Build or Buy Decision Workbook

01

Name the owner life each path requires

Define the work you want to do, the income you need, the hours you can sustain, your location constraints, and who depends on you. Ownership may bring control over some decisions while increasing obligations to customers, employees, lenders, suppliers, and family. Ask which responsibilities you are prepared to accept, not only which title you prefer.

Set non-negotiables before being persuaded by an attractive story: maximum affordable loss, cash reserve, time commitment, personal guarantees you will not accept, or a type of work you cannot responsibly perform. A high average score cannot compensate for breaching a hard constraint.

02

Compare the mechanisms of risk

• Capital: Building may allow staged investment but require funding before demand is proven. Buying requires evaluating purchase terms, fees, working capital, transition needs, and any debt obligations.
• Cash timing: First revenue is not the same as cash available to the owner. Test collection delays, operating costs, reinvestment, and debt service where relevant.
• Relationships: A new venture must earn trust. An acquisition inherits relationships that may depend on the seller and may not transfer as expected.
• Complexity: Building can begin with a narrow scope. Buying can bring systems, people, contracts, and liabilities that need careful investigation.
• Capability: Identify the work you personally understand, the work you need to learn, and the work requiring qualified support.
• Control and reversibility: A cheap experiment may be reversible. A signed transaction, guarantee, or long-term commitment may not be.

03

Treat inherited evidence as evidence to verify

The acquisition advantage described in Walker Deibel's Buy Then Build is the opportunity to start with an operating business. It is not a guarantee that earnings, people, or demand will survive a change of owner. Verify what the business depends on and what the seller actually does.

For a build path, test a customer's costly problem and willingness to act before committing to a broad product. For a buy path, investigate customer concentration, owner dependence, earnings quality, contracts, workforce, operating assets, and cash needs with appropriate advisers. This is a scoping list, not comprehensive diligence.

04

Make the cash and time downside visible

Create base and downside scenarios for both paths using the same horizon. Include personal living costs separately from business costs. Label estimates, source each material assumption, and show what happens if revenue arrives late or transition costs run above plan. Avoid using a seller's headline earnings as your expected take-home pay.

The SBA recommends assessing both finances and experience and performing due diligence when buying a business. Use qualified legal, tax, accounting, and financing advice before a transaction; this workbook cannot determine whether terms or financing are suitable.

05

Illustrative example: a service-business decision

A hypothetical operator compares starting a specialized service with buying a small established provider. The build option can be tested with a limited paid pilot but has unproven repeat demand. The buy option has customers and staff, but the largest relationships rely on the seller.

The next step is not to add up vague scores. It is to test repeat demand for the build option and obtain credible, appropriately authorized evidence of relationship transfer for the buy option. If neither path meets the household cash constraint under a plausible downside, preserving employment while learning is a valid result.

06

Choose an evidence threshold, not just a preference

For each option, write the strongest evidence against it. Name the cheapest ethical test that would change your mind, the cost of obtaining that evidence, and the date you will decide. If you use scores, define them in advance and record uncertainty beside them; do not hide weak evidence inside precise numbers.

End with one of four decisions: explore further, run a bounded test, proceed to professional diligence, or stop. None is equivalent to authorization to invest or acquire.

07

What not to do

• Do not compare the best version of one path with the worst version of the other.
• Do not confuse an attractive industry with a business you can operate.
• Do not use a broker's summary as a substitute for diligence or assume debt makes a deal affordable.
• Do not disclose a target's confidential information in an ungated or shared worksheet.
• Do not let sunk search costs force you into a purchase.

Continue with a related resource

• Before You Build: A Customer Evidence Sprint
• Investment Thesis to Operating Cadence