Starting a new business from scratch vs. buying a business, the pros and cons

When starting your own business, there are several ways to begin. You can start your business from home with minimal starting costs, slowly reinvesting your revenue to grow and acquiring better equipment, expanding your services, and building your inventory over time.

But let’s say you want to start a gardening business, window cleaning service, junk removal company, or pressure washing business. These types of service-based businesses require some initial capital. Depending on your approach, startup costs can range anywhere from $10,000 for a lean operation to $150,000 if you want to scale quickly with top-tier equipment and multiple employees.

What’s the Best Way to Start a Business?

Should you start a business from scratch and figure everything out as you go? Or is there a smarter alternative. Buying a business that’s struggling but available at a discount?

In this article, I’ll break down the pros and cons of both approaches, helping you decide which path suits you best. Whether you’re a first-time entrepreneur or looking to expand, understanding the advantages and risks of each option will give you a better look into what to do.

The pros and cons of starting a business from scratch

The pros:

Pros of Starting a Business from Scratch

 

• Start small and scale gradually
  One of the biggest advantages of bootstrapping a business is the ability to begin on a small scale and grow at your own pace. If you’re launching a service-based business like gardening, window cleaning, pressure washing, or junk removal, you can start part-time while keeping your full-time job.
  • Low initial investment—start with what you can afford
  • Time to test the business model before committing full-time
  • Less financial risk compared to taking on a large loan

However, be prepared for long working hours. You’ll essentially be maintaining two jobs until the business generates enough revenue to support you full-time.

• Full control over branding, website, and equipment
  When you start your business from scratch, you make all the decisions from day one. You’re not inheriting an outdated website, old branding, or inefficient systems, everything is built the way you want.
  • Freedom to create a modern, high-converting website
  • Avoid fixing an outdated brand identity
  • Choose the best equipment and tools from the start

In many cases, rebranding a failing business can take even more effort as starting from scratch! This is a big advantage of starting from scratch!

• Choose your own employees
  As your business grows, you hire employees that fit your vision and work culture. Buying a failing business often means inheriting employees you didn’t choose, some of whom may resist change or quit unexpectedly, leaving you with both financial and operational gaps.
  • Hire employees that match your values and vision
  • Build a strong team culture from the beginning
  • Avoid resistance from old employees unwilling to adapt
• Freedom to pick the right industry
  When you start from scratch, you can choose the exact industry you’re passionate about rather than waiting for a struggling business to go on sale. Whether it’s gardening, cleaning services, or personal training, you aren’t limited by what’s available on the market.
  • Launch in a high-demand industry rather than inheriting a failing one
  • No compromises, choose the exact niche you want to work in
  • No waiting for the “right business” to go on sale
• No inherited problems (debts, bad reputation, or legal issues)
  Buying a struggling business often means inheriting someone else’s mistakes—such as outstanding debts, bad supplier contracts, legal issues, or a poor customer reputation.
  • Start with zero liabilities, no old debt to repay
  • No need to fix a bad reputation left by the previous owner
  • Avoid legal issues that may come with an existing business

When you build from the ground up, you are in full control of how customers perceive your brand.

The Cons of Starting a Business from Scratch

 

1. You have to build everything from the ground up.
   Unlike buying an existing business, where systems and infrastructure are already in place (even if inefficient), bootstrapping a business means setting up everything yourself. This includes registering your company, building a website that needs to rank on Google, Google profile business setup, starting social media pages, purchasing equipment at full retail prices, securing business insurance, finding an accountant, streamlining operations, and much more. These tasks demand significant time, effort, and resources. This is a big disadvantage of starting from scratch
2. Higher initial marketing costs.
   A new business has zero brand recognition, so you need to have a brand awareness strategy, meaning you will need to invest heavily in marketing to attract customers. While an existing business already has an established reputation, you’ll have to spend money on:
   1. A professionally designed website
   2. Google Ads
   3. Facebook & Instagram ads
   4. SEO efforts
   5. Print or local advertising

These costs can add up quickly and may be a significant financial burden in the early months.

 

1. Harder to secure bank loans.
   Banks are hesitant to lend money to brand-new businesses without an established revenue stream. Since 20% of new businesses fail within their first year, lenders see startups as high-risk. Without a steady cash flow, securing financing for expansion, inventory, or even initial startup costs may be difficult. You may have to rely on personal savings or alternative financing options like business credit cards or investor funding.
2. Limited initial cash flow can make it hard to pay yourself a salary.
   Many new business owners struggle to take a paycheck in the first one to two years. If your business requires significant upfront investments, it could be a long time before you can comfortably pay yourself a stable income. Be prepared for personal financial sacrifices during this phase.
3. Building a customer base takes time.
   A brand-new business has no credibility or reputation. You’ll have to build trust with potential customers through consistent service, marketing efforts, and referrals. If you’re in a competitive industry, breaking through the noise and convincing clients to choose you over established competitors can be difficult.
4. Finding and hiring employees is challenging.
   When you start your business, you might be able to handle everything on your own. But as your company grows, you will need extra hands—and that’s where the challenge begins. Hiring good employees is time-consuming and costly. Plus, while you’re already working 50 to 60 hours per week, you’ll have to:
   1. Create job listings
   2. Conduct interviews
   3. Train and onboard new hires
   4. Manage payroll & HR

Finding reliable employees who share your vision and work ethic can be one of the biggest hurdles in scaling your business.

 

The Pros and Cons of Taking Over an Almost Bankrupt Business

 

If done right, taking over an almost bankrupt business can give you a head start of almost one or two years. A way to measure this is by calculating the hours you would have spent building a new business from scratch.

For example, if you value your time at $30 per hour and work 60 hours per week for 50 weeks a year, that is:

• 3,000 hours per year
• $90,000 worth of time per year
• $180,000 worth of time in two years

By taking the shortcut of buying a failing business for a lower price, you save all that time, and time is money.

But is buying a struggling business always a good idea? Let’s break down the pros and cons of this strategy.

 

The Pros of Taking Over an Almost Bankrupt Business

 

1. You Don’t Need to Set Up Everything Yourself

The previous owner has already done much of the initial work needed to establish the business. This includes:

• Marketing efforts and brand name recognition
• Website creation and online presence, even though maybe old
• Business registration and necessary licenses
• Operational processes already in place
• Suppliers and vendors already established

While the business may be failing, fixing an existing framework is often easier than building one from scratch. Instead of spending months setting up, you can immediately focus on growth and profitability.

The Business Already Has an Existing Customer Base

Unlike a startup that has to build everything from zero, an existing business already has a customer list and revenue stream—even if it’s underperforming.

With an already existing customer database, you can:

• Call old customers to inform them about the new ownership.
• Offer special discounts to past customers.
• Use the existing email list for targeted promotions.

Even if the business is struggling, the low-hanging fruit of past customers can bring in quick revenue and make the turnaround process much smoother.

If the Owner Is Old, Maybe You’re in the Gold

Many businesses start declining simply because the owner is no longer motivated to grow the company. This presents a great opportunity for buyers.

Signs of an aging or unmotivated business owner include:

• Outdated website or no online presence, hasn’t been updated in 5 years.
• No social media engagement or marketing efforts.
• Revenue declined over the past few years.

Older owners are sometimes eager to sell and less likely to negotiate aggressively, especially if they have no succession plan from family or employees. If no other buyers are interested, you might even be possible to purchase the business below market value.

The Business Comes with Employees

Hiring and training staff is one of the hardest parts of scaling a new business. When you buy an existing business, you inherit a team that already understands operations.

This means:

• No need to hire and train from scratch.
• A smooth transition since employees already know the customers.
• Ability to delegate work immediately, rather than doing everything yourself.

However, employees can also be a challenge, which we’ll discuss in the cons section.

The Business Can Rapidly Increase in Value

If you buy a struggling business for a lower price and know how to fix its problems, you can significantly increase its value within a few years.

For example, if you buy a company for $150,000, and by cutting costs and boosting revenue you double its profitability, the business might be worth $300,000-$400,000 in just one or two years.

Many business owners don’t consider valuation growth, but it’s similar to holding an investment stock. You don’t have profit until you sell it, but it’s visible that the profit is being made.

 

The Cons of Taking Over an Almost Bankrupt Business

 

1. You Will Often Need More Money

Buying a struggling business still requires significant capital. Even if the company is failing, you will still have to pay for assets such as:

• Equipment and inventory.
• Goodwill for the customer base.
• Any remaining financial obligations or debts, you don’t want to buy a business with debt.

Additionally, banks may be hesitant to finance a business that is not profitable, making getting a loan more difficult compared to starting your own company.

2. You Must Do Extensive Due Diligence for business acquisition

A struggling business often carries a lot of history, and you need to uncover everything before finalizing the deal.

Key due diligence questions to ask:
– Financials: Are there outstanding debts or unpaid loans?
– Legal Issues: Has the business had any lawsuits or legal problems?
– Supplier Contracts: Do existing supplier contracts change under new ownership?
– Revenue Trends: Has the business revenue been stable or declining over the last few years?

Business valuation: You want to make sure that the business valuation is reasonable before you acquire it.

Skipping due diligence can lead to costly mistakes—such as taking on hidden debts, legal troubles, or unrealistic business expectations. Also take in account the extra costs of a business acquisition, it’s not cheap to hire good lawyers.

3. Employees Can Be a Challenge

While inheriting employees can be a benefit, it can also cause issues during the transition.

• Employees may not adapt well to new leadership.
• They might demand higher salaries once the business starts improving.
• Some employees may resist change and leave, disrupting business operations.

Since you buy the company based on its current revenue, losing key employees can cause an unexpected dip in sales.

4. Old Equipment Might Cause Unexpected Expenses

Taking over an existing business often means inheriting old equipment. While it saves money upfront, it can become costly if expensive machines break down shortly after purchase.

Consider:

• Is the equipment well-maintained?
• How soon will it need replacing?
• Will repairs disrupt business operations?

If you don’t have the liquidity to replace critical equipment right away, this can put a financial strain on the business.

 

Conclusion

 

When to Start a Business from Scratch?

 

Starting a business from scratch can be the safer route if you have major financial responsibilities such as:

• A full-time job that provides a steady income.
• House payments, car loans, or other monthly expenses.
• A family to support, including kids and a spouse.

If you fall into this category, it may be less risky to start small, test the waters, and see where your business goes. Since you’re not committing large amounts of money upfront, you can exit easily if the business doesn’t work out—without ending up in serious financial trouble.

Another reason to start from scratch is if you’re unsure whether there’s enough demand for your product or service.

For example:
Let’s say you want to start a dog trimming business, but you’re not sure if people will actually pay for it. Instead of investing thousands into renting a grooming shop, hiring employees, and buying expensive equipment, you could start small from home—offering local services at a lower financial risk.

By gradually building up your customer base and proving demand, you reduce the risk of failure while still maintaining the flexibility to pivot or stop if needed.

 

When to Take Over an Almost Bankrupt Company?

 

Here’s my hot take: If you’re young, have few financial responsibilities, and have lots of time, then buying an almost bankrupt company could be a golden opportunity—but only if you have a well-thought-out plan for turning it around.

This approach works best if:
✅ You don’t have high monthly expenses (e.g., you still live with your parents).
✅ You can dedicate long hours to fixing and improving the business.
✅ You have a detailed strategy on how to revive and scale the company.

However, this is not a decision to take lightly. The financial risk of buying a struggling business is much higher than starting from scratch, and things can go south quickly if you don’t cover every single detail in your due diligence. And, you need to work really really hard in the beginning, you want to turn the business around as fast as possible. Take into account that your workweeks could take up to 80 hours in the first years.

Before taking over a business, make sure:

• You have an airtight plan for increasing revenue and cutting costs.
• You fully understand the financial risks and hidden liabilities.
• You’re prepared to work long, demanding hours to turn it around.

If you get everything right, you could skip years of slow business growth and turn a failing company into a highly profitable venture in just a couple of years. 

H9: Conclusion

Deciding between starting a business from scratch or taking over an almost bankrupt company depends on your financial situation, risk tolerance, and long-term goals.

Starting from scratch offers flexibility, lower upfront costs, and controlled growth, making it a great option if you want to minimize risk while testing the market. On the other hand, buying an existing but struggling business can give you a major head start, with an existing customer base and infrastructure—but it comes with higher financial risks and the challenge of turning things around.

Ultimately, the best choice depends on your skills, experience, and resources. If you’re willing to put in a lot of hours, analyze the risks carefully, and execute a solid turnaround plan, taking over a failing business can be a shortcut to success. However, if you prefer to start small and build up gradually, then launching your own business from scratch may be the safer and smarter path.