In this video, the presenter contrasts two entrepreneurial paths: building a business from scratch versus acquiring an existing, cash‑flow‑positive online business. He outlines five key advantages of acquisition—immediate profitability, freedom to select size/industry, location independence, existing team and client base, and easier financing—followed by five disadvantages—higher upfront cost, inheriting the seller’s problems, hidden flaws, need for additional capital to improve the business, and the risk of owner‑dependent revenue. The speaker shares his personal experience with both approaches, stating that for his personality and investment model, buying profitable businesses yields higher returns, though he acknowledges that the choice ultimately depends on the individual’s preferences and risk tolerance. He concludes by inviting viewers to comment on which path they find more suitable.
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Imagine you decide to become an entrepreneur and open up your very first business. And the moment you open up your doors, from day one, you're super successful. You're a huge hit and you're profitable. How often does that actually ever happen in real life? Most likely not very likely. However, there is a way to get to that in a path that we call entrepreneurship through acquisition. Now I want to explore that a little bit deeper today in comparing starting a business from scratch versus acquiring an existing established business. What I want to compare here is what are the advantages versus starting from scratch and versus the advantages or disadvantage of buying a profitable company. So number one, one of the advantages of buying an existing business is that you're actually cash flow positive from day one. So the moment you take over this business and acquire it, invest in it, you're making cash flow positive returns and profits on your business, which is huge. You don't see that when you're starting from absolute scratch. Number 2, you get the freedom to decide what kind of business you want to buy. So you can decide on the, the size of the business, the industry, the type of business you want to work with. So you're kind of free and you get to decide what kind of business you want to work with. You don't need to decide and think of the idea of starting from scratch. Number 3, you get to be location independent, especially with online businesses, which is what we focus on a lot on. You get to manage the business from anywhere in the world. As long as you have a reliable internet connection, you can manage the company anywhere you like. Number 4, you feel like you're making a real impact, like you're actually improving the business over time. So there's a lot of moving parts. You have an existing team, you have an existing clientele that you can work with right off the bat versus, you know, starting where you have nothing to work with. And lastly, if you're looking to acquire a business, you're actually seen as less risk from the bank or any lender. So it's easier to get financing, which is a big struggle if you're starting from scratch. Now, so those are the advantages of starting a— of acquiring a business. Let's look at some disadvantages. Some disadvantages of buying a business versus starting from scratch is there's obviously a lot higher upfront cost in terms of your investment. If you're starting from scratch, maybe you're starting a new online business, Obviously your costs are a lot lower. You know, you just need a website, you know, some, some marketing costs, different hosting. You can get started for very cheap, but you know, to grow to a sustainable level will take time, a lot of effort, a lot of resources to figure out if it's the right business. However, there is going to be a lot higher cost that you need to figure out how you're going to finance. Number 2, what you're doing when you're buying another company or another business is you're actually buying the other person's problems. So those kind of problems come to you when you're looking— when you take over the business, you start absorbing those problems and you have to figure out how to deal with it. Maybe they hired a team that wasn't as great as you thought. Now you have to figure out how to manage it or replace them or change things around, right? So now you've taken over something that's existing and you have to work with what you're given. 3, it's quite easy for a seller to manipulate Or hide flaws in the business. So what I mean by that is you take over the business, they say how great it is, look how much we're growing, look how amazing our team is. But then, you know, as you start taking over and you run the business, you start finding these little flaws and problems that weren't so apparent from if you were to start it yourself. Number 4, so it actually requires a lot more capital to one, acquire the business, and 2, to make any changes to improving the business. So When you're first starting from scratch, you don't need to make any— invest anything to make changes. Whereas if you're taking over, you need capital to make changes and improve the business. So you'll need to figure out a way how to find that capital. And lastly, another disadvantage when you're taking over a business, you know, you see this with a lot of businesses. Let's say you're buying a website, akeeljabbar.com. What you're buying is my personality. You're buying the relationships that are tied to me. So sometimes you'll find a business, let's say an agency or a business that has a brand tied to the owner where they're doing all the sales, all the clients are based on their own personal relationships. Now, as soon as they leave and you take over, maybe all their clients disappear with them. Okay? So you want to find a business like, hey, if I leave tomorrow and there's no owner for a month, the company continues to grow with or without the owner involved. So those are the type of businesses that you want to look at but can be an issue if you're looking at an existing business and you want to make sure to account for. Those are the differences between starting from scratch versus buying an existing business. So we've done both where we've purchased businesses that are already profitable, established, and cash flow positive from day one. That's our existing investment model, which we found to be a better, higher return model for us. However, we've also started businesses from scratch that have been successful as well. It's really up to you and to your personality. What we find is buying existing businesses is a lot more healthy and better returns for us. So it's really up to you at the end of the day. So I hope that was helpful to you guys in making a decision whether you guys want to start from scratch versus deciding to use your investment and time by acquiring a business through acquisition, right? Let me know if that was helpful. Please comment below, and we'll see you guys in the next video.
