An upside-only bonus model ties payouts to year-over-year net income growth. When income rises, the increase is split among employees. When it falls, no bonus is paid and the prior year's baseline stays protected as working capital.
Always bonusing over year-over-year growth, and for the most part, when the company is growing. Well, let me give you some context. If Nestwell Property Management does $100,000 in net income in 2025, and then in 2026 we do $150,000 in net income, I was taking that $50K and dividing it amongst the entire company, and that worked well when the company is growing. What really sucks is in 2027, instead of $150K in net income, we only did $75K in net income, and the bonus. Bonus pool, the pool of money that's eligible is only on year-over-year growth. And so, I'm always protecting the house. I always have working capital. In the example I give you, I always have $100,000 in working capital because that's protected. We're only paying on upside.
