Buy or Build a Business? Here's What To Know

Buy or Build a Business

Part 7 of Acey Gaspard’s Guide to Starting a Small Business – Made Simple

This article covers one of the first big decisions a new business owner faces: once you know what kind of business you want to be in, should you buy an existing one or build it from scratch? It’s written for anyone weighing that choice, whether you already have a specific business in mind or you’re still deciding how to get started.

If you’re creating a new idea or something artistic or tied closely to your own personality, you’re probably better off starting from scratch. However, if your business is the type that can be bought, a faster entry into something that’s already working may be the better route.

Jane’s Story

Jane had wanted her own flower shop for some time, and she kept putting it off until the opportune time. She figured she would start little by little and keep her current job. This is an approach many people take.

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The only problem with this approach is that it takes a lot of time, more than you’d think. Sometimes years go by, as they did for Jane.

One day, Jane was at a flower shop in the mall. When she started talking to the owner, she learned that the business was going to be put up for sale. Jane realized she had been postponing starting a flower shop for five years now, and if she kept going down this road, she would never get her own shop. She and the owner worked out a deal, and after only a few weeks, Jane was up and running in her flower shop.

If Jane had waited to start her own business, she might have started it eventually, or she might have worked as an employee for the rest of her life, with the desire for her flower shop still inside her. Sometimes all we need is a taste of the real possibility.

Buying a Business is a Shortcut to Get Started

Buying an existing business can get you started much quicker and reduce the stress of the setup. It can help you avoid depleting your cash in the race against time to get up and running. It also has some disadvantages, such as taking on the liabilities of the existing business’s operations.

The numbers help explain why buying appeals to so many new owners. As of 2026, data from the U.S. Bureau of Labor Statistics shows that roughly 20% of new businesses close within their first year, and about half don’t make it past year five. An established business has already cleared many of those early hurdles.

You have to look at every business and every situation individually — what works for one buyer’s deal may not work for another’s.

A Few Advantages and Disadvantages of Buying a Business That’s Already Operating

Note: the examples below are for a business that’s doing all right, though it doesn’t have to be highly successful. They aren’t meant for a company that’s in trouble or failing.

Advantages

The business is up and running, so the setup process is already done.
Your time to get into business is minimal.
You already have customers and clients.
You can start making money as soon as you take over.
It may be easier to get a loan for operating money — as of 2026, buyers commonly use an SBA 7(a) loan, which can finance up to $5 million toward an acquisition with terms of up to 10 years, often with a lower down payment than a conventional loan.
You know what you’re getting into before you invest the time and money.
If the business has existing employees, they’re already experienced.
A demand already exists for the product or service the business supplies.
Most initial problems and oversights should have already been identified and handled.

Disadvantages

The business already has momentum in a direction that’s harder to change, unlike starting from scratch, where you set the direction yourself.
It may cost a lot more than starting your own business, because of goodwill — the value attached to the existing customer base.
Customers may need time to adjust to a new owner. If the previous owner had a lot of personal interaction with them, those customers may be slow to warm up to you.
If the business had been neglected, it might take a lot more effort to turn around.
You may need to honor existing contracts, liens, and loans.
There could be existing liabilities.
If you plan to make changes, expect some resistance — employees who are used to the old way of doing things aren’t always quick to adjust to a new owner.

Note: Years ago, I purchased a video rental business, and when I started implementing new ideas, all I kept hearing was, “We’ve never done things this way,” and, “The previous owner did it this way.” Getting the existing staff to adjust to a new owner takes patience, time, and energy. In the end, it worked out, and we doubled sales in the following few months — but this is a crucial thing to keep in mind going in.

Takeaways

It’s up to you to decide what’s better for your situation. You may find the perfect business, but it might not be for sale. If that’s the case, ask anyway — you’ll never know unless you do.

If you find an existing business that looks like a real possibility, get professional advice from an accountant and a lawyer before you make an offer. A certified accountant can determine how profitable the business really is and flag any red flags. Lawyers and accountants tend to be cautious by nature, and that caution works in your favor — it helps make sure there are no surprises waiting for you down the road. The final decision is still yours; once you have all the information, you can weigh the pros and cons for yourself.

Key Points and Facts About Buying or Building a Business

Starting from scratch tends to suit ideas that are original, artistic, or closely tied to your own personal vision.
Buying an existing business tends to suit situations where speed, an existing customer base, and reduced setup risk matter most.
As of 2026, roughly 20% of new businesses fail in their first year and about half don’t make it past year five, according to Bureau of Labor Statistics data — a big part of why buying an already-running business appeals to many first-time owners.
Buying a business usually costs more upfront than starting one, largely because of goodwill — the premium attached to an established customer base.
As of 2026, an SBA 7(a) loan is the most common way small business buyers finance an acquisition, with terms up to 10 years and financing up to $5 million.
Whichever path you take, get an accountant and a lawyer involved before you commit money to either building or buying.

Action Steps for Buying or Building a Business

Evaluate the type of business you want to be in and whether it’s the kind that’s typically bought or typically built from scratch.
To find businesses for sale, check marketplaces such as BizBuySell, BizQuest, or Flippa, in addition to business brokers and your own local network.
When buying a business, perform due diligence before you commit — review the financials, contracts, and any existing liabilities so there are no surprises.
If you want to buy a business that isn’t listed for sale, make an offer anyway. You won’t know if the owner is willing to sell until you ask.
Line up financing early, including whether an SBA 7(a) loan or a seller-financing arrangement fits your situation.

Checklist for Buying or Building a Business

Decide which path fits your idea
- Is the business built around your personal vision or a new idea? Lean toward starting from scratch.
- Is it the type of business that already exists in a similar form elsewhere? Buying may be the faster route.
If buying, find the opportunities
- Search marketplaces like BizBuySell, BizQuest, or Flippa.
- Talk to business brokers in your industry.
- Ask owners directly, even if their business isn’t listed for sale.
Vet the business thoroughly
- Review financial records with a certified accountant.
- Have a lawyer review contracts, leases, and any existing liabilities.
- Ask the seller directly about the reason for selling.
Line up financing
- Look into an SBA 7(a) loan if you need financing for the purchase.
- Ask whether the seller is open to a seller-financing arrangement.
Plan for the transition
- Expect some resistance from existing staff and give the transition time.
- Expect customers to need time to adjust to you as the new owner.

FAQ: Buying or Building a Business

Is it cheaper to buy a business or start one from scratch?

Starting from scratch is usually cheaper upfront. Buying an existing business typically costs more because you’re also paying for goodwill — the value of its established customer base.

What’s the biggest risk of buying an existing business?

Taking on existing liabilities — contracts, leases, loans, or legal issues that came with the business before you owned it. That’s why due diligence with an accountant and a lawyer matters.

How do most buyers finance a business purchase?

As of 2026, many buyers use an SBA 7(a) loan, which can finance up to $5 million toward a purchase with terms up to 10 years, often paired with a smaller down payment than a conventional loan.

Where do I find businesses that are for sale?

Online marketplaces such as BizBuySell, BizQuest, and Flippa list businesses for sale, and business brokers can also help you find opportunities that fit what you’re looking for.

Can I make an offer on a business that isn’t listed for sale?

Yes. Many owners haven’t listed their business but would consider selling if asked. It doesn’t hurt to reach out directly.

References:

Acey Gaspard’s Guide to Starting a Small Business – Table of Content