How to structure Profit Sharing w staff/employees????

Question

Not sure if this is the right forum for this or not.

Our ALF business will end 2018 doing better than i expected. I'm owed a lot of cash at this point - didnt blow it out of the water I'm sure by some folks standards but on paper it's better than I've ever done in my life. Still pay myself what I consider a modest salary and my couple splurges this year was an economical family vacation to Colorado for a week (done on a tight budget like I always do - first vacay in 2-3 years) and a maybe once in a lifetime antelope hunt I was offered) and then a used vehicle so I actually have room to have staff with me and not have to ask them to drive. I'll continue to do that next year with our only goal of updating the small house we live in now and adding a storage shed.

I went into this not quite knowing how I'd do things but in the back of my mind I always had the intentions of when I owned a business be it a full fledged RE investment only business or this ALF business I'd give some of the profits to the staff/team members.

I have no idea how to structure it and how much to give to staff/keep in the business - my idea was to try to pay out 10% profits to the staff - 3.5% to our exec director, 1.5% to our nurse and either 3% or 5% split up and paid to our hourly staff. If we hit our #'s for next year it will be a big bump (imo) to our exec directors salary (it would equal 20% of her pay with the ability to go higher if she helps me get our revenues higher yet.)

When I sell the company at some point in the future I'd like to give some back to staff to - not sure how to do that either but hopefully I have some time to figure that out.

Anyways - curious if others have thought about working up a similar thing or worked in a company that did that. I feel it's the right thing to do - I only took this path to gain my freedom and my sanity - so far I've done so - and without our team I wouldnt have that and I feel they should reap some of the rewards.

Hoping to grow this business and add 1-2 more buildings in 2019 then start investing in residential or commercial Re with extra cash and grow that part of my business to the scale I've always wanted and then start a sharing program there.

If anyone can help me find the article or a long shot knows the guy - I remember a few newspaper articles about a guy on the east coast (I think) that owned a # of grocery stores and when he retired he transferred ownership of the company to the employees. i'd love to pick that guys brain and buy him coffee.

TIA

Teri Feeney Styers · Answer

@Shane H. I used to own a small grocery. Traditionally turnover in that business is terrible - but not for me. One year I had 100% retention. I'm going to challenge you a little... That support staff is also critical to your business, does some crummy jobs, and I understand that (anecdotally) wages generally aren't very good. In my grocery business I had a tiered wage system plus bonuses. Simple math again. I hired a new person they started at let's say $8 per hour. If they stayed for 3 months then I RETROACTIVELY raised the wage to say $8.50 per hour - so there was an incentive to stick around. I did the same thing at 6 months and 1 year. This helped a lot with retention and the other problems associated with constantly training new staff. Of course I also gave some bonuses, occasional gifts, and other perks to show them how much I appreciated their hard work. Low budget recognition can go a long way...

Shane H. · Answer

@Richard Sherman normally I would want to gravitate to something like that - but most of our staff survive paycheck to paycheck and even though I'd love to help them with retirement etc cash now in their pockets will help them more. I think. I dunno - in the future I would like to add a retirement component - I have my goals of what I want and once I get there anything extra can be put to use or spread amongst others. Hopeful the Good Lord will allow me to get there.

Shane H. · Answer

@Russell Brazil Assisted Living Facility

Teri Feeney Styers · Answer

@Shane H. I would take that 10% (or whatever number works) and divvy in an equal way to all staff on the percentage basis instead of giving the higher ups a greater percentage. For simple math lets say that 10% equals $10,000. And lets say your annual payroll is $200,000. Then that equals 5% of your payroll and everyone gets 5%. Obviously the higher paid people get a bigger chunk - but everyone gets an equal percentage.

Gene Guarino · Answer

That is a great idea Teri.Staffing is a challenge in every business. Even the biggest companies in the world have the same issues. Google, Apple etc. The key is to attract and keep the best people. Money is one form of compensation and the other is Emotional, IE: respect, caring, empathy. THAT is an even more valuable form of compensation. It has to be holistic and include both sides.Gene

Shane H. · Answer

@Teri S. -- good idea - I'll have to pencil that out on paper and see how that works - my thought process was that turnover is EXTREMELY high with the support staff - so it'd create a paperwork nightmare to divy up equally with them. And they are very important to our business, but truly what drives our business and who I want to feel like owners are our nurse and exec director. I wanted them to feel more in the drivers seat as far as what they can make with my help and feel more appreciated. Paying a profit sharing of some sort I have seen seems a bit unheard of - I've spoken to others that work in this industry (my wife did for a long time) and support staff would be lucky to get $25 or a $50 gift card at Christmas and that's it. Even the higher ups getting little to nothing. I'm just afraid of not keeping enough in the company and how to wing that - figuring it out as I go but I know for a fact if we make a profit I want to share it as without the staff we wouldnt be making one.

Russell Brazil · Answer

What is an ALF business?

Richard Sherman · Answer

@Shane H. Look into cash value pension plans (NOT life insurance) IF you have a limited number of personnel they could make a lot of sense. DM me if you need a recommendation. We have run one for the past 3 years and it has some tremendous benefits. They are sort of like a combo of a 401k and a traditional pension (you deposit funds like a 401k as opposed to committing to a payment.