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When homeowners and businesses have many items needing storage to eliminate clutter, they turn to self-storage units. Those with space to spare for a self-storage business earn their income passively. At the same time, those who don’t have enough space at home and business can manage them, which is why self-storage units are in demand today. If you’d like to run your own self-storage business, here are the steps you should take.
1. Create A Self-Storage Business Plan
Entrepreneurs can put their best foot forward using a concrete business plan. While not every businessperson will see the need for one, it’s crucial to have a well-formulated strategic plan that includes everything you need to run a self-storage business. Here are the considerations you should consist of in the business plan:
- Buying Land
The start-up and continuing costs will involve buying land for the project you will develop into a structure of storage units. The land purchase will take up to 30% of the project budget. From here, you need to calculate the price per square foot, the fraction of the job site where you need to build, and the pricing for the rentable space per square foot. For this project, you will need a specific out-of-pocket budget. An investor could also back you for buying the land and the construction cost. Even if you’re considering the purchase of shipping containers to serve as storage units, land of your own will ensure that these units have somewhere appropriate to settle.
- Target Market
Next, the plan is to determine your target market—the customers that need to use your storage units and can pay a month’s rent or more. First, identify what your business can offer and which problems it will solve. You can also do market research and use online tools to determine if your area has similar companies and how condensed the market is. Assess the competition and create customer profiles by using demographics and psychographics.
- Pricing And How It Will Make Money
Another thing to remember is to find out if other possible income streams come with running storage units. In this business, you won’t only make money through monthly rentals but also from auctioning unclaimed contents, past due rental fees, and moving supplies. Along with this is how much rent you will need to charge to turn a profit and figure out the amount of how much you can make in a year.
2. To Buy Or To Build
Another factor to consider is if it’s more beneficial to buy self-storage units or build them from scratch. Depending on your location or state, existing storage units will cost under one million up to tens of millions of dollars. If you want to get an existing facility, hiring a professional licensed broker experienced in self-storage facilities is best. They will know more about the market and the ways of negotiating for a fair buying price.
When you decide to construct the storage units from the ground up, more factors are worth considering, such as the location, how many stories, land cost, and construction cost. For this part, it’s also worth researching because you want your storage units to be versatile for the customers’ needs. The following question will help you decide what your units should be like:
- Will you be building small or big storage units or a combination of both?
- How many units will there be per building?
- Should you include storage units for land and water vehicles?
- Do you need units with climate control or none?
- Should you have indoor-access units or drive-up units? Or both?
3. Pick Your Financing Options
Depending on whether you want to build your self-storage units or if you want to buy existing ones, it will allow you to determine how much money you need and where to get financing if you haven’t any budget yet. If you’re looking for financing, you need a clear business plan and financial information detailing your project needs and costs.
Lenders will review your business plan and will likely ask. They will also want to know your plans, such as what requirements you’ll need for the next five years. To get into further details, lenders might also ask what your strategic goals are, how you’ll use the money, and how you’ll pay off your debt.
4. Ensure To Comply With The Tax Laws
Once you get financing for your self-storage business, the next order of business is ensuring that it is registered at the appropriate government agency, such as the Business Agency or the Secretary of State’s office. The business must comply with various regulations regarding taxation laws that business owners need to address.
You can seek out the US Small Business Administration if you need more guidance on business bureaucracy. It also won’t hurt to seek out the assistance of a lawyer specializing in small business taxation laws. You might get more information regarding government financial support.
A self-storage business can be lucrative because it has multiple income sources. But to start, one takes research, consideration, and money. You must also weigh your pros and cons to see if a self-storage business is right for you. You can start this business by having a solid business plan, choosing which routes to take, and then looking for financing options to fund the project. With knowledge and patience, you can also have a self-storage business.