Holiday Bonus Planning For Your Team

We lay out a simple, repeatable plan to fund holiday bonuses without wrecking cash flow, balancing fairness, morale, and sustainability. From tiered vs equal payouts to profit-sharing, we show how to set expectations and build a dedicated bonus fund that survives a slow December.

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*Intro/outro song credit:
King Around Here by Alex Grohl

Chapters

• 0:00 Why Holiday Bonuses Matter
• 1:46 Subscribe And Support The Show
• 2:45 Start With Desired Bonus Per Role
• 5:15 Avoid Unsustainable Expectations
• 6:19 Profit Sharing Vs Holiday Bonuses
• 8:02 Create A Dedicated Bonus Fund
• 10:10 Handling Down Months And Cancellations
• 11:42 If It’s Late, Communicate And Adjust
• 12:21 Closing And How To Get Help

Transcript

SPEAKER_00: 0:00

As the holidays approach, you are likely thinking about how to compensate your team, give them a nice end-of-the-ariday bonus of some kind. Yet I know for a lot of people this is a stressful process because you're trying to figure out what I can actually afford to do in a way that's going to make them feel valued and that's actually going to be something that is helpful to them and is an amount that you think reflects what their value is to you and the company. I'm going to guide you through how to come up with this process, this structure, and then how can you save and create a system in a way that you have the money already set aside and it's no longer a stress or a strain on your business. My name is Craig, and I'm the owner of DAC Financial Coaching. Our team is on a mission to make your therapy practice permanently profitable. If you own a solo or group practice, we're here to help you build a business that creates more time, makes more money, and serves more people. This is the Therapy Business Podcast. Usually as we step into the fourth quarter of the year, conversations start coming up with our clients regarding bonuses for their team. In fact, a lot of times when we are onboarding a new client, we're going through goals, one of the things they really want to have in place is a bonus structure, a bonus system for their employees so that they can regularly reward them for the growth of the business and bring them in on that. The holidays is one of the biggest. I mean, it's almost like gotten to a point where it's expected from team members that they're going to receive some kind of bonus. And if they don't, or if it's smaller than what they got last year, there's resentment, there's frustration, and it can really hurt morale. Whether that's right or wrong, that's kind of the reality we live in. And so having a system, having a plan in place to do this is really, really important. Now, before I dig into that, first of all, I just want to say thank you for being a listener. If this is your first time here, I really recommend or I ask that you subscribe to our podcast. I think this is something you'll find really valuable in growing your practice. And for those who are regular listeners, it genuinely means a ton to me and my team that you are just tuning in and following along and utilizing what we're talking about. The messages I receive from listeners, the people who have ended up becoming clients of ours as a result of this podcast is just been amazing to see the changes that are happening for those who are able to implement it on their own or for those who actually need some extra help. If you can help us, the one thing we can ask, we ask for in return is if you don't mind subscribing, leaving a review, sharing how much you enjoy the show. That's gonna help us get in front of more practice owners and help give this podcast more likes. We can in turn help more people feel more financially stable and more in control of their finances. So thanks again for being a listener. Now let's dig into the holiday budget for bonuses. How can we set up a bonus structure? So there's a few key steps I want to talk to you about, and I'm gonna approach this as here we are, it's coming up. So again, when I'm recording this, it's the beginning of Q4. So I'm recording this in early October. So we are thinking through coming up here in about two months is when those bonuses would go out. So we have to start going at this process really systematically, and I would say starting big picture and then bringing it down into a small actionable plan. So the first thing I want to start with is just we got to decide how much we think each employee should get. Now, you can work this way instead of coming up with I need this much money to divide out, I prefer to go about it as how much would I like to give each person? How much do I think would be would be a welcome surprise? How much do I think would show them what their value is? Now I know they're all invaluable and they all deserve way, way more than what we would probably be able to afford to give them. But in general, what do I think would be a really well-received reflection of the value they bring to the company? So going through, now there's a couple ways to do this. The you can either make it a tiered process. So if you want certain people in your company to get more than others, if you want uh maybe your therapist, your full-time therapist to get a higher bonus than maybe your part-time therapist or maybe your admin, it's okay to do that. If you have certain people who are licensed of a certain at a certain point, or those who generate the most revenue or see the most clients, there's a lot of different ways to go about it. And every practice owner is different when it comes to this. So there's not necessarily a right or wrong. You could do that, you could do it based on just an even split that everybody in our company gets a bonus of X dollars. So go sit down and figure out that's probably step one is do I want to give everybody the same amount? Do I feel like there's different levels and kind of chunk those out? So decide how do I want to break those apart. So again, some common ones are full-time therapists, part-time therapists, and then admin. So those three groups, how much would full-time get, how much would part-time, how much would the admin get? Another one we've seen is based on how edu how much education they have in the sense of licenses and what services they provide. So if you feel like they are more valuable in that sense, then you could put those. Maybe they get more than the next tier, maybe they get more than the ones who are who are still working on getting their license. All those elements come into play. So decide how you want to break that apart. If you are overwhelmed by the process already, then that's where I would say maybe just doing an even split is completely fine. We want to keep in mind that we are setting a baseline. Now, the it should be understood and maybe articulated in team meeting that you know what they received last year is never a litmus test for what they're gonna receive this year. And so as we are paying this out, letting people know that, but also keeping in mind that if I'm gonna maybe you feel you've felt guilty for not giving a big enough bonus over the past year. So you're like, I'm gonna give them a huge bonus this year to make up for that. We had a good year, and I just want to do that. That's setting the new line in the sand for them of what to expect next year. And so keeping all those pieces in mind of what's sustainable, what is a sustainable bonus structure, an amount that I can give them that I know next year I should be able to do the same thing, and the next year I should be able to do the same thing. That's what we want to do. Now, when it comes to if you feel like you want to really reward them more on the times where things are good, that's where a recurring or a regular profit sharing would be really beneficial. This is utilizing your profit bank account. So if you're putting money into a separate account, nickname profit, at the end of every quarter, sharing some of that with your team. They know that fluctuates. I do this with my team. My team knows it's gonna fluctuate. They pretty well know when things are tight, when business is down, and then when we are doing really, really well. So they know that it's gonna be up and down. There's gonna be times where that bonus is gonna be less. There's gonna be times where it's a lot more. There is not necessarily this thing that they're anchoring into or expecting it to be. And if it's less, then they're frustrated, disappointed, or feeling like I'm cheap. At least I hope they don't think that. It's based on our company's profit. If the company was profitable, they get a piece of that pie. If it wasn't as profitable, they get a smaller piece of that pie. A holiday bonus is gonna be a lot different. This is gonna, again, be expected. Sometimes families even put this into their holiday shopping budget. So they already have that in their brain of I'm gonna be receiving a$500 bonus from my employer. So they're already putting that in their head. And then if in turn you come back and it's$250, that's where sometimes morale can go down. It's not owed to them, but at the same time, we want to we want them to be happy. We want this bonus to be well received and not something that's a negative experience. So really outlining that. So sit down, list out your team members. If you're not gonna do a an even split across, making sure everyone gets the same amount, list out your team members and decide how much do I want to give them, and then write that total down. And that's gonna be our target goal. So, depending on when you're listening to this, you might have plenty of time to save for it. So, and really the amount of time you need to save is gonna drastically lean on how much you need and how big your practice is. So, let's just say you decide I need$5,000 to pay out my team's bonuses. Then what we want to do is we want to just open up an extra a little account called holiday bonuses and figure out do I want to set 1%, do I want to set a chunk of cash over there ever every month, every couple weeks? That we're just gonna slowly fill that fund up so that way it's there come December 1st. That's our target goal is December 1st. We can pay out bonuses for that first payroll of December. So, really thinking through what does that number need to be, and then saving systematically for it, even maybe even year-round. You could start January putting one percent into that account, and then if you hit 5,000, you can stop putting money into it. It's already funded, it's ready to go. And if you get to August and you're realizing we're not gonna we're not close to hitting the 5,000 in there, then maybe you up it to two, three percent just to get you there faster. So setting that goal and then systematically saving money over to the side. So again, we have that account. Now, another way to go about it is I was talking about the profit sharing with your profit account. Some people elect to use their profit in that fourth quarter to then pay out, help pay out bonuses or help fill in gaps if they don't have enough in their expenses or in that other account. So you can utilize your profit in a profit sharing way for that. The only time it doesn't work is if you're paying in profit sharing throughout the year, then you know it's kind of a here's your profit share slash Christmas bonus. That said, you don't have to give them more on top. And so that's going to the profit sharing piece. If you're sharing profit every quarter, that doesn't mean you have to give a Christmas bonus. You can profit the profit share could be their end of year bonus. Or if you do, it can be a lot less because they're receiving bonuses throughout the year. And so you can really, instead of saying I think they deserve$500, maybe it's one or two hundred dollars, just a little extra cash for them to spend on holiday shopping, but knowing that they're also getting their profit distribution and all those pieces. So all these can come into factor. So not to overcomplicate it, but that's why I mean, if you're wanting to do the profit sharing, you can incorporate it that way. If profit sharing is just beyond what you're wanting to even try and do right now, then having that account, saving for it, being ready to then pay out those bonuses is going to be huge. I know and I acknowledge that the holidays, December can be a month where revenue's down. It's a stressful time. That's why this whole bonus thing at Christmas time at the holidays is stressful for business owners because you know, okay, I got team members who are probably going to be out this month. I've got uh clients who are probably gonna be canceling or rescheduling on us this month because of the holidays, because of uh sicknesses as we have that cold weather hitting. So it can be stressful to think about this while also trying to muster up cash to pay out your team members those bonuses. Having that account set up, ready to go, so that when the stress comes of maybe a down month, you already have the money there. It's not going to be a factor into your operating expenses because it's set aside, it's ready to go, you can pay it out without it playing into the stress. That's a great system for a simplified system for paying out your bonuses. Now, if you need help coming up with this, we are always here to help you. Click a link in our show notes where you can talk to one of our coaches, but compensate your employees. Don't feel obligated. So if you're listening to this here in October, November, if it's too late for you, give what you can. And it's okay if you have to forego the bonuses, but communicating it if you've done them in the past, communicating is going to be key because just knowing your employees are likely counting on it is super, super important. But setting up this system for next year, if it's too late now, looking ahead to next year. But I would say even if you're listening to this in November, you still have 30 days. So see what you can set aside over the next 30 days, see what you can cut, what you can reduce, what you can trim, what you can pull maybe from the profit account if you need to, to help at least give something to show your appreciation to your team this year. Thanks for joining us on the Therapy Business Podcast. Be sure to subscribe, leave a review, and share it with a practice owner that you may know. If your practice needs help getting organized with its finances or just growing your practice, head to therapybusinesspod dot com to learn how we can help.