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International Karting Industry Buyer's Guide

GO KARTING!
A Guide To The World's Most Popular Motorsport.

Kart Expo International

The creation of a year-around operation offers the opportunity to ride go-karts when the individual chooses to do so, not when mother nature cooperates. This is equally true in the snow belt as in the sun belt, but for different reasons, primarily weather related. In the snow belt it means people can ride karts when it is below zero, while in the sun belt it means you can ride karts when the temperature is in the high 90s and above.

It takes a lot more than being comfort-friendly to succeed. Many other forms of entertainment will compete for the disposable income within a given community. This can range from school athletics and other activities, professional or amateur sporting events, theater, movies or other forms of entertainment available within the projected market area. All of these ventures can impact the potential number of guests a given venture can attract.  Historically, most of these ventures will provide serious competition during the conventional school year, which is the time not served by outdoor venues in the snow belt.

Those who have realized the need to appeal to a broader market in order to draw sufficient guests to remain profitable, have selected easy to find locations and have created a strong and ongoing market plan are succeeding; and those that didn’t thoroughly investigate their market potential, failed to create the appropriate attraction mix and did not appropriately address the marketing needs, fell or are falling by the wayside.

BEWARE OF DREAM MERCHANTS THAT COULD SELL YOU A NIGHTMARE 
What worked in one location (maybe) may not work in your situation. Remember, salesmen sell, it’s their job. Many are well informed and provide good information, while some may be concerned with selling a product and a concept based on faulty premises when addressing your site.

The entire entertainment industry is full of projections as to how successful one can be when (if) you build the “100% successful” attraction. Claims made are not necessarily claims delivered. Promises made are not necessarily kept. It is easy for someone to tell you that projects using a specific attraction or marketing approach have returned their investments in one or two years, but it is a far different thing to actually make it happen. Even more troubling is how easy it is for someone to make the statement in such a way as to infer that it always happens, when it may only have happened once, or maybe never at all.

We all want to hear that a given venture is a dynamite idea and certain to succeed. The fact that most success is a result of ongoing hard work is often ignored or left in the background. Success is usually the product of a good attraction, developed in a good location, supported by excellent planning, marketing and operation.

FIND THE RIGHT CONCEPT 
Location! Location! Location! The three most important elements for creating a successful venture apply to indoor karting to an even greater degree than to other businesses. This includes the location of the facility at an easy to find site, the location of the facility in a market than can support the proposed venture and the location of sufficient funding to develop the site, obtain the equipment and to cover the costs of not only the initial facility but of operating costs to support the facility until the cash flow is established. Locating the financing should take into consideration that short term financing can be disastrous in the event “bumps” in early cash flow occur.

The indoor go-kart market is still evolving throughout the United States, both in the number of facilities and the concepts being applied. There are facilities that have operated for many years as indoor concession tracks as well as others following the indoor kart racing concepts similar to those used overseas. Some are relatively successful while others may not be. Detailed information is scarce, as owners are not very charitable on specifics.

We’ve seen advertising materials for various family entertainment products that contain glowing figures for annual use, attendance and revenues. These numbers would be great if they had validity for typical operations, but we have yet to see any that do. The information is not necessarily wrong. If all of the assumptions made in creating the information occurred, it is possible to achieve similar results. Unfortunately, the set of assumptions made in many of these projections could not occur at any given location other than at a large tourism center, and then only at unique locations.

The unfortunate part of this type of presentations is that many people not familiar with the industry take this information to heart and believe that their specific use will give them similar results.

Be certain you obtain as much information as possible before taking “the big step”. Your future success depends on it. Not everything will work everywhere. The wrong location, the wrong site or building, the wrong concept, etc., may all result in the failure of a project.

Success, other than in dynamite tourism locations, depends as much on the effort of the owner/operator as it does on the location. When you don’t have the ultimate site, success depends on a number of elements, not all of which you can control.

FAILING TO PLAN IS PLANNING TO FAIL 
This is not some trite phrase. It is one of the most important pieces of information to consider in your quest to develop a successful venture. Never believe a claim for potential success without checking it out thoroughly. Money spent investigating and thoroughly planning a venture prior to actually making a commitment in terms of purchasing land, equipment or starting the design process, is money well spent. It is far more economical to spend a few dollars to find out that your dream could turn into a nightmare if you proceed without investigating the potential downside. The result of not doing so could be disastrous. 
 

PLANNING TO SUCCEED. A BASIC ROAD MAP FOR SUCCESS 
Prior to making any commitments to a specific course of action, give close consideration to each of the issues we’ve attempted to identify in this article. Take an even closer look at the specific issues that concern your specific circumstances. The following are some issues that you should at least give consideration to before taking specific steps which have major financial impacts.

SELECT THE CORRECT LOCATION 
Where you build your attraction will have a strong impact on your ability to be successful. If your site isn’t visible to passing traffic, forget about impulse customers. It will be difficult enough to attract your local market. People today are creatures of comfort, they don’t want any difficulty in finding you place or entering it. The surroundings of the site in terms of adjacent business activities, street lighting, parking, public transportation and the overall comfort factor for the people you seek to attract must be considered as well.

Family units will be turned off by dark, unattractive locations, unsafe neighborhoods and related issues. They want to go to facilities that are attractive, well lit, safe and generate a good feeling. The adult market may be less influenced by the comfort factor, but not much. Everyone want to feel safe. 

BE CERTAIN YOU HAVE CORRECTLY IDENTIFIED YOUR POTENTIAL MARKET
Without a realistic target market, kiss your investment goodbye! You need a strong base of people within a 15 minute driving time of your facility if your primary attraction is go karts alone. This is especially true of impulse or walk-up customers. Expanded attractions can increase the market distance by increasing the average time of stay. If you have a wide variety of attractions, this travel time can go higher because the stay will be longer.

KNOW YOUR COMPETITION 
Don’t expect to automatically put your competition out of business. Study any competing facilities carefully. Be certain you can build a better mouse trap before you spend all your money on cheese. It is far better to walk away from a site because of competing attractions within your primary market that would reduce your potential revenues than to build a facility destined for failure.

FINANCING 
Constructing and equipping a facility involves a multitude of costs, all of which become a part of the debt service which must be met for the initial investment as well as for the ongoing operating expenses. It is mandatory that the project be capable of generating a return equal to or exceeding the demands of the underlying debt service and the ongoing operating costs. If serious initial evaluations indicate that ongoing revenue will far exceed the initial and ongoing costs, “full speed ahead” is the correct response. If. however, projected revenues cannot address all initial and on-going costs, forget the project before it destroys you.

In all cases, be aware that bumps in the road occur even for the most successful ventures and it is far better to build in the capacity to cover them before they happen.

LOOKS ONLY ATTRACT ONCE 
There is no denying the benefit appearance has in attracting people to a new attraction. Unfortunately, repeat business is far more dependent on the quality of the first experience. To assure repeat business requires a facility and attractions that generate any enjoyable or challenging experience. If they don’t have fun the first time, why would they want to come back. Customer satisfaction is the key to the success of any business.

Visit other facilities. Watch the reactions of the people using the facility. Talk to as many operators and guests as possible. You are undertaking a sizable investment when you enter the indoor karting industry. Look for the things that seem to appeal to those who use the facilities and also find out what turns people off.

BE REALISTIC IN ESTABLISHING YOUR CONCEPT 
In today’s indoor karting industry, there are a number of concepts being applied to the track design with no industry-acceptance standards. These include long straight-aways, varying radii used in the corners, pit designs, barrier designs, methods of operation and the type of power being used on the karts. Each can have a strong impact on the final configuration of your facility.

DEVELOPING A FACILITY IN AN EXISTING BUILDING 
If you are developing your facility in an existing building, there are many issues you will have to address prior to entering into the design phase. Be very certain that you’ve done your investigation and resolved potential problems prior to making any commitments. At the minimum we suggest considering the following:

1.  Overall space available and configuration of that space. Can the available space be developed to accommodate the proposed track(s), maintenance area, queue lines, spectator area, support attractions, rest rooms and office space? If you are considering food services, corporate meeting or party rooms, these all have to be factored into the overall space requirements.

2.  Column spacing, location of doors and stairways. Are columns and walls spaced far enough apart to accommodate the proposed track and barrier systems? Will doors and stairways be accessible after installation of the track and related facilities? Can the proposed usage meet fire codes?

3.  Existing air handling system and associated ventilation. Does the existing air handling system have the capacity to bring the facility into compliance with applicable codes?  If not, is there a practical way to expand the system rather than installing a completely new system?

4.  Available electrical service. Will the available electrical system to be able to accommodate the added loads generated by the proposed operation. This is of concern for electric kart, flat rides, restaurant and arcade needs.

5.  Building drainage and plumbing system. Will the building systems have the capacity to accommodate the proposed operation? This encompasses restaurant needs, rest room requirements, etc. Is the building equipped with a sprinkler system or will such a system be required? Is it feasible to provide such a system, if one is required?

6.  Parking capacity. Sufficient parking capacity must be available to accommodate a fully occupied venue. If not available, attendance will suffer.

The final evaluation of the above design areas will as require a determination as to whether the building and associated facilities can be brought into compliance with applicable building codes; state, county and local regulations and ordinances and OSHA and public health codes, standards and regulations.  Information on each of these must be obtained and reviewed prior to proceeding with any design. Failure to become aware of all the hoops you may have to jump through, from a bureaucratic standpoint as well as design-wise, can well result in unnecessary costs, time delays and possible rejections.

NEXT MONTH - MAJOR DECISIONS ONCE THE SITE IS SELECTED AND MUCH, MUCH MORE!

Peter F. Olesen, P.E. is President of Peter F. Olesen and Associates, Inc., a consulting firm specializing in the design of indoor and outdoor concession go-kart tracks, family entertainment centers and related family-oriented entertainment facilities. Check them out on the Internet at www.olesen.com. They can also be reached by phone at 847-253-1515 or by e-mail at: pfolesen@flash.net.
 
 

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