Spolu 6: The Profit Distribution

In the previous two sections, I provided more details of the five stakeholders (investors, employees, customers, suppliers, and philanthropy) and re-investment obligations of each spolu. From hereon, I will call the re-investment obligation as another stakeholder. All six will share in the spolu’s profit distribution, making all these stakeholders more inter-connected.

A spolu that is not profitable will fail, probably sooner than later. So most spolus will be declaring profit distributions. And this money will be circulating around the spolu network, eventually connecting unrelated spolus together.

At the end of each fiscal year, the financial statements will show the profits of the spolu. I recommend that the spolu articles specify that at least 40% of stated profits be distributed. The senior management team can increase that amount.

For this book, I am recommending that the ratio of profit distribution for these six stakeholders be 1:1:1:1:1:1.

Is this fair? I believe profits will be circling around the spolu network, making the six stakeholders all eventually getting their “fair” share of the profits. This “circling around” should be mathematically modelled to understand its full effect. Alas, I have neither the skills nor time to create this mathematical model. I can just see the profits circling around…