EntreLeadership - Buying a Business vs. Starting One: Which Is Better?

Episode Date: October 2, 2026

Buying an existing business can give you a head start—but it can also mean inheriting someone else’s problems.  In this episode, head coach John Felkins explains when buying makes sense, when starting from scratch could be the better move, and how to choose the right path for you.   Next Steps: ·      🎥 Watch our next video, #1 Silent Business Killer (and How to Fix It). ·      🎯 Not sure what to do next in your business? Let’s figure it out together. Book a free 30-minute consult call with the EntreLeadership® Team. ·      📞 Have a question for the show? Call 844-944-1070 or send us a message. ·      📚 Order Dave’s most recent EntreLeadership book, Build a Business You Love. ·      📧 Get EntreLeadership’s free weekly newsletter: expert advice and practical tips from the same playbook we used to build Ramsey Solutions into a $300 million company. ·      🌎 Attend our world-class leadership conference, EntreLeadership Summit. ·      📝 Stop guessing. Get a plan built for your business and someone who holds you to it. Find out which coaching option is right for you. ·      📈 Bad hires. Strategies that never get off the ground. 60-hour workweeks. Sleepless nights. EntreLeadership Master Series is where you trade all that for the exact systems our Executive Team used to scale Ramsey Solutions to $300 million. Don’t wait until seats are sold out.   Connect With Our Sponsors: ·      Go to BELAY Solutions or text ENTRE to 55123 for their free resource! ·       See if Christian Healthcare Ministries Groups are the right fit for your organization. ·      Visit NetSuite today to learn more.   Listen to More From Ramsey Network: 🎙️ The Ramsey Show 💸 The Ramsey Show Highlights 🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💰 George Kamel   Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

There's a massive shift about to happen in the business world. Millions of small business owners are getting ready to retire in what's being called the great ownership transfer. The crazy thing is a lot of them don't have a plan for who's going to take over, which means around one million businesses worth about $5 trillion are going to need a new owner over the next decade. If you've ever wanted to own a business, this could be one of the biggest opportunities you'll ever see. But is buying a business the right move? I've coached a lot of business owners over the years, and one of the biggest misconceptions I hear

is that buying a business is somehow the easier path. Social media makes it look like there are these can't-fail businesses just sitting around, waiting for somebody to scoop them up, that all you have to do is sign the paperwork, then sit back and collect the checks. Well, that sounds great, and buying an existing company can be an incredible opportunity. But it only works when you understand exactly what you're buying and you're prepared to lead

it well. Just because somebody else built the business doesn't mean it's healthy. Even a business that's been around for 30 years can still be a complete mess under the hood. So before you decide if buying a business is the right path for you, let's walk through the opportunities, the risks, and the expensive mistakes that can cost you if you get this decision wrong. The biggest advantage of buying a business is that you're not starting from zero. You usually already have customers, revenue, processes, equipment, vendors, some staff,

and maybe a reputation in the marketplace. Instead of spending years trying to prove there's a demand, you could be stepping into a business that already has people willing to pay for what it offers. That can be a huge head start because you get to improve upon what already exists. And buying a business can make even more sense when you're already inside that business. Maybe you're a family member. Maybe you've worked at the business for years and the owner is getting ready to retire and wants you to take over. In that case, you already know the customers and the team.

You understand how the place operates. You've seen the good, the bad, and the ugly of it all. That doesn't necessarily remove the risk, but it can lower it dramatically because at least you know what you're getting yourself into. It's also a chance to preserve something valuable to the community. You get to help people keep their jobs and continue to serve customers who depend on the business. Now, another way to buy a business is with a franchise. This is kind of like getting a business in a box.

Someone else has already figured out the systems, the marketing, and the operating playbook. You have a model to follow. You may have corporate support, and you usually have a somewhat recognizable brand to rely on. For the right person, the franchise structure can be a big advantage, but you still have to actually run the business. You're the one opening the doors in the morning. You're leading the team of people. You're dealing with customers and solving problems all the time. And with a franchise, you may have rules from corporate about what you can sell, how you can market,

and even how to operate the day-to-day. So keep all of that in mind before you jump at the chance to own a franchise. In general, buying a business can be a really smart move, but you have to do your homework and know exactly what you're taking on. It's easy to think of buying a business as a shortcut to success, but it could be a shortcut to a nightmare. You're not just purchasing someone's building and equipment. You're buying somebody else's culture and reputation. All of that gets transferred with the business. So if the team is healthy, that's great.

But if the culture is toxic, congratulations, that's now your problem to deal with. It could also be the previous owner was the glue to hold everything together. Maybe everyone stayed because they loved them. Maybe every important customer relationship ran through that person. But now they're gone and you're trying to earn the trust of the team and the customers. And that takes a lot of time and work. You also need to figure out if you're buying a business, or you're just buying yourself a job.

Here's what I mean. If the current owner works 70 hours a week, makes every major decision, and barely pays themselves a salary, the business may look a lot more profitable than it is. So ask yourself, if I had to pay someone a fair market salary to do everything the owner is doing today,

what would be left? Because if there's little or no profit after everyone is paid a fair wage, you're just paying for the privilege of going to work. why you can't just take the seller's word for it. You have got to dig into the books. Review the tax returns and look at several years of financials. You need to understand what the business actually earns, not just what the owner says it earns. And if they say, don't pay attention to the tax returns, we actually make more money than that. You need to run. What they basically

just told you is, we lie to the federal government, but you can trust us. You do not want to get mixed up in all of that. You also need to account for any expenses the previous owner may have ignored. Maybe the equipment hasn't been maintained. The air conditioner is on its last leg. Maybe the floor needs replacing or the roof leaks. Those future improvements are actually current operating costs that haven't shown up in the financials yet. If the business should have been spending $20,000 a year on maintenance, that $20,000 is basically an unpaid bill. Now, that doesn't automatically make it a bad business, a poorly run business can be a fantastic opportunity to buy. Broken systems can be fixed, equipment can be replaced, and customer service can be improved.

But you don't want to pay the current owner for the improvements you're going to have to make immediately. So if you know you'll have to spend money to fix things and keep the business running, you need to factor that into what the business is actually worth. Because if you're the one putting in the time, the money, and leadership to turn the failing business around, that future value belongs to you, not the seller. You'll also need to think about how you actually buy the business. Ideally, you should buy a business with cash.

But the reality is, most buyers don't. They take out loans and convince themselves that it will pay for itself. And maybe it will. But now you've put yourself in a third. tough position. You're learning how to operate a company while also paying off a loan. That's a lot of pressure and a lot of risk. Those payments don't care if sales are low or if your main team members quit, you still have got to pay up. And if taking on a ton of debt is the only way that you can make the deal work, it's not the right time to buy. Be patient. Buy a business when you're

financially ready, not just when the opportunity shows up. You might see somebody on TikTok, talking about the perfect business to buy, and suddenly you feel like you have to jump on the next deal that comes along. But don't confuse urgency with wisdom. Business isn't a game of monopoly. You don't have to buy whatever's available just because you're afraid someone else might get there first. Remember, you're not just buying a business, you're committing to this being the next 10 or

20 years of your life. So before you buy a business, ask yourself these questions. What am I actually buying? Is the business profitable? Can I afford to buy this business with cash? Is the team healthy? Are the customers loyal to the company or just the current owner? Will the team still be here after the sale?

Do I actually care about this business? Do I understand this industry? Can I see myself leading this team and serving these customers for the next 10 or 20 years? And am I excited about the work or am I only excited about the idea of owning something? An existing business can absolutely be a great path, but it's not the easy shortcut social media makes it out to be. It's still hard work. There's still risk, and if you don't actually want to build that business, it'll probably

become more of a burden than a blessing. So that's buying a business. And the other option is to build one from scratch. But whether you're buying a business or starting one, your job is still the same. Take good care of your people while being a wise student. of the business. And one of the biggest investments you'll make is health care. That's why I want to tell you about Christian Health Care Ministries Groups Program. It's a faith-based alternative to traditional health insurance where members help pay each other's medical bills. It's a great

option, not only for individuals, but also for small businesses to care for their people in a way that's effective and affordable, whether you're a church, a nonprofit, a school, or a family business. Many organizations report saving 30 to 50 percent compared to traditional health insurance. Of course, the goal isn't just cutting the costs. It's being a wise steward of the resources that you've been given. CHM has over 700 participating groups, and they offer flexibility for companies of different sizes. So, if you're responsible for your organization's health care benefits, contact CHM. One of their representatives will walk you through your options and help determine whether the groups program is a good fit for your specific situation.

So go to ch ministries.org slash entree, or call 1-800 join CHM, or click the link in the description. Now, let's talk about starting your own business. People love to pitch entrepreneurship like it's super simple. Quit your job, be your own boss, never work for the man again. And honestly, there is something really exciting about that. quite like creating something that didn't exist before. You see a problem and come up with a way to solve it. Then a real customer pays you for that solution. That's an incredible feeling. And starting a business from scratch gives you the freedom to shape the business from day one. You get to

choose the product or the service that you offer, the people who work for you, the culture, the systems you use, and the kind of company you want to become. You're not beholden to somebody else's decisions. You're making your own. There's a deep sense of satisfaction that comes from watching something grow from an idea into a real company that serves people, creates jobs, and supports your family. However, this usually means you're starting from zero. No customers, no systems, no team, no reputation. You've got to earn your first sale and every sale after that. But it also means You can grow at a pace that makes sense for you. You don't have to inherit overhead the business can't support.

You don't have to take on a team before you're ready to lead one. You can add each piece as the business earns the right to grow. The good news is starting a business doesn't always require the massive upfront investment. People think that it does. Many entrepreneurs say, I need $50,000 or $100,000, I need an office, I need a new truck, I need the best equipment. And maybe you do need some startup money, but you usually don't need a building or a big team

or a mountain of equipment to get started. In fact, you'd be surprised how little it can actually take to get your business off the ground. Most of the time, you can use what you already have. You just need to create the smallest version of a business that allows you to serve a real customer and get paid. For example, if you want to start a landscaping company, you may be able to begin with equipment you already own and a few yards in your neighborhood.

If you want to start a photography business, you probably don't need the latest camera. So start scrappy, get creative, serve one customer, learn from it, then serve the next one. The first version of your business is just supposed to prove that you can actually sustain the idea. You can always improve upon it. That said, figure out what you really need to start the business. What can you borrow or rent or buy used? Because remember, your tools aren't the reason customers choose you. You are.

Your creativity. Your ability to solve a problem. Your willingness to serve people. That's the foundation of the business. And as the business grows, you can upgrade. When you have more work than you can handle, then you can hire. When your equipment starts being the limiter on what you can produce profitably, then you can replace it.

When your space becomes too small for you. your team, then you can invest in something bigger and better. But don't build the business you hope to have five years from now. Build the business your customers are asking for today. Test out your ideas, make adjustments along the way, and avoid taking on a ton of expenses before you know the business will even work. I don't want to kill your dream here, but not every business idea is a good one. You may love the idea, your friends and family may tell you it's a great idea, but the

The marketplace gets the final vote. That's why strong entrepreneurs love solving a real problem for real people. Just having an idea isn't enough. So before you get too far ahead of yourself, ask, what problem am I solving? Who has that problem? Are they willing to pay for the solution? Can I test the idea before making a huge investment? What is the smallest version of the business that I can start today?

That last question can save you a ton of money. I would suggest you do some honest soul searching before you start a business because owning a business isn't for the faint of heart. You'll wear a lot of hats. You'll be the salesperson, the bookkeeper, the customer service rep, and the janitor. You're basically the chief everything officer for a while. But that season teaches you the business from the ground up. It gives you the chance to really know your business and create something that reflects what you really care about.

As an entrepreneur, the hardest boss you'll ever work for will probably be yourself. But if you feel called to it and you're willing to do the work and keep showing up after the excitement wears off, starting a business can be one of the most rewarding things you'll ever do. As I said earlier, the next 10 years are going to create some incredible opportunities for entrepreneurs. Whether you buy an existing business or start one, don't choose the path that simply looks easier, choose the one you're prepared to handle. Buying gives you the chance to step into something proven and carry it forward.

Starting from the ground up gives you the chance to create something new and shape it from the very beginning. Neither path is easy, but both can be incredibly rewarding. Both can create jobs, serve customers, and make a real difference in your community. And whatever option you choose, the fundamentals of running a business are the same. So if you're serious about owning a business and doing it the right way, check out Dave Ramsey's book, Build a Business that you love. It'll show you how to lay the right foundation so you can avoid the most common mistakes

and create a business that you actually enjoy running. You can grab a copy via the link in the description, but becoming the owner of a business is only the beginning. You've still got to keep the doors open and make payroll every month. And one of the biggest reasons small businesses fail is, because they run out of cash. So watch this next video where I break down the biggest cash flow mistakes

business owners make and how to avoid them.