This Is How You Can Start a Self-storage Business

The dream of owning your own business is only a few steps away. This Is How You Can Start A Self-Storage Business -Here are guidelines to help you get started.

The truth is that there will always be a demand for self-storage units all over the world. The big question is whether or not you can launch a business that can successfully compete with existing self-storage enterprises or find an existing gap within the market and maximize on it to build a successful self-storage business. For instance, if your area is rife with new development projects, you may have an incredible opportunity to establish a self-storage business and attract a significant part of the new market.

So, how can you start a self-storage business? Before you start your self-storage business, you need to take time and conduct thorough research to understand the current market needs. After that, learn the laws governing the operation of self-storage businesses in your area, choose a location, develop a comprehensive business plan, obtain financing,  create your business name and logo, open your business bank account, develop a comprehensive marketing strategy, set up your business, and start reaching out to potential customers.

This guide discusses everything you need to know about setting up a self-storage business that will succeed. Read on to find out everything you need to know.

How Much Does It Cost to Open a Self-storage Business?

The truth is that opening a self-storage business can be quite expensive. If you are constructing the units from the ground up, a standard single-story building can cost anything between $25 and $50 per square foot, depending on where you live.

This doesn’t include the cost of purchasing land, and multi-story buildings will generally have a relatively higher cost per square foot price.  You will spend between $45 and $75 per square foot on multi-story buildings depending on where you live.

If your primary objective is to construct a state-of-the-art facility, you are looking at at least $70,000 rentable square feet with a cost of between $50 and $70 per square foot, excluding the cost of land.  It means that you need approximately $3 million for a state-of-the-art facility.

So, with such amounts of money spend, how do you break-even? Typically, you should be able to break even at around 50%-70% occupancy.

A self-storage facility
There is always be a demand for self-storage units all over the world

A state-of-the-art self-storage facility in a good location can easily operate at between 85% and 95% occupancy throughout the year. It means that you should have a relatively good profit margin on your self-storage business.

How Much Profit Can a Self-storage Business Generate?

As mentioned above, you should expect to break-even once your facility’s occupancy reaches about 50% to 70%. However, a good facility in a good location will easily operate with 85% to 95% occupancy producing a net income of about 27% of rental income after paying all the business expenses and loan debt service.

For instance, renting out units at the rate of $1.42 per square foot per month will translate to about $17.04 per square foot per year. So, if you have an 80,000 square feet facility, you should expect to generate approximately $1.4 million in annual rental income and up to $354,432 in gross cash flow per year.

To make your business more profitable, consider adding moving truck rental services, supplies, and moving equipment to your self-storage business. The addition of such services can increase your income by up to 5%.

Many self-storage businesses usually extend their business operations to include managing a fleet of vans, moving trailers, and rental trucks. The good thing is that these businesses can operate together seamlessly as one big business.

Besides offering moving vehicles as an extra service, you can offer moving equipment such as furniture pads, hand trucks, and furniture dollies.  You can also start selling moving materials such as packing supplies, moving boxes, and packing tape.

How Do You Start a Self-storage Business?

Now that you have a rough idea of how much it will cost you to start a self-storage business and how much profit it may generate, let us discuss the crucial steps you need to accomplish to set up your business.

1. Conduct Thorough Research

Committing your valuable time and money to start a business that you don’t fully understand can be one costly mistake. You need to take time to gain a deep understanding of the self-storage industry and analyze your local market before you make the final decision.

A woman having thorough research.
Take time to gain a deep understanding of the self-storage industry and analyze your local market.

Research your future competitors and find out as much as you can about the business and how they charge their current customers. There might be a high demand for self-storage facilities in your area, but the demand may have already been met.

Take note of the size of self-storage facilities in your area, capacity, whether they are climate controlled, operating hours, prices, logistics, how the storage units are sized, and any other additional services being offered.

You can even go a step further and try to find local residents who lack enough storage space in their homes and would be willing to pay for a self-storage unit. The data you gather will provide you with a clear overview of whether the business is viable or not.

For trade-specific information, don’t be afraid to consult trade journals and specialist sites. The more information you dig up before you start the setup, the better.

2. Create a Comprehensive Business Plan

A business plan is simply a roadmap for your self-storage business. It is a crucial business tool because it organizes all your thoughts relating to the business into an actionable plan.

Some of the critical things to include in your business plan are competitor analysis, marketing plan, pricing model, market analysis, expenses, and projected revenue.

Make sure you conduct a thorough feasibility study as part of your market analysis. The feasibility study should include evaluating occupancy potential based on your market analysis, assessing competition, identifying loopholes in the current market that you can exploit, and conducting a thorough demographic analysis.

A team conducting a meeting.
You should also consider hiring an industry expert to help you.

If you cannot do this analysis on your own, consider hiring an industry expert to help you. One of the most significant benefits of having a business plan is to help you raise the money you need to run the business from investors and financial institutions.

These people will only be willing to finance a professional-looking business plan as part of their investing or lending process.

3. Choose an Ideal Location

One of the factors that will determine the success or failure of your self-storage business is the location where you set up the business. Take time to scout out potential locations with easy access to residential apartments, condominiums, or military camps.

You should also ensure the location has sufficient land space that can permit you to construct your facility. However, you need to be mindful of the property taxes while choosing the location.

A pinned map location.
Scout out potential locations with easy access to residential apartments, condominiums, or military camps.

Pay attention to the up-and-coming residential areas such as the outskirts of the main city with apartment and condo complexes.  You can also consider empty lots and warehouses.

Ensure you obtain zoning approval and hire a licensed contractor who is 100% familiar with the self-storage industry to help you design your facility and submit building plans.

The other things you need to pay close attention to include where to situate the office, parking, security, drainage, maneuverability, accessibility of the area, and a wide range of other factors that will ensure your facility remains functional, dry, and clean to keep your clients’ stuff in excellent condition.

4. Obtain Necessary Permits and Licenses

You should never start operating any type of business without acquiring necessary permits and licenses since it can result in hefty fines or even closure of your business.

So, take time to find out all the permits and licenses you need to start operating a self-storage business in your area.

Visit the local authority’s office or your municipality’s website to find out what you need in terms of permits and licenses to start running your business.

Some of the crucial documents you will need to start running your business include a certificate of occupancy, service contracts, small business permits, and much more.

5. Obtain Financing

Fortunately, many investors and financial institutions are willing to finance your self-storage start-up. Some of the most popular financing options include the SBA loans and traditional bank loans.

Although the qualification requirements for these loans may vary greatly depending on where you live, you will typically require a good credit score and some down payment to qualify for financing.

A cash on hand.
There are many online lenders willing to finance your self-storage business.

If you are in the United States, SBA loans offer you the best option for constructing your self-storage facility because you can finance the entire construction process and enjoy up to two years of loan payments. In most cases, the SBA will only require you to raise a 10% down payment.

If you prefer working online, then feel free to find reputable online lenders and approach them for financing. There are many online lenders willing to finance your self-storage business. All you have to do is complete the online application and wait for feedback.

6. Get a Business Insurance Policy

Lastly, you should find a good business insurance policy that will ensure you operate safely and lawfully. The primary purpose of business insurance is to protect your business’s financial wellbeing in case of any covered loss.

There are different types of business insurance policies designed for different types of businesses with different risks. However, if you are still unsure of the different risks that your business faces, consider purchasing general liability insurance.

This is the most common form of insurance that many small businesses require to operate safely. Another notable insurance that you may need is workers’ compensation insurance if you will have employees.

Summary

So, there you have it. The critical steps you need to accomplish to set up a successful self-storage business.

While they may sound simple and straightforward, they are not easy to execute. You will be required to spend a lot of time planning everything before you launch your business.

It is also good to be mindful of the risks involved and find possible solutions before diving straight in. Take time to learn, and everything else will fall into place.

Share on email
Share on print
Share on facebook
Share on twitter
Share on pinterest

read this next

Working out at home has become more and more popular in recent years. With features such as suspension training becoming more common it is no surprise and many people are choosing to workout in the comfort of their own home. This is a brilliant idea for those who prefer not to go to the gym, or who cannot afford a gym membership. Here are some effective tips on storage for home gyms
Owning a pet is a rewarding experience, but pet supplies can quickly clutter your home if you don’t organize them. You want to make sure that all of your pet essentials — from food and toys to leashes and treats — are easy to find when you need them. If your pet is suffering from disorganization, we have a few simple solutions for keeping all their supplies in order.
While it may seem like a small space, a self-storage unit can house all types of belongings — from lawn mowers to designer clothing and collectibles. If you’re considering renting a storage unit, it’s helpful to know what size space you need
A storage unit is a great device for anyone looking to store valuable things. As long as it is built to last, and that it gives you the necessary space to keep your valuables, then it is more than worth your money. Here we will be going over 9 reasons why You need outdoor storage unit, so that you can be sure that you are making the right decision.
Storage ottoman are practical, storage solutions for small homes. They are also terrific additions to living rooms, studios apartments, kid’s spaces and basement recreation rooms. For those unsure about which ottoman to choose, we’ve carefully selected the top 9 storage ottoman types for your home.
The storage is one of the most important parts of your yard, if not the most important. A good outdoor storage will allow you to keep things that you use outside organized and tidy. Follow these tips to build or improve the outdoor storage space that you have now.
If you have a storage unit, you know how difficult it can be to organize all of your possessions. A storage unit makes the perfect storage space for items you’re not currently using or that don’t fit into your home or apartment. So let’s get organized! Here is the ultimate guide to organizing a storage unit.
Tiny houses can be a little challenging when it comes to storage solutions. After all, every square inch of space counts. If your tiny house has limited floor and wall space for storage, 20 creative storage ideas will help you get the most out of the available space you have.
If you live in a small apartment or have lots of stuff lying around, then it’s time to get savvy with storage. Here are some useful tips to store your items under the bed that it can be a great solution for small bedroom interior design
Sometimes it is hard to find matching shoes when they are scattered all over your closet. But with the right storage solution, you can tidy up your shoes in no time. There are many shoe organizers which are designed differently. Some allow you to organize by style or color, others are equipped with pockets or drawers for sneakers and boots, or shelves for high heels.
You don’t need a lot of space for baby storage items. We’ve gathered solutions for nursery storage, baby clothing storage and toys. If you have a tiny living space, you don’t need to buy a huge house or move into a bigger place to properly store everything your infant or toddler needs.
Attractive, modern and practical, shoe storage furniture can be a stylish addition to your home. Whether you’re organizing your entryway, mudroom or bedroom closet, shoe storage furniture will create space for your shoes without taking up floor space or cluttering a room.
Shoes are one of the trickiest items to store in your home. To keep them organized and free of clutter, you’ll need some shoe storage ideas and clever solutions. Creative shoe storage is not a problem with these 18 storage designs. The beauty of these ideas is that they don’t require any skills or incredible amounts of money to pull off.
Storing camping gear in your small apartment, or other smaller living spaces can be a big challenge. The last thing you want is for all your gear to take up most of your space. Here are some helpful tips that I’ve learned over the years on how to store camping gear in a small apartment.
If you don’t pay for storage, your items won’t be available to be picked up or shipped until you do. If you’re running late with a payment, we’ll send reminders to help you out. Once your storage period is over, your items will be returned to our other customers or donated.
If you have been looking into self storage units, you may be wondering how safe are self storage units. Your concerns likely stem from what is done to protect your belongings while they are in storage. Here’s what you need to know