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New World Library Unshelved

New World Library Unshelved

Positive news and inspiring views from the New World Library community


Thursday, October 06, 2016
THE POWER OF PROFIT SHARING by New World Library Publisher Marc Allen
 
There is one simple little practice that can transform every company in the world — large and small — into a profit-making powerhouse. 

I say this as the owner of a highly profitable company. Most successful publishing companies have profits in the range of 5 to 10 percent of their income. Ours is usually around 20 percent and has been as high as 36 percent when we’ve had a bestseller. What’s our secret? It’s very simple. . . .

When I first started New World Library, I knew nothing about business. I had never taken a class in it. But I read business books voraciously for a while. And then I read a magazine article that changed my company — and changed my life — quickly and dramatically.

The article was about a Swiss hotel. It had been losing money for years; it was run-down; it had a major problem with “shrinkage” — the euphemism they use in the hotel business for theft. It was obviously a badly managed business, so the owners went in search of a new manager.

They interviewed a potential manager, and he said, “If you hire me, here’s what I’m going to do: I’m going to make a profit, and one-third of that profit will go back into this hotel for improvements, one-third will go to employees, and one-third to owners.”

At first, the owners objected. They were okay with putting some of the profits back into improving the hotel, but they felt it was too much to give employees as much of the profits as the owners got. The potential manager said, “You aren’t making any money! You’re losing money! This formula will make you very happy in the long run, believe me.”

They decided to hire him and give his experiment a try. He went to the employees and told them the new plan: They would receive the same amount of profits as the owners received, so they’d better get to work and start making the place profitable.

Within a year, the hotel was profitable, and employees received a bonus check equal to about two weeks of their regular pay. Seven years later (when the article was written), employees received an annual bonus check equal to almost eight months of their regular pay. 

Everyone was happy — owners, employees, and customers. The hotel was vastly improved. Customer service was excellent. “Shrinkage” had dropped dramatically. They were highly profitable.

Every company, large and small, should do some kind of profit sharing with every employee. It’s a magic key to success.

The US Postal Service should have profit sharing; it continues to lose billions of dollars a year. The Postmaster General should say to everyone, “Look, we’re not making a profit. We’re losing serious amounts of money. Help us make a profit, and a good percentage of that will go to you as bonuses.” The post office would be profitable within a year, I’ll bet.

It doesn’t matter whether your company is a small mom-and-pop business with a little bit of part-time help or a larger organization with several employees or a mega-operation like the Postal Service: The best way to create a profitable company is to give everyone a piece of that profit. Everyone involved — even the part-time help.

That immediately turns employees into owners. They start thinking like owners and acting like owners, and seeing where they can contribute to the bottom line. (And every employee can affect that bottom line in some way, either by cutting expenses or increasing income — or both.) If you have a tiny operation, say to everyone, “Look, we’re not making any profits at all. Help me get this company sailing along and profitable, and I’ll split half the profits with employees.” Split it 50-50, and watch the results. If you’re in a mega-corporation and feel that 50 percent is way too much, start by giving 10 or 20 percent to employees, and watch your profits grow dramatically!

It’s so obvious — I really don’t know why more companies haven’t realized this yet. The bottom-line people, the numbers people, should recognize this: profit sharing is not a matter of being generous to employees; it’s a matter of maximizing profits, which businesses love to do.

Support your people with part of your profits, and you’ll have a far greater profit. The formula is a simple one: give half of your profits to the employees, and you’ll see far more than twice the overall profits, so in the long run you’ll make far more than you would have if you’d gotten 100 percent of the profits.

This seems so obvious to me — and has so obviously worked not only in my experience but for so many other companies as well. Why aren’t more companies sharing their profits with their employees? It turns a struggling company into a profitable one, and turns a profitable company into a far more profitable one. It’s win-win business. It’s enlightened capitalism.

I encourage every one of you to do what you can to start profit sharing now. And prepare yourself for some great results!

# # #

Marc Allen is the author of several books, including Visionary Business, The Magical Path, The Greatest Secret of All, and Tantra for the West. He is an internationally renowned seminar leader, entrepreneur, author, and composer. 

He cofounded New World Library (with Shakti Gawain) and has guided the company, as president and publisher, from a small start-up to its current position as a major player in the independent publishing world. He leads seminars in Northern California and gives teleseminars that reach people all over the world. Visit him online at www.MarcAllen.com.


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