TOA Business Strategy

We at TOA abhor hearing about people who put forth the vast sums of money, time and energy it takes to open a commercial raceway, only to see it go down the tubes - kaput! - often in two years or less.

Sadly, the lifetime of the typical "slot-car-racing-only" facility is all too short. Therefore we constantly preach from day one..."Don't put all your eggs in one basket!" Don't open with just slot cars! Diversify as quickly as possible! Put in many other complimentary hobby items to attract the public who has leisure time and discretionary income to spend.

Stock items like kites, rockets, hard-plastic model kits, die-cast, NASCAR collectibles, clothing, and numerous items which appeal to the ladies. You know them...those wonderful creatures who control the purse strings! Seriously investigate putting in video arcade games, radio control, pool tables, Foosball, ping pong, a snack bar, miniature golf, go-karts...whatever...just anything that will attract the widest assortment of consumers through your door.

And while they're there...voila!...show them how much fun it is to play with and race slot cars! That way anyone stands a much better chance of getting a decent return for their initial investment.

IF YOU DON'T PLAN FOR THE FUTURE YOU WON'T GET THERE

TOA is always on the lookout for intelligent advice to offer its members through the monthly TOA Newsletter. Far too many people have tried getting into the slot car racing business, coming to it drastically uninformed and severely under financed.

Granted this is a fun business, and one which initially will make the owner quite hefty sums of money - at least for the first three or four months. What most naive new raceway owners don't know is that slot car racing - like outdoor ice skating - is a very, very seasonal business! It works very well when the weather is cold, there's snow on the ground or it's raining. Come summer and track owners can suddenly find themselves staring at four walls in an empty building! Yet the rent goes on, as does all the other expenses so YOU MUST BE PREPARED!

Start-up funding for a commercial slot car business - even a small one - can be anywhere from $10,000, $15,000 and up. Large ones can run upwards of $100,000 or more.

The prospective raceway owner must recognize ahead of time that 1/24 scale slot car tracks in particular are very large - taking up a great deal of expensive floor space in terms of rent. You must also provide adequate sales area and places for people to work on their cars when they're not racing. These are called "pit" areas. Again...more square footage needed. Read...more money for rent. Good thing we've already discussed the critical need for diversification, huh?

COMPUTERS

The entire world is now run by computers. Slot car racing emporiums are no exception. You'll run all your races on all your tracks by computer. Only way to go! But did you know that you should also run your sales counter by computer as well? Slot car parts are small. When employees are involved install a computerized point-of-sale system. This not only minimizes employee and/or customer theft, but will automate your inventory control and ordering capabilities with your distributors.

You should seriously reconsider opening unless you can afford redundant control over every phase of your business. Please do not make the significant financial investment without adequate research and enough money to back you so you can operate (pay all the bills) for a period of one year - whether you make a dime of profit or not! We are still amazed and sometimes frightened by the number of raceways who still do not own a computer to help them run their business!

THE FUTURE IS NOT THE PAST

There is a growing trend in certain areas of this industry to go in another direction. It's called "downsizing", just like the auto industry did a generation ago. In slot car terms this means downsizing the total real estate investment involved, which means saving on the rent/lease payments. Unless you have exceedingly "deep pockets" of money, opening a huge building for slot car racing can bring about a huge drain on your cash reserves - sometimes depleting it completely. (Read: Closed, gone, and bankrupt!)

TOA actively encourages hobby shops and track owners worldwide to add (or replace) non-revenue-producing large track layouts with newer, smaller, more efficient money-making layouts. TOA research is shows that for some areas of the country, 1/32 scale and the even smaller 1/64 scale (H.O.) tracks are usually where the bulk of the retail dollars are spent on equipment and racing.

There have been so many incredible advances made in all phases of slot car racing by all the manufacturers that you must keep an open mind as to what you will offer your customers. Naturally, when you first open your doors you should probably concentrate on the more affordable classes of cars and equipment. Through the years these "low-end" products will, if serviced properly, continue to make you the bulk of your income.

However, as customers/racers become better skilled and want to go faster, the nice thing is that there are classes, cars, equipment and racing programs for them to advance upward - again, making the track owner needed profits. Some places will never go to those extremes - content to stay where the speed isn't so fast.

That's fine too...what makes you money is what TOA is prepared to help you do.