So, you’re starting a self-storage business? Congratulations! But do you know how to go about the business? Do you have the requirements? We’ll know that you can’t just wake up out of the blue and open your business. Opening a business and running it successfully takes time, effort, and money. You must prepare yourself well with all the necessary details.
A self-storage business allows you to allow people in need of a storage unit to store their belongings. They’ll not have to struggle with too much clutter at home and in the office. A self-storage business helps clients with the storage of furniture, office, equipment, and more. Owning a business that will help people store their items and declutter their homes and offices can be profitable because many people need such services.
If the idea of starting a self-storage business sounds good, then it’s time for you to make the first step. Here is everything you need to know about starting a self-storage business.
Start With a Market Research
Before you open the doors to your self-storage facility, you first need to conduct some market research. A good grasp of how the market looks like will help gain traction into the business right from the start. Doing some market research will help you understand whether this business is worth the effort, time, and money.
Of course, you understand that people already need the storage facility, but what’s in it for you? You must understand the profit margin of this business and the competition around it. You need to understand how the local market looks like for you.
Start by having a look at your competitors. Remember, there are other people who’ve been there before you, and other businesses are yet to enter the market. Find out the competitors’ prices, their customers, and their marketing strategies. Find out if the competitors are already meeting the market demand and if there’s anything left for you. You don’t want to invest in an already saturated market.
In your research, you should also consider factors such as the weather in your area. Consider whether you need storage for an RV or boat. Consider how valuable a climate-control unit can be valuable in your business location. Think about the unit sizes and the layout of your business. And finally, consult with security advisors for suitable technology and security layout for your facility.
What’s Your Target Market
Your market research must also put into consideration the target market. You need to define your market. Consider targeting customers who’re likely to need your storage facility for a long time basis. People like the military members can pay for storage on a monthly basis when they’re out on duty.
Consider families that are in the middle of a move and need some space for temporary storage. Think about those families that don’t have enough space at home and will rather store their extra items than sell them out. Other customers may be business facilities that are moving or undergoing renovations. They could also be expanding or need extra space for seasonal storage.
Consider the Location
During your marketing process, you should also find out a good location for your business. You don’t want to locate your storage facility where the market is already saturated. A good business should be able to fulfill the demands on the market. It won’t work for you if you place it where there’s no demand. You’re going to have a hard time finding customers in a place where the demand is already met.
Choose a location with good potential for business. You should ensure there are no established competitors already in the area. You need to build your clientele without having to struggle to steal some from your competitors.
Choose an area that’s already populated. Cities with mixed housing solutions can work well. It will even work better if you find areas where people are likely to downsize. You can also choose areas where people live in temporary apartments and are likely to look for storage needs from time to time. Make sure you’ll get the locals who need your services because they’re better customers to start with.
Don’t forget to consider security in the area where you choose to locate your business. As far as you want to make money by attracting many customers, make sure their precious belongings are safe. So, when it comes to your business location, you need to think about traffic, the zone for business development, accessibility, and security. You’ll also need to consider whether you’re going to build the storage unit, buy, or rent.
Plan Your Business
To succeed in your business endeavor, you need to have a clear business plan. Your business plan should contain all the key information for your storage business. The plan should include your findings on the market research, your services, and your management structure. The plan should contain how you plan to run the business for the first few years, including your goals and objectives for these years.
Have a clear plan of what you need to achieve. Do you want to run your business on a part-time basis, or do you want to build a large business that will need much time and money? Based on your answer, you can come up with your estimated startup cost as well as your development plan.
A clear and good business plan will help you source support and financial aid. Many lenders will want to see a business plan before extending their loans. You can even attract good investors to help boost your business plan. Take your time to plan and develop an incredible plan if you want to show a good impression.
Here are the sections you must include in your business plan:
- An executive summary with all the details of your goal and development plan
- A summary of the location, entity, and nature of your business
- A summary of the services you plan to deliver
- A detailed analysis of the market
- Marketing strategies
- Management structure and approach
- A financial plan with all the costs and projections of the first years
Come Up With a Marketing Strategy
How are you going to market your business and get the customers? When you open your business doors, customers are not going to come to you out of nowhere. You’re the one who has to get to them first and introduce your services. That’s where a good marketing strategy and plan comes in.
Marketing your business and finally getting the first customer is not an easy thing. One thing you must know that one method will not work for you. You need to be flexible and adaptive to any approach that can work for your business.
A good marketing plan should contain how you plan to penetrate the market, communicate, and grow your business. You also need to come up with a website for your business. This will increase your credibility and help you command trust. You can also consider digital marketing services once your business starts to grow and bring in some capital.
Don’t forget about traditional marketing methods such as the use of fliers, cards, and posters. Embrace any kind of advertisement that can help put your business get out there and boost it.
Legalizing the Business
The next step is to get your business to stand and open its doors for customers. But that won’t take place without a permit, license, and registration. After getting everything in order, the next step will be to register the business, acquire permits, and get licensing. Visit the website of your state secretary to do all these.
Ensure proper registration and compliance with the tax laws to avoid getting into problems with the authorities. Research the State License and Federal License before you launch your business. Contact the US Small Business Administration to find out everything you need on licensing and navigating the red tape of your storage facility business.
You should also consider getting an experienced attorney to help you decide on a suitable business entity. You’ll also get a tax identification number so you can comply with the tax laws of your state. Your attorney can also offer you advice on the best grants and financial aids suitable for your small business. You can then open a business bank account and start applying for necessary financial aid.
Consider the Costs of Opening a Self-Storage Business
There is no general cost of opening a self-self-storage facility, although you don’t expect to spend much at the startup stage. The cost depends on whether you’re going to build, buy, or rent. If you’re going to build a new facility, you’ll have to account for the land, the building materials, and the builders. The cost of buying or renting will depend on the location and size of the facility.
You also need to consider the size of the facility in your budget. A small facility that will only run part-time will cost less than a larger one that requires more time. You also need to compute ongoing expenses. These include maintenance, staff salaries, equipment like temperature control, loan debt, marketing expenses, insurance, security, and utilities. If you’re going to operate online, then you need to budget for the costs of hosting a website.
Remember, the business might not be able to pay for itself during the first few days. The costs you’re going to spend to get your storage facility off the ground are called sunk-up costs. You must have a plan of where you’re going to get the money to finance all the expenses before the business catches up.
Check the Financing Options for a Self-Storage Facility
When the costs of starting your self-storage business are too high for you to finance, you don’t have to worry because there are various financing options for you. Consider various options that can help get your business to its feet. One of the options includes the small business association (SBA) that offers loans to self-storage investors. SBAs can be highly competitive, but it’s worth giving a short.
Another great alternative is conventional financing. You’ll need at least 20% down to apply for these loans. This will not include working capital or improvements. Another option that gives you more chances is owner financing. This is where the owner offers to finance for the buyer. Others that are not so popular include crowdfunding, private funding, and bridge loans.
Develop an Online Presence
The internet is taking over all kinds of businesses. A self-storage facility that doesn’t have an online presence is none existent. You need a strong online presence to reach your customers and build credibility. Make sure you have an informative website that’s easy to navigate. A user-friendly website will ensure you convert any customer that visits your site.
People will always go online to look for a self-storage facility near them. If your storage facility has an online presence, its name will appear in the search. Adopt various online strategies to make your storage facility visible to online customers.
Take care of the reviews on your site, as many people will go through the online reviews before hiring you. Any negative review on your site spells doom in your search for customers.
You can also consider creating various social media pages for your site where you can interact with your customers and answer their queries. Establish a strong online presence on social media platforms such as Facebook, Instagram, and LinkedIn. Most of your customers are always on these platforms, and you need to follow them there. A social media platform is a great way to show the human side of your business as you engage and answer the queries of your customers.
Map Out the Challenges and Threats to Your Business
No business ever operates smoothly, whether it’s a startup or an established one. You’re likely to face several threats and challenges that might even push you out of business. Map out the potential obstacles that are likely to get in your way and work out how you’re going to tackle them.
Some challenges may start when you need to register your business and establish a legal entity. You might face some strict rules and requirements that seem impossible to achieve. You’ll need higher professionals such as lawyers to help you register your business and acquire a permit.
Other threats include theft and unforeseen disasters such as water damage. You’ll need to ensure your business right from the day you open its doors. Customers always have confidence working with insured businesses as they’ll get compensated in cases of damages or theft. Without a good insurance policy, you might lose your business in case of a disaster as you might not be able to compensate your customers.
Invest in a Climate-Controlled Unit and Other Tools
One of the essential equipment you need to have in your facility is a climate control unit. Theirs is a tremendous demand for storage facilities with a climate control unit, especially among clients who will store their items for an extended period. If you don’t invest in this unit at your startup levels, you’re still going to consider it in the future.
A climate control unit will give you more competitiveness in the market. Just the impression that your facility has premium equipment is enough to attract the attention of your customers. Some of your customers will store highly prized possessions that you can’t expose to heat, cold, and humidity.
A climate control unit will ensure the storage room remains 55 and 88 degrees even with constant weather changes. This unit will cost you a lot to invest in, but it’s worth it because you’ll be able to keep your client’s possessions for a long time and not expose even a single one to humidity and high temperatures.
Here is a list of items that you’ll need to store in a temperature control unit:
- Leather and wooden furniture
- Music instruments
- Household appliances
A self-storage unit is a good investment, but only if you take your time to think about the ins and outs of the business. Like any business, self-storage is highly competitive, and you need to come up with the best strategies to cut through the competition. Expect to put a lot of hard work into it because the road to developing a business is not smooth.
You need to cut through all the aspects of running your business, including all the paperwork, financial aspects, and marketing. You also need to come up with a solid work ethic and dedicate yourself to the community to succeed. If you do your research and find out all the ways to overcome challenges, you’ll end up a successful entrepreneur for the self-storage business.