Why Buy Instead of Build


I have undergraduate and graduate business degrees, yet I never had a single class covering marketing automation, contractor hiring, cash flow management, online advertising tactics, distributed product development, remote team culture, multi-channel customer support, or converting email leads into online customers.

What if everything you’ve been told about starting a successful business, FBA Amazon site, web application, SaaS, or lifestyle business is wrong?

Maybe not 100% wrong… but at least super risky and prone to failure, especially if you’re thinking that starting from scratch will lead to a profitable business?

What if you knew you had over a 99% chance of guaranteed failure? Would you still try?

I bet you know the above is true, or at least said “yes” in your head, because you’ve tried to start your own business, product, service, or email newsletter and failed. I bet you’ve failed many times over.

I know I have. I have failed many, many times.

My Dropbox is full of archived projects, abandoned code, and dormant websites that were great ideas that never went farther than a few customers.

At least I wasn’t alone. Every message board, every discussion thread, and every forum that talks about starting a business is overwhelmed with questions about what business, idea, or app someone should pursue.

All of my failed projects were quiet failures; none of these business ideas even got off the ground far enough to make even the slightest ripple across the ocean of commerce.

They don’t count in any organization’s statistics, but for me, they represented a 100% rate of failure.

And let me tell you, it hurts to say that, because aren’t I admitting that I’m a failure too?

Build It and They Will Come

Like almost every individual dying to be independent, break free from the corporate world, and be their own boss, I’ve lost track of the number of business ideas I’ve had, the number of projects I’ve started, and the number of stale domain names I’ve purchased that are still sitting at GoDaddy unused.

We all want to create something and become financially free. Or at least, calling our own shots enough to work for ourselves.

This is where we start searching for advice about “how to start our own business.”

Imagine the challenge to be number one for that search term?

Almost every single result from that search will assume you want to start from scratch with your own idea, and they will help guide you to your first customer, first sale, and first profitable dollar.

These are not bad programs, bad ideas, or bad people. The techniques and strategies they discuss are the building blocks of success for almost every business you could start.

These programs help you generate ideas, flush out a market for your idea to grow, and get you started building and marketing your product or service to a future customer base.

This is really great, isn’t it? People helping people….

Except that 90% of businesses fail in the first year. 95% of all businesses fail within the first five years.

And that doesn’t count the millions (likely billions) of small business ideas that never even get to the point where the SBA would even count them as a “business” to include in their statistics.

None of my dozens of failed ideas count in those numbers above because those projects never had a client, customer, product, or a dollar in revenue.

It would be safe to say that 99% or more businesses never make it to year five.

You can build it, but they likely won’t come.

Why Do People Keep Telling You To Start Your Own Business?

How many results do you get if you Google “start your own business” today?

Okay, I did not expect 7 BILLION results when I rhetorically asked that question in my head.

Yet, that goes to show how many people are possibly asking the wrong question, getting potentially the wrong answer, and not setting themselves up for long term success.

It’s no secret that many of the people selling you “how to start your own business” products are creating their own business from selling products teaching you how to “start your own business.”

Look at Ramit Sethi – a guy I very much respect and learned a ton from over the years – and what he is doing today. When I first started following him a very long time ago, his business was sharing financial advice for new college graduates.

One of his largest product offerings is teaching other people how to…wait for it…start their own business. (He still does financial advice, mainly because Ramit is an all-around good guy who shares his knowledge with customers to help them succeed.)

The reason these gurus changed their focus from their first successful business to selling information about You starting a business is that it’s a hell of a lot easier to make money selling the dream than realistically, predictably, and consistently succeeding in starting and building multiple different small business ideas in a row.

Once they realize that, they start packing up what they learned from one or two of their successful ideas and teaching what they believe are the principles that made those prior ideas successful.

That’s why you see so much information about “starting your own business” instead of information on why you should buy instead of build. It has nothing to do with the real reason you should be trying to build your business portfolio around cash-flow-generating assets. If you want to be managing a profitable business, starting it on your own is easily the worst way to go about it.

Skip the Line In Good Company

The older I’ve become, the more I’ve realized that younger people are mostly focused on building a company. In contrast, older, more experienced, and successful people are more focused on buying companies. This is odd, as most successful startups are started by people in their 40’s and 50’s, but there you have it.

James Altucher, one of those old guys who’s been up and down enough times to ignore at your own detriment, always talks about skipping the line as a strategy for success. “The line exists for those afraid to skip it.”

Did Howard Schultz open Starbucks in his garage, or did he skip the line? You guessed it, he skipped it, bought Starbucks from their management team who wanted to concentrate on Peet’s Coffee and Tea, and made it a multi-billion dollar company.

Did Sam Walton set up his first Wal-Mart from scratch? No, he bought five-and-dime stores and skipped the line.

Warren Buffett was way too smart to build any business from the ground up. After Hathaway Manufacturing and Berkshire Fine Spinning Associates merged into Berkshire Hathaway in 1955, Warren bought stock in the company until he controlled a majority and moved the company away from the failing textile industry into the insurance and investment industries. The rest is history.

Don’t let the bombastic self-congratulatory rhetoric from Silicon Valley pull the wool over your eyes; young people aren’t very successful at starting new companies. Many younger career-oriented entrepreneurs would experience better long-term success by saving money to make their first acquisition with the same focus many families use to save money for a down payment on their first house.

When you’re older with more experience and wisdom, you are in a prime position to choose between either acquiring an asset to manage or building one from the ground up.

So how should you choose?

Which Would You Choose?

This brings me to my final question, based on what I’ve described above, how should you approach your next business venture?

Let me propose a scenario…

Which would you rather have :

  • Business A) A great idea, no product, no revenue, no market analysis showing anyone would pay for your idea, no website, no customers, and no prospects. A lot of startup costs are offset by zero income.

  • Business B) A tangible product or service, cash flow positive earnings, multiple engaged customers, functional website, profitable marketing funnel, growing email list, tax benefits, and SEO juice in Google.

If Business A is your preferred method for creating success, then there are many places where you can find more information on making that dream come true. Unfortunately, this is not one of them. This is a practical place, not one of fantasy.

If Business B sounds like a better idea, then you’re in the right place.

Buy Instead of Build

I am not going to spend much time on ideas or techniques for starting a business on this website.

This website will only be about acquiring appropriately sized businesses for your asset portfolio, keeping them manageable, scalable, growing, and positioning each entity for a potential acquisition just in case you decide to sell.

No slow ramp-up like when you start from the back of the line; we’re skipping the line and investing, growing, and earning from day one.

If that might be of interest, I encourage you to look around at some articles and sign up for my newsletter.