Decision tool
Buy an existing business, or build one?
Model both paths against the same capital and see where you actually end up in five years.
On these inputs, buying reaches a stronger cash position within five years.
Buying trades capital and debt for immediate cash flow. Building trades time and uncertainty for a lower entry cost and full ownership of the upside.
| Factor | Buy an existing business | Build from scratch |
|---|---|---|
| Capital required up front | $160,000 | $80,000 |
| Cash flow in year 1 | $146,370 | $0 |
| Annual debt service | $103,630 | $0 |
| Time to meaningful income | Immediate | 18 months |
| 5-year cumulative cash position | $696,850 | $690,000 |
| Estimated exit value in year 5 | $937,500 | $660,000 |
| Primary risk | Overpaying for a declining business | Never reaching product-market fit |
| Failure rate profile | Lower — proven revenue | Higher — unproven demand |
This comparison is a simplified educational model using your assumptions and generic financing terms. It is not financial, lending or investment advice.