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EP360 Build a Transferable Business- Could Yours Run Without You? · Profit With A Plan

• 0:32
  Marcia Riner | Profit Booster®: If you handed someone the keys to your business tomorrow, what would fall apart first? The customer relationships? The decisions your team still bring to you? Or the jobs that look profitable until the final costs come in?
• 0:46
  Marcia Riner | Profit Booster®: You can have strong profits, a full pipeline, and still have a business that's difficult to transfer.
• 0:53
  Marcia Riner | Profit Booster®: So, what would you make someone… what would make someone confident that they could take over your business that you have built? On today's Profit with a Plan podcast, we're getting into what buyers actually examine
• 1:05
  Marcia Riner | Profit Booster®: Why the full backlog may become a liability, and what to improve now so that your business can thrive when someone else is doing the leadership.
• 1:15
  Marcia Riner | Profit Booster®: Even if you're selling years away, this is the work you can start today to turn your business into a great company.
• 1:25
  Marcia Riner | Profit Booster®: Hey entrepreneurs, are you working too hard for too little profit? Well, welcome to Profit with a Plan Podcast, this podcast that helps business owners to grow smarter, increase profitability, and build a company that's worth more, whether you plan to keep it.
• 1:39
  Marcia Riner | Profit Booster®: or sell it. I'm Marcia Riner, business growth strategist and the Profit Booster behind Infinite Profit. In each week, I bring practical strategies, expert insights, and real-world steps to help you grow revenue, improve margin, and build a stronger business.
• 1:56
  Marcia Riner | Profit Booster®: And today's episode is brought to you by Infinite Profit, where strategy turns into profitable growth.
• 2:02
  Marcia Riner | Profit Booster®: But before we jump in, I have something special for you.
• 2:06
  Marcia Riner | Profit Booster®: If revenue is plateaued, or your marketing is just not producing the return it should, go grab your free Profit Booster Growth Map.
• 2:15
  Marcia Riner | Profit Booster®: In just a couple of minutes, it'll help you identify where to bring in more qualified clients, and where your profit leaks may be costing you money.
• 2:23
  Marcia Riner | Profit Booster®: Go get yours after the show at ProfitBooster.biz. And by the way, there's no sales call required. All right, let's get into today's conversation! Joining me today is Nitkin Khanna, who is the founder and president of N3 Business Advisors.
• 2:41
  Marcia Riner | Profit Booster®: He helps construction and skilled trade business owners to build profitable businesses that can thrive beyond their ownership.
• 2:50
  Marcia Riner | Profit Booster®: With nearly two decades of experience across construction, banking, business sales, and acquisition, Nitin understands both what owners are building and why buyers need to see.
• 3:04
  Marcia Riner | Profit Booster®: We're talking about what makes a business transferable, why strong profits just alone aren't enough, and what you can start improving long before you're ready to sell. Nitin, welcome to Profit with a Plan Podcast! It's gonna be a good conversation if I can get my mouth to work here today, so thanks for joining me.
• 3:24
  Nitin Khanna: Marcia, thank you for having me over. I'm excited to be here.
• 3:28
  Marcia Riner | Profit Booster®: Me too! This is a topic that we haven't spoke on, in… in probably 6, 8 months, so I think it's a really good conversation, especially as we're coming towards the end of the year, and talking about how to really position your business for that double-edged win.
• 3:45
  Marcia Riner | Profit Booster®: You have a business that you can sell later on, whether it's 3 years from now or 20 years from now.
• 3:52
  Marcia Riner | Profit Booster®: But those same
• 3:54
  Marcia Riner | Profit Booster®: things that make it really profitable and valuable for a buyer to come in also make a really great company to run right now. So I just… I love this topic and the ideas around how to really do that, and you being the expert, I think it's… it's just gonna make a great conversation.
• 4:13
  Nitin Khanna: I'm excited, Marcia. That's, you know, you said it correct. It is so true that, you know, a business should always be prepared
• 4:23
  Nitin Khanna: to run by itself, not just to be prepared when you're ready to sell the business, right? I'll use this phrase, which we use it in our email subject line, my entire team, and we say, every owner exits.
• 4:39
  Nitin Khanna: Few do it well.
• 4:42
  Nitin Khanna: And if you'll allow me, I'll explain what I mean by that is…
• 4:46
  Nitin Khanna: Think about it. Everybody, at some point, has to exit out of their business. Now, I'm not talking about sell their business.
• 4:54
  Nitin Khanna: exit out of the business, right? And typically, if you think about it, there are 5 ways people exit the business. The first is, which is their visual thinking, they'll give it to their kids, and hopefully they'll take it over, right?
• 5:06
  Marcia Riner | Profit Booster®: In today's environment, that's really not a common thing anymore, to give it to your kids.
• 5:10
  Nitin Khanna: What's not happening?
• 5:11
  Marcia Riner | Profit Booster®: They don't run it.
• 5:12
  Nitin Khanna: Yeah, look, I come from a business family myself. I wanted to carve my own path. I never took on my dad's business.
• 5:19
  Nitin Khanna: Right? It's not that I didn't want to be an entrepreneur, but it just, you know, kids want different things. They want a different kind of businesses these days, right?
• 5:27
  Nitin Khanna: Many kids don't want to be… they see their parents struggling and working hard, and they don't want to be the plumbers of tomorrow, or, you know, the electricians of tomorrow, but, you know, again, that's where the money is going these days, but anyways.
• 5:39
  Nitin Khanna: So, that's the first option, that's the wishful thinking every business owner has, that hopefully my business will be taken over by my kids, right? The second option, again, a wishful thinking.
• 5:49
  Nitin Khanna: My employees would take over the business at some point.
• 5:53
  Nitin Khanna: Doesn't happen as often as they think, right? Many times, employees don't have money to buy the business. Many times, they have their own mortgages, they have their own kids, or they don't have inclination to be an entrepreneur.
• 6:04
  Marcia Riner | Profit Booster®: They like the… they like the employee part.
• 6:07
  Nitin Khanna: Not everybody wants to have that, you know, 80-hour job, right? So… so that's a second option. So, third way people exit is, you know, they would find an outside buyer, a third-party buyer, and they would try to sell the business to the third party. Now, which is…
• 6:24
  Nitin Khanna: quite often, that's what happens, typically how the business transfers, right? And the fourth option is where they will just decide to shut it down.
• 6:33
  Nitin Khanna: They would lead their business into a slow death, and they would shut it down. And you will be surprised
• 6:39
  Nitin Khanna: how often we have that conversation, where people come to me and say, look, I built this company, I'm gonna shrink it every year for next 3 years, and I'll shut it down. I'm like, why would.
• 6:49
  Marcia Riner | Profit Booster®: What'd you do?
• 6:49
  Nitin Khanna: that, right? You build an asset, it's your 30 years' worth of hard work.
• 6:54
  Nitin Khanna: And you want to lead into a slow death, but…
• 6:58
  Nitin Khanna: Unfortunately, most people choose that path, right? And then the fifth option, which could be very unfortunate, is going belly up. Somebody goes bankrupt.
• 7:07
  Marcia Riner | Profit Booster®: Hmm.
• 7:08
  Nitin Khanna: But if you think about all 5 scenarios, everybody has to exit.
• 7:13
  Nitin Khanna: Right? They don't have to sell, but they are going to exit at some point.
• 7:18
  Nitin Khanna: Might as well do it properly. Might as well do it properly.
• 7:20
  Marcia Riner | Profit Booster®: I love it. It's so true. You're gonna get out of the business at some time in your life. You might as well do it well. So I love that viewpoint on it. And I think, you know, if we… if we add even more, a little bit more sprinkling to that, it's…
• 7:34
  Marcia Riner | Profit Booster®: it's from day one, right? So, if you start thinking about how you're gonna exit from day one, then you build that company that's attractive or enjoyable for yourself.
• 7:45
  Marcia Riner | Profit Booster®: and that new buyer that's going to come in. I think that there's so many buying opportunities that you can have coming in there, and we could probably spend a whole topic, a whole subject, on what kind of buyers are out there, because you've got partners and, you know, people that want to buy just your product, or just your contact list, or just grow their own business by bringing you on.
• 8:10
  Marcia Riner | Profit Booster®: I mean, there's so many different angles that you can do on that. But let's go back to really how the business owner
• 8:17
  Marcia Riner | Profit Booster®: thinks a little bit, and maybe we can shift some of their thinking. I know that business owners constantly say, well.
• 8:25
  Marcia Riner | Profit Booster®: I've got a profitable business, we're busy, of course someone wants my… to buy my business, it's totally worth buying. What are they missing?
• 8:34
  Nitin Khanna: Oh, you know what? They're missing a surprise.
• 8:36
  Marcia Riner | Profit Booster®: Big surprise!
• 8:39
  Nitin Khanna: So, you know, being profitable doesn't mean being transferable.
• 8:46
  Marcia Riner | Profit Booster®: Mmm…
• 8:47
  Nitin Khanna: Alright?
• 8:47
  Marcia Riner | Profit Booster®: Explain more.
• 8:48
  Nitin Khanna: Your business could be pretty profitable, you could be making money, but can those profits be transferred over to somebody with the least amount of friction?
• 8:57
  Nitin Khanna: That's what makes a business transferable, right? You could be running a business.
• 9:02
  Nitin Khanna: You know, everything sits in your head.
• 9:05
  Nitin Khanna: All the relationships are owned by you. All the clients call you. You know, I just wrote a blog post the other day. I'm like, you know, let's say your name is Dave, and every Monday morning, the rulebook of your business says, call Dave.
• 9:19
  Marcia Riner | Profit Booster®: Right?
• 9:20
  Nitin Khanna: Every employee issue, every, you know, firefighting in the company called Dave, every approval of a hammer and nuts and bolts called Dave, every estimation, every
• 9:31
  Nitin Khanna: client call, everything which goes wrong with the supplier is called there. Every payment that didn't get paid call there.
• 9:38
  Nitin Khanna: That's not a business, actually.
• 9:42
  Nitin Khanna: That's Dave…
• 9:43
  Marcia Riner | Profit Booster®: Dave.
• 9:44
  Nitin Khanna: glorified job, so-called as business, right? So, you just said here, just a few minutes ago.
• 9:54
  Nitin Khanna: When somebody builds a business, they should keep an exit in mind. They don't have to do the exit today, right? I typically use the phrase, build it backwards.
• 10:05
  Nitin Khanna: Right? And in our world of construction industry, I always use an example. I'm like, you know, you are a builder, you are given a task to build a hotel. What's the first thing you're going to do?
• 10:17
  Nitin Khanna: You're going to run to Home Depot and look for hammers and salt and, you know, sorry, and sand and bricks, or are you going to ask for the blueprint first?
• 10:26
  Nitin Khanna: Right? You're gonna ask for the blueprint and ask, okay, how many rooms this hotel is going to have.
• 10:32
  Nitin Khanna: Where is the lobby going to be situated? Is it a limited service hotel? Is it a 5-star hotel? What kind of hotel we are building?
• 10:40
  Nitin Khanna: You do that for your clients.
• 10:43
  Marcia Riner | Profit Booster®: Yes.
• 10:44
  Nitin Khanna: Why are you not doing it for yourself?
• 10:46
  Marcia Riner | Profit Booster®: The, the, the, the…
• 10:49
  Nitin Khanna: What business are you building? Think about it. There are… people say, I'm in a plumbing business.
• 10:54
  Nitin Khanna: And I asked them the question, what kind of plumbing?
• 10:58
  Nitin Khanna: What do you mean? Plumbing is plumbing? No!
• 11:01
  Nitin Khanna: Are you doing plumbing work for a new-build construction?
• 11:05
  Nitin Khanna: Are you doing plumbing work for residential clients? Are you doing plumbing work for commercial clients? Are you doing plumbing work which is service-focused? What kind of plumbing business?
• 11:17
  Marcia Riner | Profit Booster®: Damn?
• 11:17
  Nitin Khanna: They're absolutely different businesses.
• 11:20
  Marcia Riner | Profit Booster®: Exactly.
• 11:20
  Nitin Khanna: And if you don't decide it, what kind of business you're building, I bet you your clients, your employees, they're gonna decide it for you.
• 11:30
  Marcia Riner | Profit Booster®: Love it. You know, that foundation is so incredibly important. And funny, when you talked about building, I thought you were going to talk about the foundation, but you didn't. You went to the plans, which are so often missed, is putting kind of a structure of
• 11:46
  Marcia Riner | Profit Booster®: do I want this beast to be? I'm growing a child, right? I want my child to go through, you know, education and go to college and become a doctor. Whatever that is, you have kind of this vision and plan for it.
• 11:59
  Marcia Riner | Profit Booster®: But people don't think about that in those kind of details when they're looking at their business, which is a full-on marriage and commitment that you are getting into that, you know, it surprises me that they miss that.
• 12:13
  Marcia Riner | Profit Booster®: So yeah, I'm glad that you brought the blueprints up and really looking at that kind of planning. And that's not a one-and-done thing, is it? That's something that should be reviewed and adjusted and massaged, like, on at least, I believe, a quarterly basis, but, you know, annually at least.
• 12:29
  Nitin Khanna: Absolutely, absolutely. And you know what? You can be rigid. I always paraphrase what Jeff Bezos says, right? It's… I just told it from him. He always says, be rigid on your vision. Be flexible on the details.
• 12:44
  Marcia Riner | Profit Booster®: Oh, that's good. I like that.
• 12:47
  Nitin Khanna: Figure out what you want to be, what your life should look like, what
• 12:51
  Nitin Khanna: you… perhaps you're 30 years old or 40 years old, and you are building a business. When do you want to retire? Do you want to retire?
• 12:59
  Nitin Khanna: Alright? But what should your business look like when you're 65 years old?
• 13:03
  Nitin Khanna: Is it a $10 million company, $2 million company, $100 million company? And they're all right answers. Not everybody has to build a $100 million company.
• 13:12
  Nitin Khanna: Right? They're all… but know what you are going after.
• 13:16
  Nitin Khanna: Right? And then work backwards. And then, yes, COVID will come, recessions will come, things will come, and we learn to pivot. We…
• 13:25
  Nitin Khanna: We should be flexible with the details, right? Industry will change, AI will come, and we will learn, and we will incorporate those tools in our business, and we will use those tools to grow our businesses, right? So you've got to be flexible, but you've got to be rigid about your vision. What is it that you are after?
• 13:42
  Marcia Riner | Profit Booster®: I like it. Alright, well, let's get into that vision. But let's look at it maybe from the buyer's side. So, if you were looking at a business, what would you first check to see if someone else could successfully take that business over?
• 13:57
  Nitin Khanna: That's a very good question, Marcia. I wish…
• 14:01
  Nitin Khanna: some buyers, or most buyers, should ask us that question, because, you know, we get through… we talk to… my team talks to, I would say, 50-plus buyers every week.
• 14:12
  Nitin Khanna: And you know how the conversation typically starts.
• 14:15
  Nitin Khanna: Show me the financial statements of this company.
• 14:19
  Nitin Khanna: I get it. It's important. Every buyer should look at that. I'm not trying to say you should not. But if you are only going to start with looking at the financial statements, and that's all you care about.
• 14:32
  Nitin Khanna: You are up for a big surprise.
• 14:35
  Marcia Riner | Profit Booster®: Right.
• 14:35
  Nitin Khanna: So, having seen so many success stories, and a bunch of failures, we were a part of that transaction, and we've seen people bought the businesses, and they have really done well with them, and some people did not do as well.
• 14:50
  Nitin Khanna: If I have to put it all together, and I was to buy a business tomorrow, what I would do is, I would not start with the quantitative aspects of a business. I would start with the qualitative aspects of the business.
• 15:02
  Marcia Riner | Profit Booster®: I like that. So tell me more.
• 15:04
  Nitin Khanna: And I would… the first thing I would say is, what is the future of this business?
• 15:10
  Marcia Riner | Profit Booster®: Right?
• 15:12
  Nitin Khanna: Think about, do you want to buy Nokia?
• 15:15
  Nitin Khanna: stock today.
• 15:17
  Marcia Riner | Profit Booster®: Right?
• 15:18
  Nitin Khanna: Again, I'm not giving any stock tip, I don't know what's going on with Nokia, but I personally don't, because I don't know anybody using Nokia phones, right?
• 15:25
  Nitin Khanna: It was an amazing company many, many years ago.
• 15:28
  Nitin Khanna: for that reason, maybe the Sony stock, right? It was an amazing company, but nobody uses Sony because everybody uses iPhones and Samsungs and so on, right?
• 15:36
  Nitin Khanna: To start with, what does the future of this company look like?
• 15:39
  Marcia Riner | Profit Booster®: Mmm.
• 15:41
  Nitin Khanna: Do you have a strong conviction about the future of the business? Right?
• 15:47
  Nitin Khanna: If somebody's buying a HVAC company in a town which is a dying town.
• 15:53
  Nitin Khanna: Right? The writing is on the wall. HVAC is a good business to buy, but…
• 15:59
  Nitin Khanna: Do you really want to buy where, you know, all the residents are leaving the town?
• 16:03
  Nitin Khanna: Or vice versa, if you can have a big picture vision, and look, there is a lot of money pouring into this town, you know, a new Walmart is coming up, a new Costco is coming up, and I want to grow my business, and then, you know, all of a sudden, the population is going to grow, everybody's going to build houses, everybody's going to need HVAC services, absolutely.
• 16:22
  Marcia Riner | Profit Booster®: Hello.
• 16:22
  Nitin Khanna: What most buyers do, what I see, is they start with the rear view mirror.
• 16:29
  Marcia Riner | Profit Booster®: Right.
• 16:30
  Nitin Khanna: They look at it, what did the business do in the last 3 years?
• 16:35
  Nitin Khanna: Well, they did last 3 years, they did really well, but last 3 years were good years. Now, all of a sudden, the industry has turned around, or the town has turned around, or whatever. Or, you might be missing a big picture, you don't realize last 3 years were not as good.
• 16:48
  Nitin Khanna: Because the new Walmart which is opening, new Costco which is opening, they were not there. Now they are coming, so the next 3 years are gonna look much better.
• 16:56
  Marcia Riner | Profit Booster®: Yeah. You know, that's… that's a really good point, is that…
• 17:00
  Marcia Riner | Profit Booster®: you know, we rely on the first thing that they all say that we should do is we should look at the financials for the last 3 years, but there's so many variations of why the financials look like that, right? And it's not just the financials, but it's, like, so much more of it. What if they had a really
• 17:19
  Marcia Riner | Profit Booster®: Strong relationship with one company, or one vendor, or one, you know, That could completely fall apart.
• 17:29
  Marcia Riner | Profit Booster®: You know, because they didn't look… they only looked at the numbers, they didn't really look at that whole picture, or even the way you've presented it. What's the vision of that company? What's the culture like? What's the reputation of the company? You know, there's so many other things I think you can look at, besides
• 17:46
  Marcia Riner | Profit Booster®: One more thing, is that the industry you want to be in, right? You know, do you know anything about that industry, or are you just buying something because it sounds cool, right? HVAC is incredibly popular these days as a… as a…
• 18:01
  Marcia Riner | Profit Booster®: a company to buy on, and home services and stuff, but yeah, I… there's so much more beyond than the hard numbers.
• 18:08
  Nitin Khanna: Yeah, and thank you for bringing that up, right? If you don't really like that business, you may buy it, you may make money for the first year, second year, third year, but then after that, you will start hating it.
• 18:20
  Marcia Riner | Profit Booster®: Yeah.
• 18:21
  Nitin Khanna: And you and me, we're both small business owners, we know, in order to build a good company.
• 18:28
  Nitin Khanna: you need to enjoy the business. You need to be passionate about it, right? It's not just the money, it's got to be, what is it… am I passionate about the business? Am I enjoying it, right? If you don't do it, don't buy it.
• 18:41
  Nitin Khanna: Right? That whole excitement about the money will fade away after a year or two. And then when the tough time comes.
• 18:48
  Nitin Khanna: It will be hard to bounce back.
• 18:50
  Marcia Riner | Profit Booster®: Yeah.
• 18:50
  Nitin Khanna: Because if you didn't like it to begin with.
• 18:52
  Marcia Riner | Profit Booster®: Yeah, you know, and that's.
• 18:53
  Nitin Khanna: But then, you mentioned about the customer concentration risk. That's huge. That's huge. Many, many buyers have an oversight over that, so thank you for.
• 19:03
  Marcia Riner | Profit Booster®: Mmm. You know, there's so many variations you look at when you're looking at a company to buy, and I… and I love this… I love this quote that I heard from one of my guests years ago that said.
• 19:16
  Marcia Riner | Profit Booster®: I have to sell my company for one reason. It's either age, or health, or, you know, financial reasons, or, you know, something that's come on, a divorce of my partnership. I have to sell my company.
• 19:31
  Marcia Riner | Profit Booster®: The side that people don't realize is that the buyer wants to buy the company. They don't have to buy the company. And so, as that buyer's stepping in, what makes you want that company?
• 19:45
  Marcia Riner | Profit Booster®: Right? What excites you about doing it? Because you're gonna be married to that company for a long time, and so a good marriage has to have, you know, you have to be happy in it.
• 19:58
  Nitin Khanna: Yeah, and you're absolutely right, because, look, you have one business to sell, and you have to sell it. Buyer has options.
• 20:05
  Marcia Riner | Profit Booster®: Mmm. Right.
• 20:06
  Nitin Khanna: They don't have to buy your business, they have other 50 businesses out there available, which they can buy, right? So you've got to make sure that the business is sellable.
• 20:16
  Nitin Khanna: Before you start talking to the buyers, right? You, as a seller, want to have more than one buyer.
• 20:24
  Nitin Khanna: to be able to sell the business on your terms. And how you make sure that you have more than one buyer? By making sure that your business is attractive enough to more than one buyer.
• 20:34
  Marcia Riner | Profit Booster®: Well said, well said.
• 20:36
  Marcia Riner | Profit Booster®: Alright, so let's shift a little bit here, and talking about a business that looks good from the outside, right? You know, they've got a lot of business, they've got some backlog going, they've got good marketing, they've got good people in place, their numbers look good.
• 20:53
  Marcia Riner | Profit Booster®: What kind of trouble could be underneath all of that that maybe the buyer isn't looking at?
• 21:02
  Nitin Khanna: multiple things, right? So…
• 21:06
  Marcia Riner | Profit Booster®: Yeah, there's always… it's a can of worms, for sure.
• 21:08
  Nitin Khanna: Yeah, yeah, I don't know how much time we got here, but so, you know, typically what happens, what we say is a seller thinks they're selling a business, and what buyer realizes when they bought it, they bought a bunch of relationships, which
• 21:24
  Nitin Khanna: Existed with the seller, and as soon as the seller left, those relationships left the door.
• 21:29
  Marcia Riner | Profit Booster®: Yeah.
• 21:30
  Nitin Khanna: Right? And I'm not talking about just the relationship with the… with the clients.
• 21:36
  Nitin Khanna: It could be relationship with the suppliers.
• 21:40
  Nitin Khanna: Right? Maybe your supplier gives you better terms because they're friends with you now. They know you have paid always, even if you were late once in a while, right?
• 21:51
  Nitin Khanna: your employee relationships. One of the most important things, right? If employee is buddies with you, your general manager, he's comfortable with you, and he knows that you and their families are entangled and so on, that's a relationship which has to be transferred over.
• 22:08
  Nitin Khanna: I once bumped into a client, and he said, oh, I've got management in place. I'm like, well, that's a good thing. You got somebody, he said, I can take holidays, I can take time off, I've got a good general manager.
• 22:19
  Nitin Khanna: Long story short, when we found out, the general manager is almost 63 years old.
• 22:24
  Marcia Riner | Profit Booster®: Huh.
• 22:24
  Nitin Khanna: Looking to retire sooner than the owner himself. Oh my goodness. That's not a succession plan, that's not a management in place.
• 22:32
  Marcia Riner | Profit Booster®: Yeah.
• 22:32
  Nitin Khanna: So these are the things which you've got to deliberately plan
• 22:36
  Nitin Khanna: If you want to build a good, transferable company.
• 22:39
  Marcia Riner | Profit Booster®: And… and you… and again, going back to your what's your vision and future, you know, if your… if your key employee, the general manager, is 63 and looking to retire in a few years, that's not longevity.
• 22:53
  Marcia Riner | Profit Booster®: That's not looking at what the next 10 years is going to look like. And when we're selling and buying and that kind of stuff, no promises can be made, but… but the buyer's looking at those risks of what will the next 10 years look like for me, and what do I have to change, or put in place, or adjust, and what am I forecasting as potential growth and revenue?
• 23:18
  Marcia Riner | Profit Booster®: revenue out of that company. And if you've got an aging market, or you've got
• 23:23
  Marcia Riner | Profit Booster®: You know, no proof of where that next at least 2 to 3 years is gonna look like, then that makes it a super high risk for the buyer, right?
• 23:33
  Nitin Khanna: Absolutely, absolutely. And then, again, coming back to the point you made, customer concentration.
• 23:39
  Marcia Riner | Profit Booster®: Yeah.
• 23:39
  Nitin Khanna: That's one of the big no's, right? And we see it more often than somebody can think of, especially in the commercial construction side, where, you know, 40-50% of the revenue comes from two clients.
• 23:52
  Marcia Riner | Profit Booster®: Yeah.
• 23:52
  Nitin Khanna: That's not a business. That's just a glorified job, in a way. You got just… you're being paid as a business owner, but literally, you've got one or two bosses who can dictate your business and put your business under the ground within just one day.
• 24:07
  Marcia Riner | Profit Booster®: If one leaves, yeah, if that relationship ends, then it's done.
• 24:11
  Marcia Riner | Profit Booster®: So, speaking about… speaking about relationships, and you had brought up the point, it's not just the customers, right? So, how does the business owner… because normally, we start our company, and it's all us, right? I'm wearing 57 hats, I'm doing everything, I'm the salesperson, I'm the implementer, I'm the team manager, you know, how do we get that owner
• 24:35
  Marcia Riner | Profit Booster®: to kind of step back, and so that… so that those relationships can be transferable, I guess. Is that… is that… is that clear in what I'm asking?
• 24:46
  Nitin Khanna: Yeah, no, no, it's a very good, very relevant question here. So…
• 24:53
  Nitin Khanna: I typically ask all my clients to go through a 90-day test.
• 24:57
  Nitin Khanna: And what that test is, take 90 days off.
• 25:01
  Marcia Riner | Profit Booster®: Right? You're not allowed.
• 25:02
  Nitin Khanna: How to touch your phone, no email.
• 25:05
  Nitin Khanna: No!
• 25:05
  Marcia Riner | Profit Booster®: Right?
• 25:06
  Nitin Khanna: I was just checking in. No checking in needed. Nope. Right? Take 90 days off.
• 25:12
  Nitin Khanna: Guess how many people will say I can do it?
• 25:15
  Marcia Riner | Profit Booster®: Zero.
• 25:17
  Nitin Khanna: Absolutely zero. I was just gonna say .01, but…
• 25:20
  Marcia Riner | Profit Booster®: Zero.
• 25:21
  Nitin Khanna: Right? But I get it, right? That is what a beautiful business would look like, right? That's… what is a business? Business is not a job. Business is where I can invest some money.
• 25:34
  Nitin Khanna: To get some return on my money.
• 25:36
  Nitin Khanna: Right? Without doing anything. So, the more passive it is, the better business it is.
• 25:42
  Marcia Riner | Profit Booster®: Yeah.
• 25:43
  Nitin Khanna: If I am involved in the business, it's not a business. It's… up to an extent I'm involved, it's a job.
• 25:49
  Nitin Khanna: Right?
• 25:50
  Nitin Khanna: So…
• 25:50
  Marcia Riner | Profit Booster®: N.
• 25:52
  Nitin Khanna: We agreed. 0% of the people can do that 90-day test, or we'll pass that. But look, that's fine. That should be the goal. Start with 7 days.
• 26:02
  Nitin Khanna: Right? Just take 7 days off.
• 26:04
  Nitin Khanna: go away, And Go in a meditation camp.
• 26:10
  Nitin Khanna: You're supposed to check any emails, you're not supposed to talk to anyone, but just come back and see what broke down.
• 26:17
  Nitin Khanna: Alright?
• 26:18
  Marcia Riner | Profit Booster®: Have you come…
• 26:18
  Nitin Khanna: And you say, okay, this invoice could not be paid on time.
• 26:22
  Nitin Khanna: or this estimation was not done properly, that's good. That's not a bad thing, that's a good thing. Now at least you know what broke down, so you can fix it.
• 26:30
  Marcia Riner | Profit Booster®: to fix.
• 26:31
  Nitin Khanna: And if you fix one thing every quarter.
• 26:34
  Nitin Khanna: You will have a much better business in 3 years from now, which is 12 quarters, and you'll have a much better quality of life, so that when you go on a vacation, you will be able to, you know, unplug from everything.
• 26:50
  Nitin Khanna: Right? It's not about, you have to do this because you want to sell the business. You want to enjoy the journey while you're running the business, right? It's like you're enjoying your home. You keep your home neat and clean and tidy because you want to enjoy your home.
• 27:04
  Nitin Khanna: Right? It would be sad just to, you know, live in a dirty home and just fix it up when you have to sell it.
• 27:09
  Marcia Riner | Profit Booster®: Which is very common when you're selling homes, too.
• 27:12
  Nitin Khanna: Right.
• 27:13
  Marcia Riner | Profit Booster®: Oh, that's so true! It's like… and that's what I preach, is trying to make sure that you're creating a business now that you enjoy, right? And it does require that, you
• 27:26
  Marcia Riner | Profit Booster®: empower your team to do the things that need to be done without calling Dave, right? Dave, I need you to fix this. Dave, I need you to sign this off. Dave, can we do this, right? In your earlier example, we want to have a business that our employees are empowered to make decisions.
• 27:43
  Marcia Riner | Profit Booster®: That, they're capable to do the task at hand.
• 27:48
  Marcia Riner | Profit Booster®: Because that buyer does not want to buy your job, they want to buy, as you mentioned, that investment that's going to return some money.
• 27:59
  Marcia Riner | Profit Booster®: And I think the biggest thing that we forget about a business… a business is not me, even though I'm the, for example, I'm the attorney on hand, and people are buying my expertise.
• 28:13
  Marcia Riner | Profit Booster®: This business is an entity.
• 28:16
  Marcia Riner | Profit Booster®: an asset. It's a freestanding thing. I'm just creating the asset by using my intellectual property, or my labor and skills, or my connections and people.
• 28:31
  Marcia Riner | Profit Booster®: But it still needs to be thought of as a separate entity that could stand on its own.
• 28:37
  Nitin Khanna: Yeah, yeah. And that's actually the definition of incorporation.
• 28:42
  Marcia Riner | Profit Booster®: I'm a thing.
• 28:44
  Nitin Khanna: That's what it is, we just all study it, we just don't implement it, right? And sometimes it's just so easy to get carried away, right? I'm sure we all made mistakes. I admit my own mistakes, you know, I should have delegated processes, systems in my business way sooner than I did.
• 29:03
  Marcia Riner | Profit Booster®: Hmm.
• 29:03
  Nitin Khanna: I wish somebody looked at me and said, look, this is what you're doing wrong.
• 29:08
  Nitin Khanna: You're going on the wrong path, you're going in the wrong direction.
• 29:11
  Nitin Khanna: Right? You learn with your experience, and that's what I like to do now. I just like to share that with folks, the listeners, so that they can… they don't make the same mistakes which I did, and which I see still 90% of the people are making out there when I talk to them.
• 29:25
  Marcia Riner | Profit Booster®: Agreed, agreed. And this is why I wanted to bring it on, is because
• 29:30
  Marcia Riner | Profit Booster®: we're not talking, you know, the chances of us talking to somebody right now, listening, that is ready to sell their business tomorrow is slim. But, if we're talking about this as an idea to saying.
• 29:45
  Marcia Riner | Profit Booster®: What kind of great business can you create, or improve on, or develop, or… or…
• 29:51
  Marcia Riner | Profit Booster®: mold into that is also very sale-ready and sale exciting, and will also give you an ROI on your 30-year investment that you made over time. That's, I think, the shining star here, is that it's a win now and a win later.
• 30:10
  Marcia Riner | Profit Booster®: And I think that's really, really the key.
• 30:13
  Marcia Riner | Profit Booster®: You don't…
• 30:14
  Nitin Khanna: Marcia, I don't want to sound negative about this, but look, life can be unpredictable, right?
• 30:20
  Marcia Riner | Profit Booster®: Yes.
• 30:20
  Nitin Khanna: I come from a business family, and you know, growing up, I remember I was maybe 10 years old or something, I was sitting in my dad's shop, and I heard him saying.
• 30:32
  Nitin Khanna: So the conversation started, there was no client, and we were just sitting idle. And I said, why don't we go home?
• 30:38
  Nitin Khanna: Right? Why are we doing it? I'm a kid, I want to go home, I want to play, right? So, my dad said.
• 30:43
  Nitin Khanna: Remember, Death and customer.
• 30:47
  Nitin Khanna: Can show up anytime uninvited.
• 30:51
  Nitin Khanna: Right?
• 30:52
  Nitin Khanna: So, but if you think about it, things can happen in life, right? Maybe you have a good, sellable business, and somebody knocks on your door and say, look.
• 31:01
  Nitin Khanna: I'm desperate to buy at this business, right? I have a very large HVAC company, I don't have any presence in this city or in this state, I want to be here.
• 31:13
  Nitin Khanna: What's your number?
• 31:15
  Nitin Khanna: And I've heard those stories. I have clients who have benefited from that.
• 31:20
  Nitin Khanna: Right? Just because their business was ready to be transferred, and that the offer was so good, they could not say no.
• 31:28
  Nitin Khanna: Right? So…
• 31:29
  Marcia Riner | Profit Booster®: Exactly, and just because, just be…
• 31:31
  Marcia Riner | Profit Booster®: just because you give them a number, you know, my mom had this problem, which was one of the triggers in my life. My mom got… she ran a very successful mortgage company in California in the 80s and 90s.
• 31:45
  Marcia Riner | Profit Booster®: And, she got this incredible offer, and she goes, well, I'm not ready to retire yet, so I don't want to sell. And fast forward to 2008, when the market crashed, she ended up closing her doors, and… because she didn't take the offer. You don't have to retire.
• 32:04
  Marcia Riner | Profit Booster®: You don't have to leave, you don't have to exit and be gone from it. It just means, what's next? And I think that's the thing that, you know, when you're prepared for it, and you've got a good thing, it may, you know, what is one door closed, another one opens, and there's always opportunities.
• 32:23
  Marcia Riner | Profit Booster®: So, you know, I just…
• 32:26
  Marcia Riner | Profit Booster®: It hurts me when people say, oh, well, we have to, you know, make sure that it's the perfect time to sell, because it's never the perfect.
• 32:33
  Nitin Khanna: Yeah.
• 32:35
  Nitin Khanna: Perfect time. And, you know, you just said that, and one of the misconceptions most people have when they think about selling a business, they think, oh, I'm gonna sell and I'm gonna retire, I don't know what to do, right?
• 32:46
  Nitin Khanna: That's just one way you sell the business. I said there are multiple ways you exit the business.
• 32:53
  Marcia Riner | Profit Booster®: what.
• 32:53
  Nitin Khanna: I suggest most people should do. You're running at maybe 100 miles an hour, you don't have to go from 100 to 0.
• 33:00
  Marcia Riner | Profit Booster®: Nope.
• 33:01
  Nitin Khanna: a gradual exit.
• 33:02
  Marcia Riner | Profit Booster®: Yeah!
• 33:03
  Nitin Khanna: Maybe you want to build a business where you can bring in a partner.
• 33:08
  Nitin Khanna: and then eventually sell the business to them in pieces, right? So you don't have to exit on day one.
• 33:15
  Nitin Khanna: You could exit in… Pieces over the next 5 years.
• 33:21
  Nitin Khanna: All right.
• 33:22
  Marcia Riner | Profit Booster®: Time to exit.
• 33:24
  Marcia Riner | Profit Booster®: is when you're doing really well, too. So, when you're… when you're at the top of your game, that's probably the best time, rather than when you're, you know, slowly winding down, or like you said, flatlining, and businesses, then you're not going to get anything from it. So, yeah.
• 33:41
  Nitin Khanna: That's a mistake many people make. They're like, oh, I want to be retiring at 65, I want to be selling… no, that's not the way. Who is to say that when you were 65,
• 33:49
  Nitin Khanna: we're not gonna have a recession, and your business is not gonna tumble, right? Anybody who's been a business owner for 20, 30 years, I'm sure they have been through multiple recessions in their life.
• 33:59
  Marcia Riner | Profit Booster®: Right.
• 33:59
  Nitin Khanna: It goes down, and you've got to build that back up, and it takes a lot of energy to build it back up, right? And when it is up, you cannot time the market.
• 34:10
  Nitin Khanna: The best time, I always say, is to sell it when you are really passionate about it, you are… the business is doing well, and you've got full of… full energy in it, and you see good prospects ahead of you for the business.
• 34:22
  Marcia Riner | Profit Booster®: Yes, that Futurecast.
• 34:24
  Nitin Khanna: And that's when the buyer is going to buy the business, because a buyer, if you don't have a solid conviction that your business is going to do well in the next 3 years.
• 34:32
  Nitin Khanna: The buyer is gonna smell it from far.
• 34:35
  Nitin Khanna: Right? And they're not gonna buy it.
• 34:37
  Marcia Riner | Profit Booster®: Exactly. Wow. This is… this is really, really good, sage advice.
• 34:46
  Marcia Riner | Profit Booster®: from somebody who's been around for a while, I mean, at least a couple years, right? I mean, you know, you've been doing business for a long time and selling businesses for a long time, and this is really sage advice that any business owner
• 35:00
  Marcia Riner | Profit Booster®: should really consider listening to again and going, do I have this in place? Should I have done this? How can I do this, right? And this is… this has just been fantastic. So I know that you are very active in social, and I want to make sure that listeners can, get ahold of you, and follow you, and learn more about this, because I know it's not just a one-and-done situation.
• 35:25
  Marcia Riner | Profit Booster®: So where can listeners find out more about you and N3 Advisors?
• 35:29
  Nitin Khanna: Thank you, Marcia. I've really enjoyed the conversation here. So, the… the easiest way to find me is just go on LinkedIn, type my name in there, and you will see, hopefully you'll see me on page 1. Just type Nitin Khanna, and I should be, I should be there. And, just shoot me a message, I will do my best to guide and help.
• 35:48
  Marcia Riner | Profit Booster®: Awesome, awesome. And you write articles and make posts, and your team helps you with all of this, and you're very active on LinkedIn, right?
• 35:55
  Nitin Khanna: Yes, yes, or we… they can also reach out to my team at N3 Business Advisors. Just type N3 Business on internet, and again, we should show up on page 1, and you can just shoot us an email, and somebody from our team will connect you.
• 36:11
  Marcia Riner | Profit Booster®: I love it, I love it. And it's better to start early than later, so that that way you're in the driver's seat, and you're in more control of your business, so you can make the right decisions and get the most bang for your buck. So, I encourage you to follow N3 Business Advisors.
• 36:28
  Marcia Riner | Profit Booster®: All right, listeners, thanks for tuning in today. I hope you're walking away with some really good, practical ideas that you can put to work right now in your business, and exactly what we've talked about is actually going to grow a more profitable and valuable business.
• 36:46
  Marcia Riner | Profit Booster®: So I encourage you to follow, learn more about it, start implementing, like, like Nitin said, something every quarter that'll improve your business and make it worth more.
• 36:57
  Marcia Riner | Profit Booster®: Speaking of that, before we go, if you want to have a clearer path to revenue and stronger profit, go grab my free Profit Booster Growth Map.
• 37:07
  Marcia Riner | Profit Booster®: It'll quickly show you the top opportunities to grow revenue and stop those profit leaks that may be holding your business back. You can go get it anytime after the show at ProfitBooster.biz. And if this episode gave you value, which I surely hope it did, be sure to subscribe and share it with another business owner who may need to hear it.
• 37:29
  Marcia Riner | Profit Booster®: I'll look forward to seeing you on next week's show with more strategies to help you grow smarter and profit stronger. So until then, make your plans and profit with them. Thanks so much, Nitin.
• 37:41
  Nitin Khanna: It's a pleasure, Marcia. Thank you.