In the world of barbering, cash has long been king. But as the industry spirals deeper into the digital age, third-party payment processors like CashApp, Venmo, Zelle, and PayPal have become the new royalty. However, this convenient tool comes with a catch – one that's making financial management and tax filings a lot trickier for shop owners, school instructors, booth renters and suite leasers.

Third-party payment processors are becoming more and more strict on requiring users to provide either an Employer Identification Number (EIN) or Social Security Number (SSN) to create or maintain an account. This isn't just a formality – it's the IRS tightening its grip on the digital economy.

These payment processors are required by law to report your earnings to the IRS via Form 1099-K. This form is like a tattoo on your financial arm – permanent and very visible to the taxman.

How does it work? Let's break it down:

1. You accept payments through a digital platform.
2. The platform keeps track of your transactions.
3. If you meet certain thresholds (more on that later), the platform sends a 1099-K to both you and the IRS.
4. The IRS now has a record of your income, whether you report it or not.

It's like having a reality tv show of your finances and the IRS tunes in every night at 8:00pm.

Now, you might be thinking, "So what if they know? I'll just... not file taxes." Hold that thought.

When your SSN or EIN is linked to an account, it's like leaving a trail of hair clippings right to your door. The IRS's algorithms are getting smarter by the day, and they're excellent at connecting dots.

*If You Don't Know Now You Know: The IRS generally has three years from the date you file your return to audit you. But don't get too comfortable – this period can be extended to six years in certain cases. For instance, if you underreport your income by more than 25% of the gross income shown on your return, the IRS gets an extra three years to take a closer look at your finances.

And if you think you can outsmart the system by not filing at all? Think again. For non-filers, there's no time limit. The IRS can come knocking at any time, and trust us, they're patient - allowing interest and penalties to pile up, so by the time they come knocking, that unpaid tax bill could look more like a small mortgage.

The point is this: While you might not see immediate consequences, remember that the IRS plays the long game. Those unpaid taxes could be silently accruing interest and penalties, turning a manageable sum into a financial nightmare down the road.

It's like letting a bad haircut grow out – it only gets worse with time.

For those who use booking platforms, it's even easier for the IRS to track your income. Most booking platforms like Squire, TheCut, Booksy, Vagaro, StyleSeat, Gloss Genius, and Square are built on third-party payment processors (most commonly Stripe). So if you're using these to book clients and accept payments, you're already in the system. The IRS doesn't need to be Sherlock Holmes to figure out your income – it's all there in black and white.

Lastly, as if federal reporting wasn't enough, states are getting in on the action too. The thresholds are constantly changing per state and is usually lower than the federal threshold which is $5,000. This means if you make more than $5,000 per year using these third-party payment processors – you're either in the system or will be soon enough.

*For a full state-by-state table breakdown text "table" to 888.572.2017.

Picture this: a classroom at Wake Tech Community College, filled with the energy of aspiring barbers. It's presentation day for their business model canvas projects. The twist? All but one student chose to present ideas outside the barbering industry. Why? Who truly knows? But word on the street - fear. Fear that their barbershop ideas might be "stolen" by classmates.

I've been emphasizing a crucial lesson throughout our eight-session program: collaboration is key in business. "If you're scared to present an idea," I told them, "it likely means you don't truly believe you'll implement it."

I wanted to instill in them the confidence to share their ideas, knowing that their unique perspective and drive are what truly set them apart.

Then came the moment that changed everything.

One brave student decided to present their business model canvas on a barbershop. As the class provided feedback, something magical happened. The room transformed into a think tank of innovation. Questions about barber travel led to head instructor, William Graham, sparking a discussion about cross-country barbering. Ideas bounced back and forth. One student coined the term "chair hopping," and suddenly, we were all creating together.

I stopped the class right there. "This," I said, "is why collaboration is key. This is why focusing on your actual business - the barbershop you want to create - is so important. You're getting real-world application, real-world advice, and assistance from people who genuinely care about your success."

It was a lightbulb moment for everyone. They realized that once they step into the real world, it would be incredibly rare to have 20+ business-minded individuals giving honest, caring feedback - people who aren't just friends or family, but peers invested in their success.

The "Chair Hopping" concept, although familiar to some – has not been executed on a mainstream level, but has the potential to be a revolutionary approach to barbering that's not just about the cut, but about the journey.

Not Just In the Barbering Industry

This collaborative creation process isn't unique to the barber industry though. In fact, many successful businesses and innovations have emerged from similar collective brainstorming sessions. > Read or listen to the blog for this full section <

What happened in the classroom that day was a perfect example of this collaborative magic in action. It showed these aspiring barbers the power of open dialogue, the value of diverse perspectives, and the potential for innovation when minds come together without fear or reservation.

I rewarded them by promising that I would create a RhodeMap for this business model and we have done just that! We won't dive too deeply into the concept in our blog, but in Part 2 we'll break it down a little to give you a sneak peek - stay tuned!

So, to all barbers, remember this: Your ideas gain strength when shared. They grow when exposed to different perspectives. And sometimes, the most revolutionary concepts are born not from solitary genius, but from the beautiful construct of collective creativity.

Are you ready to collaborate? Your move boss.

15 million, 540.8 million and 6.8 BILLION – those are the amount of glasses given away by, the annual revenue from and valuation of Warby Parker a purpose-driven, revenue-generating glasses retailer. Their "Buy a Pair, Give a Pair" program isn't just clever marketing—it's a masterclass in business impact and income...

...see it for yourself.

• Brand Differentiation: In a crowded eyewear market, this program helped Warby Parker stand out.
• Customer Acquisition: The social mission attracted socially conscious consumers, particularly millennials and Gen Z.
• Customer Loyalty: Customers feel good about their purchase, encouraging repeat business.
• Employee Engagement: The program boosted employee morale and attracted talent who wanted to work for a purpose-driven company.
• Media Attention: The initiative garnered significant positive press, providing free marketing.
• Business Growth: Warby Parker's valuation reached $6 billion, mainly attributed to their strong brand identity.

What's the lesson? Understanding and addressing community needs sets you apart from barbers who are solely focused on service delivery – it provides a competitive advantage.

"That's great for Warby Parker, but I'm not running a big company." ...think again. Whether you're a student just starting out, a seasoned professional, an educator shaping the next generation, or an influencer with a platform, you have the power to create ripples of positive change. Your barbershop has more potential for impact than you realize.

The Psychology Behind the Impact

According to a study by Cone Communications, 87% of consumers will purchase a product or spend with a service provider because they advocated for an issue they cared about. In other words, your impact strategy isn't just good for the community—it's good for business.

This directly aligns with the "warm glow" effect. Coined by economist James Andreoni in 1990.

His revelation gave language to the below consumer behaviors

• Emotional Reward
• Self-Interest in Altruism
• Intrinsic Motivation

The above behaviors that consumers felt resulted in:

• Dopamine Release
• Self-Image Enhancement
• Stress Reduction

So, how do you implement this in your barber business?

• Think Inside the Box: Begin with one community initiative based on your known/current knowledge.
• Integrate Data Collection: Implement systems to gather and analyze customer data ethically - use tools like short surveys, conversation notes, or digital check-in systems.
• Eat From the Feeding Hands: Listen for community needs during client interactions - Involve them in brainstorming and implementing community initiatives.
• Communicate Your Impact: You’re not bragging, you’re inspiring others to make a change.
• Partner Strategically: Collaborate with local organizations to amplify your impact.
• Measure & Adjust: Set clear, measurable goals for your initiatives - Regularly review the data and adjust your approach as needed.

It's time to think beyond the fade and consider how your skills can contribute to a greater good. Ready to make an impact and dive deeper into business impact strategies tailored for your industry? Text "strategy" to 888.572.2017.

Let your impact be the driving force of your income. Your move, boss.

Did the title get you here? Yeah – it was a good one and it's one of the strategies we're going to discuss below. Today we're going to briefly dive into "The Mind Games of Money" and decode the psychology of pricing.

We're constantly asked questions about pricing – which is why we talk about it every 6-8 weeks. This time we're going to dive deeper into one of our unconventional approaches on pricing, because beneath the surface of numbers and decimal points lies a fascinating world of psychology that can make or break a sale.

*To make sure we didn't overload you with information we limited our list to the three below.

If you want the full list and a one-time, 30min, complimentary consultation on how to implement one of these strategies in your business - text "strategy" to 888.572.2017.

The Decoy Effect: How Comparison Shapes Choice

Ever wonder why companies often offer three pricing tiers? It's not just to cater to different budgets—it's to guide your choice.

The Economist magazine once offered three subscription options:

• Web-only subscription for $59
• Print-only subscription for $127
• Web and print subscription for $127

At first glance, option 2 seems pointless. Who would choose print-only when they could get web and print for the same price? But here's the kicker: the presence of option 2 made option 3 seem like a bargain, significantly boosting its sales.

This principle, known as the "decoy effect," is used widely. Netflix, for instance, uses a three-tier pricing strategy that makes its standard plan seem like the best value, nudging customers away from the basic plan.

Anchoring and Framing: The Power of Context

The way a price is presented can be just as important as the price itself. This is where anchoring comes into play.

In a study published in the Journal of Marketing Research, researchers found that exposing consumers to a high anchor price for a product increased their willingness to pay by up to 50%.

Apple masterfully employs this technique. When they launch a new iPhone, they often introduce the premium model first, anchoring a high price in consumers' minds. This makes the standard model seem like a bargain in comparison, even though it's still a premium-priced product.

Charm Pricing: More Than Just Numbers

A study published in Quantitative Marketing and Economics found that using a $9 or $7 ending increased demand by more than 24% compared to a nearby price point. This phenomenon, known as "charm pricing," is so powerful that it even works when the 9 or 7-ending price is higher than a nearby round number.

While these psychological pricing techniques can be powerful tools, it's crucial to use them ethically. Manipulative pricing practices can damage trust and harm long-term customer relationships.

The key is to use these insights to better communicate your value, not to deceive or manipulate customers.

Understanding these psychological principles - as a barber - gives you a powerful toolset and an advantage in your industry. Brainstorm on which of the strategies we discussed best fits your current business model.

Remember, the goal isn't to trick customers into spending more, but to present your pricing in a way that accurately reflects the value you offer.

Feel like you know were to go from here, but you'd feel more comfortable with a personalized plan of action? That's why we're here! Text "strategy" to 888.572.2017.

The SBA (Small Business Association) reports that businesses conducting mid-year audits are 83% more likely to secure funding when needed. But in the barbering world, only 11% of barbers (via self or outsource) maintain, accurate up-to-date financials - and there’s no data on how many barbers actually conduct mid-year or annual business audits.

Mid-year is when common people slack or maintain - it’s also when the cream of the crop level up. At this crucial mid-year point, is your barbershop financially f[H]it or are you risking your future growth?

Think of your business as your car sitting in the driveway and business audits as the gas refills, oil changes, tire rotations, etc...To keep it running smoothly, you or a professional need to regularly perform maintenance. You don’t just drive your car and hope the tank magically gets refilled (even though that would be amazing). And if your brakes were screeching so loud that it was heard three blocks down the street, you wouldn’t just rock it out by blasting your stereo hoping the music drowns out the shrieks. No, you'd take it to a shop, allow them to run diagnostics and make critical adjustments. Well - guess what? That's exactly what your barbershop needs right now.

Starbucks, a company that knows a thing or two about consistent service, reviews its sales data weekly. Why? Because data doesn't lie. It can be manipulated to tell a story - but at its core - data doesn’t lie.

In big business it's recognized that three aspects majority of businesses lose money on are taxes, operations and marketing.

Taxes

I know, I know. Taxes are about as exciting as watching paint dry. But here's a statistic that might perk you up: The IRS reports that businesses that engage in mid-year tax planning can reduce their tax liability by up to 85%. That's real money back in your pocket.

Operations

Let's talk efficiency. Toyota's famous for its "lean" manufacturing process, which has helped them reduce waste and increase productivity by up to 30%. Now, you're not building cars, but the principle applies.

How streamlined are your operations? Are you wasting time between appointments? Is your booking system working for you or against you?

Marketing
Your marketing strategy should be tunnel-visioned based on system data. Did you know that Nike adjusts its marketing campaigns quarterly based on performance data? They consistently see a 40% increase quarter-over-quarter in campaign effectiveness as a result. What's the barber equivalent?

Have you set a marketing budget or are you just posting the same reels and videos as every other barber? Or are you just throwing money at social media ads and hoping for the best? I know maybe you're reaching out to influencers who have a large following and trying to tap in their market. Smart – you're in NC tapping into a FL market. It's time to double down on what has been proven time after time to work.

A mid-year business audit isn't just a feel-good exercise. It's a critical business move that can mean the difference between scraping by and thriving. Remember, you're not just cutting hair - you're running a business.

It's time to take a hard look at your barbershop, make the tough decisions and set yourself up for a killer second half of the year. Recently a barber out of Raleigh and I had a great conversation about the information I just told you. He owns three shops and said something that you may be thinking - "I wish I had the time to think about these things and the time to execute these practices."

In response to his comment, we created a Barber Business Audit Checklist. Text "audit" to 888.572.2017 to get started. Don't let another day go by leaving money on the table.​​​​​​​​​​​​​​​​ The clock's ticking. What are you going to do about it? Your move, boss.