Pavielle Babai-Pirouz is the owner of a bustling pedicab business, High Tech Hippie, in Austin, Texas, where she oversees a fleet of pedicabs rented out to drivers. Pedicabs, essentially bicycle taxis, provide a unique and eco-friendly mode of transportation around the city. Pavielle’s journey began in 2008 when she started as a pedicab driver herself. In 2021, fueled by her years of experience and knowledge, she made the leap to start her own company. Seizing an opportunity, she acquired a pedicab business that was being sold, instantly expanding her fleet to 32 pedicabs to begin her journey.
Pavielle shares her experience as an EGBI client.
How did you hear about EGBI?
I was looking for an accountant and my accountant recommended EGBI. I needed help organizing my money flow. While I could manage it myself being a small company, I needed assistance in learning how to do it effectively.
How has EGBI helped you?
EGBI has been instrumental in various aspects. They taught me accounting, how to build a website, and even how to hire a lawyer. Moreover, they helped in connecting me with the Chamber of Commerce, which is quite similar to EGBI in terms of networking for entrepreneurs. However, the Chamber of Commerce mainly deals with established businesses rather than EGBI that works with both ideas and established business owners. I attended all the workshops they offered.
What are you working on now?
Currently, my business has outgrown its current property, so I’m looking to expand to a new location. In the pedicab industry, the drivers pay me in order to rent the pedicab. To make it more appealing for drivers to choose my company, I plan to offer better amenities at the new facility, like air conditioning, showers, and even bunk beds for naps. This new shop could also serve as a landing place for drivers coming from out of town for events in Austin.
What inspired you to become an entrepreneur?
The freedom that comes with entrepreneurship was a big inspiration for me. Being able to set my own schedule and pace was something I valued, which I experienced as a pedicab driver. Initially, I was terrified to start my own business due to fear of failure and self-doubt, especially with challenges like reading difficulties. However, technology and mentorship from the previous owner helped me overcome those hurdles.
What’s your biggest challenge?
Managing drivers is one of my biggest challenges. Many of them have diverse interests in their lives, and some aspire to be musicians or pursue artistic endeavors. Balancing their aspirations while maintaining the efficiency of the business can be a delicate task. It’s important to maintain respect and understanding, especially when dealing with individuals with artistic inclinations.
What advice do you have for aspiring entrepreneurs?
My advice would be to embrace criticism and feedback, even from those who may sound like they’re tearing you down. I learned to convert negative feedback into something positive, acknowledging problems and working to address them. Worrying about things that can change is futile; instead, focus on making those changes. And for things beyond your control, learn to accept and adapt without unnecessary worry.
How to create a budget you’ll use for your business. Sure, you can trust your gut, but your employees don’t have your gut and will need a concrete plan they can see and use.
When you hear the word, budget, what emotion comes to mind for you? Some dread it and actively avoid using it. Some think it’s restrictive and not flexible enough to match their ideas. But, a budget helps give you a north star to follow. If your business doesn’t have focus, it’ll feel like nothing is moving or things are moving in all directions and yet feel stagnant. A budget can help you focus your energy on one thing for that year. If you realize halfway through the year that the budget you built is over or below your actual results by a huge margin, then at least you have a starting point on what to change for the remaining year.
If you don’t have a baseline budget, then how can you know what needs to change and how to change it? If you feel like your business is off course, you can always go back to your budget to see what your plans were and refocus. It’s not meant to be a restrictive handcuff. You can have fun with it and get into the habit of recording and seeing the changes in your budget and business as it evolves.
Three ways you can start creating and using a budget:
Simple
Growth Rate
Detailed & Bottom-Up
Simple
The simple method of creating a budget is multiplying your monthly revenue and expenses by twelve (annualizing your monthly number). This automatically gives you your annual goal for revenue and expenses. This only works if you’re just starting out and are a one or two-person team. At least you’ll have a goal that you’re trying to reach. You will sacrifice some accuracy with this method, but it’s a starting point. Then, as your business grows, you’ll get a sense of what revenue and expenses look like to help inform next year’s budget. What ends up happening, as you grow, you’ll want a more detailed method to plan for revenue and expenses.
Growth Rate
Another way is to pick a percentage that you think your total revenue or expense will increase or decrease for the year. For this you’ll need your previous year’s total revenue and expense to multiply your rate to it. Some common sense will have to be applied when using this method. You can’t say you’ll 10x your revenue over the next year when you’ve barely been able to double your revenue. Don’t set yourself up for failure, and keep your numbers reasonable. I usually like to underestimate revenue and overestimate my expenses. You’re always going to spend more than you think so you might as well build that in your budget.
Detailed & Bottom-Up
I like using this detailed and bottom-up approach when building client budgets. It forces my clients to think through the levers that run their business. What quantities and at what price do you think you’ll be able to sell every month? If you’re a nonprofit, which donors or grants can you get your funds from? If your business is seasonal, we can build the seasonality into your budget. How many employees do you think you’ll need? Is the number of employees needed associated with your sales? If you have department heads, this approach forces you to talk to them and have them bring their input as to what the budget should look like. Since, they’re living the day-to-day and can accurately estimate what resources they’ll need for the next year. This approach takes the longest to build, but it’s comprehensive and will have every part of the business talking to each other to build a functional budget.
Not having a budget is not an option. A budget gives you a goalpost to look towards and helps keep you honest as a business owner. If your actuals don’t match your budget, at least you have a starting point to investigate the differences. Do you have to change your sales and marketing tactics? Is it an operation issue? Have you hired too many people? Do you need to hire more people? Is your fundamental product that you’re selling not what your customers want? It opens a world of ways to start analyzing and seeing your business. A budget is a plan that you can use to run your business, but don’t feel you have to stay stuck to it. It’s just a plan that can change, but whatever change you plan must make business sense. You can’t change just because you feel like it. Your employees will feel the whiplash and lack of stability.
About the author:
Anwuli Chukwurah is a versatile finance professional with a track record of starting new finance organizations and scaling them for growth in fast-paced entrepreneurial environments. She has over 6+ years of experience working with small business owners, startups, and nonprofit organizations to help connect finance with their business goals. She aims to ensure her clients become comfortable and adept at navigating their numbers. She works with clients at Woolichooks and writes a newsletter for non-finance folks.
Claudia and Fidel Castillo of Castillo Drywall LLC are not just a dynamic duo in the Texas construction industry; they are a testament to resilience, hard work, and entrepreneurial spirit. Relocating from Chicago to Texas in 2013 amid financial adversity, they found a new home and opportunities for growth in Texas.
The journey to founding Castillo Drywall LLC was paved with over 15 years of experience and a shared passion for excellence. Specializing in drywall installation, taping, and texture, their company caters to a wide range of clients across central Texas, offering unparalleled service and craftsmanship.
Claudia and Fidel share their experience as clients of EGBI.
How did you first find out about EGBI?
“I found out about EGBI through my friend Mariela Méndez, who is also an EGBI client,” Claudia shares, highlighting the community connections that led them to the support they needed.
How did EGBI help your business? What service did you benefit from?
“EGBI helped from business planning to marketing tools, legal advice, and accounting,” Claudia explains. “They continue to support us with workshops and tools for our growth.”
If you had to start over, what would you do differently?
“I would start the business without overthinking it,” Fidel reflects, underscoring the value of taking the leap with confidence and passion when one is first starting the entrepreneurial journey.
What was the biggest challenge when starting your business?
“Overcoming the fear to start was the hardest part,” adds Fidel, sharing a sentiment many entrepreneurs can relate to.
What advice would you give to someone starting their business?
For those starting their entrepreneurial journey, Claudia and Fidel suggested leveraging support networks like EGBI, which can assist you with critical business fundamentals, from legal and financial knowledge to effective marketing strategies.
Through their partnership with EGBI, Claudia and Fidel Castillo have not only navigated the complexities of entrepreneurship but have also seen significant growth and success that is only expanding. Their story is a powerful reminder of the impact of community support, education, and perseverance in the business world.
EGBI provides training, coaching, and support to aspiring and existing business owners who face barriers to growing a successful business. If you would like to support our efforts, please visit our website https://egbi.org/donate/.
It’s a lot better to prepare for them than to get a surprise tax bill.
Taxes. They’re a necessary part of doing business, and you need to make sure you’re aware and are planning for when you’ll eventually have to cough up the money you owe the government. Tax planning is an essential part of running your business, and you need to ensure you save a portion of your net income every month when the payments are due. This post is not for non-profits — except for your annual 990 filing to let the government know you’re still alive as an organization and you won’t owe the government money.
Here are the five most common paid taxes by small business owners:
Income Tax
Sales Tax
Payroll Tax (includes Unemployment Tax)
Franchise Tax
Property Tax
Income Tax
Frequency: Annual
Mandatory: Yes
This annual tax is due in March (for corporations) or April for everybody else. Work with a CPA to ensure you’re paying the right amount and you’ve taken advantage of any deductions. If you’re an LLC, your business income tax is filed with your personal income tax. Yes, just because you have a business doesn’t mean you get out of filing your own personal taxes. I’m not a tax accountant, so I always refer clients to a CPA.
Sales Tax
Frequency: Annual/Quarterly/Monthly
Mandatory: Depends on the business industry
For sales tax, I suggest you call your local sales tax office for answers. If you have no idea if you’re supposed to pay sales tax, call the local office to get a quick answer. It will save you hours scrolling through Google. This can be a cumbersome thing to figure out, depending on where you make sales. The last time I called the local office, they were very helpful and answered all my questions — no matter how stupid I thought they were. If you’re a bigger corporation, you can also work with sales tax firms or use software that tracks sales tax payments to make sure things are aligned and filed correctly.
Payroll Tax
Frequency: Quarterly/Monthly
Mandatory: Yes
If you have full-time W2 employees, you must file and pay payroll and unemployment taxes. A payroll system such as Gusto will remove the stress from these filings. Make sure you’re registered with your state’s Workforce Commission so you can connect your tax account number with your payroll system so all payments can be correctly allocated.
Franchise Tax
Frequency: Annual
Mandatory: Yes
Everyone is required to file the Franchise Tax report. The threshold for Texas is $2,470,000 in revenue, and even if you don’t have that revenue, you’re still required to file the Public Information Report or Ownership Information Report. If your company issues shares, your franchise tax report can use your share counts and amounts—this is easier, especially if you use a cap table software such as Carta.
Property Tax
Frequency: Annual
Mandatory: Depends on if you own property
If you owe any property, you’re required to pay property tax. Properties include land, buildings, and any improvements you’ve made. It also includes tangible personal property used in the “production of income,” such as furniture, inventory, machinery, supplies, etc. Due dates vary based on county, so call your local office to confirm the date.
So, if you don’t want to be hit with a tax bill that the government thinks you owe them, be proactive with your filings. There’s nothing more shock-inducing than getting a bill for $100K when you know that number couldn’t be right. Also, form a relationship with a CPA (Tax Accountant) at the beginning of your business so they can make sure you pay the right amount of taxes and show you how to achieve that as a business.
About the author:
Anwuli Chukwurah is a versatile finance professional with a track record of starting new finance organizations and scaling them for growth in fast-paced entrepreneurial environments. She has over 6+ years of experience working with small business owners, startups, and nonprofit organizations to help connect finance with their business goals. She aims to ensure her clients become comfortable and adept at navigating their numbers. She works with clients at Woolichooks and writes a newsletter for non-finance folks.
The Balance Sheet is also known as the Statement of Financial Position (nonprofits), and this shows you the balance between how much you own (assets), how much you owe other people/companies (liabilities), and the book value of your company (equity). Like the income statement, you read it from the top and then move down the report. It tells you the ending balance of your accounts at a singular moment in time. Most business owners ignore this report and focus on the income statement, which causes you to be short-sighted with your business. If you can’t tell how much debt you have, how often you can turn your assets into cash, and any other future payments you may have, then you will always feel behind. Your balance sheet should always balance—Assets always equal liabilities plus equity.
When you’re reading your balance sheet report, you’re looking for months that break the trend you see. What’s weird? Why’s one month significantly lower or higher than the rest? Why are your total assets lower? Why are your total liabilities higher? Why is your total equity higher? You should be able to determine the answers to these questions as you review your balance sheet. All three financial statements are connected, and you shouldn’t favor one report over the other. Your net income from your profit and loss statement is connected to your balance sheet in the equity section. A monthly review of all three financial statements helps give you a complete picture of your business.
There are three main sections to a balance sheet:
Assets
Current Assets
Long-Term Assets
Liabilities
Current Liabilities
Long-Term Liabilities
Equity
Owner’s pay & investments
Investments from others
Retained Earnings
Assets
Your assets are divided into current and long-term assets. Your current assets include your bank balances, accounts receivables, and inventory. Your current assets mean that you can quickly access your cash immediately, or if you need cash within 12 months, it’s possible for you to sell more inventory and call on your customers who owe you money (accounts receivables). Long-term assets include purchases such as equipment, vehicles, and properties. These assets will take longer than 12 months to turn into cash. It’ll be harder for you to access cash for immediate needs quickly.
Liabilities
Current liabilities include your credit card balance, lines of credit, and accounts payable (vendors/contractors that you owe) — bills/debt you must pay within 12 months. Long-term liabilities include your larger loans and other long-term debt you may have. These loans usually don’t need you to pay the full balance within 12 months. Some debt is good to help you grow your business, but being over leveraged (having more liabilities than assets) will cause you to constantly be scrambling for cash to keep up with your interest and principal payments and may eventually go bankrupt. So, be careful when taking on debt, and always have a plan of how you’re going to pay your debt back while growing your business.
Equity
Equity has three main sub-sections: owner’s pay or investments, investments from others, and retained earnings. As the business owner, any dividends or transfers from the business account to your personal account will be recorded here. Unless you legally turn yourself into an employee, all the money you pay yourself as the owner is recorded on the balance sheet, which doesn’t show up as an operating expense on the income statement! Also, if you invest in the company with your personal money, it’s recorded in the equity section, as well as any other investments you receive from others. Retained earnings are the cumulative net income from starting your business. So, if you’ve lost money from the beginning, your retained earnings will be negative, and if you’ve been net positive, your retained earnings will be positive.
The balance sheet reports help you see your business as a whole, while the income statement only shows you one portion of your business. Having a positive net income means your retained earnings increase, which in turn means you have more cash in your bank. But you may have to use some of that cash to pay your liabilities. Next week, we’ll talk about how reviewing your cash flow statement will help you confidently see if you have enough cash to pay your expenses for next month.
About the author:
Anwuli Chukwurah is a versatile finance professional with a track record of starting new finance organizations and scaling them for growth in fast-paced entrepreneurial environments. She has over 6+ years of experience working with small business owners, startups, and nonprofit organizations to help connect finance with their business goals. She aims to ensure her clients become comfortable and adept at navigating their numbers. She works with clients at Woolichooks and writes a newsletter for non-finance folks.
