Racing Budgets:
Why Planning one is important
You have started off as a weekend racer, racing in your spare time,
but you’ve caught the bug and want to go the next step. One of the first
things you should do is sit down and bang your head against the wall. If
after that you are still determined to step up to race the next level
let’s talk.
When racing becomes more than a hobby we have to look at it as a
business. Any good business must have certain factors. Today we will
talk about one – the budget. A budget is much more than how much money
you have and how much money you need.
A budget is really a plan for financial activities. For you it is a
way to organize and prepare for the season ahead for one and a way to
make sure you are budgeting enough money from yourself and/or sponsors
to race effectively. We budget to recognize our responsibilities and
make sure we can fulfill them.
First things first – speak with a professional accountant. Have them
help you set up an organized way of keeping your team’s financials. It’s
important you know your team’s requirements to run a season. The
majority of small race teams underestimate the costs involved. Preparing
a model is key.
Expenses: Fuel, track, car, travel, equipment, employees, are obvious
and can somewhat be set in stone. It is important to leave a cushion for
unexpected variances. Poor planning can make the emergency expenses
cause not only stress but make fulfilling those obligations impossible.
Be realistic. Look ahead.
Budgets change through out the course – this allows us to use real
data – ie. Expenses from a previous race to help better determine the
next race’s cash requirements. This does not mean that you are allowed
to wake up one morning and say “ I need so much more money to do this
right”. After a race it’s time to go through all the receipts and have
them documents and filed correctly. This will make it easier to do the
bookkeeping and keep on track – both literally and figuratively.
It is important to communicate with crew the importance of a budget.
I know one instance when a crew chief bought a year’s worth of race oil
to save a dollar a case but unfortunately this left the team cash
strapped for the upcoming race – not a good deal after all.
Why should you go to the trouble of detailing a budget? Not only will
it help you and your team run easier but it is absolutely essential to
have when pitching a potential sponsor. Not having a financial plan and
you could have too little cash flow to run your team professionally or
be asking too much for a sponsor to even consider.
A detailed budget can help you and your team be well prepared for a
race season – good luck and remember common sense and being realistic is
key.
Nika
Do you have any advice on preparing a racing budget? Drop us a line at
info@racerchicks.com
Check out some of our other topics in racerchick101:
Just to name a few!
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