Industry Insights Into How To Start A Self-Storage Business

As we become more established in our homes, we tend to accumulate objects that have sentimental value, or things that are simply important to us. Almost everyone can relate to the need for more space, in our homes and offices. This is why renting a self-storage unit has become such a popular activity, and why the self-storage industry has grown so much in recent times. 

To maximize your chances of success, as a self-storage business owner, you will need a solid appreciation of how this industry works. To begin with you will need to develop insight into competition, local demand, and possible costs. In this article, we will provide you with the information you need to get started on the right foot in the world of self-storage. 

Self-Storage Industry Trends 

People have been investing in self-storage for decades. Yet, in the past couple of years, this niche industry has seen a boom in the uptake of storage facility units. The number of storage facilities is now 49,000+ and the total rentable self-storage space is 1.9 billion square feet. (Sparefoot reports).

What’s more, annual self-storage industry revenue is reported to be $39.5 billion. An astounding 10.6% of households are reported to rent a self-storage facility, today. Which means that the self-storage space per person is 5.9 square feet. 

Moreover, the demand for self-storage space is likely to grow with the generations to come. These impressive statistics provide some idea of why so many entrepreneurs are looking to break into the self-storage business. 

Why People Need Self-Storage Facilities 

He is a summary overview of why people often require self-storage facilities:

• To live in a minimalist-style home: you can store your old decorations, toys and vehicles.
• To declutter your office space: you can store your office equipment and inventory.
• During a renovation or move: you can put the things you need in a storage facility until your new space is ready. 
• Use your storage unit as a permanent shed: a shed away from home can help keep your home space clean.  

The Costs of Opening a Self-Storage Business  

Breaking into the self-storage business market can be financially demanding. Particularly, if you plan on building your storage facility yourself. Constructing a single-story self-storage facility generally costs around $25-$40 per square foot, excluding land purchase costs. Building a multi-story self-storage unit can range from approximately $42 -$70 per square foot. Typically a self-storage facility ranges between 60,000-80,000 square feet, and the building will cost between $45 – $65 per square foot. (according to Mako Steel).

If you are able to find and purchase an existing storage facility, you may be able to cut some costs. 

Here are some common costs you will need to consider as a startup self-storage business: 

• Land
• Security systems
• Development costs
• Office equipment
• Signage 

You will also need to consider working capital for your initial operating months, including lease, debt services, utilities and insurance.   

Steps to Starting a Self Storage Business

Step 1 – Create your Business Plan

So, you have decided to get into the business world of self-storage. You will now need to get started by writing a self-storage business plan. Ultimately, you will use this plan when you apply for financing and/or a loan. However, a solid business plan will also give you an indication of where your business is headed. When writing your plan take the following things into consideration; competitors, occupancy rates, and construction costs. 

Step 2 – Develop a Business Entity

Your next step involves creating a legal business entity. This will organize, in a legal fashion, the way your business is set up and who is authorized to operate what. There are 4 main business entities that you can look at. They include partnership, sole proprietorship, corporation, and Limited Liability Company (LLC). Each of these entities has its minuses and its pluses. You will need to look into your business requirements, considering costs, liability exposure, and administrative needs, when deciding which business structure suits you the best.  

Step 3 –  Decide Where to Set-Up-Shop

You will also need to think about where you want your business to be located. The amount of money you will need to give as rent or mortgage will largely vary according to the location and size of your business. It is best to choose a location that is close to apartment complexes, commercial businesses, or small homes, as your clients are likely to come from these areas. 

Step 4 – Register your Business for Licenses and Permits 

Look into the type of licensing requirements your self-storage business will need to meet. There may be zoning requirements as well as some generally local, state, and federal business registration rules that you will need to abide by. For example, you may need an Employer Identification Number and Occupancy Permit. 

Step 5 – Look into Financing Options 

Having a great business concept and having the know-how to pull off your business idea is just the beginning. You will also need to have the finances to back up your business operation. To land a small business loan, you will need to have a good credit score. You may also need to invest 15-25% of your own money towards your self-storage initiative. However, there are many online lenders on the market today, who generally have more lenient loan application requirements. 

Step 6 – Set-up a Business Bank Account

Making a distinction between your personal finances and your business finances is essential. You must be able to easily track the income and expenses of your business and this can be better done when there is a separation between personal and business money. 

Step 7 – Establish a Marketing Plan of Action 

You can reach your initial client base through effective marketing. However, before you embark on a marketing strategy, it is important to ensure that you have enough self-storage facilities to rent out, on a continuous basis. Some marketing techniques include social media marketing, online email marketing, and print advertising. As a self-storage business owner, you could also form ties with local moving companies, as this could help spread word-of-mouth publicity for your business. 

Step 8 – Hire Your Initial Employees

One of the benefits of a self-storage business is that you won’t need too many employees. You may even be able to run the business by yourself, at the beginning. This will give you time to build up momentum before you will need to layout salaries for your employees. Storage managers are reported to earn, on average, $12.55 per hour. An assistant manager earns around $12.19 per hour. (according to Indeed). When you are ready to hire staff you will need to include salaries and other employee-related expenses in your self-storage business budget. 

Conclusion 

Once you have your storage units and paperwork together, you can get ready to open your business. Make sure that you spread the word and cause a buzz on the streets so that people become aware that there is a new self-storage business in town. 

 

Starting a storage unit business can be a lucrative business. On this page, we have given you the advice and tips you need to get started. You can now start your self-storage business journey knowing what you need to do to optimize your chances of standing out in the self-storage industry.