Business Overview

A pedicab business is a small, pedal-driven vehicle operated by a driver. Just as with taxi cabs, customers hire pedicabs to take them to a desired destination; however, pedicabs are better suited for short trips, as the cab's fuel is limited by the strength and endurance of the driver. Pedicab businesses provide a clean, quiet, alternative form of short distance transportation. They help ease traffic congestion during well-attended community events for both tourists and residents.

Who is this business right for?

This business is ideal for conservationists who want to help reduce carbon emissions. Active people who enjoy working outdoors and interacting with customers are particularly well-suited for it.

What happens during a typical day at a pedicab business?

The daily activities of a pedicab business owner can include:

  • Negotiating fares with individual customers
  • Bicycle repair and maintenance
  • Providing safe transportation to multiple destinations
  • Communicating with potential advertisers
  • Traveling to other cities for special events

What is the target market?

Preferred customers include anyone able to pay the fare. Those attending concerts and sporting events are often able to provide ample tips in addition to the regular fare.

How does a pedicab business make money?

Pedicab businesses make money by charging customers a fare for transportation. Many provide tours for residents and tourists. They also make money by contracting with businesses to use their vehicles for advertising goods and services.

What is the growth potential for a pedicab business?

There are many pedicab businesses so large that the main source of income is renting or leasing vehicles to independent operators.

Getting Started

What are some skills and experiences that will help you build a successful pedicab business?

  • Bicycle maintenance and repair skills to ensure the safe operation of the vehicle
  • A clean driving record, safety training, physical fitness and cycling skills
  • Outgoing personality and a sense of humor to successfully compete with other providers working the same events
  • Geographic and cultural knowledge of the area to provide tours
  • Sales and marketing skills for negotiating fares and selling advertising space

What are the costs involved in opening a pedicab business?

A pedicab business can be started with a relatively small investment, whether the pedicab is leased or purchased. A new pedicab costs between $3200 and $4000, depending on the number of additional features. For example, a canopy for rain protection costs about $750, a cargo cache about $80, and lights about $20.00. In addition to accessories for the pedicab, operators require a few as well, such as comfortable clothing and a bike saddle, for optimum performance. A business license, and in some states and cities, insurance, is required.

What are the steps to start a pedicab business?

Once you're ready to start your pedicab business, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:

STEP 1: Plan your Business

A clear plan is essential for success as an entrepreneur. A few important topics to consider are:

  • What are the initial costs?
  • Who is your target market?
  • How long it will take you to break even?
  • What will you name your business?

Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.

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STEP 2. Form a legal entity

Establishing a legal business entity such as an LLC prevents you from being personally liable if your security guard company is sued. Consider using a registered agent service to help protect your privacy and stay compliant.

STEP 3. Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

STEP 4. Open a business bank account

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

STEP 5. Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

STEP 6. Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

STEP 7. Get Business Insurance

Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.

STEP 8. Define your brand.

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

STEP 9. Establish your Web Presence

A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.

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Select your state below for an in-depth guide on completing each of these steps in your home state.

Where can I find a business mentor?

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

Growing Your Business

How to promote & market a pedicab business

Many pedicab business owners promote their businesses by creating and offering specialized tours of their cities. Cultivating personal relationships within the business community can increase advertising revenue. Those relationships can also provide valuable knowledge about new businesses that can be added to tours and upcoming cultural events that will utilize your services. Face-to-face interactions are important in this business, since building a loyal customer base of advertisers as well as passengers is essential for your business to flourish.

Recommended: Get started with local advertising for your business with a $300 credit from Yelp.

How to keep customers coming back

A website is essential for disseminating information about sightseeing tours and areas of operation. Pedicab business owners make their vehicles available at local community events, so advertising at concert venues and sporting events is especially effective. Museums and other popular sightseeing destinations are also good locations to place advertisements for your services.

How and when to build a team

If you find that you are turning away business, it may be time to purchase another pedicab and expand. When leasing a pedicab, it’s important to make sure operators are at least 21 years of age and have good driving records and adequate safety training. Most pedicab fleet managers provide training programs for new drivers.

Legal Considerations

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate pedicab service. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

Maintain Personal Asset Protection

Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.

Two of the simplest steps that will protect your business, and yourself, are to:

Open a business bank account

  • This separates your personal assets from your company's assets, which is necessary for personal asset protection.

  • It also makes accounting and tax filing easier.

Get a business credit card

  • This helps you separate personal and business expenses by putting your business' expenses all in one place.
  • It also builds your company's credit history, which can be useful to raise money and investment later on.
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To learn more about maintaining your LLC's corporate veil, read our guide and protect your personal assets.

Release of Liability

To avoid liability and potential lawsuits, XXX businesses should have their clients sign a release of liability. Here is an example of one such form.

Recommended: Rocket Lawyer makes it easy to create a professional release of liability form for your pedicab business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.

Earning Potential

How much can you charge customers?

The prices charged for fares vary according to a number of factors, such as the size of the pedicab, the number of passengers the distance of desired destination, and the popularity of a local event. For example, at a sporting event such as the Super Bowl, pedicabs able to switch from street to sidewalk and get to a destination more quickly are in high demand. A ride that would normally cost $30 can command three times as much. Depending on the city and the event, rates can range from $60-$100 per hour. Other prices, such as those of tours, remain relatively constant, with $60 being the average cost of a short sightseeing tour. In larger cities, owners can earn as much as much as $1,200 per month in advertising for each pedicab from other business owners. Some also lease their cabs to the local Chambers of Commerce for both promotional and advertising purposes.

What are the ongoing expenses for a pedicab business?

Pedicab business owners must maintain their business licenses and meet any state or local requirements for insurance. They must also keep their vehicles safe, clean, and attractive for customers. That requires daily inspections and replacing any worn parts as needed. Tires must be kept properly inflated and seat belts fully functional.

How much profit can a pedicab business make?

The small initial investment makes it possible to begin earning profits almost immediately. Profit margins depend on a number of factors, such as weather, the number of community events, and the size of the local tourist economy. Pedicab businesses located in sunnier regions are less affected by seasonal weather changes and can operate at full capacity year-round.

How can you make your business more profitable?

Some pedicab companies provide designated driver services on weekend nights in areas with a lot of bars and nightclubs. Others create specialized sightseeing tours. Maintaining your own repair shop can reduce maintenance expenses and increase profits. It can also enable you to customize your pedicabs with additional accessories, such as drink holders. Purchasing or renting a trailer to transport your pedicabs to other cities for special events can also be highly profitable. Some owners have reported profits of up to $3000 in a single week working a nationally popular event such as a music festival or sporting event. Smartphone apps such as Clover Go allow drivers to take credit card tips from customers who may be low on cash.

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