By Ilona French
Imagine you’re doing about $1 million in sales. You’re the go-to person when Saturday night racers bang up their vehicles at your local track. All those years of hard work have paid off. Business has never been better. You’re on an upward swing.
That is, until all of a sudden your local track closes its doors, and those grassroots racers—who competed locally because, obviously, it’s closer to home where they can race, drive home and sleep in their own beds—have nowhere to go, so they simply stop racing.
What would you do? Might that mean the end to your speed shop?
Unfortunately, Jeff Schrader from Racecar Factory in Irwindale, California, found himself in this predicament when Irwindale Speedway cancelled its 2012 season and closed its doors, thereby obliterating about 75 percent of his business.
Rather than close shop, Schrader was determined to keep going.
About 15 percent of those local, Saturday night racers decided to travel to other venues, which continued to support businesses like Racecar Factory, as competitors bought parts and needed repair/fabrication work. Schrader had to make ends meet, so when his customers traveled, he went with them. “From a business standpoint, we made the best of the situation, and when we went on the road, traveling with customers and clients, and racing, we exposed ourselves to a new customer base that we could reach out to and try and get business from,” he said. “We probably got 5–10 percent of the business from other venues that we wouldn’t have had had we not gone out racing on the road, so to speak.”
Schrader also had to downsize staff and lay off employees last year—as well as diversify and branch into other markets of fabrication, such as hot rods and drag racing, which were not necessarily his forte. “We didn’t really have a lot of background in that, but fabrication is fabrication,” said Schrader. “That ended up filling up 25 percent more of what we had lost with Irwindale being gone. That’s how we survived. It was very challenging, and now that they’ve built a new track in Bakersfield, with Kern Raceway scheduled to open in April, and Irwindale Speedway has a new management group and they’re going to re-open that, business has picked up a little bit as far as consumable stuff. The fabrication hasn’t picked up yet because nobody has gone out and crashed their cars yet…. When they crash, they need fenders and chassis work and whatnot.
“So that’s, in a nutshell, how my business went from doing $1 million a year in sales to doing $400,000–$450,000,” he said. “It took a big hit, but we survived and we got creative.”
Minimizing expenses during good times is key to enduring lean times. When the tides turned and Schrader’s business came to a crawl, all of his equipment was already paid off and he had minimal debt, so he essentially only had rent and payroll to deal with.
Also, when the race track closed, Schrader examined how to become more efficient. “We’ve outsourced a lot more of our products to the laser cutting and waterjet industry to produce the same product cheaper and quicker than some of the older school fabrication methods,” he said. “Getting a part on a band saw and drilling holes in it with a drill bit are a thing of the past now. We try to laser cut almost everything, so it’s premade and the repeatability is enormously better. Going to laser cut, waterjet cut parts obviously reduces your overhead because you’re not paying a guy to stand there and drill holes into the part…. The laser will work way more efficiently than a human being does.”
In order to outsource, Racecar Factory aligned itself with two laser cutting shops. “Between the two vendors, they take care of all my parts now,” said Schrader, adding that Racecar Factory simply doesn’t have enough volume to make it worthwhile to purchase a laser. “As a small company, I just went to a good laser outfit, established a working relationship with the guy that runs the laser machine, and I email him a picture of what I need cut—and two days later, my parts are cut, very reasonably priced, and exactly the same every time. So I didn’t have to buy the laser; I just basically buy laser time.”
The parts are delivered to Racecar Factory’s doorstep, usually via UPS; although sometimes Schrader picks up the bigger items. “That has reduced a lot of the man hours that are required to build race car chassis, and we build our own spindles and build a lot of our own components now because we can laser cut them,” said Schrader.
Landing More Business
Many business owners would agree that procuring customers can be a huge challenge. There’s a seemingly limitless pool of racers out there, but actually getting drivers to shop at your store and request your services is another thing. In an attempt to gain exposure, Joe Wood from Sun Prairie, Wisconsin-based Pathfinder Chassis came up with a unique promotional campaign: a swap meet held right at his shop. “There’s a lot of racers that try to sell their used parts and pieces and update them,” said Wood. “And then there’s a lot of racers that can’t afford the parts, so they need the best deal to buy the used ones from the other racers.” And that’s what the swap meet was designed to do: help racers buy and sell affordable equipment.
For the swap meet, Pathfinder Chassis charged vendors $20 per table. “We’re not making any money on that,” said Wood. “It gets customers in our door, and we have a lot of customers that will sell their used parts, and then they’d come to us and then buy new parts with the money that they sold their stuff for…. It worked well for us.”
In addition to racers manning their own tables, vendors included manufacturers showcasing their new products. Pathfinder didn’t make a commission off anything the vendors sold. “We didn’t keep track of any of that stuff,” said Wood. “Whatever they sold, that’s what they got. There’s a lot of auctions, where you take your parts to auctions and then you pay to put it in the auction and then when you sell it, you’ve got to pay another commission. We didn’t want to do that. We wanted to keep it so that it didn’t cost the racer a bunch of money to try to sell his own parts.”
The swap meet included 25–30 vendors (made up of racers and manufacturers), and 200–250 people came through the door throughout the day—some of which were new faces that had never before visited the shop. To promote the swap meet, Pathfinder handed out fliers and advertised the event on its Facebook page and website. This year, Wood plans on ramping up the promotion by taking plenty of fliers to the big end-of-the-season races.
Some might argue that anybody with talent can do fabrication work. But it’s going the extra step and consistently being available at the track and on the phone that really sets successful race businesses apart from others. “Our customers always know that if they have a problem, they can call seven days a week,” said Lynne Hansen, from Montclair, California-based Hansen Race Cars, which has earned a reputation for doing things right. The company has done virtually no advertising and relies solely on word-of-mouth leads, yet cars are always in the shop. Two years ago, however, the company did downsize to a 1000-square-foot smaller building to cut overhead and allow for easier manageability.
“We run our business like a business and not like a hobby shop,” said Hansen. “There are a lot of places that don’t get work in and out. You can’t make money if you don’t get the work in and out.”
Hansen Race Cars has been in business for 26 years and caters to NHRA drag racers. In the last year, Hansen has seen a big improvement in racers’ willingness to spend more money. “The Canadian dollar is pretty close to our dollar, so we have a lot of Canadian customers that bring their work to us,” she said. “They drive their trucks and trailers down here and leave them here until their cars are done, and then fly down, pick them up and take them. We always have had a lot of Canadian customers, but at one time we had nine cars in our shop—it was probably a month and a half ago—and five of them were Canadian cars. It’s the dollar; when the dollar gets even with theirs, that’s when they cut loose with their money.”
The availability of racers’ discretionary income can indicate how racing businesses fare. For example, Hansen noted, “99 percent of our customers are business owners. So when they start spending money, that means to me that their people are spending money with their business also.” As the economy strengthens and businesses outside of racing grow, spending picks up, which trickles down to motorsports shops.
To be successful in a race fabrication business, sometimes you’ve just got to take a chance on your dream. “When myself and Jason started the business, a lot of people told us we were foolish for starting it,” said Wood. “At the time it wasn’t a big deal for me to do it, but then looking back, it was a big risk.
“The biggest thing is just work hard,” he said. “If you work hard at anything, you usually can survive, as long you’re putting 100 percent effort into it.”