The Pros and Cons of Buying vs Building a Home Service Business

There’s never been a better time to be in the trades. Even the Wall St. Journal knows it.

But what about if you’re not yet in the game and want to get started? You have some options, but it all comes down to buy versus build.

Do you have the time to wait on a business acquisition? That all depends on your tolerance for pain and slow movement.

Small business acquisitions have grown since this time last year. Does that mean buying is the way to go over building from scratch?

Depends on your perspective. A lot of you know how I feel: If it was buying to a million or grinding to a million, I think I would buy just because you can do it overnight.

Past that? It’s the speed conversation again.

If you’re happy with five to ten million, you don’t really need speed… But if you want to grow faster, buying is a shortcut to years of time over build.

But if you’re still trying to decide between buy and build: building offers the unique ability to control every aspect of a company.

Buying gives you a ground floor to start on.

Which is better? Let’s look at the main pros and cons of buying versus building, along with the hidden cost of both.

Getting Big, Fast

We got where we are with a combination of acquisitions and operations. I think we're a pretty decent blend between the two. It’s also dependent on the year. 

But all things being equal… I like to buy over build. That said, you cannot avoid some build.

No avoiding it, sadly. You can buy systems, but that won’t get you all the way there.

What does it get you? Speed.

The rapid growth that comes along with acquisitions is hard to match. It’s the ultimate way to get over a hump when it comes to growth.

The trade? You inherit a lot of things, some of which are bad. You also may find that you have to learn some pretty basic stuff, such as outbounding, in our case.

We just didn’t do it.

Time to learn.

Despite all that speed, the things that may slow you down are the things that come along in an acquisition.

Did that company use old technology? Well, it’s your job to replace those systems.

Hope you weren’t attached to that fax machine.

But those literal systems you need to learn and build will be the thing to complicate matters.

We pumped our way to 15 million and then had to sit down and figure out best-in-class operations.

Speed up, just to slow down.

Hurry up and wait.

Slow And In Control

Maybe you hate fax machines and inheriting a bunch of garbage. That is the prime problem with a buyout.

I talked with a business owner recently who had a deal in place with the previous owner of his acquisition.

The old owner would stay on for a certain period of time. He made that owner’s life miserable at that time. Demanding to hang onto systems like buying into Yellow Pages.

Do you know how you avoid situations like that? Build it yourself.

If you build it, they’ll come.

It comes back to that system’s process. If you’re building from scratch then you have absolute control of what you build.

When we slammed two businesses together it was tough.

We put in long hours trying to figure problems out as we separated those businesses in the way we needed.

That said, you do give up an extreme amount of growth potential by not taking a buying shortcut.

But if you turn the key the correct way? Find growth? Those systems will be all yours, you’ll understand them, and you’ll know your operations inside and out.

The Shared Struggle

Here’s the secret of being in the home service business: It’s hard.

No matter which route you go, they come with a similar set of self-inflicted wounds.

Time, stress, capital.

You’ll never have enough time. If you’re building from scratch then you’ll have nights where you, the owner, are answering calls and putting out fires.

If you bought that business then you’ll spend weeks of your life fixing systems and meeting about setting up meetings to fix problems.

It even happens to us. It was an adjustment moving our call center over to Avoca AI, but once it jelled? That system was in place and now it runs smoothly. No stress.

But you? You’ll be stressed. You want to succeed. You want to provide for your employees. You want to win.

All of that takes time.

It also takes money. In a perfect world, we wouldn’t have any capital constraints, but that just isn’t reality.

What you can do is take the journey a day at a time.

Ask yourself “What can we do to win today? Tomorrow? The day after?” For us, the compounded annual growth rate has been above 50% over the last eight years.

And that’s because we didn’t consume all the cash. Knowing how to do that took time.

So, which is the best? Pick your poison and get ready to work.

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