“I’ve been a car kook for as long as I can remember,” says Dawn Stokes. “I’ve always had a need for speed.”
As Stokes speaks, a fleet of 10 yellow Z06 Corvettes race past her. And while they don’t literally have her name on them, they have the next best thing – the name of her company. Texas Driving Experience (TDE), a racing academy and safe-driving school, is located midway between Dallas and Fort Worth, amid the impressive surroundings of the Texas Motor Speedway. This 1,500-acre site boasts a 1.5-mile track with 24-degree turns and a 200,000-plus seating capacity. “It’s actually the second biggest sports facility in the States, after Indianapolis Speedway,” says Stokes. “And I’m really proud to be a part of it.”
If the petite, blond Stokes cuts an incongruous figure in these burnt-rubber, testosterone-heavy surroundings, she’s quick to assure that she’s right at home. She still has the first car she ever bought when she was 14 – a 1963 convertible Corvair Monza Spyder, now “retired” to her garage. During her previous life as a harried health-care executive, she enrolled in high-performance driving schools as an outlet for job-related stress. “I quickly saw the value of these schools, both as a way of letting off steam and of making better drivers of people,” she says, in ebullient tones. “I got caught in a workforce reduction in 2003, by which time I was married and divorced, and the mother of a young son. I definitely felt like I was at a turning point. I could have carried on in the corporate world, but my entrepreneurial spirit was leading me in a different direction.”
Stokes’s decision to marry a hobby with a passion was largely inspired by the fact that 6,000 teenagers die in car-related accidents in the U.S. every year. “That’s an intolerable statistic,” she says heatedly. “I thought, do we not realize the potential we’re losing?”
Thus fired up, Stokes drove out to Texas Motor Speedway, walked in, and pitched her idea, which she’d christened SKILLZ – for Life. “They weren’t impressed,” she says with a laugh. “I thought it was going to be easy because I was going to save the world, but they soon put me straight. They said you’ll need $5 million-worth of insurance for a start. And I’d done no costings and had no business plan. As a woman, it was hard to get them to take me seriously at first. It could get really frustrating when they’d address remarks to my male employees rather than me. It was an important and difficult lesson, but it’s helped me in other strategic partnerships.”
To prove her seriousness, Stokes cashed in her 401k (“I know,” she says, laughing, “you are never supposed to do that”), went MIA from her accountant and financial advisor for a year and a half, and pre-sold three events before she even had any cars. “I was incredibly bullish,” she says. “But it was clear to me from the start that a teen driving school was going to be a hard marketing sell. It had to be cool enough to stand out from traditional Drivers’ Ed, but at the same time it had to reassure Mom and Dad, who were freaked out that their kids were coming to a racetrack.”
To raise serious cash, Stokes started a service aimed at people like her former self – corporate thrill-seekers. “It’s a total adventure for the CEO or the executive or sales team,” she says. Within months of setting up Texas Driving Experience, Stokes was fielding calls from Fortune 500 companies seeking a team-building exercise for their workforce that would be a little more white-knuckle than golf or paint-balling. She saw the number of events rise from 12 in 2004 (at which time she was only in business for a few months) to 150 in 2007, with almost 200 planned for 2008. Revenue has also increased exponentially, from $153,000 in 2004 to $1.5 million in 2007; this year TDE is on target to hit $2.3 million.
Winning the Make Mine A Million $ Business program, designed to help female entrepreneurs grow their businesses with a combination of money, mentoring and marketing, was key to helping Texas Driving Experience to pass that magical million-dollar figure in annual revenue. “Make Mine A Million was truly the best thing that ever happened to this company,” beams Stokes. “It validated who we were and got us taken a lot more seriously.”
On a typical weekend afternoon at the Speedway, the range of Texas Driving Experience’s activities is readily apparent. A team from a finance company which has hired the Corvettes is furiously high-fiving after a frenetic spin round the infield track with TDE’s drivers. At the same time, the SKILLZ school is taking teens through the intricacies of wet-road driving, tailgating and the ABS braking system in their brand-new Toyota Scions. The cars are aptly emblazoned with the legend “Drivers’ Ed Was Never Like This!” Stokes congratulates the corporate riders as they remove their helmets and make for TDE’s souvenir trailer; she then moves on to give a rousing pep talk to the teens. “It’s still the part of the company that I’m most passionate about,” she says of SKILLZ. “We get letters from people saying we’ve probably saved their lives because of the things we’ve taught them. That’s a pretty big incentive to get up in the morning and come to work.”
As it approaches its fourth year in business, Texas Driving Experience is looking for new growth opportunities. In June of 2008, Stokes inaugurated the SKILLZ – for Life Fleet Safety Training program, in which some of the giant oil and energy companies based in the area will send their drivers to TDE to brush up their handling skills. “It’s the teen school, transferred to drivers of company-owned vehicles,” says Stokes. “And they’re very keen on the team-building side as well. As times get tougher, companies want to invest in their employees and retain their loyalty. So we’re expecting teams of 30 people out here at least three times a week. It has the biggest growth potential of all our offerings – it’s projected to add over $100,000 in bottom-line revenue this year, with a $250,000 goal for 2009.”
Stokes also has her eye on physical expansion of the business. She’s been asked to replicate TDE in other American venues including Monterey, California, as well as Dubai and Bahrain in the Middle East. “Speedway Motorsports Inc. owns and operates seven tracks, including Texas Motor Speedway, so there is much potential for other locations. The growth has been steady up to now, but the fleet-safety side should take things to a whole new level and open up a load of new opportunities. It’s a pretty exciting time for us.” While exploring the options, she’s already secured the appropriate state domain names – floridadrivingexperience.com, californiadrivingexperience.com, etc – “so that, if we ever need ’em, they’re ready to go!” she says with a grin.
Does she still feel the need for speed? “Absolutely,” she says beaming. “But now I don’t even need to get in a car to get it. Running this company is so cutting-edge, my adrenalin’s just flowing all the time.”
Periods of fast corporate growth can be a heady time. New opportunities seem to be everywhere. It’s tempting to put the pedal to the metal and grow, grow, grow. Growth, however, can be a serious drain on cash, and may also impact profits in ways you don’t anticipate. Before you spin out of control, consider these points:
1. Ensure that your new venture won’t place undue strain on the overall business.
Will the new opportunities be as profitable as the core business? How long will it take to ramp up sales of a new product line or expand to a new territory?
2. More salaries, rents and utilities can amplify cash needs.
Will the core business be able to provide you with enough cash to cover both the investment in new growth opportunities and any potential losses?
3. Growth investments can decrease profits for a number of years.
If bankers or investors are looking for bottom-line results, they are likely to factor in non-operating expenses such as depreciation or amortization.
4. Spending for the sake of growth should yield a good return on investment (ROI).
Do you know what return your investment is bringing or likely to bring? If you have several options, invest in those that are likely to provide the highest growth potential based on the numbers.
From OPEN Book: A Practical Guide to Financial Planning
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