Profit Per Cut

Written by Daniel Contreras on July 24th, 2020
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About this video:

Most of the problems barbers face, including me at first, is how to generate more money?

It seems as though even coming into the industry believing we would be our own boss, be financially free as soon as we build up our clientele, that it might not ever become a reality, so we settle for what we got.

This can be frustrating, and motivate some to start looking for answers and solutions.

I think this is why we see so many redundant hair products and barbers coming our with shaving gels and poorly produced straight razors and t-shirts.

People tend to think that if something isn't working, that we must find something else to do, or add on in order to generate more cash.

Ready to join the Elevated Mentorship program?

Click the button below to book a call with me and my team to see if we can help your business scale!

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Video Transcript

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Hey everyone, Daniel Contreras (@dlucs_) here founder of The New Era Of Barbering. And on this video on YouTube, they, I kind of want to go over really what the identifying, like the real problem in your business. Um, and I kind of foreshadowed this video. I know I missed a week, um, was really busy at least with creating the program. So sometimes happens like that, but we're back on this week and I'm willing to bet you, this one is well worth the wait, uh, cause we have a lot of to get into. Um, but really for,Like I said,Early in the week, I kind of forecasted this video a little bit post to posting on my story on Instagram. Uh, really about the, I guess the misconception about the, what is really going on in barbers businesses. Um, of course I showed you guys the diagram of, you know, smaller inputs, uh, to create bigger outputs, whereas larger inputs create small outputs and really that that's, um, have the barber industry is really formed right now and really existing. A lot of barbers, I hop on calls with, um, to get into the Elevated mentorship program. A lot of barbers I didn't even talk to in, in the DMS. Um, a lot of their problems were designed around, you know, doing a lot of work for minimal results. Um, in thinking, you know, I kinda didn't like most people like they don't like, like, bro. Like I'm doing a ton of work. Like, um, the more work that I do, like I'm going to kill myself. It's not worth that I like Barber is almost like kind of wave the white flag almost at a certain point in time. They say, I give up, I'm just gonna stay here. I don't, I don't need to go ahead and work any harder because that's the only thing that I, uh, or the Barber associates growth with.It is more work when, um, reallyThat that's not it at all. So, um,Really want to kind of go over what you should be focusing on,Uh, and really identifying the real problem. You know, most barbers when I talked to them at least, um, they're of course wanting to, um, do a plethora of things, right. It's actually quite hilarious to when I get on these Q and a calls with students, even that's in the elevated mentorship, um, I'll just listen to them, talk for like five minutes straight, um, you know, about what's going on and then I kind of ask, so what's your question, you know, cause there's no question being asked in there at all, or even when I hop on, on calls, the barber's typically the first thing I always, you know, ask is, well, what's, what's your problem. What's going on with your business, right? What's going on with your career and they'll go on for like another 10, 15 minutes just telling me all about it, but telling me about,You know, how, um,The shop owners, a Dick, you know, their, their town is cheap. Um, you know, they live in a small, um, apartment, tons of, uh, just a budget of the, right? Um, th the owner doesn't allow them to cut hair from certain times, certain times they're on commission, all this other that really I'm like, cool. Okay. So what, what's the problem are you, you got your baggage out the way you got your complaining out the way what's the problem. And I think Barber is actually have a hard time, like identifying a problem because there's a bunch ofLike you're going on.Uh, and frustration, like literally that's what it is and not a whole lot of cool. I got this problem. This is what I must do or try it. And let's see what this result is, because if they did, they would actually start getting some results. Um, again, borrowers will go ahead and tell me, well, I'm, I'm working on building website and working on building products, you know, working on, I've heard some crazy on these calls and I'm just like, what the is going on. So, um,Really the,The problem that I had kind of dissected, Oh, it always comes back to this. I'm like, so you're not making any money in their account. Like, what do you mean? Like I'm making like $6,000 a month. I'm like, well then why do you want to go ahead and do this, this and this? Or they may say, you know, that you need to Barbers we hop on calls with I'm making $10,000 a month. Like, what do you mean I'm making money? I'm like, well then why do you want to do everything else? We were making money and they kind of pause for a second and they're like, Oh, that's a good point. Or even Barbers, we're making $2,000 a month. It doesn't have to be something substantial. But you know, we see it all around the, the, the board, uh, of, of what Barber's make. And still, this is still a very core problem.They're just not making any money. Um, and they want to go ahead and thinking that, you know, they want to blame other things of like, Oh, I'm not making money. Must be the town I live in. Must be it. I gotta move. I gotta get the about here. Um, they think it's a website, got to build a website, got to do all this. And then they go ahead and do it. And they get the same exact result. And they're kind of just left that had like no result, no, no nothing has happened when having website wasn't the issue or not having website was not the issue, not being in, uh, whatever town you just moved to was not the issue. The issue was you were still making money and neither of that directly affects those things. And yet everybody still thinks that we're just crazy cycles. Like I tell my own administering was all the time. Like, like students, like my students, I just like, bro, this, the industry is crazy, bro. Like thinking that this is actually what it is. Um, to be quite honest, it just Barber's, don't have a proper business. You're making a pro if you had a profitable business, you would not be worried about, I mean, of course you would want to grow your business, but you wouldn't be in this panic attack to be going off and doing something else which most barbers are in.So, you know,I even said in the, in the story prior in, in my Instagram, my Instagram story, you know, we, we track a lot of metrics and elevated mentorship. We, we do a lot of things that are very unconventional, um, and spearheading like really understanding this new understanding of what the industry needs to go towards. Um, I think a profitable business model or prop rule barbering businessNeeds to be likeThe found the core foundation, which most barbers aren't. And that's not, I don't think that that's bad on anybody. I mean, I didn't have a profitable business for a very long time as well, to be quite honest, nobody like really stressed this. Everybody wants to stress how to fade the hair, how to get a blurry fade. Um, what products to add, what services to add. Nobody talks about having a profitable businessMaybe becauseThey don't have one either. I don't know. Right. I can't speak on that, but it's kind of crazy to,Um, atLeast see for, for a mass part of the issue who, you know, thinks that okay, uh, again, like, I, I, I'm not making money. It must have my haircuts. If you're not making money, obviously you're just, you don't have a profit business. So tell me, please, what a haircut, you know, working on your skills on a haircut will do. It just sounds like you need to actually just be making profit in the first place.Um, and I think, I think for a lot of barbers, this, this goes,It's back to just a little bit of like our background in general, right? Like I'm, I'm a college dropout. I didn't go to college and just kind of defaulted to Barber. And a lot of us do a lot of us kind of default to BarberGossip. Um, and nobody uses,It shows us the ropes of how to maneuver in this industry, a proper business too, because you know, the OGs or wherever, you know, it was in the shop who's been cutting for awhile, obviously hasDominance or, um, has pool or say so, and what you should be doing. Yep.Charging the same amount that you are, which doesn't make any sense. They're, they're literally like, I'm trying to tell you exactly what to do. They don't charging different than you. So, and people take this. I mean, I did the same, you know, people were charging 40 bucks. So I thought it was like doing it.They weren't charging any different than me. And I was like, why am I going to listen to you then? Right. Okay.And I think a lot of barbers have to start looking at truth. And so I had to start looking at like, okay,Cool. Um, who, whoActually, who is actually making money this. Cause I know this. I know.Okay. But yeah, we, we,I just kind of go around with, with eyes, like our hands over eyes, just kind of saying it's a little, like whoever is willing to speak up and say something is going to be like, like represent like, Oh, that must be it. You said something. Somebody finally said something because nobody really, nobody really is. I don't think anybody really,He knows what to do to be quite honest. Um, yeah,That's just my, my, my that's my personal opinion from my experience and being in the industry and cutting hair, you know, until I was charging $200 per haircut,It just, all the,All the, all the, um, advice I used to get, didn't help one bit. It's like what, I'm going to show you what I'm going to show you in terms of like how to, how to calculate profit per cutting and everything of that actually got the ball rolling for me in the right direction. It wasn't out of like cut hair better. It wasn't like adding more services. Wasn't doing all this other.Um, and yeah,It's still widely accepted as that's, that's the norm. I think that's the biggest issue with these, with the industry and the barberIndustry. Um, andThat's what we're trying to combat with. Like elevated mentorship. My vision for this thing is to really be on a mission to transform this industry. Um, to actually one that's actually highly, very highly respected, uh, in business. Right. Not just something, I mean, I remember telling people, you know, that I cut hair, um, and they almost looked at me like, Oh, you poor, you poor kid, you got here for a living. All right. And I think a lot of people like, like, uh, experienced that too as barbers. Right. Um, even when I told people I'm, I'm, I'm not getting any, I'm retired. Like, thank God finally, you, you, you left the industry, finally, you, you stopped cutting hair. I'm like, okay. Um, but that, that's how that's all, a lot of people view our industry. And I think it's, it's, um,The level of mediocrityThat's, that's allowed to get by as like a mental virus and it's, um, it can't, it can't go on anymore. So I think for us, we really have to go ahead and take charge of really what the we're making, really what, what are we doing?Um, um, you know, in termsOf lower level thinking and really like elevate ourselves to a new standard of, um, business model. Um, so for us, you know, especially in elevated mentioned, like I said, a lot of what I teach my students is really rethinking exactly the foundational aspect of, you know, uh, mental models, how to think systemizing, like their approach and really understanding how to be in the service industry, just in general. Right. Not, I mean, you, you could literally probably, um, you know, w w were doing, you could probably even, even, uh, replicated in hairstyles industry without a doubt. Right. I think just being in the service century in general, people feel like I have to give more, give more, give more, that couldn't be farther from the truth. I don't care. Like if you keep on, if my like, well, I used to get my eyebrows done and do it myself, but like the lady who would do my eyebrows would be giving massage and like, you know, doing my teeth and the teeth whitening and like that. And just for an extra $5, I'd be like,All right. I mean, if you want to kind of sell yourself short, but that's what people do, peopleBarbara industry this all day. Um, so, you know, like, like in terms of w what the can you actually do about this, right. Um, because I think, I mean, for, for a better part of, I think a lot of the content they put out, especially right now, um, a lot of people understand, like it's kind of like a, a breath of fresh air, I think because, um, I don't think many people want to even talk about this, um,For whatever reason.Um, so like really what to do about this and, and, um, for, you know, a lot of what I'm not going to give you anything that we do, that we give her students at all, because that's just not having integrity, um, for them and what they did to go ahead and go ahead and go through the program. Um, who I did create is, is, is kind of like a, it's like a, um, I don't even know what to call, like a sliver of like, uh, my new, like thing that we do in our financial, uh, tracking at least, uh, which is, you know, what I talked about in his profit per, uh, profit per cut, uh, type of aspect, right? Like we really want to understand, um, how much do we actually, like in businesses, never about how much you make, but how much you keep, it's always about the profit margin, because if you don't, I mean, I I'm, and I only reason I'm kind of giving this, is it because who hops on a call with me, like in terms of to get into elevated mentorship, um, we kind of go over these numbers too.And I think this is probably the most eye opening thing for myself, because I, I mean, I kinda just did it just as kind of like a little, like, okay, cool. You're hopping on this call, you scheduled a call, let's go ahead. And that leads to like, kind of give you some metrics to give you feedback on your business right now. Um, and I was actually very surprised to see that most barbers, um, honestly, I'd probably making about anywhere from like two to $7, uh, uh, profit per haircut that they do, even though, like, honestly, these barbers are charging 40, 60 bucks already before they come to the program. And, but they're only profiting about two to two to $7 and they kind of, you know, I do that metric. I'm like, Hey, um, so I think we have a bigger problem than what you want to be doing, like really addressing the bigger problem is, um, you know, we need to be making some money.You need to be making some money because I'm raising prices at like that margin it's habitual thing. Like it's, it's a, it's a, um, it's a character that you live in and reside in to be quite honest of poor spending, terrible tracking, and honestly, most barbers, including myself for a very long time, just used to track our spending in terms of on a monthly expenses on just a, um, was it on, on, on the phone, like the little notes section, right. And you just writing some numbers and you're like, I think, is this my things this sounds like about right. And that's how we track, which is, I mean, it, it sucks to go ahead and do that for taxes reasons too, but it's just completely inaccurate and give you a very false sense of hope. Um, when you see the number, which is like five, $6,000, but in fact, you probably only profiting about like, honestly, like probably 200, 300 bucks.Um, and we, we see a lot of barbers that come in to come through our program first that are making that. And, and, um, for us, we really try to get the barbers up to, um, definitely above a, a $50, um, per profit per cut margin, um, at minimum. But, um, really it's, it's all about what, what, you're, what you're actually doing outside of actually cutting hair, right? How, how long and services also this up too. Like, it's going to be up if you try to add on more services, because again, if you're not profitable in what you do, just the main thing, how are you going to be profitable with extra services? Which again, I, you you'll hear me slander extra services all day long, but that's, that's, I mean, I've already done a video on that. I'll probably make another one, um, somewhere down the line, but, um, this profit per cut thing is actually pretty interesting because, um, instead of really focusing on making which, whatever you make, the revenue number increase, um, we're really looking at like the, the thing that we can control at least for right now.I mean, I think everybody can control what they, what, uh, um, uh, this number, at least right now, that's what I kind of, uh, also thought it was like the perfect metric to put out there because a lot of other things, uh, when we kind of see for our barbers and in our relationship, when we see the metrics, we can be like, okay, cool. We know we need to focus on this, this, and this more to up these numbers to get them up onto this level, really this number. I mean, of course there's other things that we can do. Um, but the biggest thing that would support is, and you don't really need, you need to be an open mesh, but it's, but it's just, um, really tracking your expenses, right. Really understanding where your money flow is going, because, um, if you're making a certain amount per month, but only keeping a very, like maybe a couple of hundred dollars from that, um, somewhere in there.So I'm sucking all this out, right. And that's completely controllable depending on situation wise, of course, but also too, it's very good to at least understand what your profit per cut number is. Um, from the fact that like, look, um, some people, you know, especially barbers, we associate a lot of what we do per hour, typically like for a haircut per hour, please, if you're doing 30 minute haircuts, please get out of that that gonna make your shoulder fall off. You're going to be idiotic stupid. And just like a blob by the end of the day, every single day, and your shoulders going to hate you too, please stop doing that. Um, it's not way to be profitable, but if, if, um, and even though those people to profit per cut, cause we're not going off hours, people, those people would be like, Oh, I'm in my, hour's worth this really.So how much do you per cup? Because we're do going out that it's probably still very, very low with 30, 30 or 30 minute haircuts. Um, forgot what I was going to say now, Jesus, it'll come back to me, but I mean, we track this number, uh, specifically just, just because, I mean, it doesn't give us a good hold on price raise, but it also gives us a good whole like, okay, cool. Um, if this, if the margins are good on this number that we can take on a price range, because we know when we say we raised prices, um, we're actually still in the property more. It's not because most people, when they raise prices, honestly, most people, when they raise prices, they still make the same amount, if not less money, uh, because their proper cut number never changed. In fact, when they start making more, more money, when they make more money, but not keeping more money, they're not keeping anymore.Right. They're actually probably losing even more because their spending habits mentally switch like, Oh man, I'm charging. I could spend a little bit more on this hell. Yeah. I can do this thing. So worst thing, it's getting caught up in this facade of the industry to be quite honest. Um, and even with that too, um, you know, I think, I think cutting back on this number when I started learning this, I mean, I remember one year I went to a barber show, um, and I talk about this elevate mentorship in terms of like getting caught up in the facade of, of, uh, in this Mirage of what it is to be like a pop and Barbara, I remember I spent like $2,000 on some shoes, like, uh, 14, $15,000 on some, no, I think it's flipped around about 2000, 2,500 on some jeans and like another 1500 on shoes, apparently even more than them.But I think like a lot of barbers honestly try to like, stop like that and try to do that. And I remember like, you know, cause I was told like, Oh, you gotta look the part, you gotta go ahead. And like you buy that and reinforces, I bought it. I'm like, makes me feel no different to be quite like, it didn't help me at all. It literally did nothing to me except make the image of what it seemed like I was, I guess, better, but internally it didn't help anybody out at all. In fact it probably just put me back a good couple of thousand dollars. I'm like, w what was the point of this? Like, so I think like even, um, tracking in terms of profit number, like, you will really start to see like, you know, exactly, you know, how caught up are you really getting up in this image of like one bar was saying, there's a Liberty barberLiving in like Wyoming. Right. Um, but like,You know, they cut like two celebrities or like one celebrity. And it's like, it's like an extra that was in a movie that was four years ago. Right.But this was the eyes, the point, um,It's still, still keeping up with this, like the side of just like, yeah.Um, come on. Like, if you're a barber,We're not rappers. And I think a lot of barbers like think that the rappers, whichIs pretty funny, um,Especially watching the light and I thought I was too, like, you know, you kind of get in that, uh, uh, idea, but like, honestly, probably like year and a half ago, I started seeing things. I was like, Oh, this is cool,Weird. Because first of all, you know,Making, you know, it's, it's all facade, it's all, it's all front. And I hate to burst everybody's bubble is I think everybody, even, evenI see online, it's kind of a front, like I had to break it to y'all. Um, and I'm prettySure if they even put their numbers in this profit per cut, they would probably be like slapping themselves, probably like returning everything that they justBought. Um, and even BarbaraIs that, go ahead and try it. Like, literally I'll have barbers that wanna get into the program too.And, um, they, they they're thereIt's like a perfect fit for like what we're looking for and that they would get, be getting the results. And they would actually like tremendously improve their life. But because they want to get caught up, caught up in the facade of like spending a ton of money,Buying a lot of, buying a couple of cars.They're not in a position to invest even in themselves. And it's like, wow, you just kinda yourself. Um, so I think this is a very good metric. I think for us,Everybody doesn't matter. Um, where, where you, where you are price wise right now. Um, and it, but itAllows you to see, okay, cool. Before I even raised prices, I want to make sure my price, my product per credit is actually something that's, um, closest to what I chargeBecause, um, otherwise I'm conscious myself over. Um, so I'll go ahead and leave that link down below. Um,But basically what you can do with this, right? So you can obviously, why didn't your profit margins? You can obviously be making more money without having to increase prices or technically making more money, but you'll be keeping a ton more. Um, which is the name of the game. It's always a profit number, right? Doesn't matter how much you're making. Like if you're not keeping anything and you can't make moves the way you want to and do the things you want to do from abundance. And you're always living month to month, you're. Right. So, um, next thing would be, we'll be okay. Um, you know, uh, of course like tracking, iterating this process, right? You want to track exactly what's going on month to month iterate in terms of what you're spending on or what you're doing maybe in your free time, maybe like what you're doing, um, spending wise and even taking a deeper look on like, okay, cool.Do I really need this or not? Right. Because is this purpose side, this for result? Cause what does this actually get me end of the day? Why am I actually even going with this right now? Um, because that proper cut, I'm telling you once, uh, once you kind of see a number start going up, you know, you are doing something correct with that. Um, and then again, like if you don't understand this number or this number is way too low, it doesn't, doesn't even matter if you're going to raise prices or not. Because honestly you're probably going to start losing even more and more money because your habits haven't changed. Uh, you know, when you raise a price, it's not just raising a price, it's changing habits and changing habits drastically because the, when you're making more money, um, really that could be the worst thing for any barber probably out there right now, because if your profit per cut is stupidly low, you're still, if not even more, because now you have more cashflow coming in that you're making and you're spending even more each month, um, on whatever that is on image, on, uh, lifestyle, whatever that may be.I'm all about simplicity now. Right? I probably wear the same thing. Not like there'll be the same things, but I kind of wear like the same aspect of clothing. Like I always, I'm pretty simple right now. I kind of like got out of that idea of thinking, because it doesn't make you money. It doesn't allow you to keep money. So you can make moves later on down the road. I think everybody, the whole reason why even working is not as apply yourself for a lifestyle right now, but also to be able to make and put yourself in a profit position later on down the road, whether it be family help, most barbers in our program have families that they're trying to have more time and more vacations with because to be quite honest, most borrowers don't even take a vacation. Most barbers take maybe a two day vacation once every like three years, um, and have to work like are literally glued to their chairs the rest of the time there, which is sad.Um, and it's because of this profit per cut number. Um, so really, um, I'll, I'll leave the link down below for that. Um, and you know, in that video it will be a link. I, it will be a link and then there'll be like a, a breakdown, but you, because you can't, I don't just want you to give you the, the, the spreadsheet and then you'd be like, what the am I supposed to do? Um, so once you click the link, it'll take you to like, uh, I'm still like building it right now, but it will be like a video page. Um, and then you can go ahead and just watch the video first. And then the sheet will be a Google sheet. So make sure you have like a Gmail account or Google account, uh, that we can get to upload it. And then you have your own personal file machine.You make a file on your own. Um, that way you kind of have one and that'll be yours, that's kind of like my free gift to you. Um, just watching all these videos and staying up to date with the content because, um, I, I know this, this is very different content. I'm actually thinking of repurposing. A lot of my, my older con model would have YouTube content, um, and redoing a lot of the, the, uh, voiceovers in terms of still putting it a lot of game on them, because I think a lot of people like, um, like what you guys, I was, I was reading some feedback from, from you guys, even sub DMS, a lot of barbers still like to see tutorials. And, um, for me I'm always like student or Barbara obsessed, so it's like, okay, cool. If that's in your best interest.And even though I don't agree with it, um, I might as well go ahead and repurpose at least with some game behind it too. That's, that's more up to date with what you need to be doing right now. Um, so we got that to look forward to as well. Um, and then also too, if you were interested in getting into elevated mentorship program, by all means you could set up a call with me, I'll leave that link down below as well too. You can set up and schedule a call with me and see if you're a good fit. Um, you will have to go through like an application process, see if application is accepted. Um, and then we can go ahead and get you started right then and there. Um, but other than that, that's it for this video. Nice short, quick and sweet, um, make sure to go ahead.And, uh, like I said, leave the link to the, what did I call it? Um, I called it the, uh, proper precut tracking sheet that was simple. So I'll leave that down below that link and they'll take you to like, well, what page? And go to Washington breakdown, video of that, and then download it and start kind of tracking everything for yourself and kind of see exactly what's going on with your business and kind of a better view, uh, of, okay, cool. What am I actually doing? What is my business actually telling me? Um, and then, you know, of course, if it's too low, if the number is stupidly low, which warning, it probably will be at first, um, start cutting out massively expensive, start figuring out where you can cut expenses out because that will be your best friend. Um, and then don't get caught up in this image of sod that most of the industry's living in. Alright. So with that bill, uh, that does it for this week's video again, we're going to stay on date with them every single week. Uh, unless I get too busy again. Cause again, we're, we're about doing, not about talking about. So sometimes they look at my, take a little hiatus, just produce it, but we'll be back on as a word. All right. Thank you guys. We'll see you next video.

Daniel Contreras

Daniel Contreras is spearheading the industry with his New Era model that helps overworked and undervalued barbers to work less and make more.  His students are some of the fastest-growing barbers in the industry and he has helped them gain market dominance in their respected areas of business and online. If you're interested in getting out of the old traditional model of barbering and start your New Era journey, click the "FREE Demo Breakdown" button above to request a strategy session.