In recent times, new technologies have made it possible to move fresh, perishable foods from one side of the world to the other without altering their freshness. There are also cold storage and refrigerated warehousing that make cold chain logistics a premium service in this age.
When looking to start a cold storage business, first find out the industries in your area that require your services and the best approach to cater to these needs. Once you find a viable demand in your area that has not been filled, you can put together a concise business plan to ensure you understand the tasks ahead. Ensure to seek advice from people who are in the same business and get ideas on how to implement your strategies.
Steps on How to Write a Cold Storage Business Plan
Table of Content
Prime Care Storage (PCS) is a cold storage facility catering to the storage needs of healthcare and pharmaceutical companies in Philadelphia, Pennsylvania. At PCS, we will help our clients store things at various temperatures. According to research, most healthcare and pharmaceutical facilities in Philadelphia have limited space, or only have one temperature level in the storage area.
Meanwhile, a good number of vaccines and medicine need to be kept at different temperatures. At Prime Care Storage, we can meet those varied requirements, while also helping our clients reduce product waste, especially since medicines or vaccines become spoiled at certain temperatures.
a. Our Products and Services
It is not always advisable to store medical and healthcare products under room temperature conditions. At PCS, our cold storage leverages high-tech flame-retardant insulation materials that follow modern design norms and is energy-saving and environmentally friendly. The medicine cold storage types we intend to offer include;
- Vaccine Storage: At 0℃~8℃, effective to store vaccines, medicines, etc.
- Medicine Storage: At 2℃~8℃, used to store medicine, biological products, etc.
- Blood Storage: At 5℃~1℃, used to store blood, pharmaceutical and biological products, etc.
- Low-temperature-maintaining Storage: At -20℃~-30℃ can be used to store blood plasma, biological materials, vaccines, reagents, etc.
- Ultra-low-temperature-maintaining Storage: At -30℃~-80℃, used to store placenta, semen, stem cells, blood plasma, bone marrow, biological samples, etc.
b. Nature of the Business
Indeed, there are many uses of cold storage in the pharmaceutical and medicine industry, and we believe a good number of healthcare facilities in Philadelphia will trust PCS with their medicines and vaccines. At PCS, we will provide cold storage and other services, including 3PL and the ability to distribute to wholesalers from our facility.
c. The Industry
Prime Care Storage will be part of the pharmaceutical segment of the United States Cold Storage Industry.
d. Mission Statement
Our mission at PCS is to provide healthcare and pharmaceutical facilities with the right technology to preserve the function of their products. We are committed to providing exceptional cold storage services. With an experienced workforce, we understand the precise art of moving and storing temperature-controlled medical products.
e. Vision Statement
Our vision is to become the prime choice for healthcare facilities when it comes to product storage and delivery. Storing vital products at the right temperature will allow our clients to focus on other essential things, such as innovation and quality control. Taking this responsibility from their hands will free them to do the work they should.
f. Tagline or Slogan
Prime Care Storage – Your Ever Reliable Storage Partner!
g. Legal Structure of the Business
Note that Prime Care Storage will be registered as an LLC with the State of Pennsylvania. We believe this business structure is suitable for our medicine cold storage business since it offers the following advantages;
- Protect the personal assets of our owners, stakeholder, and employees
- Offer tax choices that benefit our bottom line
- Gives us the platform to grow our business
- Ensure we gain credibility with customers
h. Organizational Structure
- Chief Executive Officer
- Facility Manager
- Admin and HR Manager
- Marketing and Sales Executive
- Front Desk Officer
- Refrigerated Truck Drivers
- Security Guards
i. Ownership/Shareholder Structure and Board Members
- Michael Smith (Chief Executive Officer/Owner) 49 Percent Shares
- Diamond Minton (Facility Manager) 21 Percent Shares
- Josephine Smith (Marketing and Sales Executive) 17 Percent Shares
- Greg Lawson (Accountant) 13 Percent Shares
- Philadelphia boasts of a mature healthcare industry with an adequate manufacturing base and capacity to produce and supply quality drugs.
- The sheet material of our medicine cold storage uses modern high-tech flame-retardant insulation materials which have excellent airtightness.
- Our medicine cold storage is energy-saving and environmentally friendly.
- Outside waterproofing.
- Inside vapor proofing.
- Air distribution.
- Adequate humidification.
- Properly designed controls for precisely maintaining the storage atmosphere.
- The city has a very small internal market.
- There seems to be a lack of innovation within the city’s healthcare industry
- Philadelphia has established itself as a hub for biomedical and pharmaceutical firms
- The city’s robust medical network includes the University of Pennsylvania’s largest teaching hospital, the Children’s Hospital of Philadelphia, and the Thomas Jefferson University Hospital.
- The city’s regulatory framework is good and embraces the mutual recognition agreement.
- The city has an encouraging legal, political, social climate and attractive low corporation tax, which embraces the tax imputation system.
- Sound financial services are available
i. How Big is the Industry?
According to reports, the US Cold Storage Market size was valued at $15.26 billion in 2023; however, it is expected to attain a valuation of $19.69 billion by the end of 2026, growing at an annual compound rate of 3.7% between 2022 and 2026.
ii. Is the Industry Growing or Declining?
The pharmaceutical segment of the US Cold Storage Market is expected to witness exponential growth from 2019 to 2025. According to experts, pharmaceutical and biotechnology supply chains are liable to certain risks associated with product adulteration during transport. Aside from that, strict federal regulations, standards, and guidelines will also boost growth in this segment.
iii. What are the Future Trends in the Industry
The general cold storage industry is without doubt a very demanding logistics segment. Coupled with recent additional challenges like increases in the sensitivity, quality standards, volume of goods, and additional regulations, more and more is being expected from this industry.
According to experts, the industry is expected to put up with serving the global market, driving out costs, becoming more strategic, and addressing capacity and resource constraints, all still catering to the precise needs of the sector’s most vital cargo—primarily food and pharmaceutical products.
To succeed in this segment, businesses must steadily upgrade technology to guarantee efficiency, integrity, and safety. They will have to invest in both back-end IT infrastructure and front-end devices to always have and report key shipment data in real-time
1v. Are There Existing Niches in the Industry?
- International pharmaceutical distributors
- Temperature-controlled shipping and freight services
- Biobanking services
- Passive thermal protection services
- Pharma supply chain companies
- Pharmaceutical freezers
- Insulated packaging concepts
v. Can You Sell a Franchise of your Business in the Future?
No. At Prime Care Storage, our business plan is to start up our first pharmaceutical cold storage facility in Philadelphia, Pennsylvania, before opening more company-owned facilities in strategic locations across the country.
- Competition from developing cold storage businesses
- R&D infrastructure and investment are under-developed.
- Fluctuation or unexpected increase in electricity tariff
i. Who are the Major Competitors?
- Interstate Warehousing, Inc.
- United States Cold Storage
- Americold Logistics
- Bennett International Transport, Inc.
- Diversified Transfer & Storage
- Aphena Pharma Solutions
- Daybreak Express, Inc.
- Yusen Logistics, Co. Ltd
- AIT Worldwide Logistics
ii. Is There a Franchise for Cold Storage Business?
No. There are currently no franchises offering pharmaceutical cold storage opportunities in the United States, mainly because this is still a new and growing segment of the cold storage industry.
iii. Are There Policies, Regulations, or Zoning Laws Affecting Cold Storage Business?
Yes, regulations and zoning laws in the United States are known to vary from state to state. Therefore, it is necessary to consult your state’s public health department or medical board to find out if you are expected to be licensed to offer the sort of storage services you’re interested in.
a. Who is Your Target Audience?
i. Age range
At PCS our medical cold storage services provide rental options for healthcare businesses to ensure the safety of their products.
ii. Level of Educational
The services we offer at PCS are essential for doctor’s offices, hospitals, and medical centers across the city of Philadelphia.
iii. Income Level
The income level of healthcare facilities is barely released; when done, the presentation is haphazard and hard to navigate, much like health care itself.
At PCS, there will be no restriction on the ethnicity of our clients. We will be catering to the storage needs of healthcare and pharmaceutical companies in Philadelphia.
Our services and products will be accessible to everyone, irrespective of language and accent. By leveraging Google Translator software, our website will also be accessible to foreigners and non-English speaking clients.
vi. Geographical Location
In recent years, Philadelphia has become a hub for biomedical and pharmaceutical firms and has also grown into a premier destination for healthcare professionals. Note that the city’s robust medical network includes the University of Pennsylvania’s largest teaching hospital, the Children’s Hospital of Philadelphia, and the Thomas Jefferson University Hospital.
The cold storage services we offer are essential for the following clients:
- General Practitioners
- Medical Clinics
b. Advertising and Promotion Strategies
- Optimized web design for cold storage facilities
- Collaborate with hospitals and other medical-related businesses
- Leverage couponing to entice first-time customers to make initial contact with the brand
- Buy a mailing list and perform a direct mail campaign.
- Hire a marketing firm
i. Traditional Marketing Strategies
At PCS, we understand that the success of our business will depend on our marketing and advertising campaigns. In the initial as well as later stages of our business, we intend to hire a marketing firm to help market Prime Care Storage.
ii. Digital Marketing Strategies
- Pay-per-click (PPC) ads
- Social media marketing
- Email marketing
- Search engine optimization (SEO)
- Web design
iii. Social Media Marketing Plan
- Provide Incentives For Instagram Word-Of-Mouth
- Provide Group Deals
- Use Twitter hashtags
- Post Content That Will Entice Our Target Customer
- Use Facebook as a Key Communication Tool
- Use Twitter As An Information Source About Our Services
c. Pricing Strategy
At PCS, we will ensure our clients enjoy the dividends of fewer charges and more benefits, therefore we intend to adopt the Market Penetration Pricing Strategy, and as we grow, switch to the Geographic pricing strategy. Have it in mind that our price range will be affordable for all the segments. At PCS, we will offer the following;
- Attractive prices for all segments
- Prices will be set according to the competitor’s price strategy
- Prices will be affordable.
Sales and Distribution Plan
a. Sales Channels
At PCS, we plan to grow our cold storage facility’s position in the customer’s mind as well as in the market. Leveraging differentiation, Prime Care Storage will be positioned as the most convenient and value-added pharmaceutical cold storage facility for healthcare facilities in the area. We will always strive to make available more products and services to our customers and ensure we become a reliable storage partner.
b. Inventory Strategy
Our plan at PCS is to adopt a properly designed inventory strategy that will address all products based on class and group. Also, note that this strategy will take into account the layout and design of our cold storage to ensure the efficiency of operation and the maintenance of good Health & Safety of every product in our care.
c. Payment Options for Customers
At Prime Care Storage, we intend to make available the following payment options to our clients;
- Payment via bank transfer
- Payment via credit cards
- Payment via online bank transfer
- Payment via mobile money transfer
d. Return Policy, Incentives, and Guarantees
No. There are no return policies at Prime Care Storage. However, we guarantee that the temperature in our cold room will be fully adjustable, and it is controlled to prevent products from dehumidifying. Have it in mind that temperature controllers and monitoring systems are all mounted in our cold storage units.
e. Customer Support Strategy
Note that our cold storage units at PCS will be equipped with two units to ensure that when the electrical unit stops working owing to a breakdown, the operation of the standby unit will not affect products inside the warehouse. Have it in mind that the control system leverages a fully intelligent microcomputer with automatic detection.
To serve our clients effectively, there is a high-precision sensor recorder (with alarm device) that has an SMS alarm function that monitors and records the temperature and humidity in the storage area, and also can meet long-term monitoring requirements. If it detects that the temperature has attained the set upper or lower limit, the device will light and sound the alarm.
- Easy to access location
- In-house, experienced experts
- Innovation and creativity
- Moderate price point
- Comfortable, customer-focused environment
a. What Happens During a Typical Day at a Cold Storage Business?
Most often, cold storage businesses are owned and managed by a team. In this line of business, advertising available spaces is a daily task. Potential clients are given a comprehensive tour of the facility. All applications will have to be collected and processed with background and credit checks.
Also note that security deposits, key deposits, collection of rental payments, and monthly accounting records will have to be handled on time and accurately. It also falls on the owner or group to ensure that the facility is kept clean and constantly supervised to prevent vandalism and theft.
Also note that rent for any storage space that is past due will have to be collected, and if there is any issue with the rental payments, the necessary legal processes will have to be initiated to remedy the issue. Note that this may involve turning the account over to collectors, filing court papers, or giving eviction notices, but you will have to consult the local laws and rental contract agreement.
b. Production Process
At present, there are no production plans and processes in place at Prime Care Storage.
c. Service Procedure
- We offer high-quality cold storage units that provide reliable refrigeration for medical products
- Our staff is knowledgeable about how our services
- We offer affordable pricing
- A seamless and headache-free communication system
- Our convenient hours of operation mean that someone is available when you need them
d. The Supply Chain
At Prime Care Storage, we intend to partner with Kendall Cold Chain System to sustain a very viable supply chain and ensure we always provide top-class services to our clients. Kendall Cold Chain System Co., Ltd. Is headquartered in Shanghai, China and specializes in the design, installation, and maintenance of cold storage rooms, refrigeration systems, and commercial refrigeration equipment.
Note that the medicine cold storage designed and installed by Kendall has numerous advantages such as quick-freezing, fast fresh-keeping refrigeration, energy-saving, etc. and also leverages the most advanced low-noise evaporative fans to guarantee that the lowest energy consumption of the main unit achieves the highest efficiency.
e. Sources of Income
- Rent or lease of medicine cold storage units
- Leasing or rental of mini refrigerated storage truck units
- Other related cold storage services
a. Amount Needed to Start your Cold Storage Business?
After extensive research, we need around $550,000 to successfully start Prime Care Storage in Philadelphia.
b. What are the Costs Involved?
- Setting up a business name: $150 – $200
- Licenses and permits: $200 – $300
- Insurance: $1000 – $30,000
- Business cards and brochures: $200 – $300
- Website setup: $1,000 – $3,000
- Location security deposit: $0 – $5,000
- Facility remodeling and equipment: $25,000 – $470,000
- Equipment: $15,000 – $200,000
- Labor and Utilities: $500 – $150,000
c. Do You Need to Build a Facility?
Our plan at Prime Care Storage is to start operations from a rented facility in an easy-to-access location in Philadelphia. We also understand that the components of our medicine cold storage facility will be strictly regulated by U.S. Agencies such as the FDA and USDA.
We also concur that these agencies’ regulations will have an influence on rules we put up in our facilities to guarantee safe operation and maintenance. We expect to invest around $273,000 in renting and remodeling our facility, and also in acquiring standard packing industry equipment.
d. What are the Ongoing Expenses for Running a Cold Storage Business?
At PCS, our basic expenses will include;
- Maintenance of our facility and machines
- Cost of mortgage or lease buildings
- Training and certifying employees
e. What is the Average Salary of your Staff?
- Chief Executive Officer: $72,800
- Facility Manager: $59,000
- Admin and HR Manager: $48,970
- Marketing and Sales Executive: $52,340
- Accountant: $50,720
- Front Desk Officer: $43,210
- Refrigerated Truck Drivers: $40,220
- Security Guards: $34,180
f. How Do You Get Funding to Start a Cold Storage Business
- Funds from personal savings and sale of personal stocks and properties
- Funds from investors and business partners
- Sell shares to investors
- Seeking business loans from banks
- Business grants and seed funding from the government, donor organizations, and angel investors
- Obtain soft loans from family members and friends.
a. How Much Should You Charge for your Service?
In this line of business, what you charge will most often depend on the size of the storage unit, the type of product stored in the storage unit, and the cost of storing the item per day. However, always ensure that what you charge replicates the time and resources you put into storing the product.
b. Sales Forecast
- First Fiscal Year (FY1): $400,000
- Second Fiscal Year (FY2): $920,000
- Third Fiscal Year (FY3): $1.4 million
c. Estimated Profit You Will Make a Year?
At PCS, we expect to make;
- First Fiscal Year (FY1): $180,000 (45% of revenue generated)
- Second Fiscal Year (FY2): $368,000 (40% of revenue generated)
- Third Fiscal Year (FY3): $770,000 (55% of revenue generated)
d. Profit Margin of a Cold Storage Business
According to reports, a storage facility generates a typical profit margin of 41%.
a. How do you intend to grow and expand?
Just as it was noted above, our business plan at Prime Care Storage is to startup our first pharmaceutical cold storage facility in Philadelphia, Pennsylvania, before going on to open more company-owned facilities in other strategic locations across the country.
b. Where do you intend to expand to and why?
Being a business that targets healthcare facilities, we will always expand to cities we believe have the most hospitals, medical centers, clinics, physicians, and surgeons per capita. Truth be told, all cities are not created equal, so we intend to expand to these US cities;
- Honolulu, Hawaii
- Baltimore, MD
- Pittsburgh, Pennsylvania
- Louis, Missouri
- Plano, Texas
- Lexington, Kentucky
- Orlando, Florida
- San Jose, California
At PCS, our exit plan will involve handing the business down to the children of our founding members. We strongly believe that this business exit plan is suitable for us as it wouldn’t need extensive interference or involvement of external parties and it is also one of the easiest and most direct options when done right.