How to Start Your Self Storage Business: 13 Step Guide
In this guide, we will explore the steps needed to successfully start your own self storage business. We will cover developing a business plan, finding potential locations, obtaining permits and licenses, choosing a security system, determining unit sizes and pricing, and establishing policies and procedures.
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| Statistic | Detail |
|---|---|
| Number of facilities | 49,233 as of 2021 |
| Industry revenue in 2020 | $39 billion |
| Average occupancy rate | 96.5% |
| Projected market size by 2026 | Over $64 billion |
| Annual growth 2017-2022 | 7% employment growth |
| Space ownership breakdown | Top 6 companies own 36.6%, next 94 operators own 22.4%, remainder own 41% |
| Total storage space | Estimated 2.04 billion sq ft |
| Average sole proprietor revenue | $50,998 annually |
| Average sole proprietor expenses | $50,219 annually |
| Average monthly unit cost | $88.85 |
Table of Contents
- Step 1: Conduct Thorough Market Research
- Step 2: Create a Business Plan
- Step 3: Choose a Storage Facility Design
- Step 4: Obtain Funding and Financing
- Step 5: Find and Lease a Facility Site
- Step 6: Obtain Necessary Permits and Licenses
- Step 7: Hire Contractors and Buy Equipment
- Step 8: Install Units and On-Site Office
- Step 9: Develop Marketing Plan
- Step 10: Set Rental Rates and Payment Options
- Step 11: Hire and Train Staff
- Step 12: Open for Business!
- Step 13: Grow Your Customer Base
- Why You Should Invest in Storage Lot Business
- Pros and Cons of Owning a Storage Facility Business
- Frequently Asked Questions
- Conclusion
Step 1: Conduct Thorough Market Research
Before diving into the world of self storage, it is crucial to conduct thorough market research to ensure the success of your business. Market research lays the foundation for understanding your target audience, identifying potential competitors, and evaluating the demand for self storage in your area.
The first step in conducting market research is to identify your target market. Determine who your potential customers are – whether they are new homeowners, businesses needing extra space, or college students in search of temporary storage. By understanding their needs and preferences, you can tailor your services to meet their expectations, gaining a competitive edge in the market.
Next, evaluate the competition. Research existing self storage facilities in your area and analyze their offerings, prices, and customer reviews. This will help you identify the gaps in the market that you can potentially fill. Additionally, studying the competition will give you insights into their marketing strategies, allowing you to differentiate your business and attract customers effectively. Remember, market research is an ongoing process – it is essential to stay updated on industry trends and consumer behavior to continually refine your business strategy.
Step 2: Create a Business Plan
Now that you’ve decided to dive into the self storage industry, it’s time to create a rock-solid business plan that will guide you towards success. A well-thought-out plan is crucial as it not only outlines your goals and strategies, but also helps you secure funding and make informed decisions along the way. Here’s how to craft a business plan that sets the foundation for your self storage venture:
1. Define Your Vision: Start by envisioning what you want your self storage business to become. Consider your target market, location, size of the facility, amenities, and any unique selling points. This will help you shape your business strategy and differentiate yourself from competitors. Remember, a clear vision acts as a compass for your future endeavors.
2. Conduct Market Research: Understanding your market is essential for success in the self storage industry. Conduct research to identify the demand for storage units in your area, analyze competitors, and determine pricing strategies. Gather insights on customer preferences and needs to tailor your services accordingly. By knowing your market inside out, you’ll be better equipped to make informed decisions and meet the demands of your customers.
Step 3: Choose a Storage Facility Design
Once you have determined the size and location of your self-storage facility, the next step is to choose a storage facility design that aligns with your business goals. The design of your storage facility can greatly impact its functionality, efficiency, and overall appeal to customers. Here are some key factors to consider when selecting a storage facility design:
1. Layout and Flow: A well-designed layout is essential for maximizing the use of space in your storage facility. Consider how customers will navigate through the facility, access their storage units, and move their belongings in and out of the premises. Create a logical flow that minimizes congestion and ensures smooth operations.
2. Unit Variety: Offering a variety of storage unit sizes and types can attract a wider range of customers. Consider including standard units, climate-controlled units, and even specialized units for vehicles or business inventory. Providing options allows customers to choose the unit that best suits their needs.
3. Security Measures: Security is of utmost importance in the self-storage industry. Your facility design should incorporate robust security features such as gated access, surveillance cameras, and secure locks on individual units. Consider investing in advanced security technologies to provide peace of mind to your customers.
Additionally, prioritize the aesthetic appeal of your storage facility design to create an inviting environment for potential customers. Remember that customers are more likely to choose a self-storage facility that appears clean, modern, and well-maintained. With careful consideration of these factors, you can choose a storage facility design that sets your business apart and attracts customers seeking a reliable and secure storage solution.
Step 4: Obtain Funding and Financing
Now that you have devised a solid business plan and conducted thorough market analysis, it’s time to dive into obtaining the necessary funding and financing to turn your self storage dream into a reality. While not a small feat, this step is essential to secure the resources you need to launch and sustain your venture successfully.
To begin, explore different avenues for funding your self storage business. This could include personal savings, investments from friends and family, or seeking out business loans from financial institutions. Remember to consider the terms and interest rates associated with each option, ensuring they align with your long-term goals and financial capabilities.
Another important aspect of financing is identifying potential grant opportunities or private investors who specialize in the self storage industry. Research local and national grants that could provide financial support for your business. 
Step 5: Find and Lease a Facility Site
Now that you have identified your target market and established a solid business plan, it’s time to find the perfect facility site for your self-storage business. Remember, location is key! Consider these key steps to ensure you make the best decision:
- Research potential areas: Start by conducting thorough market research to identify areas with high demand for self-storage facilities. Look for regions with growing populations or booming business sectors. Expansion plans and upcoming developments in an area can serve as promising signs of increased demand.
- Scout the property: Once you shortlist potential locations, take a trip to scout the properties personally. Evaluate accessibility, security factors, and drainage systems. Demographics of the area play a crucial role too, so ensure there are potential customers nearby who would benefit from your facility.
- Review local regulations: It’s essential to understand local zoning laws and regulations before signing any lease agreements. Check if self-storage facilities are allowable in the intended area and ensure you comply with all necessary permits, licenses, and legal requirements.
Step 6: Obtain Necessary Permits and Licenses
Here are some key permits and licenses you may need to acquire:
- Business License: Obtain a general business license or permit from your local government to legally operate your self storage business.
- Zoning Permits: Check with your local zoning department to ensure that your facility is properly zoned for self storage use. This may include obtaining a zoning permit to confirm compliance with local regulations and restrictions.
- Building Permits: If you are constructing or renovating your self storage facility, you will likely need building permits to ensure compliance with building codes and safety regulations.
- Fire Safety Inspection: Schedule a fire safety inspection to ensure your facility meets all necessary fire prevention and safety standards. This may involve installing fire alarms, extinguishers, and sprinkler systems.
Keep in mind that this is not an exhaustive list, and additional permits or licenses may be required based on your specific circumstances. It is advisable to consult with a lawyer or business advisor to ensure you complete all necessary paperwork and requirements. By obtaining the required permits and licenses, you can confidently launch your self storage business and operate within the bounds of the law.
Step 7: Hire Contractors and Buy Equipment
Once you have secured a location and obtained the necessary permits, it’s time to move onto the exciting phase of hiring contractors and buying equipment for your self storage facility. This step is crucial as it ensures that your facility is well-equipped to meet the needs of your future tenants. Here are some key considerations to keep in mind:
- Research and compare contractors: Take your time to research different contractors in the area who have experience in constructing and renovating self storage facilities. Look for professionals who have a proven track record of delivering quality work within budget and on time. Request quotes and compare their services, qualifications, and customer reviews to make an informed decision.
- Visit ongoing projects and check references: To gauge the contractor’s capabilities, visit their ongoing projects. This will give you a firsthand look at their workmanship and attention to detail. Additionally, don’t hesitate to ask for references from their previous clients. Contacting these references can provide valuable insights into the contractor’s reliability, professionalism, and competence.
- Equip your facility with the essentials: Investing in the right equipment is crucial to the smooth operation of your self storage business. Consider purchasing high-quality security systems, including surveillance cameras, access control systems, and alarms, to protect your tenants’ belongings.
By hiring reputable contractors and acquiring top-notch equipment, you are setting the foundation for a successful self storage business. Remember, attention to detail and quality should be a top priority throughout this process. So don’t rush, take your time, and carefully select the right contractors and equipment that align with your vision and business goals.
Step 8: Install Units and On-Site Office
Once you have chosen the perfect location for your self storage business, it’s time to move on to the next step: installing units and setting up your on-site office. This crucial phase will determine the functionality and attractiveness of your facility. To ensure a smooth process, follow these guidelines:
1. Building and Installing Units:
– Begin by clearing and leveling the designated area for your storage units.
– Choose sturdy, weather-resistant materials for construction to ensure durability.
- Consider offering a variety of unit sizes to cater to different storage needs.
– Optimize the layout for easy navigation and accessibility, keeping in mind security measures to protect your customers’ belongings.
– Use clear signage and markings to help customers locate their units effortlessly.
2. Equipping the On-Site Office:
– Your on-site office will serve as the face of your business, so invest in a comfortable and organized workspace to make a positive impression on customers.
- Install necessary equipment, such as desks, chairs, computers, printers, and phones, to facilitate customer inquiries and payments efficiently.
– Arrange a welcoming reception area with informative brochures and promotional materials to attract potential renters.
– Implement a state-of-the-art security system to ensure the protection of sensitive customer data and maintain a safe work environment.
– Train your staff to provide excellent customer service, as their interaction with customers can greatly influence their overall experience.
3. Creating an Appealing Environment:
– Enhance the visual appeal of your facility by beautifying the surroundings with aesthetic landscaping, such as well-maintained green spaces and colorful flowers.
– Provide adequate lighting throughout the property to enhance safety and visibility, especially during evening hours.
– Paint the storage units and office in eye-catching colors that reflect your brand and create a welcoming atmosphere for customers.
- Utilize attractive signage to highlight your business name, hours of operation, and contact information.
– Finally, promote your self storage business through local marketing efforts, online advertising, and word-of-mouth referrals to attract potential customers to your newly installed units and convenient on-site office.
Step 9: Develop Marketing Plan
Congratulations on reaching step 9 of our comprehensive guide on how to start your self-storage business! Now that you have successfully chosen the perfect location, designed a functional facility, and nailed down your pricing strategy, it’s time to dive into developing a solid marketing plan. In this step, you will lay the groundwork for attracting customers and ensuring a steady stream of occupancy for your storage units.
1. Know Your Target Audience: Before diving into any marketing strategy, it’s crucial to identify your target audience. Think about who is most likely to utilize self-storage services in your area. Are they families downsizing their homes, college students in need of temporary storage, or business owners seeking extra space? Understanding your customer demographics will help shape your marketing tactics and deliver more effective messaging.
2. Establish Your Brand Identity: Your brand identity is what sets you apart from your competitors. Create a memorable and professional brand name, logo, and color scheme that resonate with your target audience. Make sure these elements are cohesive and consistent across all marketing channels and materials. Knowing your unique selling points (USPs), such as exceptional security measures or climate-controlled units, will also help shape your brand identity and enable you to stand out in a crowded market.
3. Embrace Digital Marketing: In today’s connected world, digital marketing is essential for any business’s success. Build a user-friendly, responsive website that showcases your facility’s features and benefits alongside compelling visuals and testimonials. Optimize your online presence by implementing search engine optimization (SEO) tactics to improve your ranking in search engine results. Don’t forget to utilize social media platforms to engage with your target audience, share valuable content, and run targeted advertising campaigns.
Developing a comprehensive marketing plan will allow you to effectively promote your self-storage business and attract potential customers. By understanding your target audience, establishing a strong brand identity, and embracing digital marketing, you’ll be well on your way to achieving sustainable business growth. Stay tuned for step 10, where we explore the importance of excellent customer service to keep your clients happy and loyal.
Step 10: Set Rental Rates and Payment Options
In the world of self storage, one of the most important steps for any budding self storage entrepreneur is setting rental rates and determining the payment options for your facility. This crucial step ensures not only the financial success of your business, but also allows you to cater to a wide range of customers and their unique needs.
Understanding Market Demand: Before setting your rental rates, it’s crucial to conduct thorough market research to understand the demand for self storage in your area. This research will help you determine the appropriate pricing strategy, whether it’s competitive pricing or premium rates for added amenities and services. Consider factors such as location, customer demographics, and competitor rates to make informed decisions.
Flexible Payment Options: To appeal to a larger customer base, it’s important to offer a variety of payment options. Providing flexibility in payment methods, such as accepting cash, credit cards, checks, and even online payments, will make it easier for potential customers to choose your facility. Offering different payment frequencies, such as monthly, quarterly, or annually, can further attract clients who prefer a customized payment schedule. By catering to different preferences, you create a seamless and convenient renting experience for your customers.
Step 11: Hire and Train Staff
Once you have laid the groundwork for your self storage business and have set up your facility, it’s time to focus on one of the most crucial aspects of running a successful operation: hiring and training your staff. The people you choose to represent your business will play a key role in providing exceptional customer service and maintaining the security of your customers’ belongings.
1. Define your staffing needs: Consider the size and scope of your self storage facility to determine how many staff members you will need. Identify the specific roles and responsibilities required, such as facility managers, customer service representatives, and maintenance personnel. Clearly outlining your staffing needs will help you find the right candidates with the necessary skills and experience.
2. Craft an attractive job description: Write a detailed and enticing job description that highlights the benefits of working at your self storage facility. Emphasize the qualities you are looking for, such as reliability, professionalism, and excellent communication skills. Clearly outline the duties and expectations of each role. This will help attract applicants who are the right fit for your business.
Step 12: Open for Business!
Congratulations! You’ve made it to the final step of our comprehensive guide on starting your self storage business. After putting in all the hard work and dedication, it’s time to finally open those doors and welcome your first customers. This post will walk you through the essential tasks you need to accomplish to ensure a successful launch.
– Advertising and Marketing: Now that your facility is ready, it’s crucial to spread the word about your business. Invest in targeted online advertising, create enticing signage, and engage with your local community. Leverage social media platforms to share promotions, testimonials, and valuable tips. Offer referral incentives to existing customers, turning them into ambassadors for your brand. Don’t forget to optimize your website for search engines to boost online visibility.
– Security and Safety: As you prepare to open for business, prioritize the safety and security of your customers’ belongings. Conduct a thorough inspection of your facility to ensure all systems are functioning properly. Test your surveillance cameras, alarm systems, and access codes. Install well-lit areas and consider employing security personnel during peak hours. Additionally, equip your storage units with reliable locks and provide customers with storage insurance options to offer added peace of mind.
– Exceptional Customer Service: The success of your self storage business largely depends on your ability to provide exceptional customer service. Train your staff to be friendly, knowledgeable, and responsive to customer inquiries. Consider offering extended business hours or even 24/7 access options to accommodate different schedules. Provide your customers with convenient payment methods, such as online and autopay options. Regularly communicate with your customers through email newsletters or social media updates, sharing storage tips and promoting special offers.
Step 13: Grow Your Customer Base
In order to ensure the success and profitability of your self storage business, expanding your customer base is of utmost importance. Here are some effective strategies to attract new customers and keep them coming back for more:
- Offer promotional deals: Everyone loves a good deal! Consider offering discounts or special promotions to new customers to entice them to choose your self storage facility. You could offer the first month at a reduced rate or provide a free moving truck rental. These incentives will grab the attention of potential customers and give them a reason to choose your facility over your competitors.
- Collaborate with local businesses: Building partnerships with local businesses can be mutually beneficial. Consider reaching out to moving companies, real estate agents, or staging companies and offer them exclusive deals or discounts for referring customers to your storage facility. In return, they can recommend your services to their clients, expanding your customer base organically.
- Focus on exceptional customer service: Providing exceptional customer service is key to creating loyal customers who will spread positive word-of-mouth about your business. Train your staff to be friendly, knowledgeable, and responsive. Make sure you address any customer concerns or issues promptly and go above and beyond to exceed their expectations. Happy customers are more likely to recommend your facility to others, resulting in a growing customer base.
Why You Should Invest in Storage Lot Business
Investing in a storage lot business is a smart choice for entrepreneurs looking for a lucrative opportunity in the real estate market. With the increasing demand for storage space, this business has the potential to provide you with a stable income stream and a strong return on investment. Here are several reasons why investing in a storage lot business is a wise decision:
A growing market: The self-storage industry is experiencing remarkable growth, driven by various factors such as urbanization, downsizing, and the rise of e-commerce. As people accumulate more possessions, they require extra space to store their belongings. By investing in a storage lot business, you can tap into this ever-expanding market and cater to the storage needs of individuals, families, and businesses.
Recurring revenue: One of the major advantages of this business is the recurring revenue it generates. Unlike other types of real estate investments, such as rentals, storage lots provide a consistent stream of income month after month. Customers typically sign long-term contracts and pay their rent regularly, ensuring a reliable cash flow that you can count on.
Low maintenance: Another appealing aspect of investing in a storage lot business is its low maintenance requirements. Once you have set up your facility, you won’t have to deal with the day-to-day hassles that come with managing rental properties or dealing with tenants. Storage lots are generally self-service, which means you won’t have to handle frequent repairs or deal with customer complaints. This makes it an ideal investment opportunity for those seeking a hands-off approach.
Pros and Cons of Owning a Storage Facility Business
When considering starting your own self storage business, it’s important to weigh the pros and cons before taking the plunge. Owning a storage facility can be a profitable venture, but it comes with its own set of challenges and considerations. Let’s take a closer look at the advantages and disadvantages of entering this industry.
Pros:
– Lucrative Investment: With the rising demand for storage space, owning a storage facility can be a highly profitable business. As more people downsize their homes or require temporary storage during moves, the need for secure, convenient storage solutions continues to grow.
– Recurring Income: One major advantage of investing in a self storage business is the steady flow of recurring income. Unlike other businesses that rely on selling products or services, storage facility owners earn revenue from renting out storage units on a monthly basis. This stability offers financial security and potential for growth.
– Minimal Labor Intensity: Operating a storage facility requires relatively low labor compared to other business ventures. Once you’ve set up your facility and established processes for handling tenant inquiries and maintenance, the day-to-day operations can be managed with a small staff. This allows owners to focus on growth strategies and expanding their customer base.
Cons:
– Initial Investment: While the long-term profitability of a storage facility is enticing, it’s important to consider the significant initial investment required. Purchasing land or an existing facility, constructing storage units, and obtaining necessary permits can involve substantial upfront costs. Additionally, ongoing expenses such as property taxes, marketing, and maintenance should be factored into your financial planning.
– Competition and Saturation: The self storage industry is becoming increasingly competitive, especially in areas with a large number of existing facilities. To stand out from the crowd and attract customers, you’ll need a strong marketing strategy and unique selling points. In saturated markets, it may take time to establish a solid customer base and achieve desired occupancy rates.
- Rental Delinquency and Vacancies: While storage facilities generally offer a steady income stream, there is always the risk of rental delinquency and vacancies. Some customers may fail to pay rent on time, leading to potential revenue loss. Additionally, fluctuating market demand and seasonal variations may result in periods of lower occupancy, impacting your cash flow. Managing delinquencies and finding ways to maintain high occupancy rates is crucial for a successful storage facility business.
Frequently Asked Questions
How much investment is needed to start a self storage business?
Expect to invest $500,000 – $1 million for a small to medium sized facility.
Do I need any licenses or permits?
You’ll need zoning approval, a business license, and may require specific permits for construction, fire safety, etc.
What is the best location for a storage facility?
Highly visible areas with good traffic and proximity to residential neighborhoods usually do well.
How do I market and advertise my new business?
Use signs, Google ads, social media, direct mail, and partner with local realtors and moving companies.
What unit sizes and rental prices should I offer?
Offer a variety of unit sizes from small 5×5 to large 10×30. Rent ranges from $50-200+ per month depending on size and location.
Final Thoughts
Starting a self storage business requires careful planning, market research and an initial financial investment. However, if properly managed, a self storage facility can become a highly profitable venture with strong monthly cash flow and a growing customer base. For those able to fulfill the startup process, owning a self storage business could deliver strong long-term returns.
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