Building a strong foundation for your financial services startup

Starting a company in the financial services space is an outstanding achievement, but it's easy to get lost in the complexity of raising capital and navigating stringent regulations while building your business. There are a number of moving parts in the beginning, and it can be challenging to know what to prioritize.

With decades of experience working with startups across all stages seeking to optimize operations, here are the areas I recommend prioritizing as you get your startup off the ground.

1. Clear Vision and Mission

Your vision and mission statement set the strategic direction for your startup. In decision-making, communicating and hiring, your company's vision and mission should drive every decision. These statements help internal and external members understand what your organization will accomplish and ensure everyone is pulling in the same direction to achieve those accomplishments.

Remember your company's purpose and goals when crafting your vision and mission statement. Make sure to involve key stakeholders, such as founding members or early hires.

Your mission statement should clearly outline why your company exists. You want your customers to understand what you do and how you will serve them. While equally important, your vision statement serves a different purpose. It should detail the company's long-term goals and show where your company will be in five to 10 years. As you develop your vision statement, think about the impact you want to leave on your customers or the world when you've achieved your mission.

Take, for example, Capital One's mission and vision statements, a company I spent nearly nine years at on its operations team:

• Mission statement: Change banking for good.
• Vision statement: To create a better future for our customers, employees, and communities through innovative financial solutions.

In some cases you might feel a mission statement doesn’t encompass how you want your consumers to feel about the products you provide. You could focus on a strong vision statement with a supporting set of values or principles to guide your journey as Remitly, an QED Investors  provides an example:

• Vision statement: To create a better future for our customers, employees, and communities through innovative financial solutions. We accomplish our vision by relentlessly focusing on culture.
• Cultural Values: Customer centricity, Deliver on promises, Hire & grow exceptional people.

2. Establishing a Strong Brand Presence

Your brand presence is one of the ways you will amplify your vision and mission. This includes designing a compelling visual identity with a logo, website and social media presence. I learned the value of a strong brand at Procter & Gamble. P&G believes that brands are more than just products—they represent promises to consumers.

A strong brand presence also includes clarity of message. Leave no room for ambiguity or questions about your company offerings. As you develop messaging, approach it as a resource to help your company establish relationships and build loyalty.

If this isn’t an area of expertise for your company, branding can be outsourced. Your visual identity will be how customers identify your company; you should ensure it represents your company and brand. You can’t go empty-handed, so you still need to do some homework. You must have drafts of your mission and vision, thoughts on brand values and personality, know your target audience and market, and strong beliefs on what differentiates you from your competition.  

3. Building the Right Team

As a former Chief Operations Officer and leader in the military, I know a strong team is essential from day one. It doesn't necessarily mean that the team you start with will be the same team helping you achieve your mission in five or 10 years, but they'll lay the groundwork for future success. Your subordinate leaders must believe in your mission and all of your teammates should understand how their role contributes to fulfilling your vision. Shared understanding and belief in your mission and vision is especially important for early-stage companies where teammates will be forced to wear several hats and learn at a fast pace.

Before hiring, map out what skills and qualities new hires should possess to fit your mission and help you see your vision through. For example, consider if they need to be analytical, bring experience working with companies at different stages, or have a good business mindset. Aligning this before you begin the hiring process will put you on track to build a strong company culture.

Hiring needs for your startup could vary significantly depending on stage and sector, but there are a few foundational roles I always see in early-stage companies:

• CEO/Founder
• COO (optional at first, could be Head of or VP of Operations to start)
• Head of/VP of Finance
• Head of/VP of Product of Product Manager
• Head of/VP of Marketing
• Head of/VP of Sales
• Head of/VP of Talent/HR

When to hire versus outsource

The reality of a startup is that you won't have the budget to fill every position you need from the start. Think about nice to have versus need to have. There will always be the need for a leader and someone who can make strategic decisions to grow your startup. However, for roles you and your founding team are less knowledgeable about, outsourcing to a specialized firm like LF Partners gives you access to exceptional talent without making a long-term financial commitment.

4. Developing a Go-to-Market Strategy

I covered actions to take internally to reach your audience. Let’s move to external strategies. Developing a Go-To-Market (GTM) is not just about marketing; it’s also a strategy to help understand audiences, refine customer personas and build brand awareness.

A solid GTM strategy can help you keep marketing costs low by creating a cohesive campaign to reach your target market while bringing an impactful return. This strategy often includes marketing efforts like digital marketing, social media and partnerships.

Part of the GTM strategy should include the basics like defining your target market and crafting a compelling value proposition for the problem your product solves. It’s important to create clear and concise messages that resonate with your ideal customer profile. Choosing or testing the right business model while determining viable distribution channels help to offer insights to your customer acquisition strategy.

As your customer acquisition strategy takes shape you can design a market fit testing framework to learn quickly as you receive feedback from initial prospects. Identifying and partnering with early adopters and beta users will help refine your current offering while providing insight into future product features. Early sales are equally important for your pricing and monetization strategy and should be tested as part of product market fit research.

5. Measuring Success and Pivot

The early initiatives are some of the most important measures to help understand if you're on the right track or should consider a pivot. A few key metrics to keep top of mind are:

• Unit economics: Customer Acquisition Cost (CAC), Lifetime Value (LTV)
• Conversion Rate, Churn Rate
• Usage rates once onboarded
• Net promoter score (NPS)

Today, it's critical to use data to measure success and to design A/B testing strategies that will provide insights to your product and business. Datasets help companies learn and understand customer preferences and determine customers see value in their products. For example, if your NPS is low, you must understand where the product or service fails to meet expectations. Focusing on improving your product or service to serve your customers better drives customer loyalty and recurring revenue.

It's unlikely that you'll go through your startup's entire lifecycle without making any adjustments or pivots. Startups are constantly evolving and there's no one-size-fits-all strategy to achieve success. Measuring progress as you test and execute means you can make incremental adjustments rather than significant, sudden transformations that could disrupt your team and customers. Stay flexible, listen to your customers, and continuously refine your approach to ensure that you're continuing to build a strong foundation so your business can survive anything that comes its way.