Think laundromats, dry cleaners, car washes, and trade businesses like plumbing companies. These aren’t the businesses that typically make headlines, but they’re the quiet workhorses of communities, often necessities in day-to-day life, and they’re ripe for a generational handover.
A report by the Canadian Federation of Independent Business (CFIB) reveals a staggering statistic: 76% of small business owners in Canada plan to exit their businesses by 2033. Yet, fewer than 10% of them have a formal succession plan in place. This opens up unexpected opportunities for the next generation of entrepreneurs willing to roll up their sleeves and embrace the unsexy.
Jason Pereira, a seasoned financial planner, award-winning writer, and speaker, offers insights into this overlooked landscape. “What we’re really talking about is more traditional mainline brick-and-mortar businesses,” he explains. “Things that do not get the big appeal in the media.” For young Canadians looking to build something substantial, these established ventures offer a surprisingly stable and lucrative foundation.
Why boring is the new black: The draw of established businesses
In the business world, “established” often translates to stability and cash flow—precisely what every entrepreneur dreams of.
While some might mistakenly view businesses like laundromats as passive—“you just do something and people show up and give you money,” Pereira quips—the reality is they require maintenance and management like any other venture. But their true appeal lies in their established nature and the market conditions created by the “Boomer exit.”
Many long-standing businesses, from local manufacturing shops to service providers, lack a succession plan. The owners may have hoped their children would take over, or they just haven’t thought through the transition. This demographic shift means that countless profitable businesses face an uncertain future: they may be sold haphazardly, shuttered, or even die with their owner.
This creates a significant gap and a golden opportunity. As Pereira notes, “Because of the lack of succession planning, the reality is that even no matter what evaluator comes back with, if you’re the only one looking to buy it, then frankly, you may get a really sweetheart deal on a very established, profitable business.”
You’re not starting from zero; you’re stepping into an operation with an existing client base, potentially years of positive Google reviews, proven revenue streams, and a track record. This stability significantly reduces the inherent risks of entrepreneurship compared to building something from scratch.
The hunt for hidden gems—and navigating the acquisition process
So, where do you find these low-profile, high-earning companies? It’s not always as simple as browsing listings for mom-and-pop businesses for sale. The very nature of these businesses—often run by owners who haven’t actively considered selling—means they aren’t typically advertising.
“This is the crux of the problem, right?” Pereira states. “You have a bunch of people who are not actually out there looking, advertising or selling their business, and you have a bunch of people who basically don’t know where to look.”
Finding these opportunities requires proactive legwork and a bit of old-fashioned hustle:
- Networking: Attend trade shows and industry conventions. Talk to owners, suppliers, and other players in sectors that interest you.
- Direct outreach: Don’t be afraid to “knock on doors.” If you see a business you admire, go in, call, or email and express your interest.
- Leverage connections: Let family offices or other investors know you’re looking to acquire. Once you’re in one industry, it becomes easier to spot other opportunities through suppliers or industry contacts.
While buying an established business gives you a jump start, it’s not without risks. No matter how much due diligence you do, you never truly know everything until you’re in the thick of it. “The risks are buying a lemon and paying too much for something worth less than you thought it was,” Pereira cautions. This could mean inheriting legal liabilities, contractual issues, or a business that’s not as robust as it appeared from the outside.
On the flip side, the rewards of successful entrepreneurship are unparalleled. While a good salary can provide comfort, true wealth is often built by those who create and grow their businesses. “Just look at the Forbes list,” Pereira says. “The richest people in the world are people who started businesses.” The ability to build a successful venture and then potentially “cash out on your success” is a powerful driver for financial independence.
To mitigate risks and maximize rewards, Pereira says thorough due diligence is critical. Beyond just looking at the financial statements, you need to dig deeper:
- Verify financials: Can the seller provide clean and trustworthy financial records? Request bank statements to verify cash flow.
- Reputation check: If possible, speak to suppliers and customers (while respecting confidentiality) to vet the business’s reputation in the industry.
- Legal counsel is non-negotiable: This is where you absolutely cannot cut corners. “Use a good lawyer, full stop. Trying to cheap out here is only going to set yourself up for substantial pain,” Pereira advises. A lawyer will help you understand whether you’re buying assets (which limits your liability) or shares (which means you inherit all the company’s liabilities, making protective covenants crucial). These covenants protect you if issues from before your ownership surface later, such as undisclosed lawsuits or back taxes.
Compare the best bank accounts for side hustles
Funding your acquisition and finding overlooked industries
Access to capital can be a significant hurdle for young Canadians, especially in the current economic climate. Most young buyers won’t be “flush with cash,” meaning debt financing will often be necessary.
Pereira explains that one key strategy that can bridge the financing gap, particularly for these generational transfers, is a vendor take-back. This is where the seller essentially acts as the bank for a portion of the purchase price. For example, suppose a business sells for $1.2 million and the buyer can only secure $500,000 in third-party financing. In that case, the seller might finance the remaining $700,000, allowing the buyer to repay them over time.
