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Old 07-08-2011, 08:17 PM   #1
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Default I want to open an Indoor Offroad Track

I hope I posted in the right place?

I'm calling out to current owners and past owners of this business. I have one strong push left in me to build my own business. I've decided to investigate this one as a possibility because, though I make a good living, I have never been satisfied in my professional life. I want to try making a living at something I love, in an environment I enjoy.

I've been doing some calculations, and I've been admittedly conservative, however, even if I boost my estimates to moderate, I'm still falling thousands short of even "breaking even" per month.

There are so many tracks around the country that have been at it for years. I'm clearly missing something in my calcs, I need some help here from anyone who will give it.

I'm very serious about this, so much so that I don't want to disclose the location until I have a thorough understanding of the business model. I will say this though, it's California and not within 60 miles of any existing track, so never fear me trying to move in on someone else's territory.

Thanks in advance

Last edited by macerone; 07-09-2011 at 08:20 AM.
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Old 07-10-2011, 12:01 PM   #2
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for those that do it in my area, it's a labor of love, sweat, and hard work. It is not a "quit your day job" business model.
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Old 07-10-2011, 03:20 PM   #3
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Thank you for the response, I know people are making a living out there, I need to hear from them as well as those that have had a rough time of it.

I'm still digging for info, I've prepared a letter to send out to 10's of tracks around the country. I'm just in the middle of formatting it now.

By the way, It's my intent to ultimately close these probing forum threads when I've made a decision, so If you see this thread in a month or 3, and I haven't posted: "Done gathering info", that means I'm still searching, hoping you guys will contribute to my information pool.
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Old 07-11-2011, 10:14 AM   #4
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For best results you need the shop to be self supportive. If the shop can stand on its own then that is great, you don't want to have to rely on the track to keep you afloat. If you can can it to work that way they your 100% better off.

The more stuff your shop has in it the more chances you have to sell. The more overall hobbyshop you have that sells other stuff than just r/c cars helps. Trains, models, AFX type slot cars, paints and other crafts all will bring in a wider list patrons to your shop.

Some of the better shops also have a great website to buy products from and good promotion of this site to help drum up business.

Food at the track is kinda to fold. Its great to buy from the shop but it is an extra expense to have a full state approved kitchen setup. The shop I work out has this but it was expensive and also you need yet another employee to pay for serving food on race days. If you just sell food from a crock pot like hotdogs and burgers sooner or later you will have problems from the state since its not approved. I watched this happen to more than one shop so I would be prepare either to get the right stuff or just pass on the food. Just have a soda machine and sell that along with snack type foods.

Money making margins are small in industry and honestly most shops buy from the same few distributors (Horizon, Great Planes, HRS and a few others.) Also alot of places you need to order direct so lots of time on the phone ordering. Parts is where you make money as kits in general have smaller mark ups.

This is just alittle info I know from working at the shop I work at and many of the things the owner has gone over with me. He is a personal friend before he had a shop so I get a lot more insight that most do.
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Old 07-11-2011, 10:47 AM   #5
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Blending many years of racing, having worked throughout college at racetracks a decade ago, and my current situation working as an Economist, I think the points I'd like to make are as follows.

1) An indoor track will almost never support the track itself revenue wise. Entry fees will not cover the square footage being used by the track, the electricity being burned in the pits, water and track prep expense, and so on. Any attempt to make it do so will leave you priced out of the market. The track exists to drive revenue to your shop.

You want practice fees to be cheap so kids come in on weekdays during the summer and strip the gearboxes in their Traxxas' and so on (sounds cruel but it is true!). You want race fees to encourage a large turnout so said racers will buy tires.

As has been mentioned, margins are tight so volume is your only way to survive. Your revenue projections need to show the track in the red. To again somewhat echo the poster right above me, you need to be a hobby shop with a track, not a track with a store.

2) Research your market carefully! If you're in CA and 60 miles away from an existing indoor track, my best guess is that you're 60 miles away from a viable market place knowing where most of the indoor tracks in CA are currently located. Or, you're in the Bay Area where the odds of you finding a building wherein you'll be able to cover rent even with 100% of your gross revenue is thin. An indoor track needs either affluent customers or low overhead and those two work with an inverse correlation geographically.

You were smart to not post a specific area yet though or the thread would then be filled with people saying "do it" who will then only race once a month at your place and never buy anything there anyway.

3) I've been a "regular" at about a dozen indoor tracks in my life. At over half, the owner worked a "day job" while trying to make the track break even while dreaming of profits.

4) Get something like the Hobbytown USA franchisee prospectus. It'll give you a realistic idea of what a shop alone is looking at making.

5) Plan on selling your parts/etc. at prices competitive with the online stores. I've seen way too many hobby shops get stuck on having to have a certain % markup on each item. It's better to sell two sets of tires that cost you $17 each for $20 to match a .coms' price than insist on selling them at $22 and maybe sell one set and incorporate that into your revenue projections.

6) Re-read #2

Good luck!
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Old 07-11-2011, 07:14 PM   #6
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Guys, I'm really appreciating the advice. Thanks to you i'm looking at this from a "shop with track" perspective rather than the reverse.

I want to be very careful about how much I disclose before I make any decisions, but population and affluence won't be a problem. It's the interest in the hobby I'm concerned with. and the devastating cost of square footage. Here's the letter I've sent out to tracks around the country, it'll give you an idea of just how bad the numbers seem to be from my calculations:







I'm calling out to current owners and past owners of the indoor
raceway business. I have one strong push left in me to build my
own business. I've decided to investigate this one as a
possibility because, though I make a good living, I have never
been satisfied in my professional life. I want to try making a
living at something I love, in an environment I enjoy.
I've been doing some calculations, and I've been admittedly
conservative, however, even if I boost my estimates to moderate,
I'm still falling thousands short of even "breaking even" per
month.
There are so many tracks around the country that have been at it
for years. I'm clearly missing something in my calcs, I need some
help here from anyone who will give it.
I'm very serious about this, so much so that I don't want to
disclose the location until I have a thorough understanding of
the business model. I will say this though, it's California and
not within 60 miles of any existing track, so never fear me
trying to move in on someone else's territory.
I'm considering leasing from 8000 to 15000 sq ft. for one offroad
track, a fully stocked parts counter and space to host big
events. In my area, based on that sq footage, the lease will be
aproximately $6k-$10k/mo.
Also my area has a very good size population.
With that in mind, please look over my numbers here and correct
what seems inaccurate, and add or delete categories as you see
fit.
You can answer as little or as much as you want, obviously the
more the better for me, but I understand we all have time
constraints and reservations to disclosing certain info about our
businesses. Whatever you feel comfortable with, it would be much
appreciated. And please don't feel restricted to just the info
I've asked for, if there's key information that I didn't even
know to ask, then please note that. I want to make the best
informed decisions I can going into this venture.

Accuracy??

Start up costs:
Tenant demolition/improvement, lease deposit,
track construction, office computers, advertising,etc.. = $30k

Monthly Costs:
Lease = $6k-$10k
Electricity, Air conditioning, phone, internet,
directv, insurance, etc... = $4k
Employees x3 = $10/hr(plus state costs for each)
x8hrs x5days x4weeks = $5.5k


Total monthly costs NOT including my own pay = $15.5k - $19.5k



Monthly Income:
Track usage during the week(mon-thurs) = $15 x40
people per week x4 weeks = $2400
Track usage on weekends and 1 weekday racenight
(Fri-Sun+Wed) $15 x25 people per day x3 days x4
weeks = $4500
Fully stocked Parts counter net profit = $1000
Repair Services = $ 500
T-Shirts, Hats, Stickers, etc... Net Profit = $ 200
Sponsorship from local businesses and hobby industry = $ 500
My own creative ideas for more income, net profit = $1000


Total Monthly Income = $10100





Total Profit still not including my own pay = (-$5.4k) - (-$9.4k)

So you can see my difficulty, what am I not seeing/considering?


questions to ask a track owner:

What were your start-up costs
What is your track rental income per month or week or however
you'd like to qualify it
What is your gross/net for the parts/hobby counter
Are there other sources of income I haven't mentioned, that
you're willing to share?
did you need a loan, business plan?
How long have you been open?
any tips?


Thank you in advance for anything at all you can contribute, Mike
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Old 07-11-2011, 07:34 PM   #7
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So that letter I sent out was based on my initial perspective of "track with parts counter", however all those costs still apply.

I guess the next step is to get an idea of what a hobby shop can pull in, in an area with good population numbers. The problem here is that there are a couple of established hobby shops in the area already
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Old 10-24-2011, 10:33 PM   #8
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Hey OP, any progress on this? I'm keeping my ears peeled for new places to race 1/10th Touring cars in the south bay. Did you get any responses to letters?
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Old 10-25-2011, 06:17 AM   #9
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Default Done gathering info(For now)

A couple of replies, nothing that helps me tip the balance towards action on my part. In fact, for the short term, this thread has run it's course. Thanks to all that responded.
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