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International Karting Industry Buyer's Guide

Kart Expo International
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INDOOR INFO

BUILDING YOUR FOUNDATION FOR A SUCCESSFUL INDOOR GO-KART FACILITY

In today's market place, there is little room for error in developing an indoor go-kart facility, whether it is a competition-based adult oriented go-kart facility or a family oriented indoor entertainment facility that includes indoor go-karting as part of a broader package. Not only is a sufficient market (Residents that are potential customers) required, the facility must be easily reached and consist of a building that can be developed into a successful center; you require a solid foundation in terms of knowledge to succeed. This is not always easily acquired.

Too many facilities have been opened, only to fail because the developer/operator did not do their homework. Failing to plan is planning to fail. It takes more than a dream to succeed. Careful planning is required every step of the way. This includes far more than having the dream, finding a site, locating investors and building the facility.

Many people fail to properly investigate their market demand, determining the best location and completely ignore the realities of operating a successful facility. If the developer is independently wealthy and can support the project as a hobby, it is one thing, but if you require investors and hope that the facility will be profitable, there are many additional steps that should be taken before buying, leasing or constructing a building to house an indoor track.

Is your Target Market Sufficient to Support Your Project?
Will the demographics of your area support the facility you wish to develop? This involves more than identifying the number of potential customers that could be attracted to the proposed site. It includes establishing whether your potential market area has other attractions that will compete for the available disposable income of your potential guests and whether you can successfully compete for a sufficient share of the market to obtain reasonable revenues. Are there outdoor tracks that will greatly diminish your revenues during the five to seven months when the typical guest prefers to be outside?

If you intend to only address the "adult racing crowd", your potential market has already shrunk significantly. There are many casual go-karters that would also be logical targets for the racing venue if it were made more attractive with additional elements within the facility.

Is Your Proposed Location the Right One?
Have you selected a site that is easy to describe and locate? Is it in an appealing location and is it easily reached from a bright, safe parking lot? Many great concepts have failed from poor location.

Do you have Sufficient Funding?
Not only do you require funding to construct and equip your facility, you need to have additional funds available for operating capital, marketing, permits, fees, taxes, payroll, insurance and many other survival costs. To be strong enough to survive, you should have sufficient reserves for a minimum of one year in order to survive economic downturns, strikes and related debilitating circumstances.

Does your facility provide sufficient entertainment value?
While you may have identified a dedicated core of drivers that are satisfied to come for the racing only, you will require additional elements to assure repeat visits and sufficient per capita spending. This can include an arcade, snack bar and other attractions. The addition of a group program, establishing racing leagues, team building and similar programs can all serve to increase the total revenue. To be successful in these endeavors requires an ongoing program. For most facilities this involves a full time approach, and often a full time employee to organize, market and service these programs.

A broader approach and larger market are often vital to success.
Racing purists may not like this approach, but economics almost always demand a larger volume of business than can be generated with the adults only concept, unless a significant amount of additional attractions are added. There may be exceptions in mass markets, but they are very few.

The addition of additional attractions may include an extensive arcade, pool tables, miniature lane bowling and other attractions to expand the appeal. Food services can also generate additional revenues, but they must be scaled to a realistic size based on the number of anticipated users of the facility. You cannot create a full service restaurant unless that restaurant would be successful at that location without any added attractions.
While it is this writer's opinion that alcohol and go-kart "racing" do not mix, many facilities currently operate facilities that offer alcohol. Whether or not the total revenues justify such a mix is a question the individual developer must resolve to his/her satisfaction. In addition to the potential problems that can easily be anticipated, the presence of alcoholic service may diminish the total attendance rather than increase it.

Any decision on providing expanded food service should be reviewed carefully with a consultant knowledgeable in the food service industry. A first thought is that; if you are not experienced in food service, run, don’t walk away from it, unless you bring an experienced manager into the equation.

Expanding an operation to appeal to a broader market is a wise move, as it adds to the potential for success. Regardless of the final market the developer seeks to serve, it is important to understand the realities of success versus failure. The old adage that failing to plan is planning to fail certainly applies to this industry.

Again, using consultants can avoid false starts, wrong decisions and financial disasters. What works in one situation can well be the kiss of death in another.

Be Prepared - Do Your Research:
Carefully plan your course of action. Identify as many sources of information as possible and utilize them. There are seminars, publications, trade shows and existing facilities that can be visited. Make friends with operators of similar attractions (outside your market area). Consider as many alternatives as possible before making a final decision. Measure twice, cut once, is a very good concept. Most people don’t get a second chance to enter this industry.

One item to remember, is that the representatives of firms manufacturing racing karts or concession karts are in the business of selling karts. Their viewpoints may not be as unbiased as you would wish. They certainly know their karts in terms of performance and potential. They do not, in most, if not all instances, have the in-depth study and design experience and expertise that specialty consultants have developed over years of service in evaluation of demographic data, design of facilities and operations consulting.

In selecting consultants, check them out. Not everyone claiming to be a consultant has the same range of expertise and successful clients. Some are creative and keep up with the industry, while others keep doing things the way they were done years ago. This must be weighed against the reality that not everything new and innovative is going to be successful. This applies to suppliers and contractors, as well.

Kart Expo:
Kart Expo offers the best tradeshow environment for those who are interested in both indoor and racing go-karts. In terms of being able to see the equipment and services available to the industry, it is undoubtedly the best. It also offers a number of valuable seminars on concession and racing go-karts. Unfortunately, the tradeshow is too short and the demands on the visitors too demanding to permit a detailed seminar program that can address all of the different issues a newcomer faces. The timing of seminar presentations and the viewing time on the tradeshow floor does not permit the intense and detailed presentation of information that can be presented in a concentrated seminar format to address financing, insurance, design, operation, safety, supplemental attractions, food service and related issues.

Foundations University:
This writer would like to recommend Foundations University as a valuable learning experience not otherwise available. It provides a unique concentrated approach to developing a knowledge base on which to make some of the most important and demanding decisions most developers will face. It offers a wide range of data and information not readily gained elsewhere.

Foundations University has been formed to provide a concept specific training program that spans concept development, financing, design, constructing and operating location based entertainment facilities. The information presented applies equally to family oriented and "adult” facilities. It fills a need for concise, current and accurate information that currently is not offered in any other program.

The seminar provides the opportunity to develop the knowledge foundation so vital to your future success. It is a concentrated three-day program that brings together people planning to develop various indoor and outdoor family entertainment facilities. The presenters are professionals with more than 120 years of experience. The information presented is equally valid for many location based entertainment facilities. The presenters have provided consulting services to a wide range of major destination theme parks, casinos, hotels, family entertainment centers, government agencies and other business entities over many years. The program not only concentrates a wealth of material into the three all day sessions, it also has two evening sessions as well. The format is based on the attendees and faculty being based at the same facility, thus enabling the attendees and faculty to network during breaks, meals and at the evening sessions.

Subjects discussed include initial planning, business plans feasibility studies, market evaluation, financing, dealing with agencies, site selection, design of indoor and outdoor go-karting, miniature golf, game rooms, food services, bowling, children’s’ edutainment, insurance, staffing, security and a wide range of additional subjects.

The faculty includes experts in the fields of financing, business plan development, site selection and design, video and redemption arcades, indoor and outdoor attractions, children’s edutainment, adult facilities, food services, security, point of sales operations, card systems, staff training, group sales, birthday party programs, marketing and related issues that face both new and existing businesses in the family entertainment industry. The span and detail provided in this seminar is unequalled in the industry. Visit Foundationsuniversity.com for more complete information.

The program includes presentations, field visits to operating attractions, after-hour sessions that include business plan reviews, site and floor plan evaluations, facility operations and children’s edutainment. A 400-page manual is included with the program.

Foundations University currently is held at various locations three times a year. For 2005 the current schedule includes sessions to be held in Dallas, Texas (February 8-10, 2005), Chicago, Illinois (April 26-28, 2005) and Kansas City, Missouri (July 19-21, 2005). Each session is limited to 50 attendees.

You will find it difficult if not impossible to find a better three-day seminar at which to gain information that is crucial to your future success.

ABOUT THE AUTHOR
Peter is president of Peter F. Olesen and Associates, Inc. of Mount Prospect, Illinois. He has more than 35 years of experience in the family entertainment industry and civil engineering field. His firm has developed more than 250 entertainment industry projects ranging from theme parks to family entertainment centers, indoor and outdoor go-kart facilities, miniature golf and related attractions. These projects have been performed in 38 states, Brunei, Canada, Mexico and Puerto Rico.

He has presented seminar sessions spanning a wide variety of subjects within the family entertainment industry, including indoor and outdoor go-karting, feasibility at numerous industry seminars at Kart Expo, FunExpo, International Association of Amusement Parks and Attractions, LeisureExpo, Foundations University, Rookies and Newcomers and related programs. He has also participated in go-kart safety seminars presented by the State of Ohio.

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Post Office Box 101
Wheaton, IL 60189 USA
Telephone: 630-653-7368
Fax: 630-653-2637
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