New Age Business to Reward Every Employee

[kcool]

Hello everyone,

Not even sure if this is the right sub but I literally just came up with this idea, well the math of this. Plumbing and lots of other trades are extremely. Lucrative. I have worked for a few companies and the exploitation is bad. I started my own company about 6 months ago and am doing very well but am trying to ethically hire a workforce.

I am going to lay out some dumb math and let’s see if anyone has any feedback for me. I have done it large scale and small scale and it seems to add up.

Example 1: Large Plumbing Corp (Based on a company I worked for):
- Revenue - 65,000,000
- Employees - 210
- I estimate profit to be around 15 million (Conservatively)

If profit sharing and equal pay across the board was enacted it seems that this would be the math for example:

(Base Salary) 85,000 x (Payroll Taxes, Expenses) 3 x (Amount of employees) 210 = 53,550,000

Subtract that from the yearly revenue and you’d get 10,450,000 which would then be split evenly among everyone if they all worked equal time (so you get profit sharing daily) that would be an extra 50k for each employee each year.

Let’s scale this down to a company of 5. I’d say on average in plumbing you can generate 45k per month per truck in my area. So let’s say this company has 3 trucks a manager and a phone person. Everyone still makes 85k a year.

$85,000 x 3 x 5 = $1,275,000

$45,000 x 12 months x 3 Trucks = $1,620,000

($1,620,000 - $1,275,000) / 5 employees = $69,000 per year for each employee on top of that 85k base.

Thank you to anyone who actually read all this! Let me know what y’all think. Idk if I’m just really high or this is how I should build my business.

 

[dennid]

@kcool You just transferred your high to me by me reading this, thanks

 

[kcool]

@dennid Feedback pls

 

[dennid]

@kcool pretty mellow high, probably indica

 

[kcool]

@dennid I hate you

 

[tytyty]

@kcool This idea could work. Its known as profit sharing and some companies do already do this. There are 2 drawbacks i can think of off the top of my head:

1) You would be giving away your business's profits to your employees and not leaving anything for yourself (other than your equal share). By doing this you are essentially devaluing all of the time, money, and resources you put into the business yourself to start it. From an investment point of view this doesnt look good.

2) Would you be offering them equity in the company or just splitting the profits? If you were offering equity what would happen when someone retires or quits?

Your idea isnt bad but i think it needs more research and development in irder to be successful.

 

[kcool]

@tytyty Not necessarily, the assets would still be for whoever owns the business. Why would I be entitled to the work of my 4 employees? (I’d be a plumber/manager, so until I got tired of it we’d probably have 4 trucks with me in one) so land, equipment, trucks is potentially millions of dollars worth of money, not to mention a customer base with good reviews is worth a lot.

I would look at giving equity to people who would be willing to split and be good at higher up tasks that just not everyone wants to be responsible for, but if someone quits without fulfilling whatever the terms are for equity or retirement then that’s that.

 

[tyler112]

@kcool Yes but you gotta account for the risks you incurred by putting your own money in the early stages of your company. Businesses are likely to fail in the initial stages, so there's a big risk of you losing a massive sum of your invested money plus any leftover liabilities while your employees (who would be putting less work in than you do) leaves with 80k in the salary you've paid. You gotta be fair to yourself too. Not every employee is going to be productive either.

Assets depreciate, when companies go bankrupt (an extremely likely scenario) assets get sold to pay for liabilities first. Thats unlikely to get you any profit.

A similar business model exists, you can build a company that works for everyone, thats called a co-operative. But everyone is also liable to poor sales performances.

 

[vman10]

@tytyty I agree. You also need reserves in the bank for lean times (like a pandemic). You won’t be able to put it all in at once.
And what happens when the employees decide that they deserve a raise? If they're at the max, you have to say no.
Most businesses start out with at least one loan. That will have to come out of the profits (unless it's included in the "expenses".

 

[ms4runr2]

@kcool Build a worker owned cooperative. There are lots of models to follow.

 

[harmony21]

@kcool I've wondered about this. A lot of good companies don't bother because overtime pay is often given to the productive workers especially in the trades.

Equity is a whole different scenario. That share can get profits for decades. It doesn't fit for most businesses.