Do you want to start a storage unit business? If YES, here is a 17-step guide to starting a storage unit business with NO money and no experience plus a sample storage unit business plan template.
If you have been thinking of a business in the real estate industry that is not only less capital intensive but one that won’t take your time as well, then starting a storage unit is the business for you. Storage units are used by people to store their belongings and it can be any secured space ranging from boxes, lockers, containers, rooms to an empty ground lot.
The storage unit business became a thriving one from 1958 and has gotten a lot of investors rich. This therefore means that you can make huge profits from this business if you research the business well and ensure that you are strategically located.
Just like any other business, it is important that you conduct a thorough survey about this business before venturing into it so that you do not end up wasting money or time in a business that is not suitable for you.
Another reason why it is important to carry out a survey is to determine if the business will thrive in the location or area you intend establishing it. Your survey will also enable you understand the sector thoroughly, the kind of competition you are likely to face, how much you are going to invest in the business and how much you will gain from the business.
Once you have carried out a thorough survey about the business, then it is essential that you write down your findings as these facts and data you have garnered will be used to form your business plan.
17 Steps to Starting a Storage Unit Business With No Money
1. Understand the Industry
The storage unit industry is joined with the Warehouse leasing market by IBISWorld and has been tagged as a business that will continue to generate more revenue as the economy continues to improve.
The revenue generated by this industry annually amounts to $38 billion with an annual growth that has been pegged at 7.7 percent through a five year period – 2012 to 2017. There are more than 58,000 storage and warehouse leasing businesses in the united states of America employing more than 143,000 people.
According to IBISWorld, the storage and warehouse leasing industry is one that is the fastest in the commercial real estate sector of the industry. The industry which has continued to grow due to the growing economy has benefited a lot from an increase in demand from customers who have more disposable income to spend and this has tilted the industry to grow tremendously within the next five years.
This does not however mean that the industry hasn’t met with several challenges especially in metropolitan areas where there is intense competition as there are more companies looking to get a share in this sector.
According to a fact sheet from the Self Storage Association, 52 percent of storage unit facilities in the United States are in suburban areas, 2 percent are in urban areas while 16 percent are in rural areas. This goes to show that demand is high in some demography probably because clients choose storage unit facilities that are conveniently in or around their homes or businesses.
Also, the reason why the percentage is higher in the suburbs is due to the fact that individuals that earn higher incomes are likely to accumulate more belongings and are therefore likely to rent one or more storage units.
The self-storage industry originated in the United States of America and the country has since remained on top in the global market. Globally, Canada and Australia also have self-storage industries that are waxing strong, while Asian markets such as Japan, Hong Kong and Singapore are seen as growing markets with huge potentials.
In the United States of America, there are nearly 16,000 storage unit facilities which consist of single companies and companies with multiple facilities in different locations. The industry according to Dun and Bradstreet generates about $9 billion in revenue annually.
Companies in this industry usually provide varying services in order to be able to meet with the differing personal and or business needs and requirements of their consumers. What drives demand in this industry is the number of people in a location and how much they are willing to spend to rent a storage unit for their belongings.
The profitability of every storage unit company in this industry is largely dependent on how much they rent out their units and the strategies they use to market and promote their units to their target market.
Large scale storage unit companies usually have an advantage in finance acquisitions, marketing, purchasing and administration, while small scale storage unit companies usually compete by offering niche services to the target market.
The storage unit industry in the United States of America is largely concentrated with 50 percent of the largest companies generating nearly 50 percent of the industry’s revenue. A major percentage of the storage unit companies in the United States of America operate just one facility.
Nearly 80 percent of the storage unit companies in the United States of America are independently owned due to the fact that the number of storage units has risen by nearly two-thirds since the year 2000. However, the revenue in the industry is boosted via acquisitions by these independents as opposed to larger operations.
As at 2016, the revenue for the storage unit industry amounted to $32.7 billion; with this figure expected to grow by 3.5 percent each year for five years (2016 and 2022). Nationally, the average cost of a storage unit is $87 monthly and the average cost per square foot is $0.97 per month.
According to a 2015 forecast, there were more than 54,000 storage units in the United States of America with 9.5 percent of households renting a storage unit for their personal and or business belongings. Rents for storage units are rising as more units are becoming occupied; however, construction of new storage unit facilities are low due to the fact that the economy is just recovering.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those that require the services provided by a storage unit company is highly dependent on where the units are located, the population of those in that area, and what kind of income the households earn in order to be able to rent a storage unit for their personal or business belongings.
Therefore it is safe to say that more people in the Suburbs which consist of high income earning individuals are likely to rent or lease a storage unit when compared with those in the urban or rural areas. This does not exclude businesses of whatever size who are looking for a secured location and unit in which they can store their excess business documents.
3. Decide Which Niche to Concentrate On
The storage unit business is one where individuals, due to personal reasons, can rent or lease a storage unit to store their personal and or business belongings. The storage unit business is a sector under the real estate business and as such depends largely on the economy in order to thrive.
It is however a convenient option for those who can afford it, and it has been widely adopted by Americans. Just like any real estate concern, the issue of location, easy access, and security is very paramount to the growth of this business. In order to stand out, companies have started specializing in niche areas.
Therefore, some of the niche areas that a storage unit facility might decide to go into include;
- Rental or leasing of storage units and mini warehouses
- U-lock storage
- Rental of self-storage warehouse
- Rental of coin operated lockers
The Level of Competition in the Industry
The level of competition in this industry is largely dependent on the location of the storage units. This has led to companies acquiring other storage units or locating their businesses in areas where there is a huge demand in order to be able to conveniently compete with similar storage units offering the same services.
When it comes to the storage unit business, distance can be a barrier when competing with other storage unit companies because clients want to be able to access their belongings when they want. Certain important attributes that customers look out for when intending to rent or lease a storage unit are security, accessibility and competitive price. Once you are able to provide these, then you can safely compete against your competitors.
As an entrepreneur, you can choose to have multiple locations in the same area especially if you consider the area thriving enough for your storage unit business.
4. Know Your Major Competitors in the Industry
The storage unit industry is one that is largely concentrated and as such there are companies that have stood out from others as independents or as larger operations.
There are several attributes that have made these companies to stand out and they include but are not limited to; their length of time in the industry, their marketing and publicity strategies, the number of units they have, the location of their units and their safety and security measures.
Therefore, some of the well-known storage units brands in the United States of America;
- Public Storage Inc
- Extra Space Storage Inc
- Life Storage
- U-Haul (Amerco)
- Sovran Self Storage (Uncle Bob’s)
There are two major segments in the storage industry which includes fixed self-storage and portable storage. In the fixed self-storage segment, the structures which are permanent in nature are usually located far from the location of the customers and used by the customer to temporarily store household goods that are in excess.
The portable storage segment is one that locates the storage unit temporary within the location of the customer and is mostly used by the customers to store business belongings.
The portable segment of the storage unit industry is highly fragmented and generates more than $1.5 billion in revenue every year. This segment which also serves the mobile office industry and other modular structures is estimated to generate nearly $5 billion in revenue in North America, according to the Modular Building Institute.
The storage unit business is one that is quite popular in the United States of America as there are more than 50,000 self-storage units with the number still growing according to analysis especially as people and businesses are looking for a place where they can conveniently store their belongings at an affordable price.
The industry which has grown into a multi-billion dollar industry is expanding constantly to meet the demands of customers as new businesses are coming up every day.
One of the biggest costs of starting this business is the cost of getting land. Entrepreneurs that intend to go into this business should expect to spend nearly $1.25 per square foot of land and expect to make approximately 30 percent of the development costs.
However, the cost of the land is largely dependent on the area where you intend to build your storage units. Only about 45 percent of the land purchased is used for storage.
5. Decide Whether to Buy a Franchise or Start from Scratch
Starting your business from scratch or buying a franchise depends entirely on the goals and objectives of your business. You should also study the options well as there are pros and cons to any decision you intend to take on behalf of your business.
The storage unit business is one that is largely filled with independents and large operations and the franchise system has not been developed as in other industries. Therefore, the franchise option is not available to entrepreneurs looking to start the business.
If you intend starting this business from scratch, then you would need to ensure that you thoroughly study the business so that you are able to understand the business before going into it. Starting a business from scratch means that you would need to make marketing and publicity decisions as well as determining how much is necessary to charge your clients.
6. Know the Possible Threats and Challenges You Will Face
Every entrepreneur looking to start a business that will generate profit and compete against its competitors should expect to face threats and challenges and the storage unit business is no different. Therefore as an entrepreneur who has studied the market very well, you are expected to be prepared as well as proactive when going into this business so that you do not close shop because you have been overwhelmed by the challenges.
Some of the challenges and threats that you are likely going to face in the course of starting your storage unit business in the United States of America are, having to deal with thefts, getting sued by customers, making reports to the regulated authorities should any customer breach the terms and conditions, intense competition from competitors, economic downturn which will lead to less people demanding the services of your storage unit.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
choosing a legal entity for your storage unit business is a very serious and important decision that you would make as an entrepreneur especially as the choice you settle on will decide how far your business can expand and grow in the short and long run.
In choosing a suitable legal entity for your storage unit business, there are several factors that you would need to take into consideration and they are; how easy it is to set up the legal entity, taxation issues, how flexible the structure will be according to the needs of your business as well as the extent of liability involved.
Choosing a legal entity can be a bit overwhelming, which is why it is advisable you consult with an attorney or accountant who has the experience in the sector of the industry you are going into to help you choose the best legal entity for your business.
The storage unit business is a bit sensitive and this is because you cannot monitor when your customer comes and goes and what is in the content of their units, which is why you should take the issue of legal entity very seriously. There are different kinds of legal structures available to an entrepreneur intending to start a business in the United States of America and these are; sole proprietorship, partnership, corporation and Limited Liability Company (LLC).
Each of these legal entities have their pros and cons and some are out rightly not suitable for running this kind of business.
Therefore the legal entities that you might need to consider when deciding on the legal entity to use for your storage unit business are; Limited Liability Company (LLC) and Corporation – the S Corporation and the C Corporation. Most entrepreneurs starting their businesses in the United States of America usually prefer the LLC legal entity.
In the LLC kind of legal entity, the owner of the business is often regarded as a separate entity from the business. This therefore means that the business can take decisions and actions on its own and can be sued as an entity without it affecting the owner.
Also in an LLC, the personal assets of the owner are protected and there is taxation benefit for the owner as tax is paid on personal income returns.
The corporation form of legal entity is also like that of the LLC, the only difference being that the corporation is more formal than, and not as flexible as the LLC. More owners are required to start a corporation and one form of a corporation is an S Corporation.
However, in the S Corporation, the owners have the privilege of reducing their self-employment tax liability. A business using the S Corporation form of legal entity can however, not grow beyond a certain extent.
The C Corporation is a type of legal entity has more formality than even the S Corporation. One turn off of the C Corporation for many entrepreneurs is the fact that the owners are taxed separately from the business, leading to double taxation.
However, this kind of legal entity is perfect if you intend to build a lot of facilities which will require you having to raise an IPO or attract private investors or venture capitalists to invest in your business.
8. Choose a Catchy Business Name
When you are conducting a research on this industry prior to starting the business, it is very essential that you have a business name in mind so that you would not be stuck when it comes to choosing a name. Choosing a business name is something that has to be taken very seriously as the name you choose will have an impact on how your target market perceives your business.
Therefore, the name you choose for your business must be trendy, creative, unique and easily memorable. Below are names that you can need to consider choosing if you are stumped on names for your storage unit business;
- Smart Storage Solutions
- Integrated Storage Inc
- Triple K Storage Facilities
- Theo’s Storage Services
- G Storage Units Inc
- All-in-one Storage Services
9. Discuss with an Agent to Know the Best Insurance Policies for You
Insurance policies are intended to protect a business as sometimes lawsuits may arise due to the fault of the customer, employee or owner of the business.
If you intend to run your storage unit business without stress, then it is important that you consider creating a budget and purchasing insurance policies for your business. If you are confused as regards the right insurance policies to get, then you might consider engaging the services of an insurance agent or broker, who would then advise you on the appropriate insurance policies to use for your business.
Below therefore are some of the basic insurance policies that you might need to consider purchasing if you intend starting your own storage unit business in the United States of America;
- General Insurance
- Property Insurance
- Liability Insurance
- Equipment Insurance
- Workers’ Compensation Insurance
- Errors and Omission Insurance
- Auto Insurance
- Payment Protection Insurance
- Employment Practices Liability Insurance
- Overhead Expense Disability Insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
The storage unit business is one that has grown over several decades but with services that are basically the same. The aim of a storage unit is to ensure that customers are able to store their belongings in a unit that is safe, secured and easily accessible, which therefore means that as an entrepreneur, you are offering a service and nothing more.
11. Get the Necessary Professional Certification
The storage business is a business that offers a service and entrepreneurs that are enterprising are those that go into this business. There is no technical, professional or any sort of experience required for any entrepreneur looking to start this business.
Therefore as an entrepreneur, you would not need to bother about acquiring any sort of professional certification before going into this business in the United States of America.
12. Get the Necessary Legal Documents You Need to Operate
In order to run your business legally in the United States of America, it is vital that you acquire several documents. Not having these documents in place will mean that you are violating several laws in the United States of America and if you are caught by the law, you might be not only be financially penalized but also be banned from running that kind of business anywhere in the country.
It is therefore vital that you conduct a thorough research and also meet with an attorney who understands the sector of the industry you are going into to help you get the required documents that you will need to start the business. Therefore, some of the basic legal documents that you would require in order to successfully run your storage unit business in the United States of America are;
- Certificate of Incorporation
- Operating Agreement
- Business Plan
- Business License
- Business Permit
- Insurance Policy
- Contract Documents
- Employment Agreement
- Employer Identification Number (EIN)
- Federal Tax Identification Number
13. Raise the Needed Startup Capital
Most entrepreneurs going into this business usually do not have the funds necessary to start the business and so usually approach a bank or private investor to help with the require start-up capital.
To however convince a third party to investing in your business, you would need to have a comprehensive business plan at hand, which is why it is important that you write out a business plan after carrying out market research regarding the business.
Some of the options that are therefore available for you to explore when sourcing for start-up capital for your storage unit business include;
- Raising part of the start-up capital from personal savings and sale of properties
- Applying for loan from the bank
- Sourcing for soft loans from family members and friends
- Getting loan from private investors and venture capitalists
14. Choose a Suitable Location for your Business
Deciding where to locate your storage unit business is very important because the difference between a good location and a bad one is the ability to recoup your investment within a short period of time. It is therefore important that you conduct thorough research as regards the business you intend to go into, so you can know who your target market is and therefore use that to decide what location would be convenient for them.
In getting a suitable location for your storage unit business, you must satisfy an important criterion which is conspicuous location. While a storage facility does not have to be by foot and vehicular traffic, it doesn’t have to be so concealed as to make it impossible to get to at any time of the day or night. It must also be very convenient for your customers to get to.
You can run your storage unit administratively from home especially if you have just one unit. You would need to create a workspace in your home so that you don’t get important documents misplaced. Also, having a website for your storage unit business will be very important so that intending or existing customers can get in touch with you.
If you are however going to be employing people to work for you or you intend to have multiple storage unit locations, then it is important that you build an office facility in the lot where you have your storage units or rent or lease an office facility in town, this will enable your customers to come in and make enquiries.
It is important to set aside a budget for your storage unit business so that you do not end up spending more than you should and causing a strain on your overall budget. You can seek the services of a real estate agent with a good knowledge of the area you intend to operate from, to help you choose the best location for your business.
15. Hire Employees for your Technical and Manpower Needs
The storage unit business is one that would require you to spend a bit of cash in starting the business, so it is important to know how much you will generally need to start the business, so that you do not start and run out of funds halfway as acquiring a land will take a huge part of your capital.
Where you choose to locate your storage unit business is very important as customers want to feel that their properties are safe and secured when they are at your facility. Therefore, it is important that you do not locate the business in an area that is too far for your target market or in a seedy area.
Most of what you will need to do after acquiring a land is to build the different units where your customers will store their belongings.
You will need to ensure that you get security gadgets installed to monitor activities on the property. Other equipment you will need to run this business include; computer, landline phone and a cell phone, vehicle and security software. Some of the items can be gotten as fairly used if you are running on a tight budget.
The number of people you would need to employ in order to start and run your storage unit business successfully include; Chief executive Officer (owner), an admin and human resources manager, a business development and marketing executive, customer service officer, accountant, IT consultant and security guard.
Over and above, you will need at least 7 key staff in order to successfully run your storage unit business effectively and efficiently.
The Service Delivery Process of the Business
The storage unit has become adopted by many Americans as a means to store excess personal and or business belongings. There is no huge process involved in this business as all that needs to be done is for an entrepreneur to find a suitable location and acquire a property where he or she intends to build the storage units.
Once the location has been acquired and all the licenses regarding the business has been gotten, then the entrepreneur can proceed to build varying sizes of storage units as not all consumers will want to store large belongings that require a huge space.
Once the storage units have been constructed, the entrepreneur must get an attorney to draft terms and conditions of usage as well as agreement documents before advertising the business and renting it out to consumers.
16. Write a Marketing Plan Packed with ideas & Strategies
Marketing is an essential part of any business either new or existing because not only does it help to generate funds for a business, it also ensures that awareness is created for the business as well. It is therefore essential that you set aside a marketing budget and also draft effective marketing strategies that you would need to use in your campaigns to attract the clients you would need for your storage business.
Before you can draft any marketing strategies, it is essential that you conduct a thorough market survey for the business. Conducting a market survey for your business allows you to understand your target market and know what their requirements would be for your business. It is in knowing these requirements that you can then create marketing strategies that would be effective.
Most entrepreneurs starting out in this business are usually overwhelmed by all the marketing campaigns that have to be done and so usually hire marketing executives to draft marketing strategies in line with the company’s goals that will attract customers to the business.
Below therefore are some of the platforms that you can use to market and advertise your storage unit business;
- Ensure that you place adverts in local newspapers and magazines as well as on radio and television stations
- Use social media platforms such as Facebook, Twitter, Instagram, Linkedin and Google Plus in order to advertise your storage unit business
- Engage in direct marketing
- Tell your loyal customers to help spread the word about your business
- Distribute handbills and paste fliers in strategic locations
- Install billboards in strategic locations all around the area you are operating from
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
To remain relevant in the industry where you are a participant in, it is important that you seek for means to promote and publicize your business. The importance of promoting your business in order to create awareness for your brand and create a corporate identity cannot be overemphasized.
If you intend to position your business to have an edge over others or you want your business to become a well-known brand, then you have no choice than to ensure that you engage in the necessary publicity for your business.
There are several expensive and inexpensive ways that you can effectively publicize your business and it is important that you conduct a thorough research on the best strategies for your storage unit business. Below therefore are some of the platforms that you can use to boost the awareness of your brand and also create a corporate identity for your storage unit business;
- Ensure that you advertise your storage unit business in local newspapers and magazines as well as on radio and television stations
- Create an interactive website and employ a Search Engine Optimization (SEO) Consultant to help in ensuring that your website is highly ranked
- Install flexi banners and billboards in certain strategic locations
- Use social media platforms such as Facebook, Twitter, Instagram, Linkedin and Google Plus to promote and publicize your business
- Ensure that your business is located in Yellow Pages as well as online directories
- Participate in and sponsor local events in the community where you intend to operate from