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00:00:01
Rob Gallaher: Profit Sharing That Helps Employees Think Like Owners
16 Plays1 month ago
In this episode of The Unfolding Thought Podcast, Eric Pratum speaks with Rob Gallaher about the profit sharing system he built after starting and scaling multiple businesses. Rob walks through his early missteps with quarterly bonuses, why behavior did not change, and the simple changes that did move the needle: monthly payouts, a meaningful minimum threshold, and consistent communication that teaches people how daily decisions affect profit. He explains how to align owners and teams, what to show the team, and how profit sharing can free an owner to step back without the business slipping.
Topics Explored:
- Why traditional bonuses fail to change behavior
- The three pillars that make profit sharing work: a regular cadence, a real-dollar threshold, and strategic communication
- Showing the team job profit percentages and using that data to learn and improve together
- Turning “clock punchers” into profit-minded decision makers
- Implementing in months instead of years and avoiding common mistakes
- How the right system lets owners step away without chaos
Links:
- Rob Gallaher on LinkedIn: https://www.linkedin.com/in/robertgallaher/
- Rob Gallaher on Instagram: https://www.instagram.com/robertgallaher/
- Rob’s website: https://profitx.co
- Gallaher Company: http://gallaherco.com
- Rob’s book: Profit Sharing: The Power of Shared Success https://amzn.to/47wVbHL
- Buy Back Your Time by Dan Martell: https://amzn.to/3IoQlCj
- Study on ready fiction influencing empathy: https://pmc.ncbi.nlm.nih.gov/articles/PMC3559433/
For more episodes, visit: https://unfoldingthought.com
Questions or guest ideas: eric@inboundandagile.com
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Transcript
00:00:02
Speaker
Rob, thank you for joining me. I'm going jump right into it. You've written a book called Profit Sharing. I read it. I really liked it. It's short.
00:00:13
Speaker
And we're going to get to that first, though. Can you tell me what led to you eventually writing this book and taking this approach?
00:00:25
Speaker
Absolutely. So I lost my job during the 2008-09 housing recession aftermath. I was a commercial superintendent for a guy here in San Jose, and i found myself as an unplanned business owner.
00:00:40
Speaker
With my wife, we had our second child on the way. She was like six months pregnant. And so I started working, you know, doing everything i could to pay the bills and put food on the table.
00:00:53
Speaker
And I was successful from day one. You know, making a profit on my work wasn't an issue. You know, three years goes by really fast when you're just trying to hold on to life and hold on to your family and and paying bills and getting out of the debt and all the aftermath that I experienced from that but housing recession or crash or whatever people call it nowadays.
00:01:15
Speaker
But I look up three years later and I have 30 employees. I'm working 60 to 80 hours a week. ah One of the companies I started that time was a 24-hour plumbing service company.
00:01:27
Speaker
And I didn't plan that out, working all the weekends and nights, my phone ringing all hours of the day and night. And so I... was looking around and just overwhelmed, overworked. I was unhealthy. i was overweight. I was drinking.
00:01:43
Speaker
i was doing all these typical things. I think a lot of people do when they're in a high stress environment. And even if you're profitable, it doesn't mean it's necessarily an enjoyable time or you have balance in your life and you're actually doing things in a healthy, sustainable way.
00:01:59
Speaker
So I went down this journey, what I call relentless pursuit of self-education. And I started reading books about business, culture, marketing, sales, anything that I could do to improve my operations and my life.
00:02:14
Speaker
And I stumbled across this idea of profit sharing. which is a fascinating idea, right? It's a buzzword. It gets a lot of people's attention. If you're an employee somewhere, you're you're like, yeah, I want to talk about profit sharing. I want more money or more piece of this pie. and If you're a business owner, there's i have mixed reactions on the word.
00:02:32
Speaker
But I had this fascinating reaction to it. Like, okay, that's an interesting idea. i want to check it out. I want to pursue it. I want to learn more about it. And so I started looking for more books about it, podcasts, articles, anything I could find.
00:02:48
Speaker
And i I found some stuff, but it was all theory. There was no how-to guide. There was no, you know, buy this course and and learn how to do it. or Nobody was talking about the nuts and bolts of profit sharing. It was just the ideas and the theory behind it.
00:03:05
Speaker
So that was frustrating for one, but i was I was determined to figure it out and determined to implement it my business, at least to try it out, to see what I could do. Because I was struggling with what I think most business owners struggle with is nobody thinks, works, or acts like I do, right?
00:03:23
Speaker
web We're the boss. We show up every day early and we just feel like we're always pushing or always fighting or always a level conflict with our employees to get goals done or get projects done or whatever business we're in to get things done.
00:03:38
Speaker
And then they go home and you're left with thinking about the next day or dealing with the problems and the fires from that day or last week. And it's just this never ending cycle of business ownership.
00:03:49
Speaker
What I thought was normal at the time. And So I thought profit sharing was going to be some, some kind of fix for that. That was my thought. Right. And I took two of the leaders that I had at the time. i brought in my office one day and I was like, Hey, I have this idea.
00:04:06
Speaker
called profit sharing. I don't know how to do it because I can't find anything on how to do it, but I want to sit down with you guys and let's draw up some kind of plan what you think and what I think and what I've learned and come up with this profit sharing program.
00:04:21
Speaker
So we did that. They were very motivated to do it, right? Because they were going to get more money if it worked out. And we we did. And I cut my purse my first profit sharing check the first quarter of 2015. And there were seven people in that program.
00:04:38
Speaker
you know In my book, I talk about the decision makers, the people that actually make decisions every day to drive the profit in the company. you They either save costs or make money.
00:04:49
Speaker
And so that at that time in my life, there were seven people that I considered were the huge drivers, right? Everybody that works at a company are part of the solution, either part of the problem or part of the solution. But there are decision makers that have more weight on making those decisions every day. So I cut seven profit sharing checks for a quarter and it was a complete disaster, right?
00:05:15
Speaker
Nobody changed anything they did. i spent, I think it was like $15,000-ish, somewhere in that range and nothing changed. The behavior didn't change. I was still, I didn't see a difference in the way that they thought, worked or cared about the business like I did.
00:05:32
Speaker
So we went back to the drawing board with those two leaders and we tried some other things and made some more changes and we communicated a lot more with the team. ah One of the things that I screwed up was even communicating what profit sharing was supposed to do and what the goals were of the program to do.
00:05:50
Speaker
So people kind of just got this check almost out of nowhere. And so if they don't know what it's for, how am I supposed expect them to react to it a certain way? Right. So all these little things that I've learned anyway, fast forward, it took about three years of trial and error.
00:06:08
Speaker
And there were some wins along the way. I don't want to make it sound like it was a total dud for three years, but we, so we saw some, some light at the of the tunnel, you know, a little more every time and and a little bit brighter and a little bit closer. But in 2018, we really struck on some ideas that started to work and change my mindset of my employees. And I truly, and I truly believe this when i say that, turning them from an employee to a team member.
00:06:35
Speaker
And, you know, we hear that word team member a lot. And and I like it because it's You're part of a team, right? It creates that teamwork, that unity of a group of people that are all striving for the same goal, right? Just like in sports, you have a football team, right? You don't have coach and employees, right? So, and I started to see a huge shift.
00:06:56
Speaker
shift into what people were thinking about, the shift in what their daily activities that they were doing, you know, for the minute to help the company win, to help make themselves better.
00:07:07
Speaker
And as a result of that, the company's success skyrocketed, right? We were experiencing tremendous growth. Profits were going up. Morale was up.
00:07:18
Speaker
Culture was better. And I just was riding this wave of, okay, this is working. Let's let's keep doing it. Let's try some other things and keep fine-tuning this whole thing.
00:07:30
Speaker
And so that kind of success gets a lot of attention. It got a lot of attention from my competitors, my friends, my customers. But people started asking me, hey, what are you doing, right?
00:07:42
Speaker
You started 2010. in two thousand and ten in your garage with one guy, right? And then now it's 2022 and you have 100 employees, multiple businesses in different industries, and they're all very, very successful.
00:08:00
Speaker
We want to talk to Rob about what he's doing. And so I tell them all these things about leadership. You know, I, during that time, I doubled down a lot in leadership conferences and travel to different trade shows to speak to other business owners. It just really poured into myself and my other leaders.
00:08:17
Speaker
I'd bring them along too. We started doing our own leadership training. So we really doubled down on leadership. But this profit sharing thing was kind of the driving force of people realizing, hey, if we learn and got better, we could make more money. The company makes more money. It's a win-win.
00:08:35
Speaker
And they really dove in to absorb that stuff that we were offering that I was chasing at. So I got a lot of questions about what I was doing. i was I was happy to share and help other business owners and tell them about profit sharing.
00:08:49
Speaker
And the questions get deeper and more detailed. And so I would have business owners say, come on over for an hour and we'll have lunch and now oh I'll walk you through exactly what I'm doing.
00:09:01
Speaker
Those meetings started to pile up and I was like, man, this has taken up a lot of my time. I still have these businesses to run. I'm still a father and a husband. And once somebody suggested to me that maybe I should write it down.
00:09:14
Speaker
And that's the truth about where the book came from. so I was like, oh okay, like I could write it down. But what if I wrote a book about kind of the whole story and, and where I came from and how I got to this point. So that's what the book that you read is about in there. I wrote the 10 rules of profit sharing, which were all lessons and mistakes that I made that I learned from to, to have a really cohesive program that actually does what it's supposed to do.
00:09:40
Speaker
And that brings me to talking to Eric and, uh, and, uh, hanging out with you guys. Well, thank you. I've, i I don't know if you said this explicitly, I may have just missed it, but you said something about as an owner, you know you're going home at night and you're thinking about, or you're worrying about the next thing and how to make the next sale or payroll or something along those lines is what you said.
00:10:12
Speaker
And i don't know if you stated it explicitly that then that what you were looking for when you came upon profit sharing was how to get your employees to think more like team members, which then you got to. is that Was that your initial motivation was trying to get more buy-in and participation?
00:10:34
Speaker
Yeah. The biggest, one of the big motivator was as a business owner, it's awfully a lonely existence, right? You feel like you're the only one that really cares. You're showing up first, you're leaving last, you know, like I used to have to make sure the doors were locked, right? Cause nobody else would lock the doors because Rob was always going to lock the doors on his way out. Right. So that's, and you know, you miss a lot of family dinners when you have to leave work at seven 30 at night. Right. Cause And I was frustrated by this fact that, you know, it's not just my income that goes away if or gets hurt if we get robbed and all our tools are stolen out of the shop.
00:11:13
Speaker
Or if something bad happens and we flood the building out, you know, there's other people's income that's affected by this, right? They have jobs here. that These are good market at competitive wage jobs.
00:11:25
Speaker
Like I always feel proud of the fact that we were the top end of that spectrum, right? I'm not saying we paid the most, but like people wanted to work for us. They wanted to, we paid well. We took, we cared about our people.
00:11:38
Speaker
And so, but they don't, there's a, there is a gap between them understanding that and having that buy-in to the company's success, right? mean, just think about all the people we know that have jobs. so You go to a barbecue with your buddies, half of them or more, right?
00:11:54
Speaker
probably more are complaining about their jobs, right? It's a common topic of conversation that comes up in every family or friend gathering, you know, at church or birthday parties or whatever we're doing, people complain about their work. And I just hated that.
00:12:09
Speaker
That was the culture that I came from from my previous employer. It was so much negativity and so much complaining. It's like, man, we're here eight, nine, 10 hours a day, not counting the ah commute time and getting ready at home to get here.
00:12:25
Speaker
And we hate it. And how do we fix that? How do we not spend a third, ah more than a third of our life somewhere that we just dread or complain about all the time? So profit sharing.
00:12:37
Speaker
And I think a lot of those complaints comes from this boss that's cracking the whip, that's, you know shoving an agenda down your throat, shoving goals into your face and pushing you to do these things. And maybe you're not bought in. There's no reward for you to actually do these things except keeping your job.
00:12:55
Speaker
So we fall to this level of doing what we have to do just to keep our job, just to not get fired. Right. And what kind of boring existence is that of just doing things and not lose our job and having to go through the process of finding another one and brushing up our resumes. Like just, you know, that's what their motivation factor was.
00:13:19
Speaker
How about we create environment where If you throw the ball and I catch it better than the next guy, we're going to win more games. We're going win more days. We're going to win more profit. And then we'll share that because that's what it takes. It takes a team.
00:13:34
Speaker
I can't do anything by myself. Seems like the bigger I get, the more help I need. And that's so that's the whole idea, the whole encompassing thing about the employee versus team member.
00:13:48
Speaker
You know, I'm going step aside a little bit perhaps from profit sharing, but this just stuck out so much in your book. So I wanted to comment on it.
00:14:00
Speaker
You said there a minute ago something about... You know, if we get robbed, if our tools get stolen or whatever, or I don't know that you said this, but I think it goes along with it. If you don't make the next sale, it's not just your job or your income.
00:14:19
Speaker
And one of the things that I think you described as being sort of a transformational moment for you in the book, and I hope I'm not giving too much of the book away if I reference things like this, was you got down to do like some trim work or something with one of your employees. And he was kind of like, what are you doing?
00:14:38
Speaker
And you're like, I'm going to help you. Right. And he said, more or less, I can do this job. I'm relying upon you to find the next job for me to be able to do.
00:14:50
Speaker
Is that right? Yeah, that's correct. So That was in the early, early days. Like I think months after losing, after, you know, losing my job, I got this really big house remodel project.
00:15:04
Speaker
And, you know, I was, it was excited. It was, it was several hundred thousand dollars, biggest amount of money I've ever seen in my life. Probably the biggest amount of money most of my family members have ever seen in their life.
00:15:16
Speaker
And I was, you know, this was the job I felt like was going to make or break me, and you know, getting through this this this recession that we were in. Because you got to remember back then, there were, you put an ad out, you know, and some people may never heard of Craigslist now, but I know you have, Eric. you got enough gray hairs just like I do in my beard.
00:15:34
Speaker
But you put an ad out on Craigslist for carpenters or plumbers, electricians, you would get tens tens you know, 20, 30 responses that day, right? So the trades market was really, really tough for jobs. And so i got I got this job and I was super hyper-focused on it, going super well and making all the money out of it as possible and doing a really good job. And, you know, I just thought this was going to be, I needed this money to launch the company to find the next one, right?
00:16:03
Speaker
And It's a true story. I was there every day, right? I ordered all the materials. I got all the guys lined up, and the subs that we needed. And and it was a lot. were doing decks, kitchens, flooring, painting, inside and out this whole, this really nice house.
00:16:19
Speaker
And I lay down next to Eric one day and I'm going to help him do this. It was a fancy soundproofing floor for this bedroom that the lady wanted to put her piano in.
00:16:29
Speaker
She was a big ah piano teacher at a university here in town. And so it was this really fancy, very expensive flooring and I was going to help him do it. I want to make sure it went down right and all this stuff. And like I say on the book, like you just mentioned, I get my, I have my bags on, right? I would work too. And I think it was 25 years old.
00:16:47
Speaker
And he he looks at me and he goes, what are you doing? Right. Because if you're here working, who's who's out estimating and selling for the next job?
00:16:58
Speaker
And I can't remember if I put this in the book, too, but he basically said, I have a family, too, and I need to work the day after this job is done. Like, I still need to work. And I didn't think about that, right? I was thinking about the 20% of net profit that I was going to make on this job and how far that was going to take my family, right? i'm like okay, that's like four months of rent, groceries all hammered. So I'm good for like four months and I will find another job and I'll kind of continue on. I wasn't thinking about This continuing taking care of the team members and what their needs were and having everybody prosper in the organization at that time, right? Obviously, my mindset has changed dramatically since then.
00:17:38
Speaker
But this is probably, ah like you said, a big pivotal moment where... Oh, this guy's got bills too. This guy is motivated to pay, to make money also. Right. And, and literally he said that and it was huge. I left.
00:17:53
Speaker
I went, I was like, you could run this job. You can check on these guys. Right. I got it, boss. I went home. I put on a pair of Dockers. My wife and i literally designed a business card and printed it out on regular printer paper, not even cardstock.
00:18:08
Speaker
And we sat there and cut out the business cards. And by 11 a.m. that day, I was knocking on doors trying to get the next job. And we did. We got another job. And then we got another job.
00:18:18
Speaker
And we've done millions of dollars of jobs since then. So, yeah, huge moment and a huge shift in mindset for my team members. That guy's still with me, by the way.
00:18:29
Speaker
Oh, that's awesome. Yeah. I'm going to guess that whatever the journey has been, not just for you, but also your several businesses that as a result of, you know, thinking that, you know, because a lot of us, when you're sort of divorced from not necessarily that there's separation between you and the boss in terms of space, physical space, but you're just divorced from the mindset of the boss that,
00:19:03
Speaker
you know, you either don't think about something like that or you do, but you're not willing to say it. And so my guess would be that being a person who thought about that and was willing to say something, he has probably had a very different trajectory than an environment like it sounds like you have built than the next employee might have had in a totally different environment and not being someone who was thinking that way and willing to say something.
00:19:34
Speaker
Right. Is that why you're saying he's the highest paid person on my team? mean, is that what you're talking about? Yeah. that's awesome He's been a huge game changer. He's, we've always clicked on this idea of the next day and what the future looks like.
00:19:48
Speaker
So a lot of business owners don't, you know, and rightfully so you're worried about payroll that week, right? You're worried about getting these orders in on time. You get stuck into working.
00:19:59
Speaker
Basically a lot of business owners just bought a job or they built a job for themselves. and And it's something I was stuck in for three years. I've seen a lot of my buddies that are business owners or friends or customers or subcontractors in this same mode.
00:20:14
Speaker
And it's hard to get out of that, right? Because we can get so busy. Maybe we're making some money and we like the action, right? I still like the action. So it is a difficult transition to kind of go, well, what is next month look like?
00:20:28
Speaker
Or how about this? I went to a training seminar one time. where the exercise was five years. We're going to look ahead five years. And that was mind blowing for me because number one, people don't talk about five years.
00:20:45
Speaker
but They just don't, you know, so we we're kids and we go, well, I want to get married. and want to go on a good job. want to have some kids or not. Or and we kind of have these overall arching goals, but when we have those goals, well, what do we got to do today to get a little bit closer to that?
00:20:59
Speaker
And then what is we have to be next year to get even closer, right? And just having this, it's really goal setting, a really effective, advanced goal setting technique to do that.
00:21:11
Speaker
And some people are more naturally inclined to that. This particular individual in the book, that story is probably better at it than I am, right? He just he just has this, this this This outlook on life, you know, he's got four kids now at the time. I think he had one.
00:21:27
Speaker
We both had one. And so he's, as a father and provider for his family, these are thoughts that he has. And he pushed me to have the same thing, to have this kind of same trajectory of the future and make sure that it looks like we're winning.
00:21:41
Speaker
And what are we doing today win tomorrow? When you tell the story, and I think you've sort of alluded to it, when you cut your first check and maybe even some subsequent checks for profit sharing, there were times when it sort of backfired, right? Like people were offended at the size of the check or something of that nature.
00:22:06
Speaker
Yeah, well, when you don't properly lay out a plan, or even if it's a bad plan, not properly they laid out, because it could be a good plan that you didn't communicate about. the i had a guy I had a guy, he was on the plumbing team, and he was a salesman estimator.
00:22:22
Speaker
And we announced, you know, ah very vaguely this profit sharing plan. And I, it's one of my lessons about clarity. And it's also a huge lesson in leadership that I learned about is you have to repeat things and you have to be clear about them. And, you know, you got to paint the whole picture, right? Because if you don't paint the whole picture,
00:22:40
Speaker
and you paint half of it, people are going to fill in what they think the other half should look like. Actually so, right? Assuming beans, that's what we do. And this particular team member just thought, and some people think this, I've learned this multiple times over my years.
00:22:55
Speaker
They just think the company is like, has a money printer in the back room. It's probably in my office and it's just printing out $1,000 bills all day long. And the reality is, and most business owners listening are like, man, I wish i wish Rob was was right about this. But business is hard.
00:23:11
Speaker
And yeah, there you can be successful, but success typically does not look like seven-digit numbers in a bank account every year, right? it's It's typically a lot of business owners, especially starting out, are just making wages, right? And for it could be that could be that case for years.
00:23:28
Speaker
And at this time, we were doing profit sharing. That was, you know I was doing very well. I have no complaints about that, but I was not making millions or even a million dollars, right? And I was trying to bridge that gap, right?
00:23:41
Speaker
and and And construction, which is what my company, my first companies were, it takes money to make money. And even if the company was making, you know, half a million dollars a year, me personally, my personal income was much less than that because you need to keep money in the business for retained earnings and growth. you got to buy equipment, trucks, and have money to hire people, to train them. you know, there's all these things about running a business that your typical employee is not thinking about.
00:24:10
Speaker
And they just think that when they do a job for $1,000 and they make 30% on it, that $300 goes straight into the owner's back pocket. And then bam, he's off to vacation again or whatever else. And a lot of times it's not the case. So in this particular story,
00:24:26
Speaker
This guy thought we were making millions. And I never, I don't know what he thought a profit sharing check was going to look like. And it was obviously very disappointing to him, even though he never gave it back, Eric. He still cashed it.
00:24:39
Speaker
But see he just thought that it was really, really low and that... He was insulted by it, even though at the time for what he was getting paid on a salary, he probably couldn't have gotten a job making more anywhere else.
00:24:54
Speaker
Right. So we were already at the top of the market for his pay and his position. And. It caused some resentment. And about six months later, I think six to a year a year later, he eventually left the company because this resentment built up. Right. And I, as a young leader at the time, didn't see it, didn't catch it, didn't communicate clearly enough to fix that resentment before it got too bad.
00:25:19
Speaker
But yeah, it can, it can, if you're, you know, it's weak leadership at the time that I had. I, I just thought I gave that guy $1,800 or I've already paid him his salary. I think it was three months at the time.
00:25:32
Speaker
I'm guessing on that dollar amount. I'd have to go back and look because that would be interesting to to remember like how I paid somebody an extra $1,800 $1,500 they actually quit over it eventually. And so and they actually quit over it eventually and so That's when I talk about the clarity, yeah being a leader, the reminders of what this program is for and to really create that buy-in to the program and what it's supposed to do, what you can do, as opposed to what the company can do for you.
00:26:02
Speaker
to help each other out. And that was probably a huge point in the early days that I missed on communicating or even thought it was that important. I just, I was naive. If I give you more money, you're going to work harder.
00:26:13
Speaker
Not the case. Not the case for most people. I love the, think, humility that you're expressing and also the responsibility that you're taking onto yourself because, you know, we're all on various journeys, but I was just talking to someone else the other day.
00:26:37
Speaker
if I burn my hand on a hot stove, In the moment, I just want to blame anyone but me for touching that stove. You know, it's your fault because you left the stove on or it's your fault because I turned the stove on.
00:26:55
Speaker
But then you said something to me, causing me to look away while I reached out my hand or who knows what the specifics are. Yeah. But. I hope that over time I'm becoming better at when I'm not in the heat of the moment thinking, well, what am I responsible for here?
00:27:14
Speaker
And how can I have done better and all that? And I think that I don't know what percentage of human beings or adults, more generally Americans who we can pick whatever group we want to go with.
00:27:29
Speaker
I don't know. where most people start and then where they end up. I do certainly recognize in myself a journey though, and i appreciate being exposed to ah leader who isn't, I don't know, ah martyr because there's just no other choice.
00:27:53
Speaker
And yet also can, as I think I'm hearing from you, look at things like this, like there are lessons learned and this is a growth opportunity. It's not just something bad happened and no lessons learned.
00:28:09
Speaker
Right. I think the, what separates great leaders, you know, cause you can go to leadership training, right? You can read all the books and, and there's a lot of great books out there. I've learned a lot from But bottom line, true leadership is the relationship, right? With the one-on-one person.
00:28:27
Speaker
it's it's It's Rob and Sally or Eric or Jeff or whoever it is that you have. And when you have that relationship with them, accountability, that honesty, that's where the true leadership happens.
00:28:42
Speaker
my My goal as a leader is that when I speak and the words that are coming out of my mouth, we all know, especially this day and age, they're just words, right? just like we can get on social media and type whatever we want.
00:28:55
Speaker
But when those words have weight, that's the true leader, right? and And actually, I learned this in being a dad, right? Dads can say, i was wrong.
00:29:07
Speaker
you know, I made a mistake here. And so can owners, so can bosses, and so can spouses. And it and like you were saying, as a group of Americans or people, whatever group you want to pick, if we can go through that and understand the accountability and have that integrity, you create weight in your words.
00:29:26
Speaker
Right. And how powerful is that when I walk into a conference room and of my leaders or my construction department or plumbers or car washes or whatever I'm doing and I'm trying to move a needle somewhere.
00:29:40
Speaker
i found much more success moving that needle when I have the relationships and the and the trust and the weight of those. One of the things that stuck out to me in your book was.
00:29:54
Speaker
I'm not sure if it was a statement that you made or exactly how it came across, but I highlighted this and knowing that we were going to talk, I wanted to ask you about it.
00:30:05
Speaker
I think you said somewhere that generally you're not in support of sales commissions and Then so I was wondering how you, on average, set up your compensation agreements with your salespeople such that maybe are they taking still lower base pay, but then there's bigger profit sharing or what does that look like generally?
00:30:33
Speaker
Yeah. So great question. I get asked this one a lot. Um, and the story I like to tell, I've never been in the car dealership business, but I've bought my fair share of cars and fleet trucks over the years and dealt with commission salespeople lot, especially in the In the product industry, you know, we're buying a bunch of lumber or we're buying a bunch of soap.
00:30:53
Speaker
And so these people are mostly emission-based. And what I've seen, my experience has been almost every single time is these lone warriors out there that are not communicating well with their team, right? They're not, you know, think about you pulling into a car lot and there's guys standing on both sides of the driveway and a guy standing on the curb in front of the building saying,
00:31:18
Speaker
And it's like a mad fast of who gets to your door first to shake your hand first to claim their territory on getting that cell, that possible cell goes. And I often wonder what's it like in the break room when these guys are all clocking in or or eating their lunch throughout the day? What kind of culture is happening inside this room?
00:31:39
Speaker
And then you have a manager saying, that's supposed to manage them, their schedules, who's taking days off, what shifts they do get or don't get, the weekend shifts, I'm assuming are more lucrative for car salespeople. People have time to go but down to the dealerships and buy cars.
00:31:54
Speaker
and And I just, it's da not a, um to me, it doesn't feel like a productive, happy place, right? And I've never paid a sales commission for any of my companies. My thought is, answer your question, is a competitive salary for that role.
00:32:12
Speaker
And as I can tell you, a lot of interviews I've been in with salespeople or estimators, project managers, you know, we have a combo role type here, the way we're structured. Well, they'll be like, okay, so if I bring in a $100,000 job and we make more than, you know, 40% or whatever the metrics are you're not going to give me, you know, 5% of that, right?
00:32:31
Speaker
Right. And I'm like, no, I'm not. Because you're going to treat the superintendent like garbage if he makes a mistake. You're not going to work well with anyone else here because this is a team collective effort, right?
00:32:45
Speaker
And then what happens is, is people start marking down their jobs just to sell it. And then when the job doesn't make money because they underestimated it on purpose to get it, whose fault is that, right? So then you have a superintendent or the field foreman at odds with your estimator slash salesperson and that role. So those are the things that I don't like.
00:33:08
Speaker
Like when we sit into a room, I just, every Tuesday, we did them this morning, we do production meetings and I have my restoration company in there for an hour and I have my construction department in there for an hour.
00:33:20
Speaker
And we go through every single job front of the whole team, right? And we have our profit percentages up. We have, you know, all the information for that job. And it's kind of like a 30,000 foot flyover on the project.
00:33:33
Speaker
And we're looking for the the low profit percentages, right? Human brains always go to the negative. What happened here? What mistakes were made? Was it underestimated? Did we make a mistake in the field? Did we, you know, all these things. And then we look at the stuff that's above average profit.
00:33:48
Speaker
Well, how do we do that? What was the, witness this is a huge win. Can we do this again? Is this a repeatable process, you know, in doubling down on the wins in front of the whole team? And I have a whole theory to this.
00:34:01
Speaker
When you have, let's say you have four estimators, right? Project managers that are out there selling work and and lining up for your superintendent to handle. If one estimator makes a mistake and no one knows about it, except the boss and that one estimator, how do the other three learn from that?
00:34:17
Speaker
How does the team get better as a whole if we're hiding our mistakes or not communicating about in front of the whole team? Or the flip side, what if you got an estimator out there that's making 45% on all his concrete jobs?
00:34:31
Speaker
Okay. And we do a lot of concrete. And the other estimators are making 30%. They're struggling with this, right? Well, what does this guy know or doing different that we can all learn from to win more on these projects?
00:34:43
Speaker
So, I want a team environment, right? Tom Brady won seven Super Bowls. Most guys that like football and watch football every weekend can't name one offensive lineman on any of those teams, right? We all give Tom Brady the credit.
00:35:00
Speaker
We know the coach and we know the quarterback. But what about all those other players that helped Tom Brady win? They're champions too, right? It takes a team to win.
00:35:10
Speaker
And in business, you need a team to win, right? Otherwise, you just own a job if you're one-man show or if you have any kind of goals to get bigger and to scale something of of reasonable size to handle. and There's a lot of reasons to not be a one-man show.
00:35:27
Speaker
There also is a lot of reasons to be a one-man show. you know There's plus and negatives to both sides of that world, but you need a team working together, not a team that's worried about credit or commissions or at each other's throat fighting over customers, fighting over territories or fighting over projects.
00:35:43
Speaker
That I just don't see ever working out. What would you say to a founder or ah CFO or someone who they have typical challenges in their business, you know, normal sales, culture, whatever else, um, maybe they approached you about profit sharing. Maybe they didn't. You're speaking at a conference.
00:36:09
Speaker
What, What's your elevator pitch or your hook or, you know, the one thing, if you take one thing from this, this is what you want them to know so that they start themselves down this journey.
00:36:23
Speaker
I would ask them a question and I would say, if your team thought, cared and worked like you did on this business, what would that change for you every day?
00:36:36
Speaker
And you're going get a lot of answers there. But all those answers that they give you is their reason why they should have a profit sharing program. Because that's the gap that it bridges.
00:36:47
Speaker
That's, I mean, i have worked a lot with founders and in particular in the startup space and, you know, plenty of startups of any kind, technology, trades, whatever, plenty of them.
00:37:06
Speaker
by one metric or definition or another, don't necessarily go anywhere. And I'm kind of using air quotes around go anywhere. Whether you run your business for 15 years and you just keep bumping into a ceiling of three people or 10 people or whatever, and then you're not able to sell.
00:37:27
Speaker
and so you kind of just liquidate the business when you decide want to move on, retire whatever, or plenty of tech startups. you know, they have whatever funding they need, friends and family or bootstrap and, you know, they never get traction.
00:37:43
Speaker
But
00:37:47
Speaker
Regardless of where you come from, you know, what kind of business you're in I think a lot of founders in particular, but also middle managers and other people certainly end up in this place where they're questioning, why do I have to do everything? Am I the only one who thinks around here?
00:38:11
Speaker
My employees are a bunch of children, any number of things. And I often think to myself, much like what you said ah couple of minutes ago, that yes, there, it takes two to tango or however you want to describe it. And culture is a real thing. It's not just one person that defines culture and all that, but There are so many people who really do desire have teammates with them and to have others that you really feel like they're rowing equally as hard as you and that they're bought in.
00:38:50
Speaker
And yet there's sort of like a veil between that dream and then the ability to plan or the visibility to there actually needs to be a plan. And I think you were kind of talking about that as well. These ideas of, well, maybe I'm going to get married or have kids, but yeah how are you going to get there? What are the steps?
00:39:13
Speaker
Because you got to start doing the work. Otherwise, It all remains a dream. And they the current reality remains just as much of a pain today as it was yesterday.
00:39:25
Speaker
Yeah, correct. So I have two two thoughts on that. Profit sharing for one, we've but we've talked about this. I got a whole book you can buy on Amazon for 10 bucks, right? But one thing I see that you talked about these businesses that don't go anywhere, right? You know, they reach this or how about they reach a certain level of success and then they kind of just seem to stop and then they'll stay there for a while. And what I'll see is they lose interest and then they'll kind of get distracted and the whole thing kind of unfolds and unravels in one way another, right?
00:39:59
Speaker
What I would like to see more for business owners are leaders, you know, C-level type leaders, mid mid-level man managers, anyone that wants to excel in whatever role that they're at and in leadership is this pursuit of self-education, right?
00:40:17
Speaker
We are not reading enough as a society to help ourselves. And I can't tell you the value that I've gotten from a $30 or $10 book on Amazon. I actually just listened today.
00:40:30
Speaker
i have eight children, Eric. I've been a dad for almost 18 years. Just today, just for the fun, I was cruising through Audible and there's a book that popped up as a sponsor. It's called, uh, by James Patterson.
00:40:44
Speaker
It's like number one, how to be the number one dad. And it's one hour, something like that. Number one dad or, and it's one hour. And, yeah and I just, you know, it was one credit on my Audible account. So I'm like, I'm just going to listen to this. And it was, it was really simple.
00:41:01
Speaker
But I learned something there. Like my oldest son turns 18 next month. And I learned like two or three things that I thought, I'm going to do that tonight. Right. I'm going to do this with my daughter. That was a good idea for this son.
00:41:14
Speaker
And it took me, I listened to it on my way home from work yesterday. I listened to on the way into work today. And I finished it during my lunchtime, checking on a job site. And I'm going to be a better dad but today than I was 12 hours ago.
00:41:30
Speaker
And I think in society and leadership, no matter, even if you're not a, even if you're a minimum wage worker, somebody else, you can learn these things to deal with your, your parents, friends, your future spouse, your, your dating.
00:41:45
Speaker
You know, there's a whole, didn't want to get into dating. haven't dated in a long time. Thank God. And, but there's all these things about relationships that we can do to improve ourselves. And we just don't go after it enough. We don't think know what's out there, but there are, there's amazing authors, amazing stories out there that we could, people are sharing real life experiences.
00:42:06
Speaker
And part of me writing that book, what really motivated to write this book was if I had this book 15 years ago, how much time and heartache would have this saved me?
00:42:17
Speaker
If there's one business owner, that buys this book and actually learn something from it because of just from what I've learned from all the authors and business leaders that I've read about, if I can just pass that torch a little bit to somebody else, that's a pretty cool feeling.
00:42:33
Speaker
And Why not? Right? we're We're on this planet for a short period of time. If we could leave something to help someone else out, that's as a human being, that always feels good. I don't care who you are. It feels good to help others.
00:42:46
Speaker
And so many people have helped me. These people don't even know who I am, but I've read their books and I pick up little things here and there. And I get way more out of reading a book than cruising Instagram or TikTok or screwing around on something that doesn't help my ah family, doesn't help my children, that doesn't help my team members.
00:43:04
Speaker
So People need to be reading. I think leaders are readers. Good leaders are readers. I totally agree with you. And I realize that there's some confirmation bias here because I read ah ton. I think I looked at Goodreads yesterday or today, and i'm I've read 94, 95 books this year, a mix of audio, ebook, paper.
00:43:31
Speaker
I make a lot of notes, though, which does differentiate me from some folks that, you know, it's like in one ear and out the other, but right there are things like, ah forget the studies, but there have been studies that people who read more fiction are, tend to be more empathetic because in fiction, you get exposed to the character's inner world.
00:43:56
Speaker
And so you just get more practice Then, you know, for when you go out into the real world and your spouse or that guy in the other car who's honking at you or whatever, you get a little bit of practice.
00:44:12
Speaker
with thinking, well, what might that person be thinking? What might they be going through? Now, I don't know at the moment off the top of my head, how much success, how much more success you might have with empathy, but I find that really motivating.
00:44:28
Speaker
And then also i mentioned culture at one point, you know, the culture is a process of social learning, you know, social or society is just a group of people.
00:44:41
Speaker
And so if I touch that hot stove, well, then when I tell you, hey, if a stove is hot and you touch it, you might get burnt like this, you know, and I don't have a burn on my hand here, but let's just imagine that I did.
00:44:56
Speaker
Well, suddenly you don't have to experience it in order to have that knowledge. And now it's my wisdom because I've experienced it and it's your knowledge, but those are simple things to pass down just like one plus one equals two. Yeah.
00:45:11
Speaker
You don't have to experience a lot in order to know it. And think of all of the lessons out there. And you've, you know, passed on a few of them.
00:45:22
Speaker
We are close to time. So I wanted to be so that I don't rush us wrapping up here. i wanted to ask you about one thing.
00:45:33
Speaker
You, two things actually. So i think you race cars. Is that right? I do. Okay. Yeah. And then I think I also saw maybe a month ago or so, it looked like it was at a race, but do you have a business that does some service or support at events? Like, was it, uh, porta potties or Santa cans or something that nature? I, uh, that's fun. Okay. So the racing, so my father raced,
00:46:06
Speaker
when I was a kid and I grew up and going to the races, my mom would take us and we'd watch my dad, my uncle. I had uncles on both sides of the family that did it. It was, it's just, it's a hobby, right? It's like basket weaving, but way cooler than basket weaving, my opinion. Right. And they would drag these cars out of the junkyards and put roll cages in them and then drag them to the track and race on a dirt circle.
00:46:32
Speaker
And as a kid, the, the noise, the horsepower, the crashes, right? These guys were like celebrities, right? They were, they were Superman and Spider-Man and it was just so cool.
00:46:44
Speaker
And then, ah so it's a family hobby. My son does it. My daughter does it. I've actually built a race car with four seats in it to give other people rides and And my kids rides, I'm trying to get my wife in there. My wife has raced a car before.
00:47:01
Speaker
And, uh, so she's done it too. And so it's kind of our, our family hobby that my father got us into. And the rumor is his dad did it, although we don't have any proof.
00:47:12
Speaker
So my son would be a fourth generation racer, which is kind of cool. And i I posted a picture at a racetrack of the Porter Potties because there was a two-day event where a lot of guys would camp out. you know we race on Friday night and then we camp out and then race again Saturday night and go home.
00:47:31
Speaker
And i I was talking about how important it was to clean the Porter Potties out for a two-day event like that. But it's funny that you mentioned that because I've always looked into the Porter Potty business ever since COVID, you know, job sites would have a porta potty on them all day long. But since COVID now, now there's a sink, right? So people can wash their hands. We became much more aware of of washing your hands all the time. And then a lot of times I'll see more sinks at job sites than toilets because they're putting them
00:48:02
Speaker
throughout the job site so guys can wash their hands more often. I don't know how prevalent that is now, five years post-COVID, but it's so it's always been. and then one of my companies is a plumbing company, right?
00:48:15
Speaker
So, you know, the number two rules of being a plumber is is paydays on Friday and don't bite your fingernails. So I feel like I'm already close in the sanitation game anyway as a plumber that ah providing toilets and having the tanker trucks and all that stuff would be a natural fit that we could do. But I don't currently own part of that business.
00:48:38
Speaker
The other thing that interests me about that business is kind of the monthly reoccurring revenue. You know, someone needs two toilets at a job site for a year. you know, you build them every month.
00:48:49
Speaker
My car wash has a monthly subscription model that does really well. So i kind of like that reoccurring revenue type businesses that I've and i dabbled in.
00:49:01
Speaker
And i look at I look in those spaces sometimes. Yeah. Yeah. So that's our, that's our family hobby. Uh, no one really asked me about that, but, um, it's, it's, it's my escape.
00:49:13
Speaker
I, you know, when a helmet goes on and that green flag drops, I can hyper-focus on driving the car, right? I'm not thinking about anything else in life or work or stress or, and it's, it's a, it's a cool thing to share with my kids and to do it with my dad. I, super enjoy and the whole family enjoys it. My mom's goes out there and It's just fun.
00:49:34
Speaker
It's a lot of fun. I recall seeing, i think it must've been that post you were talking about on Instagram and it was something like you or your uncle or but somebody said to maybe one of your kids, do you smell that?
00:49:52
Speaker
And then you put like a little sick face emoji or whatever. And then whoever it was said, it smells like money. And One, it was funny, but also you reminded me of a friend of mine who is a lifelong entrepreneur.
00:50:10
Speaker
He said something to his kid. I'm going to forget some of the details, but the story ended with entrepreneurship is like scooping dog poop, that, you know, some days it's important enough that that person will pay you $1,000 to scoop that one pile of poop because they need it gone.
00:50:37
Speaker
And other days you just have ah a lot of poop on your hands and nobody is around to take care of it. And yet, you know, you still have to, nobody's around to pay you. And yet, you know, you still have to take care of it.
00:50:48
Speaker
entrepreneurship is about finding a need and doing it. Really, that's what business is in all cases. Whether someone's toilet's not working or they need their porta potty cleaned out or a new deck, you know, there's a need.
00:51:03
Speaker
And it's our jobs to service them, fulfill them. And the better we are leading our teams with relationships, I think the more successful you're going to be doing whatever it is.
00:51:15
Speaker
Rob, I appreciate you being here. I want to ask you two things as we wrap up. And and actually, I'll make a statement first. i would love to hear you present somewhere. You mentioned, I think, speaking or whatever.
00:51:30
Speaker
i think that you have so much more to say. And, you know, whether you write the next book or ah catch more podcasts that you're on, think think that the information that you presented in your book and also just your presentation causes me to want to hear ah lot more. So I appreciate that. Thank you. Maybe you'll do your own podcast someday if you don't already have one.
00:51:56
Speaker
So now the questions, where should people go to connect with you or look into your book or anything else? And then you have any parting words of wisdom or things that people should check out or think about?
00:52:11
Speaker
Yeah. So most people, you can find me on Facebook and Instagram, Rob Gallagher. I'm hanging out there posting about my kids and racing and work stuff here, there, here and there too.
00:52:22
Speaker
Uh, the book is on Amazon. It's ah called profit sharing, the power of shared success. And then our website, which is leave done.
00:52:33
Speaker
I think there's some little final tweaks on there is called profit X.co.com. And we should have some. So by time this this airs, that will be all fully operational. But with the book, the book goes over the story of profit sharing, the 10 rules.
00:52:49
Speaker
And then i realized it wasn't enough. I don't feel like you can put everything in a book in efficient ways because most business leaders, I know for myself, I don't want to read a six hour long book about how to do sales, right?
00:53:03
Speaker
There's a lot of these books have a lot of fluff in them. and I like the books. I'm going to name drop somebody right here because I think he's a great example of it. And I don't know how many pages his book is or how many hours it is to read. But Dan Martell ah just came out with a book called Buy Back Your Time.
00:53:20
Speaker
And I mentioned that book and I love that book because he just tells you what to do and why. And there's not a lot of fluff and theory. It's nuts and bolts, right? And I wanted my book to be like that, where there's enough stories in there for the why.
00:53:37
Speaker
but then the nuts and bolts to get it done. I'm a mechanical person. Uh, all my companies have a lot of nuts and bolts and levers and, and switches in it. And that's just how my brain works. I tend to enjoy math too. I'm one of those weirdos, but, uh, that's, that's,
00:53:56
Speaker
So because of that idea, we we developed a course online that business owners can buy. It's 27 videos and it goes through all the things you need to do profit sharing.
00:54:06
Speaker
It goes through the rules. I have example launch speeches in there, the spreadsheets that we use, all the nuts and bolts, right? Exactly how to do this. And I keep thinking back to me in 2014, what I needed to do profit sharing and how much more money could I have made and how much money could I have saved knowing what I know now and some of the good team members that I've lost because of how poorly it happened in the beginning. They would still be here being part of the winning formula.
00:54:38
Speaker
So all that is in a course out there on Profitex.co and parting words to any, you know i think about the new business leaders, the new business owners, there are people thinking about doing it.
00:54:51
Speaker
Become a reader. Leaders are readers and don't, there's never a perfect time, right? Don't, this was me, right? Oh, one day I'm going to have a business.
00:55:02
Speaker
My perfect time was shoved down by throat by a recession and a job loss, right? And I think by reading and going out there and reading about leadership and reading about your field and just learning about what you learn, whatever you're gonna be doing, right? So if you're going to be a tech guy, you know, how many videos on YouTube about programming are there that you can be absorbing instead of movies and social media? There's all these things that we can do.
00:55:29
Speaker
The amount of it, I tell my kids this, My son wants to be a welder and he has his hobbies. He likes to fish too. And he races cars with us too. I'm like, you could watch YouTube videos on welding.
00:55:41
Speaker
You know, these there's a lot of welders out there explaining all this cool stuff. Absorb that. You will learn things and you'll become a better welder for it one day. So the free information that's out there is incredible.
00:55:54
Speaker
we I didn't have that when I was his age. We need to use that stuff. If you truly, truly want... this life. And if you feel called to do it, you have to be, you have to have this relentless pursuit of self-education.
00:56:09
Speaker
Trade schools are great. Do I think you need to go to college get a master in business administration to be business owner? Absolutely not. There are $30 books out there that can teach you just as much stuff and do it for a couple years. You'll know way more than those people know anyway.
00:56:26
Speaker
Experience is invaluable and I wish everyone the best. Thank you. And that's awesome. I completely agree with you. So there is so much more that I would like to ask you, but for today, we'll leave it there. So thank you, Rob, for joining me. I'll have links in the show notes and hope that anyone who listens to this looks you up.
00:56:48
Speaker
Awesome. Thank you, Eric. That was fun.