Buy a Business or Start One? Why Buying Often Wins
Most people should NOT start a business.
There, we said it. Perhaps controversial for those who are founders, but for most aspiring entrepreneurs—especially those seeking a real return on their time, capital, and risk—buying a business is the smarter, faster, and more profitable path.
We understand the appeal. Launching from scratch sounds romantic and exciting.
But here's the uncomfortable truth: the odds are stacked against you. Roughly 90% of startups fail, often after years of grueling work and no payoff. Meanwhile, acquiring a healthy, cash-flowing company puts you in the driver's seat of something that already works—with paying customers, proven processes, and a real bottom line.
Still not convinced? Here's the case for buying businesses.
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The Case for Buying a Business
Walker Deibel’s "Buy Then Build" Thesis
Walker Deibel, author of Buy Then Build, popularized the modern entrepreneurship-through-acquisition movement. His argument is simple: why risk everything trying to launch a business when you can skip the zero-to-one phase entirely? By acquiring an existing business, you immediately step into revenue, operational infrastructure, and real market presence.
Deibel’s core belief is this: Buying isn’t cheating. It’s smarter entrepreneurship. And we agree.
He also points out that traditional startup culture often encourages endless iterations, product pivots, and customer discovery—all while burning through savings and investor capital. In contrast, acquisitions let you take a product or service that already has market fit and improve it, scale it, and add value from day one.
Why Acquiring Aligns With a Better Exit Strategy
When you buy a business—especially one of substantial size (between $2M–$20M in revenue and $350K+ EBITDA)—you're not just buying yourself a job. You're stepping into a model that's already working with the ability to scale.
For entrepreneurs considering an eventual sale, buying a business provides a valuable asset from day one. When starting a company from scratch, there's typically nothing substantial to sell for the first five years. In contrast, when you buy a business, you can usually maintain its value—assuming the business remains stable—any growth above that is gravy.
Breakwater has worked with many acquisition entrepreneurs who turned a modest deal into a multimillion-dollar exit—because they understood that growth compounds faster when you start on second base.
An acquisition gives you a baseline of performance. That means your focus shifts from survival to strategic growth: new product lines, expanded sales channels, improved margins, or enhanced operations. These changes create equity value, which can be captured in an eventual exit.
The Risks of Buying a Business—What to Know
Buying isn’t risk-free. You’ll need capital upfront, and a poorly structured deal could damage your finances significantly. But here’s the trade-off: you’re risking capital in a system that already proves its value, rather than years of sweat equity (and start-up costs) just hoping for initial traction.
Most acquisition deals are funded through a combination of buyer equity, SBA or commercial loans, and sometimes seller financing. If structured properly, the business’s cash flow can help service the debt, reducing the buyer’s personal financial exposure.
While this topic deserves its own article, the world's wealthiest investors use leverage strategically to enhance their returns (in exchange for higher risk). This works by minimizing the amount of out-of-pocket cash invested in a deal. After paying the monthly loan payments, any additional dividends go directly toward recouping your initial investment—typically at a disproportionately high amount relative to the cash investment.
You can compare this to launching a new business, where most of the financial risk is hidden: months (or years) of unpaid work, up-front capital investment, and burning through your personal savings—often with little clarity on whether you’ll hit product-market fit.
Buying is riskier up front, but far less speculative. And that’s a key distinction for entrepreneurs who value time, compounding returns, and a faster path to financial freedom.
The Case for Launching From Scratch
When Launching Still Makes Sense
We’re not anti-startup (we’ve founded multiple companies ourselves). In fact, there are cases when launching is absolutely the right call:
You’re creating something that doesn’t exist yet to fill a gap in the market
You have access to capital, time, and technical talent
You’re entering a highly innovative or regulated space where acquisitions are limited
You want to build a venture-scale company
Founders who are inventing new technology, building platforms from the ground up, or disrupting markets often have no choice but to start from scratch. Launching is also attractive for founders who have a specific vision and want to own the full creation story.
That said, launching a business is a slow and expensive gamble. You'll spend the first few years validating an idea, building an audience, and iterating through trial and error. How do we know? Well, in addition to launching successful companies, we've also had ventures that failed completely. Take it from us—it's a soul-crushing experience.
Even with the lean startup playbook, you’re staring down long nights, constant pivots, and uncertain ROI.
Financially, startups rarely pay founders anything during the early years. There are no guarantees. No built-in customers. No cash flow to rely on. Every dollar earned is hard-won, and most startups take 3–5 years just to break even.
And while startup success stories dominate headlines, the survivors represent a tiny fraction of the total attempts. The true cost of launching isn’t just financial—it’s emotional, psychological, and often invisible.
Are You Ready to Buy? Take This Quick Self-Assessment
Buying a business isn't for everyone—but it's an ideal fit for certain types of operators. Do these traits describe you? If so, you may be well-suited for acquisition:
You’ve worked in a business and always thought: “This could run better.”
You’re the employee who optimizes processes without being asked
You’ve managed teams or P&Ls and want the upside of ownership
You’re financially literate and comfortable with risk (but not gambling)
You have access to capital or can raise debt/investor support
You want to build wealth through operations, not invention
You think in systems, process improvements, and bottom lines
You enjoy leading people, solving problems, and executing strategy
You don’t need to be a visionary. You need to be a disciplined operator that doesn’t get distracted with new ideas everyday.
Acquisition entrepreneurs thrive by taking something good and making it great. If you’re wired this way, buying gives you a massive advantage.
The Real Deal: Comparing Risk and Reward
Let’s recap the financial risk of both options:
Buying a Business:
Requires capital or financing
Risks are upfront, visible, and manageable with good diligence
Strong potential for immediate cash flow and compounding growth
Risk is mitigated by proven business fundamentals
Starting a Business:
Requires massive time investment
Risk is speculative and long-term
No initial cash flow, often requires funding or personal sacrifice
Higher likelihood of failure despite hard work
Use an M&A Advisor to Source Quality Acquisition Targets
Working with a buy-side M&A advisor like Breakwater ensures that you're not walking blind into a deal. From sourcing to due diligence to negotiations, we act as your guide—aligning incentives to help you find the right opportunity.
We help:
Identify acquisition targets that align with your goals
Assess operational and financial risk
Navigate SBA and financing conversations
Structure deals that protect your downside and set you up for scale
And most importantly, we ensure you don’t overpay or walk into a post-close mess.
You can read more about how M&A advisors add value beyond their fees and why choosing the right one is a crucial part of the process.
Final Take: Make Your Decision with Logic, Not Ego
There's no universal answer—but for many would-be founders, buying is the smarter bet. This requires intellectual honesty and self-reflection. While being a flashy "tech founder" might sound appealing, it may not align with your goals.
Whether your goal is cash flow, freedom, or a future exit, acquisition offers a faster path with fewer battle scars.
Success hinges on self-awareness: Are you a visionary or an operator? Do you thrive on creation or optimization? Is your endgame to scale and sell, or to disrupt and dominate?
If you're ready to step into ownership, let's talk.
Connect with Breakwater
At Breakwater M&A, we work exclusively with founders of businesses doing $2M–$20M in revenue and $500K+ in EBITDA. If you’re thinking about selling your service business—now or in the next few years—we’re here to help you maximize the outcome.
Get started with a confidential call with our team HERE.
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