How to Start a Horse Derby Business

Start a Horse Derby Business by following these 10 steps:

1. Plan your Horse Derby Business
2. Form your Horse Derby Business into a Legal Entity
3. Register your Horse Derby Business for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Horse Derby Business
6. Get the Necessary Permits & Licenses for your Horse Derby Business
7. Get Horse Derby Business Insurance
8. Define your Horse Derby Business Brand
9. Create your Horse Derby Business Website
10. Set up your Business Phone System

We have put together this simple guide to starting your Horse Derby Business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is very important. Read our detailed guide on how to name your business. 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.

What are the costs involved in opening a Horse Derby Business?

You need to secure a horse racing property. If you do not own or rent your own space, you need to secure a space for racing. If you need to secure a location for just a weekend, it could cost anywhere from $2,500 to $50,000, depending on the size and location. The licensing needed costs anywhere from $50 to $100 depending on the state in which you are licensed. 

What are the ongoing expenses for a Horse Derby Business?

You can expect the expenses to include:

• Location costs
• Grounds and building upkeep
• Salary for the staff
• Insurance
• Taxes

If you own your own racehorse, there are additional costs:

• Training
• Food
• Medical care
• Horseshoes
• Insurance on the horse

Who is the target market?

The target market of a horse derby includes three different people: those that enjoy gambling and come just to gamble, those that love watching horse racing, and those that are currently involved with some aspect of horse racing or want to become involved.

How does a Horse Derby Business make money?

There are many ways a horse derby can make money. The horse derby charges an entrance fee to horses entered in the race. A horse derby also charges an admission fee to those that want to come watch the race. Since a horse derby is a race, they allow people to bet on the races. While there may be people that win money on a race, there are often many that lose the money they bet. These are the three significant ways a horse derby business can make money. 

How much can you charge customers?

The cost of admission to your horse derby can range in price, based on many factors. Prices range from $25 for general admission to thousands of dollars for clubhouse seats. 

How much profit can a Horse Derby Business make?

While it is hard to find real data about how much a horse derby makes, it is fair to say they have a significant return on their investment based on the number of bets being made and participants in the stands. The more money spent betting and on tickets, the more you will earn.

How can you make your business more profitable?

The markup on items sold inside the racetrack is large. To make a higher profit from a horse derby business, you need to sell more concessions. You want to focus on items that cost less for you but can be easily marked up.

Consider items like:

• Concession drinks
• Alcohol
• Snacks

You can branch out into higher-end food and drink items once you have a solid idea of what your customers will buy. Since you will have a mix of people, you can try selling other items like posters, t-shirts, and beer holders. Consider buying items in bulk for a lower price and then marking them up. The key is finding the balance between making a profit while not charging the customer an unreasonable amount.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your Horse Derby Business is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

STEP 3: Register for taxes

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

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

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

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

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.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

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

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

A horse derby is an ideal business for someone that is passionate about horses and horse racing. A horse derby is also suitable for an investor, especially one that enjoys horse racing and is looking for a way to earn additional money.

What happens during a typical day at a Horse Derby Business?

As a horse derby business owner, you will want to own and breed your own horses. A racehorse is an athlete and must train. If you are not a horse trainer, you need to hire one to train your horses. Starting early in the morning, the horses need to be fed, and stalls need to be mucked. The horses then should have about five hours of exercise before being fed again. They have another hour of exercise mid-afternoon before their dinner. 

What are some skills and experiences that will help you build a successful Horse Derby Business?

Aside from having the knowledge of how to run a business, you need to be licensed and participate in proper associations. Every state has a racing commission that must provide you a license for starting a horse derby. You must also join the National Thoroughbred Racing Association, which will familiarize you with all the horse racing events happening in the country. It helps if you have some experience breeding horses. If you do not, you should hire a breeder and trainer to help you in the beginning. 

What is the growth potential for a Horse Derby Business?

You have the most growth potential from buying and breeding horses. You can sell these horses for a profit or enter them into races to earn money when they win. You will need a property where you can host your races and rent out space on the property for others who want to ride. You can start out leasing the property where you host the race, but as you scale, you can buy the property to eliminate the need to pay rent.