The most common and most likely answer to this crossword clue is the 7 letter word GO-KART
I've seen this crossword clue in The Guardian
G
O
-
K
A
R
T
Buddy explains!
The straight part
We know that "a small one for racing" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case a small one for racing = go-kart.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does GO-KART mean?
GO-KART noun- A small, open-wheeled vehicle for racing.
- A framework moving on casters, designed to support children as they learn to walk.