When you picture a young, ambitious entrepreneur, someone in a sleek office, coding the next big app, or launching a disruptive startup in tech probably springs to mind. But something interesting is happening in the face of economic uncertainty: young Canadians are buying up “boring” businesses from retiring Baby Boomers.
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.
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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.
Why would a seller agree to this? While some sellers might initially question why they would sell if they’re essentially just getting paid back with their own money, or believe they could earn the same by continuing to work, Pereira emphasizes the key difference: they’d be collecting cash without working.
Plus, “If you sell the shares of your business, you qualify for up to $1.25 million per shareholder tax-free under the lifetime capital gains exemption.” This tax benefit can be enormous, often equivalent to earning significantly more pre-tax income over years of continued work. For sellers, it’s often a choice between a structured, tax-efficient sale with a vendor take-back or simply shutting down a profitable business and getting nothing. Plus, if things go south with the buyer, the seller often retains rights to the company’s assets, offering a safety net.
Beyond the financing, where are these promising, overlooked industries? Pereira points to sectors that are often dismissed but are “vitally necessary to society to exist”:
- The trades: Plumbing, electrical, HVAC, and carpentry are experiencing massive demographic shortages. “Anyone who’s entrepreneurial and wants to start a business, trades are a wonderful spot to do it because they have massive demographic issues where they’re running out of people,” he says. These roles are also less susceptible to immediate AI disruption compared to many white-collar jobs.
- Niche industrial & service businesses: Think about the unseen infrastructure of daily life. The company that distributes industrial vacuum cleaners, the firm that cleans commercial decks, or the supplier for a specific manufacturing component. These are often “sleepy” businesses that generate significant cash flow because they fulfill essential, ongoing needs.
“You know what’s not boring? Being very wealthy.” Pereira says. “Every wealthy entrepreneur I have who’s in my business—who’s wildly successful—none of them has a sexy business. None of them.”
The reality of running a business
Let’s be clear: there’s no such thing as a truly “passive” business. As Pereira puts it bluntly, running a business can be summed up in one word: problems. Even a laundromat needs maintenance, cleaning, and management. Your day as a business owner is largely about anticipating and solving issues.
To succeed, especially in the early days, you need a pragmatic mindset and a few key skills:
- Organization and financial literacy: “The better organized you are as a human being, the better off you’re going to be,” Pereira says. You need a firm grasp of accounting and numeracy. Don’t just rely on your accountant at year-end; actively monitor your books and understand cash flow. Be aware that for cash businesses, the Canada Revenue Agency (CRA) conducts “lifestyle audits” and expects you to remit HST regularly—never spend money collected on their behalf.
- Compliance awareness: Understand your legal obligations regarding employees (workplace safety, HR, payroll). Resources like the Canadian Federation of Independent Business (CFIB) offer invaluable guidance for Canadian entrepreneurs.
- Continuous learning: Before you buy, learn. Pereira recommends foundational books such as Profit First for managing cash flow and The E-Myth for understanding business systems and processes.
Building a relationship with the previous owner is also beneficial. For many sellers, their business is their baby and deeply tied to their identity and legacy, Pereira says. Show genuine respect for their work and vision. Many want to ensure their business is in good hands—especially if their reputation is on the line. The more you demonstrate seriousness, thoughtfulness, and perhaps a fresh perspective you can bring, the more likely you are to build that trust and get further when you take over.
A business that produces consistent cash flow—especially when you live within your means—generates free capital that can be reinvested. Think of titans like Warren Buffett, whose trillion-dollar company Berkshire Hathaway owns everything from oil pipelines to candy companies, or Jim Pattison, who started with a GM dealership and built an empire.
There are many examples of shrewd individuals who began with one “sleepy” business and used its cash flow to acquire others, compounding their wealth over time. It’s about recognizing opportunities where others don’t and putting in the work to make it grow.
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