Profit Sharing
Just because a professional relationship doesn’t work out long-term doesn’t necessarily mean that long term benefits can’t be derived from most working relationships. I’m thinking of my relationship with a big accounting firm out of Middletown NY who I cycled through in due course and actually left quite frustrated - however, the accountant in charge of my account advised me back in 2012 that it was a no brainer to start a small business 401k program from myself and my employees, and you know, 10 years later - between what I have put away and what my employees have, we have cumulatively put away over $1,200,000 of pre-tax dollars into investments. There are young people in my company that have over $100k, and carpenters who are right behind them.
It’s an interesting program, and I’ve said it bunch but I’ll say it again - it’s a real life example of government program that works. It’s just a good thing, with few unintended negative consequences that I can see.
Our 401k program allows our employees to put away 5% of their salary - pre-tax meaning worth 30% more than after tax - and Catskill Farms matches it, So in essence, if an employee makes $100k, and puts away $5000 (which is actually only $3500 since it’s pre-tax) I match with $5k, meaning the employee puts away $3500 and gets $10,000 worth of benefit.
We also have a profit-sharing program, engineered based on age of employee and length of service to Catskill Farms. That can add another $3000 to $5000 per employee.
And just last year, we added a Defined Pension program which again can spin off $3000-$5000 per employee.
The bottom line is Catskill Farms spun off an additional $273,000 to our employees this past year in terms of sharing the wealth, and that’s quite a bit of money no matter how you spin it. It’s a great benefit, over an above a pretty decent vacation, holiday and bonus program. As an employer, while proud of this, it’s always scary to know you have this obligation now baked into the company’s expenses, in good years and in bad years. I can’t say it keeps me up at nights, but it is a real thing. You can’t just get up one morning and say, ‘Hey, I don’t think I’ll pay this year, things are a little tight”. Once in the program, you are in it.
I often muse, here on this blog, and just when I’m sitting around, at the wealth generation this company has provided across a lot of families and businesses. it’s really just endless- there are direct benefits such as those who work with us to build the homes and get paid well and regularly - these would be our trusted material and subcontractor partners. What I provide them is beyond the cost of individual jobs - it’s a ‘have their back approach’ where I don’t hang them out to dry if something goes wrong, we share the burden, and more times than not, I just pick up the tab as the cost of doing business.
There are the ancillary beneficiaries - the towns and their increased tax bases which then go to higher standard of living for town employees, the restaurant and stores our clients frequent, the realtors who take a large cut, the homeowners who resell their homes for good profits and the realtors who help them, the home inspectors, the banks who have financed tens of millions of mortgages to triple AAA rated homebuyers. We also inspire other people to take chances and start a business, motivate people to set up shop and increase the textured fabric of upstate life. Our marketing has probably exposed more people to the area than the chamber of commerces. Once our clients finish with the homes, they add garages, build pools, hire property managers, do landscaping, donate to non-profits
The bottomline, no matter how you slice it, is the efforts of Catskill Farms, - my personal efforts and that of the teams I have put together - have literally moved the needle of economic sustainability across a broad swath of Catskill life, and idea that that all happened because I had an idea, and worked at it tirelessly, is really the essence of the magic of capitalism. I’m not unique- many people do what I do, which is leave it all on the field nearly everyday - but it’s a club of people who have an outsized role in the quality of life in any given area.
This isn’t really a self-congratulatory self-back-patting, victory lap - though that would be fair enough at this point. It’s just a general reflection of the magic of the free market, where you efforts are measured by your efforts and the tens of thousands of micro decisions you’ve made along the way.