Storage is one of the needs that many of us overlook. A lot of us require space for storing our stuff but don’t have access to it. That factor is what drives the business of self-storage.
Self-storage facilities have different sizes made for keeping things that are owned by a person or business.
People pay for these facilities monthly as compensation for the space it provides to store any item that they own. Common purposes of renting self-storage include moving and keeping business assets or inventory.
The profit margin of self-storage businesses in the U.S. is estimated at 11%, higher than other small businesses such as restaurants.
Many factors affect the need for any service, but everyone needs storage, and sometimes they just haven’t figured it out yet. It’s certainly an appealing concept for those who are looking to start a business.
If you’re eyeing to enter the self-storage business, here’s everything you need to know about starting one.
Crunching the numbers
The first factor to consider when starting a self-storage business is the cost. The expenses of building a self-storage business begin with the acquisition of assets.
Prices widely vary depending on where and how you’ll acquire yours. Another factor is your business’s size, i.e., how many units will be for rent.
- Obtaining a facility
The foundation of every self-storage business is its asset, the storage facility. Getting them is the main priority to get your storage space rental ready to operate. There are different ways of obtaining your facility:
- Buy an existing facility
- Develop your own
- Seek financial aid from investors
Your facility’s location is also a vital part of computing expenses. There are pros and cons regarding the site if you choose to purchase an existing facility.
It could be further than where you reside, and if you’ll be managing the business personally, that means additional expenses.
If you’re unsure of that choice, you can recruit investors to secure a development deal at an ideal location. Another alternative that you can choose is availing of a construction loan to build your facility.
Besides having the facility for operations, you need to decide how you’ll manage your business. Are you going to run it yourself? Because if you won’t, you’ll need to hire employees.
When hiring your staff, you need to set the qualifications for operating a self-storage business effectively and set up a payment or salary scheme.
As it should be when starting a business, research is necessary. You’ll need to know if the self-storage business that you’re looking to create is feasible.
- Why people need storage facilities
A general basis of business research is the people’s need for what you’re going to offer. You have to be aware of why people rent self-storage. Here are a few reasons why they do it:
- Extra storage space – not everyone has enough space at home to keep all their stuff. They pay monthly self-storage rent to store important stuff that they can’t keep at home.
- Asset storage and inventory management – businesses rent self-storage units to have a place where they can temporarily keep old but functioning equipment and furniture. Some also use it to keep track of and preserve their products.
- Moving – self-storage is also typically used by people and businesses as temporary storage for their things to avoid trouble when moving places.
You can use these reasons as the focal point of your research. The location of your facility also comes into play. Is the area near or populated by your target demographic?
You should also scope the self-storage business scene within or near your location. Are there any other self-storage businesses near you? Is there a facility being constructed nearby?
You can do your feasibility study on your own, but if you’re not confident with your knowledge of it, you can always look for a self-storage expert to help you.
Making a business plan
Writing your business plan is like drawing the blueprint of a new building. This is where you put all your ideas into visual concepts. By writing a business plan, you’ll be able to realize goals and foresee potential issues.
Business plans for a self-storage business should include your mission and vision statements. Like any business, you have to know where you want to go and what you need to do to get there. Both statements will serve as reminders to keep your focus on what’s important.
You should also plan where you’ll get your source of capital. As aforementioned, it can come from investors, or you can avail yourself of a loan.
Besides that, other money matters in the business plan are marketing strategies, pricing strategy, and revenue streams.
Finish your business plan with a revenue and expense projection. You’ll need to think about the future, and estimating how much you’ll earn and spend is key to planning for it.
Self-storage is an appealing business endeavor that could be successful if you know how and where to start. With this article serving as your guide, you can get on the right foot with your business idea.
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Author’s Bio: William Ross worked for a storage and logistics company before he finally decided he wanted to pursue his writing career. Today, he writes about the importance of storage facilities and organization, and how this will be the future of the storehouse industry.