we had the opportunity to build our product and company again from scratch, how would we do it?” This exercise ensures you stay lean and optimize results for the evolving environment.
- Leverage opportunities to create a sustainable advantage
Approach crises as a chance to grow and remain relevant. In a new virtual world, focus spend on online ads, host webinars, and take advantage of the ability to unlock deals by speaking with key affiliates and decision makers from the comfort of your own homes. Use First Principles thinking to look for opportunities created by the COVID digital shift, and leverage them to put your company at a sustainable advantage. Acknowledge what your company does and what problem it solves, and identify how that can relate to COVID and the resulting shift in the landscape. Has the crisis created a tailwind for your industry? When consumers don’t want to go outside, be in public spaces, or spend money, where can your company add value? What has changed about the landscape that opens new opportunities for your business? Following the COVID outbreak and spotting an opportunity for customer acquisition, Brex recognized that young businesses didn’t want to go to physical banks and were struggling to find footing with established financial institutions. In an industry historically dominated by local branches and no room for digital banking, Brex leveraged the new landscape to build upon its Cash product and position itself as the best solution for newly incorporated businesses in a digital era. What started simply as a product quickly became a customer acquisition tool. Decide what your company has to offer, and tailor it to your customers’ – and prospective customers’ – evolving needs. If the pivot ends up benefiting your audience, keep it for the long run.
- Assess your position, and focus on long-term success
Ask yourself honestly if your business is at an advantage or disadvantage in the current environment – and whether you have the runway to act. If you cannot leverage the current landscape for immediate growth, how might you leverage it for long-term sustainability? Rely on established measurement and financial frameworks to understand whether your revenue has gone up or down because of COVID and the digital shift. Once you have assessed your position, decide whether you have the resources to invest in product and growth. Startups should have 18-24 months of runway to comfortably make this investment. At the end of the day, acknowledge that this may not be a year of massive growth – and that’s alright. Focus on preservation, relationship building, and using this unique ‘quiet time’ to thoughtfully design a product and strategy to serve you moving forward. Not everyone will benefit from the present conditions, but that doesn’t mean you can’t set your company up for future success. There will be time for growth again once the environment levels. Ask yourself if your actions now are putting yourself in an advantageous position for when that happens.
- Empathize with your customer
Remember that you are not the only one struggling through this crisis. Empathize with your customer, and treat them as human beings. Building relationships is more important now than ever, and genuine compassion will set you apart in your field. In an uncertain world where everyone is distracted and concerned, consider what might be on your customers’ minds. Put yourself in their shoes, and write down what they are doing at this moment, how their behavior has changed, and where the opportunities lie. What do they need? Can you provide it? Tailor your product and communications to address and improve their current situation. When the world shifted to a remote reality, Brex pivoted its rewards system to address WFH needs, ensuring customers continued to benefit from its product. Customers will understand that you genuinely care about them if you demonstrate a commitment to evolving to meet their needs – and they will reward you with their loyalty.
In the midst of uncertainty, companies must focus on remaining relevant and responding to their customers’ needs. Robust financial and measurement foundations provide the clarity needed to swiftly and confidently make difficult decisions, and allow you to focus on keeping your business afloat and thriving. During times of crises, focus on the long run in all decisions, and keep your dream alive – You’ll need it on the other side.
This post is a sponsored guest post by Brex . Any views or opinions represented in the above post are those of Brex and do not represent those of 500 Startups or any of its staff or affiliates unless explicitly stated. All content represented above is provided for informational purposes only. 500 Startups makes no representations as to the accuracy or completeness of any information contained in the above post. Under no circumstances should any of the above content be construed as legal, tax or investment advice from 500 Startups or any of its affiliates.
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