3 Reasons Bootstrapping Has Been Crucial to My Business
A few years ago, I left my thriving career on Wall Street for a very specific reason: I wanted to construct my company from scratch. This was integral to my vision of creating an ethical, transparent, inclusive alternative in the wealth management world, and bootstrapping was an essential strategy for my greater business plan.
Now, as CEO of Lexion Capital Management, I consider myself an escaped refugee from traditional Wall Street. Lexion is an independent asset management firm, and the key word here is independent. Here are three critical ways that bootstrapping helped me achieve that vision.
I own my business, and my vision
If you don’t take on financial backers or investors, you retain complete ownership of your business, and of your vision.
I founded Lexion on the strong belief that in doing right by people, profits will follow. This vision forms the backbone of my whole approach to wealth management. It’s the reason I went out on my own in the first place. I wanted to go against traditional Wall Street’s product-based M.O. and build something better. I didn’t want to risk compromising my commitment to a rigorously client-centric ethic. Even a supposedly “silent” backer ends up having a say when they are helping to fund your company.
No guessing games
I was concerned that even though a potential backer might say they were on board with Lexion’s dedication to our clients and my vision of strategic, sustainable growth, their business recommendations could end up telling a different story.
As a budding entrepreneur, I knew that trading capital for a percentage of ownership in Lexion - no matter how small that percentage may be - meant that I risked ceding some control over the direction and operations of my firm. If you can bootstrap, you don't face the prospect of limiting your dream to the time frame, and strategy, investors want. You make those decisions.
Growth on my timeframe
Not only does bootstrapping mean that you’ll never face the problem of investors pushing you to grow too fast, it also means that you never risk outgrowing yourself. Bootstrapping creates an inherent self-control mechanism for managing growth: By hiring based on your profits, you remove the risk of over-hiring. We have created a positive and profitable trajectory by leveraging ourselves and allowing our current profits to fund our future growth.
Of course, the ability to control your own rate of growth cuts both ways. You have to resist under-hiring. I’ve seen it time and again: A successful entrepreneur’s key trait - the scrappy willingness to get creative about conserving and maximizing resources - makes him or her reluctant to hire. Bootstrapping removes the risk of over-expanding, but you don’t want to over pace yourself, either. Keep investing in your business by hiring when appropriate, and grow as your profits allow. You’ve earned it!
ELLE KAPLAN | Columnist | CEO, Lexion Capital Management
A finance expert and self-made entrepreneur, Elle Kaplan is the CEO and founding partner of Lexion Capital Management, the only 100 percent woman-owned asset management firm in the U.S.