The self storage industry is experiencing rapid growth and is currently generating considerable investment in storage. Although starting a self storage business takes time, especially if you need to build the facility, this type of business can yield significant profits if located and managed properly.
Overview of the Self Storage Business Model
A self storage business provides secure storage space for individuals and businesses to rent so they can store property. In order to start your own self storage business, you will need to have the right location, as well as knowledgeable and talented staff who can help manage your facility effectively. You will also need to have the proper equipment and technology to provide reliable and secure storage services.
Steps to Take to Start a Self Storage Business
To start a successful self storage business, you will need to do some initial planning and preparation.
Plan Your Self Storage Business
Before you can start your own self storage business, you need to develop a comprehensive business plan that outlines the goals, objectives, and strategies for your company. A business plan is a tool for helping a small business to succeed in its own right and help it achieve its objectives while reducing potential difficulties. This will help ensure that your business is well-equipped to handle the demands of the industry and grow successfully over time. An effective business plan will also help you acquire funding from lenders and investors.
Need help? A self storage consultant can help guide you through the process.
Identify Your Target Market
Just as in any real estate business, location is critical. Make sure to locate your facility in the right place, with a local market that needs storage. To identify your target market, conduct thorough market research to get a better understanding of your potential customers and their needs. Some important factors to consider when identifying your target market include geographic location, income levels, storage needs (such as climate-controlled vs non-climate-controlled storage), and other unique aspects specific to your area. This will enable you to develop the right unit mix and command the rent you need to run a profitable business.
Form Your Self Storage Business into a Legal Entity
Once you have completed your business plan, the next step is to set up your self storage business as a legal entity. This will help protect your company from liability, as well as make it easier to obtain business financing or investors for your business. Some of the most common legal entities for a self storage business include a limited liability company (LLC), a partnership, or a corporation.
Register Your Self Storage Business for Taxes
You will also need to obtain your employer identification number before you open for business and start renting self storage units. You can get an EIN by phone or email by visiting IRS.gov.
Get the Necessary Permits & Licenses
Creating and maintaining self storage businesses involves obtaining various permits and obtaining licenses from government agencies in various states and provinces. Federal regulations, licenses, and permits related to starting a new business include doing business as (DBA) and trademarks & trademark rights. You will need to obtain a license and permit from the state and county.
Open a Business Bank Account & Credit Card
Once you have your EIN and any necessary business licenses or permits, you will need to open a separate bank account for your self storage business. A business bank account can help keep your company finances organized and give you an accurate picture of how your business is performing. Additionally, it's important to open a business credit card to help manage your company's expenses. This will make it easier to track and manage your company's spending.
Set Up Accounting for your Self Storage Business
Managing your self storage business' finances effectively is essential to its success. Setting up an accounting system that tracks and records all sales, purchases, and expenses is essential.
It's important to ensure that your company's finances are well organized and documented. Even though you are still in the early stages of your self storage business, start planning exit strategies now. You could track accounting on a simple spreadsheet. However, when you decide to sell your property, you will command a higher sales price if you use more sophisticated financial software like Quickbooks Online or Yardi.
To set up accounting for your small business, you will need to develop a clear system for tracking incoming and outgoing payments, as well as establishing credit and debit limits for each transaction. You will also need to carefully plan your budget, ensuring that you have accounted for all expenses and revenues, and that your business is on track to reach its financial goals.
Additionally, you may need to consider hiring an accountant or bookkeeper to help manage your company's finances. This can help ensure that all transactions are recorded and accounted for accurately, and it makes tax preparation easier and more accurate.
Get Business Insurance For Your Self Storage Facility
In order to create a successful self storage business, you will also need to make sure that you have the necessary insurance in place. This includes commercial general liability insurance and property insurance to protect your business from financial loss due to legal claims, accidents, natural disasters, or other unplanned events, and selecting a tenant protection or insurance plan to offer your tenants, so they can protect their stored property.
Build a Self Storage Business Brand Guide
To succeed in the self storage business, it is important to create and maintain a strong brand presence. This will involve developing a clear and eye-catching logo, building a website and social media profiles for your business, creating engaging marketing materials like emails and brochures, and establishing strategic partnerships with other businesses. You can also join a well-established brand that meets your goals, such as the Storelocal Brand, in which you maintain ownership and operation of your self storage business.
Create a Self Storage Business Website
One of the most important steps in starting a self storage business is creating an online presence for your company. This will involve building and designing a website that showcases your business and its services, as well as reaching out to potential customers through social media and other online marketing channels.
To create a successful self storage website, you will need to first choose the right platform and design templates that match your brand identity. Some popular options include WordPress, Wix, and Squarespace. There are also vendors in the self storage industry who specialize in consumer websites for self storage facilities.
Once you have selected your platform and design templates, you can start building out the content for your site. This should include clear and informative descriptions of your services, blog posts, as well as user-friendly navigation to help customers find what they are looking for, all of which should be compatible with ADA guidelines for websites. You should also link to any social media accounts you create for your business.
If you opt for the Storelocal Brand, your facility will be on Storelocal.com, a well-established consumer website with many self storage properties, giving you much higher online visibility than you can achieve on your own.
Set Up a Business Phone System
You will also need to set up a reliable phone system that can handle incoming calls and make it easy for customers to contact you at your business location. To set up your phone system, you will first need to choose the right platform and provider for your business. Some popular options include cloud phone systems like RingCentral and Vonage, as well as traditional landline systems from companies like AT&T.
If you're just getting started and want to reduce some startup costs, you can also use a service like Google Voice for free to set up a secondary phone number that you can use for your self storage properties. While this isn't a long-term solution, it can help new business owners as they get started.
Ensure NAP Consistency Online
You also want to create a Google Business Profile once your website and phone number are established. This is a free service that Google hosts for local businesses to share their hours and important information about their businesses. When prospective renters search “self storage facilities near me” in Google Maps, the Google Business Profiles of the facilities are what appears.
Whether on your consumer website, your Google Business Profile, or anywhere else your phone number or other details about your self storage facility appear online, make sure you have NAP consistency. NAP refers to the name, address, and phone number, and making sure they are exactly the same everywhere is known as citation management.
Create a Marketing Plan
Based on your target audience, you can create a marketing plan. One of the greatest challenges you will face is attracting new customers, especially if you are competing with other local self storage businesses in your area.
To do this effectively, it is essential to develop an effective marketing strategy that includes advertising, direct mail campaigns, and online promotions. Additionally, you should engage in other marketing strategies, such as offering promotional discounts or hosting special events to attract new customers.
Managing Your Self Storage Business
Once your self storage business has been established, it is important to effectively manage and maintain your facility in order to ensure that it continues to operate smoothly and generate revenue over the long term. This will involve creating and implementing an effective operational strategy that focuses on hiring skilled employees, optimizing your facility layout, streamlining your billing processes, and using technology to automate various tasks.
Storelocal Brand members have unlimited access to the Storelocal Brand Playbook, an operations manual including details on all aspects of running a successful self storage business.
Additionally, it is important to continuously monitor and evaluate your business performance in order to make any necessary changes or adjustments as needed. With the right approach and a strong focus on customer service, you can create a thriving self storage business that will continue to grow and succeed for years to come.
By following these steps, you can create a successful self storage business that will help you achieve your financial and professional goals. With the right combination of planning and hard work, you can build a successful company that will thrive in today's competitive market.
Frequently Asked Questions
How much does it cost to start a self storage business?
Generally, according to Mako Steel, a self storage business costs about $25 to $70 per square foot to build. The money you spend on a self storage facility can vary significantly depending on the location and your operating expenses - which depend on variables such as labor cost, property taxes, insurance, your marketing budget, etc.
However, before you invest a single dollar, you must decide on how to finance acquisitions and new projects, and if you want or need to borrow money. There are various choices available, like construction loans, acquisition, and Small Business Administration (SBA) loans. Most loans are offered in a 10 to 25-year term.
Are self storage businesses profitable?
Self storage facilities usually make between 60% and 70% profit when fully occupied. Statistics say that the industry average occupancy is 90%, however, it takes a couple of years to achieve full occupancy.
Prices can vary depending on unit sizes, which include 5x5, 10x10, and many other options, and if a renter obtains a lease on a climate-controlled unit or standard unit. Climate-controlled units can charge a premium since they fill a niche market.
Should you build a self storage facility from the ground up?
There are several factors to consider when deciding whether or not to build a self storage facility from the ground up. One important consideration is your budget.
If you have the financial resources required to construct a new self storage facility, this may be the best option for your business. Another factor is location - if you find a pre-existing building in a location that offers high visibility, access to transportation, and other key amenities, then acquiring an existing self storage facility or undergoing a self storage conversion may be right for you.
Additionally, you should carefully consider the potential competition in the local market, as well as local zoning regulations, construction costs, and building codes. Ultimately, the decision of whether to build a self storage facility from the ground up will depend on your individual business needs and goals.
