Reduce drag by making all surfaces smooth. A rounded nose causes less drag than a sharp nose. A good design has all leading edges rounded and trailing edges tapered to reduce air friction
Rubber bands should be lubricated before the race. They are the motors and should be strong and flexible.
The end with the small hole is the rocket nose.
A potato peeler is good for carving the balsa wood.
To help increase the rocket's speed, reduce the weight. Do not weaken the area around the hanger or carve away the nose.
Do not apply to much paint to the outside.
Make the propeller shaft as short as possible by bending it close to the prop. Cut off the excess wire with wire cutters.
Test the rocket's balance. If the rocket is nose heavy, sand a little wood off that end. If it's tail heavy, remove wood from tail area.
Packs may wish to have a test line available, but stress to the scouts not to run to many trails. I have seen space derby rocket rubber bands break after three or four runs.

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