Profit sharing

Discussion in 'Business Operations' started by Ocutter, Feb 22, 2001.

  1. Ocutter

    Ocutter LawnSite Senior Member
    Posts: 314

    How does profit sharing work. Is it the same as a bonus?
  2. John Allin

    John Allin LawnSite Bronze Member
    Posts: 1,489

    Yes. But it requires considerable documentation and you'll have to open the books to whomever is participating so you can justify what they get from the overall profit. For a small business that can be tough - both from an emotional standpoint and from a documentation standpoint.
  3. kutnkru

    kutnkru LawnSite Silver Member
    Posts: 2,662

    I think that John's right on this one (again -sheesh,LOL)

    Actually I think that as we have talked about in the past, that companies like you and I "O" - are better off giving out bonuses and keeping the ledgers closed.

    Just my .02
  4. 65hoss

    65hoss LawnSite Fanatic
    Posts: 6,360

    One thing you will find as a business owner, employees think you are getting rich off their work and not paying them enough. If they see more money for you than they got, well watch out. Here comes the fireworks. It doesn't matter if you have all the liability, spent your sweat, tears and money, took all the risk to get it started, they just don't understand. If they did, they wouldn't be working for you. The thought of equipment cost doesn't add up to them. If they find out you do estimates based on say $60 per hour when they are working they will want more money. They don't understand the cost of doing business. So in short, KEEP THE BOOKS CLOSED TO EMPLOYEES. You must keep yourself separated from them.
  5. Majestic

    Majestic LawnSite Member
    Posts: 42

    Personally i dont like bonuses carved in stone.Once you iniate them they are too hard to remove even if conditions change.I once listened in on a conversation where an employee received a 1000 dollar bonus for 7 years,that year business was down so they only got a 500 dollar bonus,they cried and complained how they were banking on 1000 not 500.Even called their boss a cheapskate,I had to voice my opinion afterall Im a boss.I told them they should be glad to get any amount of free money afterall they didnt have to work for it.He said B.S. I worked all year.I said did you get paid? he know where this is going. The best bonus is unexpected cash when you feel its earned.

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