How To Do Profit-sharing

Business leaders and owners ask me all the time, “Sooooo, should I implement profit-sharing? And if so, how?” It’s a fantastic question, but there are a few questions I always have before I answer.

First of those is, do you actually have profit? You would be amazed at how many owners or leaders have a huge heart, and want to share with their teams, but it would be at a loss to themselves. In other words, they might not have much of a profit, but they want to give their team a spiff anyway that would come out of their salary.

This is not a good plan. How can you keep your doors open if you can’t keep food on your own table. Trust me, if your team is earning a good wage, they can do without profit-sharing while you and the team work to get profits up. Simply put, you can’t give from that which you don’t have.

The second question is, why do you want to give profit-sharing? Is it because your team is doing such an amazing job that you want to share? We always go with the old saying, “Dance with the one who brung ya!” Or is it fear based? Like, “If I don’t give, I’ll lose my team.” If it’s the first, great job leader. You’re headed in the right direction. If it’s the latter, and that’s what it takes to keep your team, you’re never going to be able to do enough to keep them happy.

If they are there for your profit-sharing, then they are just there to work a j.o.b. What you want are people who are on board because they realize that what your company has to offer is bigger than them. You’re looking for someone whose eyes light up anytime they are talking about the position you’re putting them in. These are the people you share with!

So what does sharing look like? It’s a lot of info for one post. See tomorrow’s post where I will break it down for you.

Question: What issues do you have with profit-sharing? What questions do you have?



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Meet Chris LoCurto


Chris has a heart for changing lives by helping people discover the life and business they really want.

Decades of personal and leadership development experience, as well as running multi-million dollar businesses, has made him an expert in life and business coaching. personality types, and communication styles.

Growing up in a small logging town near Lake Tahoe, California, Chris learned a strong work ethic at home from his full-time working mom. He began his leadership and training career in the corporate world, starting but at E'TRADE.

10 thoughts on “How To Do Profit-sharing”

  1. What a thrill it would be to work for someone who had such vision! But, if I had had the privilege of working for a company with a great team, a great leader, and profit sharing, I might not be a self-employed artist now. There is always something to be thankful for!

  2. Here’s a question for you… How do you handle callbacks that happen after the project closes? ie you do the work and complete it in May, then in August the customer calls with a faulty item. Do you deduct that from the next project’s profit sharing?

    1. If you are paying profit sharing only when a job closes, then yes. You wouldn’t be able to go backwards, so you need to pull it out after the gross profits of the next job. Make sense?

      1. That does. I’m just starting to develop a plan for our company. Both as an incentive to find better ways to do things & as a reward for a job well done.

  3. Profit sharing is a great concept! I wish I had worked for a company that offered one. However, I haven’t and as a business owner, I am working on creating my own for my employees. I believe we all gain from gratitude and things (information, skills, funds, etc) being shared with us! It is teamwork in every sense of the word that add to the ability to do profit sharing.

    1. Profit-sharing is what you do with your team because you want to bless and prosper them for growing your business. Incentives, or “spiffs”, are something you give out to individuals or teams for accomplishing a specific task. Bonuses are usually given out for a collective attained objective, like grossing more than X net profit. They are also given out to managers and executive staff for p & l and project accomplishments. That’s a basic explanation, but I’m sure others have different definitions. 🙂

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