Budget Your Racing Money

Talk to racers across the country and the one common theme is the lack of money to support their individual racing programs. The dollars simply do not stretch far enough to cover expenses. No matter if it's the money budgeted for tires, engines, or travel, money is tight everywhere.

Following are some plans and process suggestions that will allow you to gather and develop better control over the money you spend each year to support your racing program. The suggestions are not inherently difficult, but some require a bit of planning and forward looking in order to develop a model of what you actually spend, and how and where you are spending your money.

Racers can break down costs into two categories: fixed costs and variable costs. Fixed costs reoccur from week to week or month to month, and are always part of the budget that you can count on spending. The amount of money you have to spend each week to pay for pit entry fees are an example of fixed costs. You know that if you have three pit guys and the pit fee is $20, then you will be spending $60 each raceday to get the crew into the track. The driver may be free but the crew still has to pay.

A variable cost is represented as any cost that may or may not occur at regular frequencies. Things like crash damage or engine failure that we all expect to be a normal part of racing are variable costs. Why? Because you cannot logically plan the frequency of crash damage or engine failure, so you are not planning for that type of expense on a regular basis.

Once you have defined your program's fixed costs you need to look at your variable costs for the previous year. However, the first place to look for opportunities to start stretching your budget is in fixed costs.

We can start to look at each fixed cost and see if there are any ways we can reduce these areas. First we need to identify the specific areas.

Fixed Costs by Group

Chassis
Engine
Transmission and drivetrain
Brakes
Safety equipment (car specific)
Safety equipment (driver specific)
Tires and wheels
Tools at the shop
Tools at the track
Race day expenses

Your list may look similar to this, or you may have identified more groups as part of your racing program that would be common fixed costs. The point is that you need to develop this type of document as a starting point for controlling costs. Once this list is completed you need to look deeper within each group. This activity is called rational sub-grouping. This is a fancy way of saying you're placing like or similar items together. In your case, you will be looking at the various components within each group. For example, within the chassis group, your sub-group will include all of the parts that we are likely to change over the course of the season due to normal wear and/or normal maintenance. We can validate these fixed costs by looking at the expenditures we made last season. Your chassis list may look something like this:

Chassis Sub-Group

Rod ends (for the suspension hinge points)
Springs
Shocks
Suspension bushings
Wheel bearings
Tie rods
Steering box

This list is incomplete, but it gives you an idea of what you need to get started. The deeper you develop these lists the better off you will be. The next step will be to develop a cost structure for how much you will be spending on each of these components over the course of the season. It is as simple as assigning a value, or dollars spent, to each category.

Once this is accomplished, what should you do with this list? It becomes a planning tool to help you determine where you need to adjust spending. This is a tool for developing cost controls and gaining a better understanding of what you need to spend money for on a regular basis. If you can reduce the fixed costs on a regular basis, you will save money. This is where you will start to see where you are spending money on a week by week basis.