Be frugal or die: 6 cost-effective ways to run your startup

It’s no secret that startups are weathering the harsh winter. It’s not an African problem but a global one. Funding has dried up and left many out in the cold to meet whatever end awaits them. While some companies were going to die anyway because their business models were flawed from the jump, others with potential for survival, who had previously been told the only way to grow is to throw money at their problems, are now forced to navigate this turbulent weather.

The mantra for all startups in these times is clear: be frugal or die. Now that the money has stopped flowing, the only way to grow is to first survive. 

The reality is that survival has always been the bedrock but it might have been all too easy to temporarily lose sight of that when the money was flowing freely. 

But not to worry, I’ll share some of the most essential strategies any startup needs to run a cost-efficient shop; most, if not all, of which I’ve been operating with in my LaaS startup, Lendsqr

Let’s get right into it:

#1 Infrastructure: Optimize cloud resources

Every startup probably runs their shop in the cloud with most on AWS, Google, and to a small extent, Azure.The most significant drain on a startup’s budget is unnecessary spending on cloud infrastructure. 

Many startups lack competent engineers. Truly great engineers are hard to come by and with the number of startups we have around, let’s face it, someone definitely drew the short straw on talent. What happens is these engineers overspend by spinning off more services than required at that moment, which is the fundamental sin against the ethos of elastic cloud. I’ve seen engineers spin off servers that can carry as much as 1 million customers doing 100 requests per second for a company that’s just starting out. Absolutely unnecessary.

The key is to use the lowest configuration that serves the purpose and then scale resources as the startup grows. Avoid unnecessary features like Multi-AZ (multiple availability zones); unless you’re operating at a scale comparable to Netflix and co, you don’t need it.

At a certain scale, you might even be better off having your own server instead of using costly services that don’t scale. I once helped  a tiny startup crash their infrastructure costs from about $3,000/month to about $250/month from just shutting down redundant services.

#2 People: Hire and manage people resources ruthlessly efficiently 

A common mistake startups make is hiring expensive resources just because they can. Don’t hire anyone unless you absolutely need them to survive. This ensures you remain agile and efficient. You’d be surprised to find out that you don’t actually need so many people to survive. 

It’s also important to let go of people who aren’t aligned with your goals as a startup trying to survive by all means. People who aren’t in it for the long haul and care more about work-life balance and having a soft life, need to go. It’s not a matter of being mean, you’re simply fighting for your life and you need only those willing to fight with you, come whatever may. If your startup dies, everyone goes away anyway.

Contract-based arrangements are also a way to go, however, I recommend that they be tied to output rather than a fixed monthly payment. For instance, with some of the external engineers I work with, I apply a pay structure of a base pay plus sprints delivered. If there’s no work done, no one gets paid. So no one earns off you unless they work for it. There’s no need to fund people irresponsibly. 

At Lendsqr, some of my content writers are on pay for content delivered. If there’s a mental block, we both “pay” for it.

Additionally, for founders operating in Africa, stop looking for fancy engineers outside of Africa; it would do nothing but destroy your startup faster than you can whistle. Hire locally and save money on what foreign engineers will charge you.

#3 Marketing: Focus on tracking metrics and organic growth

In challenging times, you can’t do without reevaluating your marketing activities. Stop spending unnecessarily on events and sponsorships; most don’t yield any substantial value. At Lendsqr, we tried sponsorships last year and only found out they didn’t work because we were tracking everything. 

Channel your efforts into metrics-driven marketing and you can still create the buzz you need by  leveraging the expertise of senior team members like founders, CMOs, and CTOs and encouraging them to blog and engage in relevant spaces online. This performs much better for driving sustainable organic growth.

#4 Software: Go cheap when you need to

Most people believe the most expensive option is the best way to go. Maybe. But have you considered if it’s best for you? Stop using expensive software especially for support functions that deviate from your core business. For instance, my company switched from Camtasia ($179.88 / year) to CapCut ($0 / year) to save money and since we’re not planning on becoming a movie production house anytime soon, I’d say we’re good.

The same logic applies to our other tools like Figma and Postman where only those who need it have access so we don’t rack up license costs. The only tool we splurge on is Github where we use the Enterprise plan because cutting costs without compromising productivity is key. So don’t skim on what’s crucial. 

Some of the other great but affordable tools we use include Metabase for analytics, Google Workspace and Google chat (goodbye Slack); Typesense for our search engine – which is just as good as Algolia – and Sentry for code quality. Opting for open-source solutions and selecting tools based on necessity rather than popularity can significantly reduce software expenses.

#5 Haggle: Negotiate the services you use like pepper and tomatoes

Don’t be quick to take pricing at face value. Sometimes you could just call the vendor and haggle your pricing. I have saved as much as 50% on some critical software or services just by haggling with the provider. There’s no shame here. 

And if you can get a significant discount by going for a yearly contract instead of monthly, bite the bullet and pay up. Sometimes, you can get as much as 40% on some software and services (AWS for example) if you have a multi-year commitment. 

#6 Operating costs: Embrace remote work if you can

In the era of remote work, startups can forgo the need for fancy hardware and expensive office spaces. Adopting a remote work model not only aligns with the current trend but also allows you to save significantly on office-related expenses. 

In my company, we work remotely; my employees love it and so does my pocket. Although we do hybrid once in a while; rent a place, have everyone come around, we get a ton of work done and everyone has a great time.

Another great benefit of remote is that you can employ great people from all over the world (please, be aware of time zones) who would do great work at a significantly lower cost of employment. You aren’t cheating anyone; you are giving opportunities. Brownie points for you!

#Bonus tip: Audit. Audit! AUDIT!!

Listen, I cannot stress this enough: audit as often as you can. Sit down with your finance people and audit your infrastructure bills monthly. If you have services no one uses running at night e.g test environment and the likes; get your engineers to write a script that shuts all these things down automatically whenever they’re not in use and they can bring them back up again when needed. Query extensively and strip what you need to without compromising on quality.

Review salary costs, bonuses, allowances and other operating costs and adjust where you find you’re spending on things you shouldn’t be spending on. Everyone has to be prepared to make sacrifices and if they’re not then let them go; they’re not for you.

Auditing bills and removing redundancies can lead to substantial cost savings. Run numbers on these costs every single month and never stop asking, “how low can this number go?” 


For startups looking for funding, these are challenging times and the only way to survive and ultimately thrive is to tighten our belts and adopt a frugal mindset. 
With these strategies, based on lessons I’ve learnt firsthand from running a startup, you can optimize your infrastructure, manage your resources better and save about 60-70% on redundant costs to significantly extend your runway and increase your likelihood of long-term success. It’s not just about how rapidly you can grow when you’re flush with cash, it’s about setting yourself up for sustainable growth and like it or not, frugality is a necessary evil.

10 predictions for digital payments in 2024

A lot is going to happen in 2024, but do you want to know what they would be?

I have been making annual fintech predictions for so long that I should be a certified babalawo by now. Unfortunately, most of these predictions never come to pass. 

Interestingly, some of these predictions have been on point such as a major player getting acquired; Payments Services banks flopping; CBN cashless policy failing; rise of agency banking; eNaira eating dust; etc. 

Many have also stubbornly refused to come true; rendering me a digital Nostradamus. Visa refused to buy Interswitch and Mastercard refused to buy Etranzact; transfers never became free

But then missing the point is what predictions are all about; getting excited about things we don’t know and probably won’t happen. 

In the grand scheme of things, to err is human and to predict, is human as well. Let’s see what 2024 has got in stock.

#1 Crypto gets banned again

The Central Bank of Nigeria recently unbanned crypto and everyone threw a party. But we keep forgetting why they got banned in the first place. Truth is crypto doesn’t offer much value beyond the ability to move tons of money around without governance which tends to attract the wrong sort of crowd. 

Once this gets abused again, and it will definitely be; a new ban would land and this could be permanent or the requirements so stringent that it’s a technical ban.

#2 Nigerian banks screws up cNGN stablecoin

In unbanning crypto, the Central Bank of Nigeria also said that banks could have stablecoins. I laughed in Ijesha. Is it the same banks that can’t handle simple fraud issues; get QR to work on their apps; and keep their best hands;  that would build and run stable coins? 

Sure, CEOs would drag their helpless CTOs to try something out but they will all fail spectacularly.💣

Nigeria banking and crypto are like oil and water; everyone should just stay in their lanes.

#3 Direct debit comes of age 

Cards ruled the payments world for decades. Then faster payments came along. In Nigeria, interbank transfers beat the hell out of cards. But cards still rule the internet and subscription payments like an aging African dictator. 

Maybe not for long; NIBSS, Paystack, OnePipe, Mono, and Lendsqr (yes, let me throw that in) have been hard at work making direct debit sexy and it’s probably going to explode. 

Direct debit is going to be the fastest growing payment method since virtual accounts.

#4 Interbank crosses 20 billion transfers in a year 

When you do a transfer and the money appears in your recipient’s bank account in seconds, it’s probably the guys at NIBSS doing magic. Transferring money has been growing faster and faster each year since 2011. 

In 2023, Nigerians sent more money through NIBSS in a day than they did in the whole of 2015. That’s over 365x. 

The ease of transfer is so unprecedented that maybe this is the year that 20 billion alerts will ring across the network.

#5 Open Banking goes live 

We have been at this for too long. By June 1, it would be 7 years since I have been shilling open banking across Nigeria and Africa like a snake oil salesman. This time around, I am not predicting, I’m begging the gods of whatever to just let this go live so I can focus on other things. I’m not young again.

#6 Banks and Fintech crack on fraud

The Nigerian payments space is now synonymous with fraud. In 2023, over N14b was tracked to have been lost with many pundits privately saying this was grossly underreported. However, different stakeholders from FintechNGR CEO Committee (I’m a member), to the Central Bank of Nigeria, and even NIBSS, are all planning an all-out offensive against fraud. 

You can’t understand how painful fraud is until you have lost money or your entire career upended because of fraud. The worst that can happen isn’t just to lose money, but to spend months in detention for a fraud you don’t know anything about.

#7 Agency banking evolves

Agency banking was one of the fastest growing fintech segments for about 4 years and that led to the rise of Moniepoint, Nomba, and MTN Momo. But the market is getting saturated; margins are thinning out; and agent loyalty is now as rare as a unicorn riding a Yeti. 

But knowing the smart guys around payments, trust them to build more values on top of the agency ecosystem. What could this be? Delivery; address verification; last-mile lending; returns drop-offs; etc. Whatever brings extra is god-send.

#8 A major player gets acquired

With the Nigerian economy so badly hit and the Naira falling faster than a meteor; valuation of Nigerian fintechs have taken such a bad hit that most can’t even afford to do a raise as it would be at a significant valuation discount. Yet, most of those who haven’t died are doing a good job. 

It means those alive are now cheap as hell to buy; with cash runways now measured in days and weeks; it’s a matter of time a good one with solid fundamentals is snapped up. 

#9 More fintechs bite the dust

The funding winter has proven to be long, harsh, and deadly. Every month we get inundated with burial ceremonies of one fintech or the other. Unfortunately, the funding pandemic may last longer and even more startups will die in the early part of the year than ever before. And it’s simply because most are running out of gas and funding conversations are not funny.

But for startups who manage to stay alive, expect glory from 2025.

#10 NQR finally found legs

Paystack, Moniepoint and Nomba have been doing a number with tabletop payments in the last 18 months. Walk into any shop and you see a cardboard or plastic with QR code or account number to pay into. The reason why this hasn’t caught on is because Nigerian banks have been poor with their QR code payments. Of the 20 major banks, you can only pay with QR on just 6 of them.

But things could change this year because #1 CBN could whip banks into shape, forcing them to make this work and then customers could use them or #2 fintechs and others would use shame or moral suasion to make banks do the right thing.

If NQR pans out; it could blow up payments.

Wondering what happened the previous years and the predictions? Read about my takes for 2018, 2019, 2020, 2021, 2022, and 2023.