How to Build a Construction Business You Can Actually Sell

Nitin Khanna describes N3 Business Advisors as a construction-focused mergers and acquisitions advisory firm that works with buyers and sellers of construction-related businesses in Canada.

Every owner eventually leaves their business in some way. Planning ahead can help create options for selling, transferring ownership, or making the company easier to operate.

A transferable business can continue operating without depending entirely on the owner. Systems, documented processes, capable management, and transferable customer relationships can support that transition.

Nitin describes a business as an entity separate from its owner. If operations stop when the owner steps away, the company may depend too heavily on that individual.

He suggests stepping away from the business for seven days without constantly checking in. The exercise can reveal weaknesses in the company's processes and show where employees can take on more responsibility.

Nitin recommends actions such as cleaning up financial statements, implementing job costing, establishing systems, and delegating responsibilities.

Jesse Sampley (00:02.344)

Nitin, thank you. Welcome to the Meridian Pursuit Builders podcast. I'm super excited to have you on. Why don't you give the listeners a bit of background about you and the company and what you guys are doing today in the construction industry?

Nitin Khanna (00:15.096)

Yeah. Jesse, first of all, thank you for having me on your show. I appreciate it. a bit about ourselves. we are a leading MA advisory firm focused on the construction industry based in Canada. Now, if you allow me to explain that, what we do is we work with construction company owners all across Canada who are looking to build a sellable company and then eventually sell their business to a next successor for their business.

So we work with the buyers who want to buy the business, the sellers who want to sell the business. we say anything which touches construction anywhere. For example, it could be an HVAC contractor, electrical contractor, roofing company, landscaping company, construction supplies, construction equipment, anything construction focused within the industry, those are the clients we work with.

Jesse Sampley (00:45.499)

We're putting this one.

Jesse Sampley (00:50.119)

Okay.

Jesse Sampley (01:02.961)

Anything for

Jesse Sampley (01:09.449)

Okay. How long has you have you guys been around?

Nitin Khanna (01:12.76)

So the business started around sixteen years ago. I have been in the construction space almost twenty-five years. I've been a small business entrepreneur, I would say, almost thirty years now. So I started my first company when I was somewhere around fifteen. And and it's been a wonderful journey since.

Jesse Sampley (01:25.539)

Wow. So you've

Jesse Sampley (01:35.974)

The Be Entrepreneur journey is definitely an an up and down journey. really high highs and really low.

Nitin Khanna (01:39.946)

You know, they say Yeah. They say an entrepreneur is somebody who jumps off the plane and figures out how to make a parachute. I'm not one of those, but I heard it somewhere.

Jesse Sampley (01:48.369)

That's right. No, well that's really that's really awesome. Well, why don't you tell me a little bit about, you know, I guess why you got into the space or, you know, out over the years, this sixteen year journey, you know, what kind of gravitated you towards the the buying, the selling and helping facilitate these these transitions.

Nitin Khanna (02:10.168)

So Jesse, I started, as I said, I started my career as a as an entrepreneur around when I was 15 or something. it was an IT training business. We used to teach people on computer software and computer programming. I'm originally from India and then I moved to Canada somewhere in 2001. And when I arrived in Canada, I started working in the construction sector. So I I'm a finance guy by profession. I'm a hustler, but I'm also a finance person.

Jesse Sampley (02:35.929)

That's got to be pretty hard.

Nitin Khanna (02:39.778)

So I worked with some of the largest construction companies in Canada, one of the one of them being Akon Construction, which is a publicly traded couple billion dollar company. And then there was another global company which was Carillion Construction, around five billion dollar company based out of UK England. And then company does not exist anymore. It just went belly up around two thousand I believe eighteen or nineteen.

But but long story short, I worked in the construction sector for almost a decade and then I realized, you know what, it's just not making me happy. I'm not excited about it. I am a small business owner by default. I'm a hustler. I like to, you know, to to knock on people's doors and ask for business. And and that's when I started this business around 2010. And and it's been a wonderful journey since.

Jesse Sampley (03:32.471)

Wow. What are things tell me a little bit about, you know, kinda as you're looking for I mean, do you call them deals when you're looking for deals or or you're looking for people? what what are you looking for in some of these companies?

Nitin Khanna (03:47.735)

look, if I have my way, I would like to get a business that can be easily sold, right? we do look for businesses which could be transferable, right? literally what we are doing is we are looking for a successor for a business. if there is a business which can be easily transferred over to another buyer, that would be ideally what we would be looking for. Now that's a that's a tough thing to find.

Jesse Sampley (03:54.765)

Ha ha.

Nitin Khanna (04:17.036)

I call it it's a needle in the haystack story.

Jesse Sampley (04:22.186)

And what do you see when, you know, when do you see that a lot of people, you know, even see that that's a path? Because the even the build a lot of the builders I've talked to, it it probably has been only 20% that have really seen like, yeah, in the future I could definitely see that we could sell this. So I'm making decisions now to be able to make that transition period easier, you know, and in the SOPs that they set up and how they're structuring their company.

But a lot of these builders, you know, they're they're just busy in the in the work that they're doing and you know, keeping the the customer happy and winning new work and you know, kind of caught in this this really large cycle, sales cycle. You know, what what are some things that they should be thinking of, you know, even if if they don't know for sure that they want a sale in the future, but at least doing some things that, you know, could prepare them for the future and make that a possibility.

Nitin Khanna (05:19.438)

And you know, Jesse, I I think that's that's the biggest mistake I see people are making out there. I at some point I looked at it and I found there are almost hundred thousand construction focused businesses in Canada. And I would assume there would be a million such businesses in US, considering it's ten times the economy, right? but not all of them are transferable, not all of them are sellable, right? And that's a big mistake I find people are making out there.

They just are firefighting every every other Monday, right? They never put things in place. They every Monday morning they wake up and decide how to handle the business, how to run the business. They're not building anything which is transferable. And you're absolutely right. People, you know, when you talk to them and they say, okay, I'm too far from retiring. I don't want to think about it right now. I get it. But we all get it. Life can be unpredictable as well.

Jesse Sampley (06:00.213)

Mm-hmm.

Jesse Sampley (06:17.458)

Exactly.

Nitin Khanna (06:18.206)

Right. You you you you could say, Yes, I'm far from retiring, but what is stopping you from running a business or owning a business, which is something you're gonna enjoy and not fire do not not do the firefighting every Monday morning. Right? there is I'm sure you would have noticed there is a the the tagline in my signature, email signature, I say every owner exits. Few do it well.

Jesse Sampley (06:32.658)

Mm-hmm.

Nitin Khanna (06:46.682)

And if you allow me, I'll just talk about it a little bit more. Every owner, Jesse, is going to exit their business at some point. Right? I'm I repeat, I'm not saying sell their business, I'm saying exit their business. There is no doubt about it. Right? And there are five ways primarily in which people exit their business, if you think about it. One would be they would think they would give it over to their kids or kids.

Jesse Sampley (06:49.588)

Sure.

Nitin Khanna (07:14.028)

buy it from them, right? That's a very wishful thinking. And you and me both know that's not happening out there. Those kids, when they see how hard, how difficult it is to run a business, right? And how sometimes it can be a 24 seven job, they don't want to buy that. They don't want to be in it. Right. Many kids today, they, you know, they want to be doctors and lawyers and somebody wants to be an influencer. And some people are just not cut out for it. Right? So the sec that's the first option.

Which we don't see is happening at all. Right. I would say maybe only five, ten percent of the people, kids are just taking over the business from the parents. Now let's look at the option number two. That would be giving it over to your employees, right? Selling it to the employees, doing an eSOP plan or whatever it is. Right. That also is not happening as often either. Because those employees you are going to you're thinking of could be who who could be your transition plan, they have their own mortgages to pay.

Right. Chances are they are also employees for a reason that they don't want to be employed owners. They also understand the difficulties in being an owner of a business. So they don't want to be an owner either. Right? Now your third option, which is actually selling the business to somebody. This is where we see a lot of transactions happening. Then comes the fourth option, which is literally, you know, shutting the business down. And I call it people put their business into slow death. Right?

Jesse Sampley (08:13.907)

Mm-hmm.

Jesse Sampley (08:26.96)

I'm sorry.

Nitin Khanna (08:43.738)

Multiple times I have seen I go out to reach out to some people and say, you know, why what are you what what's your plan? And they have no idea they don't even that they even need to have a plan. Forget about having a plan. They don't even think that they need to have a plan. They don't realize sometimes they're sitting on millions of dollars of asset, which they are just leading into a slow death. Right?

Jesse Sampley (08:52.012)

Yeah, they're gonna need to have a

Jesse Sampley (09:08.505)

Yeah. Why do you think why and why do you think that is? Because that is a the majority of people that I think that I have interacted with myself is that, you know, it just kind of fades out into, you know, riding off into the sunset because it was such a heavy owner and operated business, which in many cases what I have seen is it was such a successful company because you had this owner very strong owner and operator for, you know, forty, fifty years.

that it was just like, I mean, who can I r hand the reins to? And like you said to your point, if it's not a son or a daughter and it's not a a project manager or someone on the team that that really wants it, then w what is what is left? You know, what is a viable option after that? And I don't think there's enough discussion or exposure to what selling a business could really look like.

Nitin Khanna (10:03.042)

And I I think to your point, education, lack of education is the problem there, right? People are just not aware that they are sitting on an asset which could be transferred and they could walk away with a fair amount of money out there. Right? They're just not preparing their businesses for sale. And you know, to your point, I would also say the kids don't want to buy it, the employees don't want to take it. Sometimes third parties don't want take it. You know the reason behind that? Because these people who think they're sitting on a business.

Jesse Sampley (10:15.557)

Mm-hmm.

Nitin Khanna (10:32.578)

Or they're running a business for the last 30 years, they're actually running a very profitable job. They're not running a business, right? What is the definition of a business if you think about it? Business is a separate entity than the owner himself or herself. A business is something where you invest money and you get a return on your investment.

Jesse Sampley (10:37.828)

Right.

Jesse Sampley (10:45.401)

Mm-hmm.

Jesse Sampley (10:53.994)

Exactly. If you remove yourself from the business and the business stops operating, that is not a functioning business.

Nitin Khanna (10:58.306)

Yeah. And that's where most people are making a mistake.

Jesse Sampley (11:03.81)

What are some of the steps that, you know, people are aware that, you know, this is something that they should have start building some of the infrastructure for? What are some of those steps to getting the business in order so that it could be sellable or, you know, just things that they can kind of be thinking about as they go into, you know, their next phase of decision making. And I and I'll preface that with a lot of a lot of people are now integrating AI into their system. So a lot of a lot of

You know, analog type information is now becoming digital. a lot of the digital information is now being automated into AI systems. So a lot of people are already in the midst of change, but maybe there's some things that they could be thinking of from a s a future acquisition perspective that they could also be thinking about.

Nitin Khanna (11:55.097)

Yeah. And I I don't think they're doing it enough. There is so much opportunity out there to systemize things and put processes in place and make the business more efficient and more profitable. I don't think people are embracing the technology as much as they should be. Right? The the the the technology exists, then they are not embracing it, they're not thinking about it. And you know, there is a saying if you if you don't know where you're going, you're not gonna go there. If you don't want to go somewhere, you will never go there.

Right. And that's that's where the problem is happening, where these people are not thinking about the exit. Right. And I repeat, I'm not talking about the selling the business. I'm talking about the exit. And when you when you put this system, think about it, we don't have to sell the business. But if you're running a business which is so stressful that it takes you to, you know, every Monday morning you you you are drained and you you don't want to be in in the office. And now you put systems and processes in place, aren't you gonna enjoy the business more than you were doing?

Jesse Sampley (12:47.976)

Yeah, good.

Jesse Sampley (12:55.68)

Yeah, absolutely.

Nitin Khanna (12:56.342)

Right. You don't have to do those things to sell the business or exit the business. You've got to do all those things just to make your business more enjoyable. You wanna enjoy the journey, not the destination.

Jesse Sampley (13:08.042)

Yeah. And I even a lot of the, you know, real successful business guys that I have been around have said, you know, the business actually improved when I took a step back and I had definite processes for things. because I wasn't I wasn't in the business working so hard fixing things all the time. But I was able to take a a step back and look and improve at at the different systems I had created because at first it's not gonna be perfect.

you know, you're gonna have some fires, you're gonna have things that you can change. But if you're able to take a step back for a week or two and just see, you know, how this workflow h takes place, then you're actually able to spend a lot more time working on the business and really be looking at more of the the big picture and not being so caught up in the finocia not being caught up in the minutia of the business itself.

So then things just get improved because you have the proper people in place. The the people that are that you have appointed are in the correct position. All of the stuff will change over time, but at least you have a framework for this business does not rely on me, which I'm assuming is really what a buyer is looking for is how hands-on is the business owner, you know, or or how eligible is it for someone to come in and me just be able to

you know, go through a transition period to where, you know, now I'm able to just manage the systems, manage the people. The people are managing the systems, but you know, my me, myself as the new owner, I'm not thrown into being relying on on allowing this business to continue operating.

Nitin Khanna (14:53.314)

Yep, can't can't agree more with that statement.

Jesse Sampley (14:57.221)

On a on a software side or just a on a getting started side, you know, what do you think are some of the the best ways for people to kind of take that first step into organizing their business?

Nitin Khanna (15:10.55)

You know, Jesse, it's it's a it's a process. People think, you know, systemizing the business or selling a business or exiting a business is an event. It's not an event, it's a process. It takes time, right? And I say, even if you fix one thing every quarter, in three years you will have fixed twelve things that could have improved your life tremendously. Maybe first quarter, you know, start with cleaning up your financial statements.

Jesse Sampley (15:32.359)

Mm-hmm.

Nitin Khanna (15:40.995)

Putting a job costing system in place, delegating the processes, delegating the systems. Take this 90 day test. And what that means is go away for 90 days, leave your phone behind, leave your emails behind, and just tell everybody, I'm not taking any calls just for checking in, sort of thing, right? And see how many people can survive that. Answer is perhaps zero.

Jesse Sampley (15:53.468)

It is

Nitin Khanna (16:09.676)

90 days without checking in your business, the business will start to go down. Right? So I get it. You can't do 90 days. Why don't you start with seven days? Right? Start with seven days, see what happens, come back, and you will see what things broke down and you can fix it. And surprisingly, you will find it's not you will find a few things which broke down. You will also find a few things which worked better when you were not there. Right?

Jesse Sampley (16:37.849)

Podcast. Mm-hmm.

Nitin Khanna (16:39.606)

I I was just talking to one of our clients and I said, Okay, what did you find after that seven day test? He was not there at night. I'm like, what did you find after seven day test? Right? What broke down and what worked? And he's like, the morale in my team was boosted when I was gone. Means who would have thought that? Right? He he always had that ego. While I'm there, you know, everybody looks at it that there is a strong leadership and so on. And while he was gone, he was worried.

Jesse Sampley (16:53.06)

On the

Jesse Sampley (16:57.016)

Yeah.

Nitin Khanna (17:06.242)

And he's like morale was boosted because people were given responsibilities which they felt really good about.

Jesse Sampley (17:10.204)

Mm-hmm.

Nitin Khanna (17:14.658)

Right. So there's there is there's two it's only a win win situation here because you will find certain things got better and you will also find certain things broke down. So you know now what to do about those things.

Jesse Sampley (17:15.654)

Yeah.

Jesse Sampley (17:25.966)

Right. What type of business owner do you see that I guess in in in the clients that you guys have, like do you see similarities in different types of bus business owners that I guess prioritize this? Or you know, what what would make a a I guess a prime candidate, someone who's like, Man, I've been thinking about, you know, doing something like this. but is there a is there a characteristic or something that's got

You know, sim that's similar from from the people that you work with.

Nitin Khanna (18:00.045)

You see, people have to walk the talk. Everybody says, I wish I made so much money or I want to make so much money. Yeah, yeah, I understand you want to make a million dollars a year, but what have you done about it? Right? Everybody wants to be fit and healthy, but nobody wants to go to the gym. But if I have to pinpoint what would make a good characteristics of a business which could be set up properly, and I'm talking not about the business, I'm talking about the mindset of the owner. And

Jesse Sampley (18:02.693)

Mm-hmm.

Jesse Sampley (18:10.041)

Mm-hmm.

Jesse Sampley (18:27.202)

Mm-hmm.

Nitin Khanna (18:28.01)

I would say that would be somebody who works who who wants to build the business backwards. Right? Who wants to decide in their mind first what this business is going to be, what does it want to be look like before they even just get into the door on a Monday morning? Right? You have to decide what kind of business you want. What what does your exit look like? Are you just running a job? Yeah, a very glorified job.

Jesse Sampley (18:47.938)

Right.

Nitin Khanna (18:57.922)

That's fine. If that's what you want, that's what you want. But if you really want to call it a business and you want to run it like a business, what is that business going to look like in 10 years from now? Is this business going to be focused on commercial construction or a residential construction? Are you going to be a HWEC contractor who works with the commercial guys or with the residential guys? Are you a builder who's going after new home construction or the custom builds? Right?

Jesse Sampley (19:01.357)

Useful.

Jesse Sampley (19:08.653)

Mm-hmm.

Nitin Khanna (19:27.896)

You gotta decide that and work backwards because I say if you don't decide, chances are your clients, your employees, your spouse is gonna decide that for you. Right?

Jesse Sampley (19:37.305)

Yeah. You know something we do even when we work with with different companies is we will do a we will do a a massive blueprint and basically it everything just answers one question which is who do we want to be and why is that? It's it's very simple, but you know it any kind of marketing that that you put out there, you have to know those things. You have to know who am I trying to attract.

who am I trying to be? And then that funnels down into the culture of the business and of course many, many other things. But getting real clear with where you want to go and what things do you need to in order to get there really kind of sets up a sets up the the organization in a way for you to make very strategic decisions on on for us, you know, on a marketing side.

That's the inf information that we're providing people is well, if you're wanting to, you know, get more market share in this this local market for the luxury home building clientele, well then we need to obviously communicate that with the public. So if you don't have marketing materials, if you don't have photos, you don't have videos, and you don't have anything that even suggests that that is who you are are trying to build for.

then why should people assume that you build for that type of clientele? So like to your point, running things backwards, I think is the most crystal clear way to do things. It's the most challenging because you are having to set definite goals. And like you said earlier, you have it you have to, you know, walk the walk. You have to, you know, just not say those things, but you really have to decide what you're going to do about that.

and working it backwards, you're just solving one issue at a time. but as you catch up with yourself when you're going into time, then you're you're basically living out that roadmap. And of course, things will change, but at least everybody on your team and yourself and your branding and all the momentum going forward is is going towards what you decided early on, which is I'm going after this type of client. We want to be known for this.

Jesse Sampley (21:56.909)

And you know, it creates the a massive momentum. Referrals know what to refer other people to, and it's not so random. marketing just reinforces what you want to be known for, which you know helps buyers on their side as they're doing the research. You know, you've got a very clear acquisition channel that can be measured. all of that is just so helpful, but you have to decide who do you want to be? What do you want to be known for?

Nitin Khanna (22:24.986)

Absolutely. Absolutely. You know, you are in marketing space and I remember one of our marketing directors early on, he told me, he said, Nathan, a piece of marketing for everyone is for no one. Right? So you you gotta decide who you serve, you gotta decide what business you really are in. Right?

Jesse Sampley (22:40.574)

Yeah.

Jesse Sampley (22:49.842)

And every even though I mean that sounds like an obvious answer, it it's it's really not, you know, because you can be, you know, some of our clients, they're they're really in the customer service business. They are a roofing company, and that is that is what they want to be known for. So their means to their customer service is the roofing jobs that they do. But you know, every decision

from every team member, every every estimate that gets sent, everything is pretty much answers the question, how can we give this customer the best experience possible? And this isn't just something they say. This is something that, you know, I've witnessed on a marketing side. Like I've actually witnessed them losing money to ensure that the customer had the best experience possible. And you don't see that many times. And

It's just it's so wholesome to see. It's so wonderful to see that when people have long term thinking like that, you know, it protects their revenue. It pretty much it fixes everything else in the future. I always go back. In fact, the longer I I I do this, I feel like the more simple things get.

you know, good wisdom to make these decisions, but so much of it goes back to a lot of the basics of doing a good job, you know, being honest, not trying to cut corners. And when you think about the the long term the long term gain of that, you know, it's really reputation that that saves all along the way. which, you know, on a marketing side, that funnels down into, I mean, that's client acquisition. And what's a business if you don't have any clients?

I I don't think that's much of a business at all.

Nitin Khanna (24:42.338)

Yeah. Absolutely. Absolutely.

Jesse Sampley (24:44.753)

Well let's talk from the the perspective from a buying the buying side. You know, people who who are interested, the clients that you have, like what what type of avatar, what type of of person is looking for someone that is looking to buy, you know, these home services, construction companies, and what are some of the things that they're looking at in these different businesses to make them eligible?

Nitin Khanna (25:10.104)

So Jesse, buyers are all over the map. Now, one thing I can tell you what's happening in the industry these days is there's become a huge demand for home service businesses. more so due to the fact that everybody is talking about AI and people are saying, you know, the jobs which are going to be insulated because of AI are the home service jobs at for now, right?

software engineering, coding, and all those things, they are kind of you know just going sideways. but there is a demand pouring into the HVAC companies, electrical contractors, roofing contractors, because it doesn't matter, you gotta change the roof, you got to change the roof, right? You got to move the lawn, you got to move the lawn, right? A furnace breaks down, you gotta get it fixed. So there is a demand coming in from a lot of private equity institutional buyers out there. now.

Jesse Sampley (26:02.159)

Right.

Nitin Khanna (26:05.686)

What happens is everybody thinks, okay, you know what, my business, some private equity firm, Blackstone or BlackRock, somebody's gonna come in, knock on my doors, and they're gonna write me a check. That doesn't happen. Right? There is buyers like those who look for a business, different kind of businesses, right? And then there are smaller businesses which will not be attractive to those private equity buyers. But then there are buyers who are saying, Look, I am, for example, a middle-aged executive.

Jesse Sampley (26:25.43)

Okay.

Jesse Sampley (26:31.598)

But I got

Nitin Khanna (26:34.986)

I got a good check, but I got sacked and I don't have a job anymore. And I don't want to get into the corporate world anymore. Right? I got some investment money. I want to buy a business. I don't want to back go back into the corporate. There are there is a lot of immigration happening in Canada where people are coming from overseas with sometimes briefcases of money and they're saying, okay, what do I do with this? I don't want to do a job. I want to buy a business. So there is a demand coming from those buyers. There are buyers who are strategic buyers.

Jesse Sampley (26:53.438)

Plus he had this thing okay, right all the time with all that work.

What is the most critical?

Nitin Khanna (27:01.858)

For example, somebody runs an electrical business and they say, Look, what do I do within this town? I've kind of saturated the electrical business market. So what do I do? I buy a HVAC company or I buy a roofing company. So they tag along another service companies within their business. Or electrical contractor would say, Okay, I have saturated Central Florida. I want to go to South Florida or North Florida or wherever, right? So they they will tag into.

Jesse Sampley (27:26.163)

Mm-hmm. Or I will even have I've I've had some some of my clients in the in a home building space, they have bought their different trades just to be able to control more of the quality. So they may be a custom home builder, but they have bought a plumbing company, they bought an electrical company and an HVAC company just to be able to have more control over their own projects.

Nitin Khanna (27:48.555)

Absolutely. We see GCs buying Millworks and vice versa, right? all sort of things. So there is buyers all over the map. There is no cookie cutter approach. every business is unique. Every buyer is unique. Every seller is unique. Right? You got to find the right.

Jesse Sampley (27:52.077)

Mm-hmm.

Jesse Sampley (28:07.914)

And what does that process, you know, if someone you know, what's the process look like as as you're selling? You know, what what is the what is the purchaser looking for specifically? and and you can keep this pretty general, you know, just with the clients that you guys have, but you know, what are some of the you know, some of the core things of you know, your financial statements or you know, s some things like that that, you know, people really you have to prioritize.

if if if you were, you know, wanting to attract a a buyer.

Nitin Khanna (28:43.63)

So I will tell you, a smart buyer is of course the financials are always going to be important. There is no going around those. You need to have good, clean financial statements. But a smart buyer is not going to ever start with the financial numbers. They don't start with the qualitative quantitative numbers. They go with the qualitative numbers. But what are the chances?

That number is going to be repeated over and over and over and over for the next few years. What was the quality of the cash flow or the profit you were generating? You made a million dollars a year, but how did that come? Did that come because you were on every single job site? Did that come because you just got lucky, you won a few big contracts, and that's about it, and it's never gonna happen again? Right? How did that happen? What is the qualitative factors there?

Jesse Sampley (29:19.318)

Mm-hmm.

I

Nitin Khanna (29:44.163)

How much working capital gets deployed in the business, right? You do a million dollars in profit, but for every million dollars in profit, if you have to deploy maybe five million dollars worth of your own cash into it, it's a different quality of a business versus a business which makes million dollars of profit by deploying half a million dollars of cash in it. Right? How much the business depends on you? Do you have the management in place? I just wrote an article in just just a few days ago and I said,

Jesse Sampley (29:50.25)

But what has changed?

Jesse Sampley (30:04.423)

Mm-hmm.

Nitin Khanna (30:14.902)

Your GM may not be your succession plan. Right? You may think, and I and why it came out because we were I just interviewed a potential client of ours, and I said, Okay, if a buyer buys your business and you're gonna leave, who is gonna run this? He goes, My GM, my general manager runs the business day to day. I take my vacations. I said, Well, that's very good. Tell me more about the GM. He's like, My GM is around 63 years old, he's looking to retire. Right? So

Jesse Sampley (30:23.73)

Yeah, no, because we would I just had to find a part that I said okay if I advised you a bit nothing but

Jesse Sampley (30:36.561)

This one's good.

Jesse Sampley (30:41.934)

Okay.

Nitin Khanna (30:44.46)

Don't you think the buyer is going to find out? Right? They will find out. And that's going to become a problem. So you gotta plan, you gotta be proactively planning the succession of your business. And it's hard. It is difficult. And that's why people don't do it. Right? But but they don't realize it is difficult, but it is equally rewarding. Right?

Jesse Sampley (30:52.818)

And I think that's a lot of people's fear.

Jesse Sampley (31:09.724)

Mm-hmm.

Nitin Khanna (31:10.818)

Why why would you want to leave your business to a slow death and shut it down one day when you could have walked away with a few million dollars on, you know, in cases a few hundred million dollars from there? Why not do it? Right?

Jesse Sampley (31:25.393)

There's a lot of discussion around the value. What is a realistic what have you seen is a realistic value on on companies? You know, are we looking at 10x? We're looking at 3x, 2x, you know, what's if if you had within the construction and home service base, what what is a realistic exit exit number and and why do you think someone can get more than than another company?

Nitin Khanna (31:56.537)

I'm gonna ask you a question to answer your question here. How much is the four bedroom house selling in US right now?

Jesse Sampley (32:05.991)

Well, it depends on where in the US it is.

Nitin Khanna (32:09.038)

Thank you. Thank you. The answer to your question is it depends on what kind of business it is. Right? It's very difficult for me to say: is it 10x, it is 4x, 2x, 1x, 3x? It depends on what kind of business you have built. Right? There is no cookie-cutter approach. And that's where I see people go wrong all the time.

They hear somebody in a golf course saying, I sold my business for five multiple and they think, my business is worth five multiple. Maybe it is seven. Maybe it is two. Right? Did you know how the transaction was done?

You know, people w one one of the most overrated deal terms we we find is the headline number. Right? And I'll explain it. Somebody will say, I sold my business for $10 million. Good. Good for you. Did you get $10 million on the day of close? Or did you get $10 million in the next 20 years? Two different things, right? But that guy just went on off the golf course bragging about he got $10 million. He never told you.

Jesse Sampley (33:05.519)

It's a problem.

Yeah.

Jesse Sampley (33:13.103)

I hate it

Nitin Khanna (33:18.37)

How that $10 million happened. What did he leave behind for those $10 million? Did he leave $9 million of working capital in the business, or did he get all $10 million plus $9 million of working capital? Right? And the poor person who heard that story now is all of a sudden thinking, I'm sitting on a retirement plan, which maybe he's underpricing himself or overpricing himself. So the best thing always to do is get a valuation opinion, get it from somebody who knows, who has

transacted before, who has done transactions before, get an opinion from them to find out what is the realistic value, right? And and then basically make up your mind and decide is it worth me selling it, not selling it, or what needs to be done to bring it to the level which I wanted to bring

Jesse Sampley (33:57.253)

Make them have

Jesse Sampley (34:06.446)

What about a branding the branding of a company? You know, people pour in a lot of money into the branding side of a business to be able to stabilize their their stale their sales and to be able to attract customers easier and just, you know, build a a better presence for themselves in their market. How how on a on a scale, how would you how would you evaluate that? You know, the

what people put into a branding or a business that has a strong brand versus a business that does not have a very strong and recognizable brand.

Nitin Khanna (34:43.384)

Jesse, you are an expert on branding, but I will add, I'll put my perspective to it. What is actually a brand? It's not a logo, right? Brand is what people think of you. Right? You just mentioned about the customer service. You gave that example. That, to me, in my mind, that's a brand. If somebody can think of it, you know, they don't, when they think of you, don't think of the logo on your truck, but they think of these guys provide the best customer service in the plumbing industry.

Jesse Sampley (34:55.085)

Mm-hmm.

Jesse Sampley (35:05.603)

Okay.

Nitin Khanna (35:13.1)

That becomes your brand, right?

Jesse Sampley (35:13.191)

Exactly. Yeah, it's the opposite actually. It's like when I see that logo, I I'm I'm actually thinking about the why of the brand. You know, like, man, that guy, he treated me really great. Or my neighbor said something really nice nice about that guy because they did X, Y, and Z. Usually it's a a story behind, you know, a brand that's recognizable. Yeah.

Nitin Khanna (35:31.04)

It's the full holistic approach. Yeah, it's a full holistic approach. I would definitely say, yes, you know, you've got to separate yourself from the crowd. Branding is important, right? Don't take me wrong. Branding is important. Logos are important. You need to have your own identity. and and it depends on what kind of business you are in. Right. but absolutely, you know, branding itself is the identity of the business and what people identify you.

Jesse Sampley (35:52.843)

Mm-hmm.

Jesse Sampley (35:57.695)

It's not the best of that.

Nitin Khanna (36:00.845)

We we sold a few years ago we sold electrical contracting business for over twenty million dollars. And they didn't even have a website. Right? They did not have a website. And we were surprised. We when we we connected with them and we thought we were going into an office of a maybe a two million dollar company. And when we looked at the financial statements, it was over twenty million dollars in revenue. and

Jesse Sampley (36:10.305)

Well I will have state. I mean the price with the eight with the heck of the

Nitin Khanna (36:28.034)

With an enterprise value, which we came up with was also somewhere in that range as well. but they were in a different business. Right? They did not need the website. We we spoke with a client and we said, I don't need a business. I deal with the government contracts and you know the large institutional clients. my business doesn't need a website.

Jesse Sampley (36:35.553)

Mm-hmm.

Jesse Sampley (36:40.769)

Yeah.

Jesse Sampley (36:48.832)

that's a lot of the misperception that people have on a marketing side is you know everything is bold and flashy and and to make a statement but it really is well decide who who you want to be and who you need to be because just because just because everyone else has it does not mean that you need and I and I have some some construction clients that

on a public facing side of marketing, the website, the social media, the, you know, that that type of thing is a very low priority because like you said, government contracts, a lot of commercial work, you know, that's not a a priority for them. They have other priorities that, you know, we're we're we're helping with, mostly on an internal flow and and communication side. But you know, just because someone says you need it really doesn't mean you do need it.

But going back to our point earlier is if you know who you are, then that's very easy to say. You know, so when a marketing company comes to you or you're thinking, hey, I wake up one morning and, you know, I just feel like we need more, you know, more of a brand or you know, all you the entrepreneur, you know, always wants to, you know, continue to do things, you know, and constantly change and and it's like, well, let's go back to what we agreed on, you know, which is this blueprint that decides like who do you really want to be, who do you want to be known for.

and and what is important because a lot of this flashy stuff that we get fed in our social media feeds all the time it seems, it's just noise and and we don't need to waste the money on that.

Nitin Khanna (38:27.647)

Absolutely. True that.

Jesse Sampley (38:30.791)

Well tell us, you know, as we're kind of winding up here, you know, the what what does the process look like when someone, you know, want wants to work with you guys? Do you only work in Canada? Do you work in North America?

Nitin Khanna (38:44.248)

So far we have been working in Canada only. but we are in the next couple months we are rolling our business into US as well. Yes. So the process, the way it works is, you know, the first thing is always with an starts with an exploratory call. Just get to know each other, right? We want to know who you are as a client. can we really help you or not? What your intentions are, what your plans are. We never go into an exploratory meeting with the intention that, you gotta sell your business.

Jesse Sampley (38:52.954)

wonderful. Wonderful.

Nitin Khanna (39:14.54)

We actually want to hear from you why you want to sell the business. Right? Are you even ready yet or not? I say, in order to sell any business, there's three things. I I train my team. I have a team of 13 people who work with me in my office, and I train everybody. I say, you got to have three things ready for the business in order to sell that business. And I will name them for you here. The first thing is the the business has to be ready.

And what I mean by that is business should be transferable, should be sellable company. If you are the business and you own all the relationships, and you are saying, I only got two months of transition period, chances are it's gonna be tough sell. Right? Because the day you leave the door, all the relationships leave with you and there's nothing left behind. Right? Besides a couple of trucks which were breaking down anyways, right? So

Jesse Sampley (39:49.51)

Okay.

What must have been?

Jesse Sampley (39:59.663)

Yeah.

Nitin Khanna (40:11.126)

So you have the business has to be ready. The second thing I say is the market has to be ready. And which we do see despite everything going on in the marketplace with all the doom and bloom, the market is ready. There is tremendous amount of demand which is pouring into the this home service sector, the contracting space, HVAC, roofing, plumbing, landscaping, even home building and all that stuff. And and then the third thing.

Which is the most important thing, and where always, always people have oversight, is that you as the seller have to be ready. To me, that's a big red flag. If you're not ready, it's not gonna happen. Right? You have to be mentally prepared to sell the business. That's where we see most people, most of the deals fall apart as well, where people, you know, it's a wishful thinking. I wish I would get ten million dollars for my business. And boom, we come in and we find a buyer who can get you ten million dollars. And then what we find out is

Jesse Sampley (40:44.411)

Yeah.

So you have to actually fit.

Jesse Sampley (40:59.221)

I think that's

Wow.

Nitin Khanna (41:07.008)

You didn't even think it through. You were not ready. And then then you decided, what am I going to do after I sell my business? I got nothing else going on. Okay, well, you should have thought about that before, right? So we want to identify that, we want to discuss, we want to we want to talk to you what it would look like for you if you sell the business, right? It's better to have that discussion from the get-go versus after you've gone through all the work and we've gone through all the work and the buyer has gone through all the work.

Jesse Sampley (41:32.897)

It's possible on the work at the end.

Nitin Khanna (41:35.158)

And then you decide I'm not sure I should am I making the right decision or not?

Jesse Sampley (41:41.827)

Well, how can people get get in contact with you, you know, even if if they're not ready today and they just have some questions or, you know, maybe some insight and and what they can be d be doing today? What what's the best way for people to to get in touch with you?

Nitin Khanna (41:55.244)

Jesse, I'll be happy to help. I I write quite a bit on this topic. I send out a newsletter. I've got over thirty-five thousand people on my LinkedIn. So the best way to do is just type my name in LinkedIn, Nitin Khanna, and hopefully I will show up on page one and and I c I can be connected from there and I will be happy to help anybody who needs help on this subject.

Jesse Sampley (42:19.267)

Well wonderful. Well Nitin, this has been very, very insightful. I know people will get a lot out of this. Thank you so much for joining me on the show. Is there anything that we did not cover that you would like to cover?

Nitin Khanna (42:30.08)

No, I found it was very insightful and wonderful conversation. I think we covered a good crown and I I hope the listeners find get some value out of this here today.

Jesse Sampley (42:39.572)

I I think they will. You've you've given us a lot of knowledge bombs and and it's more importantly just giving people the awareness and the and the perception of this is a as a a real viable thing that can happen. and maybe something that if you're a younger builder, you can go ahead and start thinking of. If you're an older builder, you know, really putting those things in place to see what would my business look like if I take a step back and let things operate. people may be surprised to see that it may run a little bit better.

Nitin Khanna (43:08.664)

Yeah. Yeah. Yeah. The only thing I would leave the audience with is, you know, it's not the the time in your life, it's not the age. Everybody should be building it backwards always. Your business should always be ready to be sold or exited because things can happen. And even if nothing is gonna happen, you want to enjoy the journey. Build it backwards.

Jesse Sampley (43:08.804)

you never know, but that's definitely the goal.

Jesse Sampley (43:23.105)

Mm-hmm.

Jesse Sampley (43:34.995)

Wonderful. Thank you so much.