Should You Start Up or Buy Your New Business? 12 Pros and Cons
By Bruce Hakutzwi
The path to entrepreneurial success is wide. There are all kinds of intersections and offshoots that form millions of combinations, and no one path is going to be perfect for everyone. In fact, that’s a large part of entrepreneurship’s attraction for those who feel compelled to take on the business ownership journey.
But, if you hope to make it to the final destination—success—you can’t just run off blindly down any path that looks interesting. Starting and running a business requires intelligent planning and strategy. So let’s take a look at one of the first important decisions every aspiring entrepreneur needs to make to illustrate how this kind of strategic decision should be made.
To Start Up or Purchase Your New Business
For most people, when they first consider the idea of owning their own business, the image in their mind is of a brand new startup that’s been built from scratch. However, once the planning and strategy period gets underway, many of these same entrepreneurs end up exploring and eventually settling on purchasing an existing business or franchise instead.
These two methods for becoming a business owner have their own pros and cons, and like every path on this journey, the new business owner is the only person who can decide which path is best for them. Taking the time, however, to consider the positive and negative aspects of each path can make that decision easier and more likely to result in success.
The pros of starting from scratch:
(Nearly) complete autonomy. When you’re building a startup from scratch, you’re painting on a blank canvas and you’re essentially free to do whatever you want or need to do to make it work. (Of course, every startup founder is only as free as his or her investors and co-founders will allow, hence the “nearly.”)
No mistakes to fix. When creating a brand new company, you won’t be bogged down by resolving any lingering issues left by the previous owners. No sullied reputations to boost, no brand image problems to fix, and no long-held grudges to deal with from personnel.
Greater potential for a breakout success. In most cases, the new businesses that appear on the world scene and make a huge splash are startups. Investors and consumers alike find startups to be more intriguing, so these businesses get more attention, and when that intrigue is combined with a stellar product and killer marketing, it’s a great formula for success.
The cons of starting from scratch:
Funding can be a nightmare. Unless you’re already independently wealthy or you’re willing and able to struggle through a tough initial bootstrapping phase, a startup is going to require significant funding. The trouble is, funding isn’t all that easy to secure when all you have is an idea and a prototype product to bring to your presentations.
Investors exert strong control. Although building a startup sounds like it should be all about the lone wolf entrepreneur going with her gut and succeeding through sheer instinct, the truth is the founder of a startup must make decisions in line with the requirements laid out by their investors. If they don’t, they risk getting the funding rug pulled out from under them at a critical moment.