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A go-kart business offers indoor racing opportunities for go-kart enthusiasts. Races include go-kart rentals, track use, and other race-related activities. Modern go-kart businesses grant drivers the opportunity to engage in low, medium, or high-speed races on indoor race tracks. Services include go-kart rental, safety gear rental, custom race options, and by-the-hour track use. A go-kart business can be a standalone entity or exist as part of a larger entertainment center, park, or public attraction.
Who is this business right for?
Go-kart business management is highly flexible, and it’s suitable for a number of individuals. Car enthusiasts, carnival workers, maintenance operators, and those with a sense of excitement can benefit greatly from owning a go-kart business. Regardless of your interests, a go-kart business should be run by someone with a keen eye for auto mechanics, driving safety, and safe entertainment.
What happens during a typical day at a go kart business?
Go-kart business owners handle insurance plans, kart maintenance, track timing systems, part sourcing, safety gear sourcing, barrier setup, and day-to-day racing governance. Looking through an administrative lens, successful go-kart business owners handle finances, marketing, management, and location maintenance. Successful tracks are run by personnel who are experienced with driver safety, since it is important to monitor every race.
What is the target market?
Because go-kart racing can be incredibly dangerous, preferred clients are those who abide by location rules and who don’t drive recklessly. Understandably, go-karting caters to younger crowds. For this reason, family units are great customer types—if only to enhance a younger rider’s safety.
Go-kart tracks are normally found within arcade complexes, so consistent memberships, on average, are more profitable than single-use riders. A go-kart track profits from ongoing bulk service packages, as they assure consistent services and a constant stream of revenue.
How does a go kart business make money?
An independent go-kart track makes money from either individual rides or monthly memberships. Again, successful tracks utilize ongoing payment “packages” to ensure visitors return. Basic go-kart tracks make money from races, but some may charge extra for site-provided safety equipment. Small amenities, like food and drinks, can make a go-kart track money, too.
If a go-kart track is part of a larger complex, it will either be treated as the part complex or as its own entity serving under the complex. If the latter is true, money is earned after the overarching complex makes revenue.
What is the growth potential for a go kart business?
Since most go-kart businesses operate as contractor entities, many simply serve larger complexes. In these cases, a go-kart business’s growth potential will eventually be tied to the complex’s. Larger complexes absorb many go-kart businesses, too. This mostly happens because individual go-kart businesses struggle to compete against larger entertainment complexes.
As an individual entity, however, a go-kart business can become an area’s preferred provider. Go-kart businesses are far and few between, making them a unique service in the market. If a go-kart business manages to stay independent, it can benefit from a healthy environment of returning customers. However, it is quite difficult to become a multi-state go-kart racing provider.
What are some skills and experiences that will help you build a successful go kart business?
Firstly, a firm understanding of driver safety, insurance, and premises maintenance is important. Go-karting is incredibly dangerous, and many go-kart businesses must stand strong against legal scrutiny for their sake and for the sake of their customers.
Go-kart business owners also need to understand the fundamentals of motor vehicle management, safe driving procedures, mechanics, racing procedures, warehouse operation, and general business planning. Go-kart racing is a profitable opportunity, but it fails to be sustainable if it isn’t approached by a responsible someone with an entrepreneurial mindset.
What are the costs involved in opening a go kart business?
The average go-kart business can cost up to $300,000 to start, due to a plethora of startup costs. Owners will need to supply a warehouse, a multitude of karts, gasoline, maintenance tools, insurance, track materials, and safety equipment. Facility rent is approximately $2,400 to $4,000 per month, depending on the facility’s size and maintenance needs.
What are the steps to start a go kart business?
Once you're ready to start your go kart business, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
- Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your go kart business is sued.
- Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
- Open a business bank account. A dedicated checking account for your go kart business keeps your finances organized and makes your business appear more professional to your customers.
- 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.
- 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.
- 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.
- 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.
- Establish a 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.
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.
Recommended: Fizzle.co offers video courses and a supportive online community of like-minded entrepreneurs. Try one month membership for free.
What are some insider tips for jump starting a go kart business?
At the beginning, a go-kart track shouldn’t exist as a sole proprietorship or a partnership. It should exist as a limited liability corporation (LLC) to be protected against accident and risk claims. Jump-starting a go-kart business isn’t necessarily difficult if you have the capital, but liability coverage must be incredibly sustainable. Every jurisdiction has specific laws regarding LLC coverage.
As for jump-starting in a local market, pricing matters. Your go-kart business should price competitively, pricing family races at about $5.
How to promote & market a go kart business
You should promote your business through nearby fun complexes, arcades, and outdoor entertainment complexes. Promotion via sports complexes, gyms, basketball courts, baseball fields, and similar areas is a good idea. Internet promotion is a solid marketing plan, though your business’s most profitable clients will be found in similar areas—engaging outdoor activities, extreme sports or exercise. The most cost effective form of advertising will be the creation and maintenance of a social media page which showcases pictures of your business, a list of activities you offer, and any special events/promotions that are presently occurring.
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How to keep customers coming back
Record your races, promote on YouTube, and offer Facebook membership exclusives. Go-kart tracks, again, thrive on return visits. If you can offer yearly memberships, discounts, holiday deals, and birthday racing packages, you’ll become a preferred provider in your area. Beware of opening a large track, however, as large tracks have niche audiences. While these audiences are often willing to pay hundreds of dollars for high-speed racing, they generally aren’t sustainable buyers.
How and when to build a team
You’ll need a team of at least five before opening day. Your workers will include technicians, track operators, safety instructors, and payment processors. Once your go-kart track is sustainable, consider increasing your team to about 10. Go-kart tracks tend to become popular quickly, if they offer a solid pricing incentive, so scaling can be rapid, difficult, and dangerous.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a go-kart business. Learn more about licensing requirements in your state by visiting SBA’s reference to state 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, check out our informative guide, Sales Tax for Small Businesses.
To avoid liability and potential lawsuits, Go Kart 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 Go Kart 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.
Certificate of Occupancy
A go-kart business can be run out of a large storefront or large outdoor space. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a space:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a go-kart business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a space:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for you business’ location to ensure your go-kart business will be in compliance and able to obtain a CO
How much can you charge customers?
Customers can be charged, on average, about $5 per ride. Safety gear should be rented for between $5 and $10 as their use limits overall track usage. If you want to make more money, consider offering yearly memberships for between $100 and $200, or you can offer special memberships for quick-access riding. Fortunately, go-kart pricing is incredibly variable. Since you’re dealing with kart depreciation, gasoline, and maintenance as expenses, you needn’t worry too much about each kart’s value compared to its use.
What are the ongoing expenses for a go kart business?
A go-kart business can expect to pay for kart depreciation, gas, kart maintenance, track maintenance, facility cooling, heating, and insurance. Employees will be paid between $8 and $20 per hour, depending on their roles. On a monthly basis, you can expect to pay between $200 and $400 for your warehouse’s utility needs. Heating will also be included in your ongoing expenses as your customers will like to stay warm, and large warehouses often lost heat quickly.
How much profit can a go kart business make?
While a go-karting business can cost a lot to open, its profits can be large. LLC go-kart businesses can make between $500,000 and $700,000 yearly, if they’re smart about attracting and retaining visitors. However, it’s a good idea to join a franchise to increase service reliability. Individual facilities can spend thousands of dollars on financial and marketing advice.
How can you make your business more profitable?
Reduce the liabilities as much as possible. New go-kart businesses face a lot of difficulty, expense-wise, with insurance and property upkeep. Once your business has grown, join a franchise or become part of an entertainment complex. You could also enter the high-speed racing market niche, and attract long-term customers with unique, competitive membership plans.