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  • Writer's pictureJason Huett

Buy or Build - The Pros and Cons of Startups versus Acquisitions.

Hello there, fellow entrepreneurs! Buckle up because today, we’re diving headfirst into the exciting world of entrepreneurship. Have you ever stood at the crossroads, wondering whether to forge your path with a startup or grab the reins of an existing business? Well, you’re not alone! Let's dissect this dilemma, shall we?

space shuttle taking off

Launching a Startup: Crafting Your Own Story

Ah, the allure of a blank canvas! Starting from scratch can feel like setting sail on an uncharted sea. As a startup enthusiast, you get to sculpt your vision, mold your culture, and creative (and guide) the narrative from ground zero. The adrenaline rush of birthing an idea into reality—there’s nothing quite like it!

But, hold onto your hat because the journey isn’t a stroll through the park. Funding challenges, product-market mismatches, and the uphill battle of establishing brand recognition—you’re in for a rollercoaster ride of epic proportions.

When I was in my early years of entrepreneurship, I was a purist. I only wanted to launch my own businesses. But, as I've grown older and wiser, I've come to see the benefits of purchasing an already operating business — building a successful brand is no small feat.

According to the U.S. Bureau of Labor Statistics, about 20% of new businesses fail within the first year, 50% within five years, and around 70% within ten years. On the flip side, approximately 80% of acquired businesses survive the first year - that's a pretty big gap.

Benefits of Launching a Startup:

  • Unlimited Creativity: Your ideas, your rules! The sky's the limit when it comes to creativity.

  • Full Control: You call the shots. From strategy to execution, it’s your show.

  • Freshness & Innovation: Pioneering new frontiers means leaving your mark on the world.

Cons of Launching a Startup:

  • Risk Galore: Uncertainty looms around every corner; failure is a harsh reality for many startups.

  • Resource Constraints: Limited funds, manpower shortages—brace for tough resource management. (And, no - raising funding isn't always the answer).

  • Brand Building from Scratch: Establishing credibility and market presence is a Herculean task - it will take twice as long and be twice as expensive as you might think.

Acquiring an Existing Business: Stepping into an Established Realm

Now, let’s shift gears to the road less traveled—acquiring an existing business. Think of it as inheriting a well-built ship, already sailing the seas. You skip the foundational phase and leap right into the driver’s seat, with an established customer base, operational framework, and a track record to analyze.

space shuttle in orbit

Sounds great, right? But wait, it’s not all sunshine and rainbows. Acquiring a business comes with its own set of challenges. You might encounter resistance while adapting to existing company culture or face the Herculean task of revamping outdated systems.

Benefits of Acquiring an Existing Business:

  • Immediate Footing: Hit the ground running with an established customer base and cash flow.

  • Reduced Risk: The business has a proven model; you inherit its successes and failures.

  • Existing Infrastructure: Skip the initial setup; systems, staff, and processes are already in place.

Cons of Acquiring an Existing Business:

  • Hidden Baggage: Unforeseen debts, legal issues, or outdated practices might haunt you.

  • Cultural Adaptation: Melding into an existing company culture can pose a challenge.

  • Inflexibility: Your room for radical change might be limited due to established norms.

The Verdict?

So, which path should you tread, you ask? Well, the truth lies in the eye of the beholder. Your decision hinges on your risk appetite, entrepreneurial spirit, and the specific industry landscape.

Launching a startup is a bold leap into the unknown, a canvas where you paint your masterpiece from scratch. It's for those who thrive on risks, uncharted territories, and the thrill of creation.

On the flip side, acquiring an existing business offers a smoother, yet not devoid of challenges, transition into entrepreneurship. It suits those who prefer a head start with fewer unknowns and an established foundation to build upon.

In the end, whether you're drawn to the audacious allure of a startup or enticed by the stability of an existing business, the entrepreneurial journey is about passion, resilience, and a thirst for innovation.

Remember, both paths have their pros and cons. It's not about the destination, but the exhilarating ride of entrepreneurship itself.

So, fellow dream chasers, which adventure will you embark upon? The blank canvas of a startup or the established landscape of an existing business? The choice is yours. Choose wisely and embark on your entrepreneurial odyssey!

Until next time,

Jason Huett Collaborative Commercial, CEO/CMO


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