In this episode, Rob Gallaher and I discuss the importance of self-leadership, the mechanics of implementing a sustainable profit-sharing model, and what it takes to create a culture of shared success. “If you want your team to act like owners, give them a reason to care whether the business wins or loses.”
In this powerful episode, I sit down with seasoned entrepreneur, CEO, and author Rob Gallaher to discuss the importance of self-leadership, the mechanics of implementing a sustainable profit-sharing model, and what it takes to create a culture of shared success.
We explore how Rob transitioned from micromanaging every detail to empowering leaders at every level of his businesses. He shares the exact frameworks that helped his team members start thinking—and acting—like owners, along with the hard lessons he's learned along the way.
This episode is filled with practical insights for founders, managers, and anyone interested in profit-sharing or building a culture of shared success.
“If you want your team to act like owners, give them a reason to care whether the business wins or loses.”
“[With this model] I have seen monthly profits triple. I just don’t know another way to make that happen as quickly. If there is, let me know!”
—
Rob Gallaher is an entrepreneur, CEO, and author with over a decade of experience building and leading successful businesses. Recognizing the power of aligning employee interests with company performance, Rob has become a passionate advocate for and expert in implementing effective profit-sharing strategies. Through years of practical application and refinement, he has developed a successful model that fosters a collaborative, motivated, and productive workplace. His book, "Profit Sharing: The Power of Shared Success," provides a comprehensive guide for business leaders looking to leverage this powerful tool to enhance company culture, boost productivity, and drive significant growth.
To learn more about Rob and his course on profit sharing, visit profitx.co.
Céline Williams: [00:00:00] I'm Céline Williams and welcome to the Leading Through Crisis Podcast, a conversation series, exploring resiliency and leadership in challenging times. My guest today is Rob Gallagher, an expert in profit sharing strategies and author of profit sharing the Power of Shared Success. Welcome, Rob.
Rob Gallaher: Thank you, Céline.
Happy to be here.
Céline Williams: I'm extremely interested to talk to you about this today because even. From the get go, I have a thousand questions about profit sharing. But before we go to that, I'm gonna start with a question I always start with, which is the name of the podcast is Leading Through Crisis. When you hear that phrase, what comes up for you or what does that mean for you?
Rob Gallaher: What comes to me is being a leader that makes the difficult decisions every day to navigate. You know, business businesses, people are always gonna bring up problems and challenges. The more you grow, the more of those you're gonna find. And so as leaders, we have to continuously [00:01:00] have that pursuit of self-education so that we're ready for the next problem, the next crisis.
Céline Williams: There is no shortage of crisis.
Rob Gallaher: Yeah, exactly. I tell a lot of people that if you don't have a relentless pursuit of self-education as a leader, you're gonna have a difficult time winning every day. Whether that's books or podcasts or classes, conferences, we have to constantly be working on ourselves.
Céline Williams: Yeah. I love that there's such an emphasis for you and it's always interesting 'cause we all have different associations with the phrase, but I love how clear you are on the self-leadership when you hear that. I think that is very indicative of the kind of leader that you are.
Rob Gallaher: Thank you. I found that one thing I've learned from myself was fitness and health.
The healthier that I was, the more capable I was of leading others, you know, just having energy, having mental [00:02:00] clarity has greatly improved my personal leadership. Or just my patience level, feeling better about my health and myself. Having that energy to handle these issues has been a huge part of my personal journey as far as leadership goes.
Céline Williams: I could not agree with that more. And it's always interesting how, for so many people, it takes a health crisis or a burnout for them to think, oh, maybe I should spend some time on my own health. and it is really unfortunate for a lot of people.
It isn't until a crisis that they think about that.
Rob Gallaher: Yeah. I can tell a difference if I have lunch at McDonald's, how my afternoon is gonna go, like how I'm gonna feel. I'm gonna feel sluggish and tired and not fueled. Versus having, chicken and rice and some vegetables, something clean.
Maybe I made it at home. I feel better and I have more energy. my mood is brighter. So those little things, do add up, but there's a lot more to it than just fitness and being healthy. But that's a [00:03:00] great place to start.
Céline Williams: Yeah, it's a key element of self leadership, right?
You can't learn and grow and be there for yourself and your team if you're not taking care of yourself. it is the foundation whether we like it or not, and a lot of us don't like to admit it. It is still the foundation of all of those things.
Rob Gallaher: Yeah. My father-in-law told me many years ago that you have to take care of the machine
Céline Williams: because the
Rob Gallaher: machine's not working.
It cannot help anybody else.
Céline Williams: Isn't that the truth?
Rob Gallaher: And as a father, I think that's what he was talking about, was just being, you know, a spouse and having children. If you're not taking care of yourself, how are you supposed to lead these kids or lead this family or take care of them and be a good dad?
Céline Williams: it's a great point.
Rob Gallaher: Yeah.
Céline Williams: Yeah.
Rob Gallaher: Same thing in business, same thing with your teams.
Céline Williams: Isn't that the truth? before we started recording, everyone who listens to this knows that
We have a little pre-chat, and I know that your team has grown and the businesses you run have grown. So you have a lot [00:04:00] more people now working for you than you did say 10 years ago. I am curious how you have changed or how you think you have, 'cause maybe you don't know for sure, but we have a perception of it.
how you think you've changed as a leader how you show up differently, what's working, what hasn't worked? I'm curious about that.
Rob Gallaher: That's a great question. I think when I was. The micromanager, I think how most business owners start, right? Like I was ordering the copy paper,
Céline Williams: right? Mm-hmm.
I
Rob Gallaher: want to see the prices, the brands, and I, you know, I was figuring out what coffee brand we were gonna have. It's just these little silly things that don't really matter. And I think most business owners, when you're by yourself or you have a very small team, you're the CEO, chief Everything officer.
as I've grown, I've learned to let go of a lot of those things, Which has freed up my time and given me the ability to work on the business and not always in the business.
Céline Williams: And I
Rob Gallaher: think nowadays [00:05:00] there's not a lot of stuff that I have to do every day that's in the business. I have a lot of projects I'm working on for future stuff, but my current businesses that are running, everything that I do is on the business.
what I've changed and learned is patience. I am the leader, but I'm working with another leader. These people are making decisions. it becomes more of a guide as opposed to a command,
Céline Williams: if that
Rob Gallaher: makes sense.
Céline Williams: So
Rob Gallaher: I try not to answer questions directly.
Like if they say, Hey, we want to change soap brands at the car wash. I'll say, okay. Why do we want to change? And then I have this exercise where I want 'em to, to get a piece of paper and put a line down the middle of it, and then do the pros and cons for the change. I want them to believe and understand that the change they want to make is their choice and give them power to do that.
But I want them to understand all the positives for that choice and the negatives. There's, you know, 'cause every time you make a change, [00:06:00] obviously we're making changes for. For good, for more success, right? But there's usually stuff that we'll have to deal with, maybe even if it's short term, to make that change happen.
People don't like change in general, and so there's always some kind of struggle or friction when you're leveling up or trying to improve an area.
Céline Williams: Yep.
Rob Gallaher: So patience has been a huge thing for me, and being a sounding board. when people come to me with problems, not just giving them what I think is the quick, easy answer, but saying, Hey, this is a problem.
Bring me three solutions and let's talk about all three of those, and then I want you to decide what you think is the best solution. I don't always agree with what they come up with, but I typically will let them run with it, especially if it's not Gonna cause a lot of damage.
They're gonna learn a lot from that. So patience and giving people the power to lead on their own.
Céline Williams: Yeah. I wish I had more [00:07:00] patience and I think those are both incredibly important and it's, I think, change, I think one of the hardest things for leaders. Full stop, let alone entrepreneurs who are also running a bit.
there is a difference if you're a leader in an organization where it's not really yours, Versus when you are an entrepreneur and it's yours and you feel some sort of ownership over whatever it is. I think one of the hardest things to do is to not just tell people what you think is best.
'cause you have context or you, well, we think we do. I'm not saying we don't always right, but we think we know what the right answer is. shifting from telling someone what the answer is, to offering a different perspective and asking them how that lands
Even something like that is such a huge difference for the other leaders than saying, well, here's the answer. go do this.
Rob Gallaher: Because that's not leadership. you're just a boss and that's why they're coming to you with that question because you're gonna give 'em the answer every [00:08:00] time.
And when I had 10 people, that's okay. Right. You know, because I, there was only 10 questions a day. But when you are at 50 plus, you cannot be that person. you need thinkers. You need someone to care like an owner does, they need to have that mindset.
Céline Williams: Yeah. Which. Takes us into this idea of profit sharing really well, because I would imagine
from my limited understanding, one of the things that is extremely interesting about the idea of profit sharing is that sense of ownership that comes with it. I have a lot of questions, but I'm going to ask a little bit about your story, when it comes to profit sharing and how you got into this.
I imagine that is woven into it and will likely bring up new questions and answer some of my questions.
Rob Gallaher: Yeah, so my business started out of the housing crisis in oh eight and oh nine. I was 25 years [00:09:00] old, I lost my job. Nobody was hiring. if you were in the construction trades or any kind of service industry, it was tight, times.
I started and was very successful from day one. we never had an issue making money growing or getting clients. I was the guy that started with no overhead. I was very aggressive, very hungry, and a lot of my competitors were. Giving up frustrated or had large amounts of overhead so they were struggling or going outta business.
So it kind of opened up a lot of roads for fast growth. Three years into my business, I was working 60 to 80 hours a week. I had 30 employees and I was gaining weight. I was looking like crap. I was not spending time with my kids. Not on purpose. Just the business was the number one priority.
My wife was extremely supportive, which is probably how I got through all that, even though we weren't seeing each other that much. And so I just thought, you know, there's [00:10:00] guys, I know I had some family members and you know, subcontractors, I dealing with customers that were owned their businesses for 20 plus years.
I started asking them how they do it what they do and how they got there and just learning from other people that have gone down this road way before I did I heard a lot of. Complaining, you know, good employees are hard to find and you have to work really hard every day and babysit them.
And just a lot of negativity around team members. And I didn't like that because there was people on my team that I really liked and I saw a lot of potential but I didn't know how to engage or be different than everybody else. So I went down this road of reading business books, and listening to business podcasts and just making sure that I knew the basic one-on-ones and I was doing everything correctly in that journey.
You know, that's where I learned about SOPs and kras and having a mission statement and core values. You know, all these things that people talk about all the [00:11:00] time. I didn't have any of that stuff, so I started implementing a lot of this stuff into my business. And taking it very serious. But during that journey, I stumbled across this idea of profit sharing, it was a page and a half in a book talking about doing profit sharing.
but it was enough to spark this interest. So I started Googling profit sharing, and there's a couple other books that mention it. I'd buy the books and read those and get a little bit more, or maybe the same amount of theory about it. There were podcasts talking about profit sharing, but nobody, I couldn't find anybody that was doing it, that was willing to share exactly what they were doing that was frustrating.
So I decided that I'm gonna do it. I'm gonna figure this out. I'm going to, I don't know how to do it, but I'm gonna try.
Céline Williams: And
Rob Gallaher: I took, two of my leaders at the time, brought 'em into my office. We sat down, I said, I wanna do profit sharing. So then their interest, of course, your team's interest in profit sharing always is high because that means they're getting a piece [00:12:00] of the profits, right?
Céline Williams: Yep.
Rob Gallaher: So I'm like, we're gonna do profit sharing, but I don't know how to do it. All three of us are gonna write it down, we're gonna figure it out. We're gonna put some metrics in there. We're gonna figure out a percentage to share. And that's how it started. That was end of 2014. I cut a profit sharing check the first quarter of 2015 and it was an absolute disaster. I was like, okay, well I just spent, I think it was like seven or $8,000 and I was like, I just spent 8,000 bucks and one guy was upset, like eventually he left the company. I think it kind of sparked this, this disinterest in him. 'cause my team didn't, they thought we were making millions every day.
There's all these preconceived notions about it. There's a lot of things that I get into in my book that I learned the hard way. But I didn't give up and we fine tuned and made adjustments as we went and we learned a lot of things of how to actually do it, like the step by [00:13:00] step, how to review your financials, what's important to know about your financials, to do this correctly because you can over profit share, you can under profit share.
Both of those things are bad for the business. You cannot communicate your plan clearly. You can be spending money, sharing profit without getting any ROI on it. as business owners, we want an ROI on everything that we do, We know that if our culture is better, we make more money.
We know that if our product's better, we make more money. If our marketing plan is better, we make more money. So we're constantly spending money on things. We want to see that return. It is a business. That's the whole reason why we got outta bed today was to make money and provide for our families.
And it took about three years of trial and error. And I think every time we did it, we got better in 2018, we made some wholesale changes that really tied it all together and started moving the needle in the business. It really unified our [00:14:00] team.
Leaders to think care and act like owners do. It's like having a partner that is on the same page as you but doesn't actually own anything, right? We all hear the partnership horror stories, I found myself in this room of partners that just wanted the business to win, and the more that I won, the more they won.
it created This culture of winning, it created this team that was united and in the last seven years, my business has gone from 30 people to 130. I do it, I have, I'm in multiple industries and extremely powerful and rewarding all at the same time. And we continue to do it and who knows what's gonna happen the next five, 10 years.
Céline Williams: I think that's incredibly cool. I don't love this for you, but I love this for my ability to ask questions about what didn't [00:15:00] work. Right at the beginning first of all, I think it's really, admirable that you even admitted that. 'cause lots of entrepreneurs don't wanna admit the mistakes that they made or that something didn't work because we look at the end result.
I always pick on the big tech companies. I know you're in California, so I'll pick on meta or Facebook we look at the end result and everyone's like, oh my God, that's so impressive. Look at what they created, what they don't talk about enough in my opinion, is like, Hey, we made so many mistakes.
And they, of course they did, but we don't know that. So people go, well, I just have to be perfect to get there. So I appreciate you. Noting that first profit sharing. Check that you cut did not go as planned. And I'm curious if you can talk a little bit about what didn't work or why it didn't work.
sometimes it's not the what, but the why behind it is what the problem might have been.
Rob Gallaher: Yeah. I got a great example of this. when we first started. We were gonna do it quarterly.
Céline Williams: Yep.
Rob Gallaher: And 'cause you hear that quarterly bonuses, I mean, corporate America. Oh [00:16:00] yeah.
they do a lot of financial decisions on the quarter. So when we sat down that first day, naturally, we didn't think to do anything different. You know, it was gonna be by the quarter. Well, what I learned was my landscaping costs, my rent, my car payment, my grocery budget, nothing is quarterly.
And so why are we trying to quarterly reward somebody for nothing that they do quarterly in their lives. that was a huge shift that we stumbled across probably in 2017, profit sharing, you want profit sharing. These business owners that are listening, you want 'em to affect your team's daily decisions, their daily activities, what they're doing.
From 8:00 AM to 4:30 PM That time that they're working for you in your office or out in the field, whatever you got going on, that's what profit sharing is supposed to affect. If you are profit sharing in the end of the quarter, in March, why are they thinking about it in January? [00:17:00] Well, they're not thinking about it in January or February.
They're gonna start thinking about that profit sharing bonus the last two weeks of March. And it's just a waste. I think it's a waste. I, I have a friend who has a very large business here. he does quarterly bonuses and every time I get a chance I'm like, man, you gotta stop. You gotta stop the quarterly things because you're throwing money down the drain that money you're spending, you can create such a bigger ROI on that.
So I figured out if their bills are monthly, why are we not bonusing out monthly? We're trying to promote this daily activity. Let's affect their monthly financial needle.
Céline Williams: Yeah,
Rob Gallaher: Let's give them something concrete that they go well. I got all my normal bills, right? I got my salary that takes care of all that.
My wife and I want to go to Disneyland with our two daughters. What can I do this month to make that happen this month? How can I help the team win to make that profit sharing check as big as possible to go to Disneyland? So that was a huge shift, and I think that was [00:18:00] one of the biggest decisions we made where everyone goes, wait a minute, every four weeks.
I'm gonna get a check based on my performance, my team's performance. 'cause we wanna create that unity you. You wanna avoid the commission type programs because you're creating these lone wolves that don't wanna work together. they're all thinking about their commission checks. You want to create a unified team that if we all win and work together, we're all getting a check.
that was one of the huge mistakes that I made. The other thing that we did in the early days is if, let's say we, we did okay, and the there were profit, they, we did qualify for profit sharing, but it wasn't a lot. I would actually cut checks for like three, $400. And when you make 80 grand a year, $400 does not move your needle enough for you to think about it every day.
So we created a minimal threshold of a thousand dollars. Our smallest [00:19:00] profit sharing check has to be a thousand dollars. there's just something about a grand one K that thousand bucks that, that term, that four digit number that just seems to register with people more than 500 bucks or even seven 50.
And so that really got the monthly day, the daily activities fired up and spiced up where people started thinking about this stuff. one of the things I was trying to affect was. in my construction business, an estimator that goes to four job sites a day, he's spending hours in the car.
What is he doing in that car? He listening to the radio zoning out. Or maybe he could listen to a podcast about sales or culture or leadership something that would benefit his position, your company, but maybe also benefit his life at home. You know, if, if he's a father, maybe you can listen to a podcast about fatherhood.
If he's, you know, maybe his hobby is woodworking. He could listen to something that helps [00:20:00] him with that. People that are happy at home are better team members, and so it just promoted, I just, and I talk about this stuff like, Hey, let's not waste any time. Let's not zone out. Let's stay engaged.
Let's do something to help our team either help ourselves or help our team, or probably will do both. And once we started hitting on some of these big things It really like supercharged the business because I'm always motivated. Your owners are motivated, right?
Like, let's do a die for them. We don't have a backup plan, we don't get unemployment, we don't get any fallback plans, like when we go down, we go down hard. And so how do you get your team to think and act the same way? Like every minute matters. Every phone call counts. Every job is a big deal.
And so by those two big things, the profit sharing being at least a thousand dollars and then getting it every month, were some of the things that I would tell any business owner thinking about this, start there, right? it [00:21:00] took me three years where I felt like I was really successful.
I think you can do it in three months now with just these guidelines and rules that I've, that I've come up with. Not come up with just outta nowhere, but like experienced. Real reason why you should follow this way.
Céline Williams: Yeah. So I'm curious about a few of those guidelines and rules, but before we do that, I'm gonna ask this question.
I am sure there are people listening who are Like, can I do that in my business? is that even possible? So before we get into any of the rules, I'm gonna ask the question. What are like what types sizes? I like what businesses does this work for?
Yeah. And or maybe you're like, it works for most businesses, but it doesn't always work well for this type of business. I'm not sure what insight you might have around that. 'cause I guarantee there's curiosity.
Rob Gallaher: Yes, absolutely. there's three things you need before you can implement profit sharing.
Céline Williams: Perfect.
Rob Gallaher: Yes. So number one, [00:22:00] you need to have a business that is making money a little bit, right? if you're not making money and you can't cover payroll and you don't have a product, you're not ready for profit sharing. Okay? So, you know, maybe a year in or six months in. You need to have a bus and you also need a team member, at least one person to share the profit with.
If you're a one man show, you don't need to worry about profit sharing either 'cause you're doing all the work. You get all the rewards. The second thing that you need is leadership. Because I've found leadership is a big part of it because when I started out, this is literally what happened.
I had those two leaders in my office, we drew up this plan. Every Monday or Tuesday, back then, whatever it was, I had an all hands on deck meeting with all the leadership as anyone that was not in the field was in this meeting. I did the regular meeting that we did every week, and then at the end of it I go, okay, by the way, I've enacted this profit sharing program.
If you guys [00:23:00] work harder and we make more money, I will share a chunk of that profit with you. And, we'll see how this goes. I didn't seem very sure of it 'cause I wasn't right and I was, kind of wishy washed. I didn't give, a lot of details and then I walked out to my surprise, three months later, 'cause we were on the quarterly system back then, nothing changed.
Our numbers didn't really change. The attitude didn't change, the culture didn't change. And so I was like, okay, I need to fix that. So leadership clarity is one of the rules, To be a leader, you have to be somebody that people wanna follow, right? You can't be going to Vegas every weekend, gambling all your money away, partying too hard, showing up Monday in the middle of the day, just like not a good practical human being.
People want to lead. People wanna follow good people, right? They want an example that's part of leadership. you gotta have a business that makes money. You need to be a leader. You need to be willing to. Handle conflict. You need to be willing to stand in front of the room with all your people and [00:24:00] talk about hard things and talk about winning and what it takes and what it looks like, and then do the work, be the example.
I never ask anyone to do anything that I haven't done already or willing to do. the third thing that you need for profit sharing, this is probably a big one for business owners out there, especially the smaller businesses, is accurate accounting. I cannot tell you how many people reach out to me and I'm like, okay, let's see your, send me your p and Ls.
Oh, well, they're four months behind and we kind of do 'em every six months and check on 'em, and I'm just like, oh my gosh. How do you even know what's going on? Four months behind, you know, financials are like the wind, the hitting the cell and the ship. You need to know the direction that wind's coming from, the temperature, the humidity,
you know, there's storms in the area that are gonna affect this wind down the road. you have to have accurate financials because that's what you're sharing. You're sharing the money that you're making, you don't know how much money you're making or where that money's coming from, and [00:25:00] having a good thumbprint on that flow, you, you're not ready to profit share.
if you're a business, and I haven't found a business that this would not work for, so I'm gonna say every business can do this. if you're making some money, you're a leader. You're working every day to be a better leader, So you're a leader today, but you're always constantly working on it.
And you have a good accounting system and process in place. You can definitely put profit sharing and reap all these rewards of supercharging your success and unifying your team.
Céline Williams: thank you that's super helpful. I appreciate that. that gives people guidelines, right? Like that gives 'em a sense of,
Rob Gallaher: yeah.
Céline Williams: If they don't see themselves as a leader or they're not doing the work, it gives them the, motivation to do some of that or to have an awareness around it. and the financials and accounting. There are a lot of small, you know, this as well as I do. There's a lot of small businesses that [00:26:00] is,
Rob Gallaher: I mean, I personally.
I struggled with accounting the most, starting out. Luckily my wife, her father had had a few gas stations, so she was exposed to the accounting and helped her mom do the books growing up. So she was, that was an advantage that I had, even though I don't like accounting and sitting there and plugging in numbers, it's tedious.
Most business owners I talked to, it's what they like the lease.
Céline Williams: Mm-hmm.
Rob Gallaher: I have this business, owner, she makes sourdough and kimchi. Amazing chicken. this homestead type business. And she hates doing the books. She hates reconciling the bank accounts with QuickBooks, and she hates sitting down and doing this, because that's not why she started her business in the first place.
But it's so important. You know, my uncle told me when I started, he goes, there's three things, which is kind of where I get my, although I changed a little bit. He's like, you need a product. you're selling something, right? So if you're a doctor, you're fixing people. If you are a landscaper, you mow launch.
You gotta have something that [00:27:00] you're selling. You need to have a marketing plan for your business. You need to have some way to get this out there, some way to get customers. And the third thing for him was accounting. he told me before I started my own company, that's where everybody screws up.
I had this mentor in my life that was like, pay attention to this,
Céline Williams: Mm-hmm.
Rob Gallaher: This is important. from day one, I always paid attention to it. Have I been the best at it? I still learn every day about it. I go outta my way to learn more about it all the time, but it is the biggest thing. I see business owners screw up.
Céline Williams: Yep.
Rob Gallaher: everyone listening right now, double down on your accounting, double down on your understanding of it. You need to be comfortable with it. You don't need to be a CPA. I have a bookkeeper that works for me. I don't understand everything that she does, but I'm comfortable enough that I understand the end result of what's going on and what levers I can pull and push to affect these numbers.
Céline Williams: Yeah, I think that's, I don't think that can be emphasized enough. Right. And [00:28:00] I think it is. I agree. We don't talk about that, and I also do not like the accounting piece of things, one of the first things I did was hire an accountant, a bookkeeper, I don't have 150, 130 employees, and that was still one of the first things I did because while I understand it, I don't know all the ins and outs of taxes and all those things.
And so this way I can ask questions and have a lens on it, and I can spot when things are obvious, like if something is wrong or there's a problem, but I don't have to be in it every day. So often people wait to outsource until it's a problem and then it's a real problem.
the books matter, right? if you're not comfortable doing them yourself, or you don't want to learn it, then outsource it not only for profit sharing, but like. You're really stuck if you're not taking care of the finances.
Rob Gallaher: Yeah. Stop running away from it.
You gotta do it. Stop convincing yourself otherwise,
Céline Williams: yeah,
Rob Gallaher: someone's gonna listen to this podcast Céline [00:29:00] and call me in a month from now and not have their book straightened out. I promise this is gonna happen.
Céline Williams: Hundred percent. I have no doubt. I do wanna hear a couple of the,
Rules is not the word that you said. There was another word that you said.
Rob Gallaher: No, they're rules. They're, they're they rules.
Céline Williams: Okay, great. Yeah.
Uh, I could
Rob Gallaher: call 'em rules.
Céline Williams: I would love to hear a couple of the rules just to tease out to our listeners and viewers around what, you've learned about profit sharing.
Rob Gallaher: Yeah. rule number three is a good one to talk about, and it's pretty simple. It's make it obtainable. A lot of business owners, they have this mentality that, let's say that you're a landscaper and you got five guys working for you, and you're making $10,000 a month. Okay? Okay. Yeah. And you read my book, or you hear podcast and you want to put profit sharing system in your business.
So you read it and set it all up and your accounting's good and you're ready to go. You're geared up and then you go, this is a mistake. [00:30:00] You go, well, I want to see my profits. At $30,000 a month before I share any of it. This is my company. I built it brick by brick. I own everything. And if these guys are gonna get a piece of that I want to see, massive results.
Huge mistake. I've done this myself. Mm-hmm. I have, and this is kind of goes with goal setting, You set a goal so far out in the stars. It hides behind the moon and no one knows where it's at or how to get there. That goal needs to be obtainable. It needs to be feelable, and you need to help your team get there because it's not about, what I've learned is it's almost like a momentum building thing, profit sharing.
you're gonna announce this to your team. You want to tease it, make it easy to get, because they need a taste. Once they get that taste, then that's like, it fires it up. I want another bite. Okay, gimme the whole freaking plate now.
Céline Williams: Yeah.
Rob Gallaher: then let's order the [00:31:00] platter. Right? And now your team is on fire hitting these checks every month.
And when you start out, you know, say you're doing a thousand dollars deal, that thousand dollars every month that starts clicking, right? And they start rolling, it starts changing their life. You're directly affecting their monthly financial needle. Their spouse wants to go on a trip. Okay, I know how to get there.
We can get that extra 3000 bucks for this crew. So we want to go on, I know exactly what I gotta do. I'm gonna help motivate my team members. So we're getting there. I'm gonna ask my boss what more we can do. Mm-hmm. And so you, so starting out, that's a huge role. You know, you need to look at, and I'll go through this in the course down in detail about exactly how to set that threshold for your company to hit.
you need to keep it attainable. That's another rule. Another rule that I like a lot, and this is the one that people get curious about is rule number seven providing some kind of financial and wellness tool to your team. Some kind of training. I used, Dave Ramsey's, financial piece program, right?
He has an EveryDollar [00:32:00] program that it's like teaching your team how to do a budget and how credit cards work, how money works, how interest works, how to invest. How to, all these things that we know, but we don't do. They don't teach this stuff in high school anymore. How a credit card works, so a lot of adults are walking around not understanding what happens when they make the minimal payment on their credit card and how that affects their monthly finances.
A lot of people don't know how to do a budget, and so we're kind of in this mode of we get paid on Friday. I know this because I did this for many years. Hurry up and spend it before it's gone type mentality in life. And that's damaging. And then what I've seen is, there's two parts to this.
You have a team member that's financially stressed, not a good team member to work with, not a team member that's gonna come into your office and be focused on the company goals because they're focused on their problems,
Céline Williams: right?
Rob Gallaher: So helping [00:33:00] people with that part of their life and offering that to them.
They get that straightened out. They come into your office, they're focused on the company goals. The other part about it too is now you're gonna have somebody that's making extra money and then they're gonna blow it, which is fine. It's their money. Right? But what happens is, and I have a car wash, so I have a seasonal business.
This is a question I get to, how do you profit sharing a seasonal business? And why is this important with that? Well, I had a, I had a 24-year-old. He was a manager, assistant manager at my car wash, and he's getting these monster profit sharing checks that were probably close to half his pay every month.
Céline Williams: Oh, wow. That's significant. At 24? Yes.
Rob Gallaher: Yes, at 24 years old. Okay. Now he knows when the car wash business, when it rains, we're not washing cars. We don't make money. He does really well about seven, eight months out of the year. And then he doesn't get much profit sharing the rainy season. But what he did [00:34:00] was in the middle of August, in the middle of the peak of our season, he goes out and buys a Corvette because he's got money in the bank.
And I'm like, cool, cool. Corvette, I want to drive it. Right. And it was awesome. I was excited for him. Well. The rain came that year in December and it rained like 27 days straight. And so he didn't get all his 40 hours. 'cause we, I mean, I'm trying to work these guys and clean and do maintenance when it's raining, but we gotta be smart too.
And then he couldn't afford the Corvette payment. He couldn't afford the maintenance on it, and it was my fault.
Céline Williams: And
Rob Gallaher: he was upset at me and became a disgruntled leader in my company. I thought dawned on me, man, maybe we should talk to this guy about a budget, maybe planning ahead for this type stuff.
So 'cause, and then I think it was his age, a little immaturity where he was blaming me for this issue. He never said that out loud, but you can tell his attitude [00:35:00] shifted. He was disgruntled. So I've learned that lesson and that's part of one of the rules too. You if, if somebody's gonna be paid like an owner and have these influxes of cash that may not always be there, maybe they should have a little understanding of how to handle that in real life.
Yeah. And so I found that to be useful. another thing too is protecting the cash flow in your business. This is rule number nine where. This goes back to the accounting. Mm-hmm. Like you have to understand every business, most businesses have cash expenses every month that are not hitting your profit and loss statement.
For example, your business has an auto loan or an equipment loan, if your books are accurate, I don't know if this applies in Canada or how that works over there, but in America your interest payment, part of that loan every month is on your p and l. The balance pay down every month on that loan is not on your p and l, [00:36:00] but it's a real expense that your business is paying,
Céline Williams: right?
Rob Gallaher: And if you don't know those numbers and you're not counting for that in your threshold to hit profit sharing, you're gonna be over profit sharing and hurt the business. And so this, those are a couple of the rules we can throw out there for people to think about. These are all things that I've done wrong and screwed up and had to make 'em rules for myself, but for others to save you all that heartache and mistakes of implementing your own profit sharing plan.
Céline Williams: there's so much to be said for making the mistake yourself and also learning from it. So Rob, let's acknowledge that you learned from these mistakes and turned it into a book, which is incredible. Lots of people make these mistakes and they keep making the mistake
The number of business owners that don't take care of their finances and then continue to make the mistake of not taking care of their finances or doing it last minute or. Ignoring until they, whatever, it's the [00:37:00] repeat of the same mistake over and over again is really, really common. And the fact that you took the opportunity to learn and correct and I'm sure make another mistake and then correct and get to these rules to be in the position to share them is really incredible.
aren't we lucky that we get to benefit from that? thank you for sharing that.
Rob Gallaher: Thank you. I appreciate that. I think most people, when you're trying something new, like this was a new thing, right? It's 2014. I'm a new business owner. I'm a new father like I am. Newly lost my job. I am like fighting for air and oxygen and keep my head above water.
Like mistakes were costly, right? These things hurt me and hurt my future and hurt my family. So, um. But I also like to learn 'em the hard way. that is the best way humans learn. You get knocked over the head by somebody bigger, like, okay, maybe I'm [00:38:00] not gonna mess with that guy next
Céline Williams: Mm-hmm.
Rob Gallaher: that's how it should work. But those three years that I struggled and fought for this program and really made changes and started to see progress, I think most people would've gave up. And I, and I almost did too, like three times, I remember cutting checks for, you know, not to one person, but the whole group, you know, $20,000, that's a crap load of money, right?
And it's like cutting this check with a white knuckle. Like, I hope this works. Like I hope we're gonna get this back, right? Where's the ROI on this? And then learning how to make that the most effective $20,000 in the easiest check that I have ever written in my life over and over and over again has been so rewarding.
That I am changing lives and I, and I'm creating a culture of winners and I love going to work. People are fired up. for example, when I started my company in 2010, it was a construction company. A year later I started a plumbing company. This is before profit sharing.
[00:39:00] when profit sharing started, I had a construction company and a plumbing company. Profit sharing starts rolling in 2018. Two years later, I had a HVAC division and a restoration division because leaders in my team were like, there's money to be made here. let's take some funds and put 'em into these areas and grow these other divisions because we're getting profit sharing from construction, plumbing.
Why not restoration? My customers are asking us to do this. So it wasn't me being. Starting up new divisions, looking for ways to increase revenue and increase profits. It was my team.
Céline Williams: Mm-hmm.
Rob Gallaher: Right. They're thinking, acting, and working like owners this is what owners do. they go out there and find, find the problem, and let's fix the problem for the customer.
So that's. Some of the benefits that I did not even know, I was not even trying to get when I started profit sharing program. And I can go on on other stories of things that I've seen and noticed over the years of [00:40:00] what happens when your profit sharing program is working.
Céline Williams: Yeah. I, I hope that everyone listening can actually hear the val, the.
Wait, that's the word I'm looking for in what you just said, that it was your leaders that went out and saw these opportunities 'cause they were acting like owners. Because I think that every, I don't care if it's in the corporate world, entrepreneurs, it does not make a difference
That is a very consistent complaint I hear the people who work for me or with me, they're not taking initiative. They're not thinking like there's not buy-in. They're not thinking like owners and what you've talked, what you're talking about is creating an environment where that's exactly what they're doing and that's the default
Rob Gallaher: Yeah. It's a blessing. It can be also a challenge sometimes 'cause people have a lot of ideas. And so you still have to be the leader, right? You still gotta guide. Like, I love your idea, I'm writing this down [00:41:00] and I'm gonna think about it. but, this is our area of focus here too.
But it's been a blessing because, another thing that happened, this is a small dollar amount story, but this stuff is happening every day in my business. At my car wash, we mow our own lawn I visit there. the manager is so strong and the profit sharing, we get the system managers on there like this place runs like a top and they're on top of maintenance 'cause they know when if something fails and the equipment, we can't wash cars, their profit sharing checks go down.
So the maintenance program's good, which was a huge challenge I had in the beginning. I visited my weekly visit. And noticed my second visit, the lawn was like three weeks high. We weren't mowing the lawn. I didn't say anything and you know, patience, right? I went back the next week and the lawn was mowed.
I asked my manager, Hey, when I was here last week, I noticed we were behind on the lawnmowing schedule. What happened? he goes, well, the lawnmower broke. the maintenance guy was trying to get me to buy a new lawnmower for like 350 [00:42:00] bucks. I almost did it, but then he was like, maybe we can fix it.
$300 new lawnmower would've came out directly out of, and that goes against your bottom line. We would've made $350 less that month 'cause we spent it on a lawnmower. long story short. A YouTube video and a $12 carburetor rebuild kit got that lawnmower fired back up and directly put, $338 back into the bottom line of the company by fixing the lawnmower instead of buying a new one.
And the cool thing I like about that story and what I want business owners to hear is not the $338 that was saved, it's the fact that I never got a phone call. An email or a text or another question to answer, should we do this? Can we do this? They just did it because it was best for the business. this is happening every day in tiny ways and in big ways, but it's that daily activity that [00:43:00] adds up at the end of the month where, you know, I have seen profits triple in areas, since 2018,
I just don't know if there's a better way. I just don't know if, you know, if you're a leader, you got your accounting, you got a product that you got a company that's making money, I just don't see, I don't know. And I would love to find it, if someone's got another way out there to supercharge a company like this, I am all ears.
But for now, profit sharing has been incredible.
Céline Williams: Yeah. and for the folks that are listening or watching this, there'll be links to find you in the. Show notes, we'll have a link to your book as well. Rob told me before we hit record, that you have a course coming out later this summer
So it's summer of 2025 if anyone's listening in the future, and I assume they will be able to find that on your website when it is live and ready.
Rob Gallaher: Yeah, so if you're listening right now and you wanna get started, get the book like 10 bucks. I don't make any money on this book.
Céline Williams: nobody makes money on books these days.
Rob Gallaher: I dream [00:44:00] of going to businesses where everyone I interact with is on profit sharing. I can imagine how much better my experience would be at a restaurant, at the grocery store, at the dry cleaners. 'cause what's the old saying? I need to speak to your manager.
Céline Williams: Yeah.
Rob Gallaher: Why do we, why do we do that? Because we wanna speak to somebody that has the brain power, the thought and the ability to fix the problem with profit sharing. I had a customer that's been working with one of my guys for two years. he thought that guy owned the company because he was getting paid to think act care like an owner was.
So, get the book, read that. The course will be out in July 2025. You can find it on our website, profit x.co. that course will be everything I know about profit sharing. Everything you'll need to do this. we'll also offer consulting if you want to talk to me directly or if you think you have some different challenges, I would love [00:45:00] to work through with that.
I have found that the more business owners I get on it. They have ideas. I have implemented some ideas I've learned from clients because we're all a little bit different. We all think different ways, but together this community of profit sharing can be so powerful.
Céline Williams: Thank you for taking the time to chat with me today.
I certainly hope we see more profit sharing, To have people acting like owners and acting like they care, is a game changer. Absolutely for the world of business. So thank you for taking the time to share your story and be so open about what worked and what didn't.
It's incredibly valuable. I appreciate it very much.
Rob Gallaher: Thank you, Céline.
Céline Williams: Thanks for joining me today on the Leading Through Crisis podcast. If you enjoyed this conversation, please take a minute to rate and review us on your podcast app. If you're interested in learning more about any of our guests, you can find us online at www.leadingthroughcrisis.ca.