Startup vs Acquisition: Assessing Startup and Growth Strategies for Organic and Inorganic Businesses

Entrepreneurs can be both made and born. The same goes for the companies themselves.

Some are born organically and some grow inorganically.

There is no right or wrong growth strategy.

When it comes to growing a business, entrepreneurs and managers have two main options: they can either buy an existing business or start one from scratch. Both strategies have unique pros and cons, so it's important to carefully weigh the pros and cons before deciding which path is best for you and your business.

No matter which option they choose, entrepreneurs will likely face a variety of challenges along the way. However, with hard work and dedication, it is possible to be successful and build a successful business both ways.

Let's explore both organic growth (building) and inorganic growth (buying) as viable strategies for starting and growing businesses by outlining their respective pros and cons.

Inorganic vs Organic Growth Explained

Organic and inorganic business growth strategies refer to the two main options that entrepreneurs and executives have to grow their business. Organic growth involves building a business from scratch, while inorganic growth involves buying an existing business through a merger or acquisition.

Both approaches have their own advantages and disadvantages, so it's important to carefully weigh the pros and cons before deciding which strategy is best for you and your business.

Benefits of starting a business from scratch

There are many benefits that can come from starting a business from scratch. Here we describe some of them.

Full Control: When building a business from scratch, founders have full control over their vision and can easily adjust the course of their business to meet changing needs or goals. Plus, they own all aspects of the business, including its culture and operations.

No need to take on debt: When starting a business from scratch, entrepreneurs don't necessarily need to take on debt to get the business off the ground. This allows them to focus their resources more on growth and expansion rather than paying down loans.

Deep-rooted brand loyalty: Starting a business from scratch gives the opportunity to create deep-rooted brand loyalty in customers. This comes with creating an entirely new product or service offering, as well as marketing it in a way that will resonate with customers and potential customers.

A sense of pride: It can be extremely fulfilling and rewarding to say one day that you are the CEO of a company that started from a home office or your garage. Many entrepreneurs are also driven by more than the bottom line. Some companies give them a greater sense of purpose and direction, especially if the company has a mission that aligns with internal values ​​and a mission that goes beyond just one person. You usually can't get the same from an acquired company.

Disadvantages of starting a business from scratch

As someone who has both built and bought, I can say that there are often more frustrating downsides when it comes to building a business from the ground floor. Starting from scratch can give businesses more control over their product offering, but it also requires significant resources to get started.

Slow Process: Starting a business from scratch can take a long time, delaying opportunities for growth and success. This time frame could be even longer when taking into account the process of developing products or services as well as securing customers or clients.

Large investment: Building a business from scratch requires a large financial investment to get started. This could include investing in the necessary personnel, raw materials and other resources needed to launch the business successfully. Time is money, and if you're starting from scratch, the entrepreneur will have to do a lot of menial tasks that probably won't add much immediate value to revenue or operations.

Tough competition: When starting a business from scratch, there is often fierce competition from incumbents that must be overcome to be successful. It could be competing with existing, established businesses or convincing customers to switch to a new product or service, especially if you're entering...