How to Start a Go-kart Business

Who doesn’t love go-karts?! You feel like a race car driver, hitting the gas and hugging those turns — but in a controlled environment. Go-karts were booming pre-pandemic, expanding 35% from 2012 to 2019. After a downturn in 2020, the industry is now coming back strong. 

You start your own go-kart business and give people good times on the road while making good money. You could even grow your business to have go-kart tracks around the country like Pole Position Raceway or K1 Speed.

But first you’ll need to gather some information about how to start and run a business. Luckily, this step-by-step guide will push the gas pedal on your entrepreneurial knowledge and prepare you to launch a successful go-kart business.

Step 1: Decide if the Business Is Right for You

Pros and cons

Starting a go-kart business has pros and cons to consider before deciding if it’s right for you.

Go-kart industry trends

Industry size and growth

• Industry size and past growth – The US go-kart industry is worth $115.7 million in 2022 after a slight contraction during the pandemic.((https://www.ibisworld.com/industry-statistics/market-size/go-kart-racing-tracks-united-states/))
• Growth forecast – The US go-kart industry is bouncing back and expected to grow nearly 3% in 2022.
• Number of businesses – In 2022, 179 go-kart tracks businesses are operating in the US.((https://www.ibisworld.com/industry-statistics/number-of-businesses/go-kart-racing-tracks-united-states/))
• Number of people employed – In 2022, the US go-karts tracks industry employs 1,555 people.((https://www.ibisworld.com/industry-statistics/employment/go-kart-racing-tracks-united-states/))

Trends and challenges

Trends in the go-kart industry include:

• Today’s go-kart tracks are getting bigger, longer and more complicated in order to stand out and attract customers. 
• Go-kart racing is one of the world’s most popular motorsports, with an estimated 35M people participating annually in the US alone.

Challenges in the go-kart industry include:

• Even with today’s technology, go-karts require a lot of upkeep, creating significant ongoing expenses.
• Lawsuits can occur if users are not properly informed of safety rules. Go-kart businesses must have strict procedures in place to mitigate potential liability.

How much does it cost to start a go-kart business?

Startup costs for a go-kart business range from $215,000 to $380,000. Costs include the rental or purchase of a large space or property, such as a warehouse or parking lot. Then there’s track construction, vehicles and safety equipment, and a labor and operating budget. 

You’ll need a handful of items to successfully launch your go-kart business, including: 

• Go-karts
• Safety equipment
• Maintenance tools

How much can you earn from a go-kart business?

For a high-end track, a single go-kart race should cost about $25 per person. Your profit margin after labor and overhead costs should be about 20%. 

In your first year or two, you might have 10 go-karts rented 5 times a day, bringing in more than $456,000 in annual revenue. This would mean $91,000 in profit, assuming that 20% margin. As your track becomes more popular, you might rent 10 carts for 20 races a day. With annual revenue of $1,825,000, you’d make an outstanding profit of $365,000.

What barriers to entry are there?

There are a few barriers to entry for a go-kart business. Your biggest challenges will be:

• The startup costs of building the track, plus the karts and equipment
• Finding a suitable space for your go-kart track

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Step 2: Hone Your Idea

Now that you know what’s involved in starting a go-kart business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research go-kart businesses in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a go-kart business that also has a miniature golf course or a golf driving range. 

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as go-kart racing for corporate or family events.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

Your services will depend on how you build your facilities. In addition to go-kart racing, you could offer mini golf or a driving range. You could also have arcade games and offer food and beverages. 

How much should you charge for go-kart racing?

The average price for a high-end go-kart race is $25 per person. After the costs of labor and overhead, you should aim for a profit margin of about 20%. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market may tend to be younger, but it’s not exclusive to young people. You should spread out your marketing to include sites like TikTok, Instagram, and Facebook. 

Where? Choose your go-kart location

Selecting the right location for your go-kart business is crucial for attracting customers and ensuring its success. Look for a spot with ample space for a track, parking, and facilities, such as a warehouse or a retail space. Consider accessibility and convenience, ensuring that the location is easily reachable by car and has ample parking.

Additionally, assess the local regulations and zoning laws to ensure compliance and obtain any necessary permits. Depending on the type of go-kart experience you plan to offer, you may also want to consider the proximity to entertainment venues, restaurants, or other attractions.

By strategically choosing the right location, you can establish a profitable and popular go-kart business that offers a fun and exciting experience for customers and stands out in the competitive entertainment industry. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

Step 3: Brainstorm a Go-kart Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “go-karts” or “go-kart racing”, boosts SEO
• Name should allow for expansion, for ex: “Speed Racer’s Go-Karts” over “Kids Go-Karts”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Go-kart Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: A concise overview of the go-kart business, highlighting its key aspects and objectives.
• Business Overview: Detailed information about the go-kart business, including its mission, vision, and core values.
• Product and Services: Description of the go-kart products and services offered, emphasizing their unique features and benefits.
• Market Analysis: Examination of the target market, customer demographics, and trends influencing the go-kart industry.
• Competitive Analysis: Evaluation of competitors in the go-kart market, highlighting strengths, weaknesses, opportunities, and threats.
• Sales and Marketing: Strategies for promoting and selling go-kart products, encompassing advertising, pricing, and distribution channels.
• Management Team: Introduction of key team members involved in running the go-kart business, emphasizing their relevant expertise.
• Operations Plan: Detailed plan outlining the day-to-day operations of the go-kart business, including facilities, equipment, and processes.
• Financial Plan: Financial projections, budgets, and funding requirements for the go-kart business, providing a comprehensive view of its financial health.
• Appendix: Supplementary materials, such as charts, graphs, and additional documentation, supporting and enhancing the information presented in the business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to go-kart businesses. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your go-kart business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Form Your LLC

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
• Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a go-kart business. You might also try crowdfunding if you have an innovative concept. At some point, if you’re doing well and set to expand, you may be able to attract angel investors or venture capital. 

Step 8: Apply for Licenses/Permits

Starting a go-kart business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your ____ business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software, such as Clubspeed, RaceFacer, or kartingmanager, to manage your bookings, events, invoicing, and payments.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Marketing

For your go-kart business, the marketing strategy should focus on showcasing the thrill and fun of go-karting, the safety and quality of your karts and tracks, and any unique experiences or services you offer, like group events, leagues, or advanced racing classes. Here are some powerful marketing strategies for your future business:

Kickstart Marketing

• Professional Branding: Your branding should convey excitement, speed, and fun. This includes your logo, track signage, and promotional materials, as well as the overall aesthetic of your facility.
• Direct Outreach: Connect with local schools, businesses, and community organizations to offer group packages or host team-building events. Participating in community events can also raise awareness of your business.

Digital Presence and Online Marketing

• Professional Website and SEO: Develop a website that highlights the features of your track, pricing, special events, and group booking information. Use SEO best practices to rank for local searches related to go-karting, family entertainment, and group activities.
• Social Media Engagement: Utilize platforms like Instagram and Facebook to post exciting action shots, customer reviews, and information about upcoming events or promotions.

Content Marketing and Engagement

• Racing Blog: Share blog posts about go-kart racing tips, the latest trends in kart technology, and profiles of popular racers or events.
• Email Newsletters: Keep your customers informed about upcoming races, league sign-ups, and special offers.
• Video Content: Create videos showcasing the excitement of racing on your track, customer testimonials, and special events.

Experiential and In-Person Engagements

• Racing Events and Tournaments: Organize regular racing events or tournaments to attract competitive racers and spectators, increasing foot traffic and business visibility.
• Open Track Days: Host open track days where newcomers can try go-karting at a discounted rate, attracting a wider audience.

Collaborations and Community

• Partnerships with Local Businesses: Partner with nearby businesses for cross-promotion. For example, collaborate with local restaurants for food deals or with entertainment centers for combo packages.
• Community Engagement: Sponsor local sports teams or participate in community events to build brand recognition and goodwill.

Customer Relationship and Loyalty Programs

• Membership Programs: Offer memberships that provide regular customers with discounts, special racing privileges, or points-based rewards.
• Referral Incentives: Encourage customers to refer friends by offering them discounts or free races.

Promotions and Advertising

• Targeted Local Advertising: Use local advertising in newspapers, radio, and online platforms to reach potential customers in your area.
• Seasonal Promotions: Run special promotions during holidays, summer breaks, or other times when your target audience is most likely to visit.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your go-kart business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your go-kart business could be:

• Bring the family and be race car drivers for the day!
• Go-karts and mini golf for your next corporate event? 
• Top-notch entertainment center with go-karts, video games and more 

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a go-kart business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in go-karts for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in go-karts. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a go-kart business include:

• Track Workers – customer service, safety briefings
• Maintenance Workers – maintain and repair go-karts
• General Manager – scheduling, accounting
• Marketing Lead – SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Go-kart Business – Start Making Money!

If you love go-karts, you’re not alone, and you could share your hobby with others with your own go-kart business. Go-karts are coming back strong post-pandemic, and with a bit of investment and a passion to help people have fun, you could build a thriving go-kart operation, and even open tracks across the country! 

You’re up to speed on the business aspects now, so it’s time to rev your entrepreneurial engine and start your new go-kart business.