Buying existing vs starting new vs buying a franchise
The three paths into business ownership in Australia, side by side — capital required, time to cashflow, risk profile and the type of person each suits.
Buy an existing business
You acquire a trading business with customers, staff, systems and (hopefully) profit. In Australia, small businesses typically sell for 2–4× annual EBITDA, depending on industry and owner-dependence.
Pros: cashflow from day one, established brand, trained team, financing is easier (banks lend against trading history), historical data lets you stress-test.
Cons: you inherit problems (lease, staff, supplier contracts, hidden liabilities), upfront cost is highest, and you may overpay if the seller is selling for a reason they're not telling you.
Best fit: buyers with $250k+ capital, low risk tolerance, who want to be operating within 90 days.
Start a new business
You build from zero — concept, brand, fitout, customers. Lowest entry cost in pure dollars, but the longest runway to profit.
Pros: full creative control, no inherited problems, lowest upfront price, highest upside if it works.
Cons: 30–50% of new AU businesses fail in 3 years (ABS data). No revenue for months. Banks rarely lend without security. Your time is the real cost.
Best fit: builders with deep industry experience, 18+ months of personal runway, and a validated customer/concept before they spend a dollar.
Buy a franchise
You buy the right to operate under an established brand and system. ACCC's Franchising Code of Conduct gives you a legally required disclosure document and a 7-day cooling-off period.
Pros: tested playbook, brand recognition, training and support, easier financing, lower failure rate than greenfield startups.
Cons: ongoing royalties (typically 5–10% of revenue) plus marketing levies, strict territory and operational rules, contractual exit can be painful, profit cap is real.
Best fit: first-time owners who want speed and structure, are comfortable following someone else's rules, and have done deep due diligence on the franchisor's existing units.
Quick comparison
Capital required (low → high): Start < Franchise < Buy existing.
Time to first dollar: Buy existing (day 1) < Franchise (90 days) < Start (6–18 months).
Risk of total loss: Start (highest) > Franchise > Buy existing (lowest, if priced right).
Long-term upside: Start (highest) > Buy existing > Franchise (capped by royalties).
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