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Canadians and their homes - it’s a love story for the ages. Whether it’s upgrading a kitchen to impress dinner guests or turning a drab basement into a Netflix-worthy hideout, home renovation is practically a rite of passage. But this isn’t just about chasing Pinterest dreams; the home improvement industry in Canada is a serious moneymaker. From big-box retailers to specialty installers, this sector is hammering out billions in revenue and showing no signs of slowing down.

For investors, the real beauty lies beneath the drywall: a market brimming with growth, innovation, and opportunities to cash in. 💸 Let’s explore why this industry is one you’ll want to build into your portfolio. 

SPONSORED

Hey Mainstreet Memo-ers (yikes) 👋 

This is Morgan Tate, one of the writers of Mainstreet Memo.

Do you hate the concept of work-life balance? 

If you’re an entrepreneur, you probably do. Heck, I launched 4 companies in the past 2 years—I’m about as balanced as a peg-legged pirate 🏴‍☠️.

And yet, I’ve built 4 companies and set a personal record in my 10K run this year. Curious how I pull it off?

Subscribe to my FREE newsletter here or read on morgantate.com

INDUSTRY BREAKDOWN

Canada's Home Renovation Landscape: Building Wealth One Remodel at a Time 🛠️

The Canadian home improvement industry has been steadily expanding, with an average growth rate of 1.3% between 2015 and 2020. In 2019, the industry generated a whopping $50.2 billion in sales, underscoring its significant economic footprint. As of 2022, the market size, measured by revenue, stood at $38.5 billion, employing nearly 88,879 individuals across 2,269 companies. 

This sector encompasses a wide range of activities, from DIY projects to professional renovations, and includes both retail sales of home improvement products and installation services. The market value of Canadian home improvement stores alone is estimated at $25 billion, highlighting the retail segment's substantial role. 

However, the industry isn't without its challenges. The growth rate experienced a slight decline of 3.9% in 2022, following the pandemic years, reflecting the sector's sensitivity to economic fluctuations and changing consumer behaviors. 

Want the full blueprint? 🏠 Dive into the full breakdown, trends, and finances shaping Canada’s home renovation industry - click here to get all the details for free!

Check out these Home Renovation Businesses for sale:

1.  Established Tile Showroom & Installation Business on Vancouver Island, BC - $1,100,000

2. Trusted Emergency Restoration Business with Growth Potential on Vancouver Island, BC - $2,450,000

3. Canadian Construction and Contracting Services - $3,500,000

Interested in a particular industry? Reply to this email with the industry you are curious about and keep your eyes peeled in upcoming issues. 👀 

DEAL REVIEW

Specialized Construction Business

This business has earned a strong reputation for its craftsmanship, operational efficiency, and customer satisfaction on Vancouver Island in British Columbia.

Deal Facts 🔥

This fitness studio offers a rare opportunity for a hands-off owner looking to invest in a steady, well-established business. With 30 years of history, a strong brand reputation, and monthly recurring revenue, it checks many boxes for aspiring investors. However, its slight revenue decline and dependence on a manager raise some considerations for structuring the deal effectively.

Green Flags 🟢

• Established Reputation: Over 20 years of experience and a strong brand in the cabinetry and finishing market provide a solid foundation for continued success.

• Skilled Team and Defined Systems: A competent workforce and streamlined operations allow for smooth day-to-day management and make the business appealing as a turnkey opportunity.

• Resilient Market Sector: The demand for high-quality cabinetry and finishing solutions is steady, offering stability and long-term growth potential.

• Growth Opportunities: With management strategies in place to revitalize revenue and profitability, the business is positioned for a strong rebound and scalable growth.

Red Flags 🔴

• Recent Revenue Downturn: The temporary revenue decline in 2024 due to a major supplier change could signal potential volatility in supplier relationships or operational dependencies.

• Leased Property: Dependence on a leased property poses potential risks if lease terms change unfavorably or if relocation becomes necessary.

• Owner Transition Risk: The owner’s departure may disrupt relationships with long-term clients or suppliers, potentially affecting short-term stability.

• Need for Marketing Expertise: While the business has growth potential, a buyer lacking marketing or operational scaling experience may struggle to fully capitalize on the opportunities identified.

Possible deal structure: To mitigate the risks associated with the recent downturn, consider offering 70-80% cash at closing, funded through a combination of down payment and third-party financing. Structure the remaining 20-30% as seller financing or an earnout, tied to performance metrics like achieving the projected SDE of $270,000 over the next 1-2 years.
This approach reduces upfront risk while aligning the seller’s incentives with the business's recovery, ensuring steady cash flow post-acquisition. If the business returns to its peak historical performance, you might include a small bonus in the earnout to reward exceptional results.

Watch Our Video Breakdown

For a more in-depth analysis, check out this video deep dive of the deal by our Founder, Morgan Tate:

Want to learn more about this deal? Reply to this email with a “send me more details” and we will connect you with the broker!

TWEET HIGHLIGHT

Honesty really is the best policy, especially when buying a business. Sellers aren’t looking for the next Warren Buffett, they’re looking for someone who will take care of what they’ve built 🏗️. The truth? Everyone starts somewhere. Whether it’s your first business or your fifteenth, sellers care more about your passion, commitment, and plan to continue their legacy.

So skip the buzzwords, keep it real, and focus on showing them you’re the right person to take the reins. Transparency doesn’t just win trust - it might just win you the deal! 🤝

GOOD READS

Recommended Resources 📚

Below is a list of articles, books, and other resource we recommend for buyers or operators of small businesses!

1. The Business Development Bank of Canada (BDC) offers a comprehensive toolkit to guide entrepreneurs through the process of acquiring a business, including practical guides and valuation methods.

2. Datarooms.org provides a detailed guide on the process of acquiring a small business, covering essential steps such as due diligence, valuation, and integration.

3. The U.S. Small Business Administration (SBA) provides a comprehensive guide for small business owners, covering topics from starting and growing a business to accessing capital and navigating federal contracting opportunities.

THANK YOU

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