Gary makes some good recommendations:
Shooting JPEG-only might be a good idea, so long as your lighting is good. The events I'm shooting are often in very tricky lighting, so RAW is a lifesaver for me. It might not be as necessary for you.
Also, if all you ever plan to do with the photos is offer prints to the participants, JPEGs will probably be fine. They're also adequate for online posting and most print media.
However, if you ever want to "leverage" your business with other uses of the same photos - to develop that second or third income stream from them that Gary alluded to - RAW is often better. Secondary uses might be stock photography or products like posters or calendars that you produce yourself. There's a catch to doing this, though: You'll need a signed model release from any recognizable participants, to make commercial use of the images (more on this below). The reason RAW is desirable is simply because advertisers, their agencies and stock photo agencies that supply them all still tend to look for a minimum 50MB TIFF file or larger. That's pretty easily done with a RAW file from just about any 8-10MP or better camera, but a lot more difficult to make from a JPEG. So, depending upon whether or not you ever plan to use the photos in other ways, this may or may not be important to you.
I was only recommending to use an inkjet while you are trying the business on for size. Gary is right, dye sub would be better in the long run. Photo quality inkjet printers are cheap to buy and some models are easy to get supplies for almost anywhere. However, dye sub is definitely better for the long haul and higher volume and - although more expensive initially - it will be cheaper and more efficient to operate over time. Dye sub are also usually faster.
Agreed, your best customers onsite the day of the event will probably be family and friends of the participants. The participants themselves are more likely to buy online later. There are various ways to set that up:
1. Set up your own site and fulfill orders yourself. Probably the main hurdle here is that you really need to be set up to accept payments online... usually by credit card. There's significant cost involved in being able to accept credit card payments. It can also be overwhelming to try to fulfill a large number of orders in a short period of time, plus pack them and get them shipped.
2. Use one of the free websites like Flikr or Shutterfly. The problem with these is that the print quality can be pretty poor because it's so highly automated (at least it was when I used one of the above in the past), plus anyone can look up the prices and compare them with what you are charging, so your markup is known right down to the penny. There's also a question of professionalism, if these sites give the image you want to portray. And, copyright infringement may be a problem. Check their terms of service carefully for words like "royalty free" and "creative commons license" and at least know what you are signing up for, before you post images on any site.
3. Use a web host that specializes in event photography. I use Printroom.com and have been generally happy with their service and quality. There are a number of these. Printroom happens to be located close to me, so my customers get their prints quickly and efficiently. It costs me $99 a year to maintain a commercial account there. They accept credit cards, handle sales tax and shipping costs, print and ship, then deduct an amount from my charges for each print sold, sending the remainder to me as my clear profit. For example, I charge $7 for a 4x6, over $5 of which is profit. Larger sizes and specialty items are not as profitable as a percentage of the price, but are more-so in dollar terms. Printroom is also very supportive of retained copyrights. There are notations on the site, especially when entering image galleries, and stamped right on the back of every print that's shipped out.
Another useful thing for the type of event you are considering is race number recognition software. This is used to match up the participant's number their name, for easy searching and locating within all the photos you shoot at the event. It's a nice, added feature of some of the better specialty sites. Printroom has it. There's an extra charge for it. There's a bit of a hub bub about this sort of software right now, because some guy has patented it. He apparently reached an undisclosed settlement with Printroom, that now allows them to use it. He has lawsuits pending against some other similar sites.
Regarding model releases. These really aren't needed when shooting "memento" photos for the participants. Nor are they required when you post the images on your website as thumbnails, offering them for sale to the participant, their friends and families.
However, if you might ever wish to use some of the photos in other, commercial ways - including self-promotion and marketing, such as a large illustration on your website or flyers you hand out at events - a model release becomes very important.
So, how do you get one? Well, I recommend working with the event organizer. First, let them know that they can pick and choose from among your photos for use on their website or in their marketing materials, and you will donate the images to help them out. This builds your relationship with them, of course. And, by supporting them you are helping to insure more work in the future.
But, there's a hidden catch. In order for them to use the photos in the various commercial ways they imagine, there's that pesky model release requirement again.
So, it behooves the organizer to try real hard and help you get releases from all their participants! They can very simply make it a mandatory part of the participant sign up packet, to be signed right along with the injury waivers, etc. You just need to put together a good release, with your company name on it, and provide it to the organizer. Then be sure to collect them all and keep them on file with the images. The event organizer doesn't need to keep a copy, but they would be the very first one sued over any image they used commercially without a signed release on file with you.
As a courtesy, if using someone's image, send them a free print, or a free calendar, or a copy of the magazine in which it appears. This can be the "consideration" mentioned in many releases. My "release" says "Permission to Photograph" at the top, then "Modeling Release & Property Release" in smaller letters right under that.
Finally with respect to model releases, it's also possible to get them after the fact, although it can be difficult to identify and contact participants. Considering that a memento photo might net you $5 or $10 or maybe even $25 profit, leveraging with stock photo sales, for example, can be a real bonus. Stock sales can be $100, $1000 or $10,000 per occurance. Over their lifetime, some individual stock photos are worth $50,000, $100,000, $500,000 and even more to the photographers who took them. So, yes it can be worth the "hassle" to get that release!
Cheers!