Self-storage facilities rent space on a short-term basis (often month-to-month, though options for longer-term leases are available) to individuals (usually for storing household goods) or to businesses (usually for storing excess inventory or archived records). Some facilities offer boxes, locks, and packaging supplies for sale to assist tenants in packing and safekeeping their goods, and may also offer truck rentals.
Studies show that the industry was worth $38 billion in 2018. Modern storage facilities grew slowly through the 90s, at which time demand outpaced supply and caused a rush of new self-storage developments. From 2000 to 2005, over 3,000 new facilities were built every year in America.
At year-end 2019, there were 47,539 self-storage facilities in the United States on industrial and commercial land parcels. There are more than 1.9 billion square feet of available self-storage in space in the U.S. The six largest publicly traded storage operators (four REITs, and U-Haul) own or operate approximately 18 percent of all self-storage facilities.
Steps on How to Start a Storage Business With No Money
Table of Content
1. Conduct Market Research
The first step in conducting market research for a storage business is to develop market-based research questions in line with your overall business goal and objective. In this regard, you should source information that will help you maximize your business, help you know what your potential market is looking for from a storage facility, and also help you operate your storage business with less stress, thus helping you gain a fair share of the available market in your city.
a. Who is the Target Market of Storage Business?
- Families (Homes)
- Business owners
- Merchants, Importers, and manufacturers
- Construction companies
b. Is Storage Service a Profitable Business?
Yes, the storage service business is quite profitable. Statistics show that the industry generates an average of $33 billion annually in the United States of America. Self-storage facilities can earn around $361,000 to $798,800 gross per year with the states of Maryland, Arkansas, and New York winning the highest number of sales.
It might also interest you to note that, from 2009 to 2018, self-storage facilities averaged an annual ROI of 16.9%. This number was higher than office, industrial, retail, or apartments during that time. Due to such elevated ROI, the self-storage industry is a highly sought-after form of real estate and can often be difficult to find.
c. Are There Existing Niches in the Industry?
No, there are no existing niche ideas when it comes to the storage business, but a self-storage business may also operate as a mobile storage and moving company.
d. Who are the Major Competitors?
- Public Storage
- ExtraSpace Storage
- Life Storage
- National Storage Affiliates
- Prime Storage Group
- Simply Self Storage
- SmartShop Asset Management
- Metro Storage, LLC.
- Sovran Self Storage Inc.
e. Are There County or State Regulations or Zoning Laws for the Storage Business?
Yes, there are county or state regulations and zoning laws for a storage service business. In the United States, self-storage facilities can be classed as Class A, Class B, and Class C properties, and you cannot legally register a self-storage unit as your business location nor can you invite employees to work from it with you as an official office space. You can, however, run your business from a storage space by using it as a place to store your stock or tools.
f. Is There a Franchise for Storage Business?
Yes, there are franchise opportunities for the storage service business, and here are some of them;
- Go Mini’s Storage and Moving
- MyWay Mobile Storage
- Storage Authority, LLC
- Units Moving and Portable Storage
- WG Storage and Delivery
- Big Box Storage Franchising Inc.
- Zippy Shell Moving and Storage
g. What Do You Need to Start a Storage Business?
- A Feasibility Report
- Business and Marketing Plans
- Business Licenses and Permits
- A Safe Storage Facility
- Computers, Laptops, and Software Apps
- EIN (Employer Identification Number)/Federal Tax ID Number.
- A Corporate Bank Account
- Locks and Keys
- Startup Capital
Memorable Business Name ideas for Storage Service
- Safe and Sure® Storage Service, Inc.
- Douglass Road® Storage Service, LLC
- Grass House© Storage Service, Inc.
- Storage Solutions® Storage Service, Inc.
- The Safe™ Storage Service, Inc.
- Chris Morgan™ Storage Service, LLC.
- Jacinth Dean© Storage Service, LLC
- Caddy Zeal® Storage Service, Inc.
- Fred Nathan© Storage Service, Inc.
- Marcelo Ray© Storage Company, Inc.
- Japhet Edison® Storage and Moving Service, Inc.
- Leo Star® Storage and Moving Service, LLC
- Perfect Safe® Storage and Moving Service, Inc.
- Banny Darlington® Storage and Moving Service, Inc.
- Martis Mosely® Storage and Moving Service USA LLC.
- Shae Harold® Storage and Moving Service, Inc.
- Box 2 Box® Storage and Moving Service USA LLC
- Storage and More® Storage and Moving Service, LLC
- Steel Safe® Storage and Moving Service USA LLC
- Tim Woods® Storage and Moving Service USA LLC.
Register Your Business
a. What Type of Business Structure is Best for Storage Business?
Even though there are several options when it comes to the business structure of a storage service, the one that most players in this line of business consider is LLC. It is common to consider LLC because providers want to protect themselves from lawsuits.
Please note that an LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed below. Most new single-member LLCs classified as disregarded entities will need to obtain an EIN.
b. Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Choose a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open a Storage Business?
- General Business License
- Health and Safety Permit
- Zonal Permits (Applicable in some cities)
- Signage Permit
- Operational State Facility Inspections
d. What Type of Certification is Needed to Open a Storage Business?
These are some of the certifications you can work towards achieving if you want to run a storage service business;
- The Certified Self Storage Manager (CSSM) Certification
e. What Documents are Needed to Open a Storage Business?
These are some of the basic legal documents you are expected to have if you want to legally run a storage service business in the United States of America;
- Business and liability insurance
- Federal Tax Payer’s ID
- State Permit and Building Approval
- Certificate of Incorporation
- Business License
- Fire and Safety Permit
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?
If you are considering starting a storage service business, you may not need to file for intellectual property protection, copyright, patent, or trademark. This is because the storage service business does not require one except on rare occasions.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Storage Business?
When it comes to starting a storage service business, the startup cost will vary and it can range from $250,000 to over $1.5 million. This is because, on average, a single-story storage facility costs $25 to $45 per square foot to build, while multi-story costs $42 to $70 per square foot for construction. A high-end storage unit facility has 60,000 and 80,000 rentable square feet and costs $45 to $65 on construction per square foot as estimated by Mako Steel.
b. What are the Costs Involved in Starting a Storage Business
- The total fee for registering the business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines, and other software) – $3,300.
- Marketing promotion expenses – $3,500, and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
- The cost for hiring a business consultant – $2,500.
- Insurance (general liability, workers’ compensation, and property-casualty) coverage at a total premium – $2,400.
- The cost for securing a facility and reconstruction of the facility – $1.2 million
- Other start-up expenses including phone and utility deposits ($2,500).
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $30,000
- The cost for storage equipment (keys, locks, boxes, crates, pallets, and safes et al): $75,000
- The cost of launching a website: $600
- Miscellaneous: $5,000
c. What Factors Determine the Cost of Opening a Storage Business?
- The size of the storage service business
- The choice of location
- The required licenses and permits
- Additional service offerings (moving and mobile storage services)
- The cost of hiring and paying a business consultant and attorney
- The cost for branding, promotion, and marketing of the storage business
- The cost for the purchase of storage equipment.
- The cost for insurance policy covers
- The cost for registering the business
- Source of your supplies and ongoing expenses
- Cost of recruiting and training your staff
- The cost for the purchase and customizing of uniforms
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?
It is not compulsory to build a new facility for your storage business, but if you have the required finance, it will pay you to build your storage facility from the scratch. The truth is that building or reconstructing a storage facility will help you come up with an edifice that will conform to what is expected of a standard self-storage in your city.
e. What are the Ongoing Expenses of a Storage Business?
- Supplies such as keys and locks, crates and pallets et al
- Fueling and maintenance of equipment and utility truck
- Utility bills – (phone bills, signage, and software renewal fees et al)
- Salaries of employees
f. What is the Average Salary of your Staff?
- Chief Executive Officer (Owner) – $65,000 Per Year
- Facility Manager – $42,000 Per Year
- Sales and Marketing Executive – $28,000 Per Year
- Accountant – $32,000 Per Year
- Facility Assistants – $26,100 Per Year
- Front Desk Officer -$25,000 Per Year
- Security Guards – $24,000 Per Year
g. How Do You Get Funding to Start a Storage Business?
- Raise money from personal savings and sale of personal stocks and properties
- Raise money from investors and business partners
- Sell shares to interested investors
- Apply for a loan from your bank/banks
- Source for soft loans from your family members and your friends.
Write a Business Plan
a. Executive Summary
Safe Lock® Self – Storage and Warehouse, LLC is a licensed and secured self–storage facility that will be located in a growing community in Asheville – North Carolina. Our basic aim of setting up the business is to make available self–storage space for our clients who are resided in Asheville and neighboring cities.
We have been able to secure a standard facility in a central location in Asheville. Our self–storage facility has a Five-by-5-foot storage space, Five-by-10-foot storage spaces, 10-by-10-foot storage spaces, 10-by-15-foot storage spaces, 10-by-20-foot storage spaces, 10-by-25-foot storage spaces, and 10-by-30-foot storage spaces available for rental or short–term leasing.
b. Products and Service
- Leasing or rental of self-storage units
- Rental of coin-operated lockers
- U-lock storage
- Other facility operation
c. Mission Statement
Our mission for establishing Safe Lock® Self – Storage and Warehouse, LLC is to build a standard facility that can favorably compete in the industry in the United States of America.
Our Vision of starting Safe Lock® Self – Storage and Warehouse, LLC is to build a brand that will become one of the top choices of residents and businesses in the whole of Ashville – North Carolina. Our vision reflects our values: integrity, service, excellence, and teamwork.
d. Goals and Objectives
The goals and objectives of the storage service business are to provide a space on a short-term basis (often month-to-month, though options for longer-term leases are available) to individuals or businesses who want to store their household goods or goods meant for sale et al).
e. Organizational Structure
- Chief Executive Officer (Owner)
- Facility Manager
- Sales and Marketing Executive
- Facility Assistants
- Front Desk Officer
- Security Guards
a. SWOT Analysis
One of the obvious strength that will stand as a plus for Safe Lock® Self – Storage and Warehouse, LLC is the fact that our facility is centrally located in a densely populated residential area in Asheville – North Carolina; our location and high level of security is our major strength.
We equally have a team that can give our clients value for their money; a team that is trained and equipped to pay attention to details and to deliver excellent services. Lastly, our rental package is one of the best that anybody living in Asheville – North Carolina can get; it is cheap and affordable.
We critically looked into our business model and we were able to identify two major weaknesses. One is the fact that we are a new business and the second is the fact that we may not have the financial resources required to match up with existing and well-established self–storage companies when it comes to acquiring large facilities in choice areas.
We are centrally located in one of the busiest and densely populated areas in Ashville – North Carolina and we are open to all the opportunities that the city has to offer. We will be open 24 hours a day during weekends (Fridays to Sundays) and from 6:00 am to 12 midnight from Mondays to Thursdays giving us the advantage to leverage any available opportunity.
Some of the threats that are likely going to confront Safe Lock® Self – Storage and Warehouse, LLC are unfavorable government policies, demographic/social factors, the downturn in the economy which is likely going to affect consumer spending, and lastly, the emergence of new competitors within the same location where our self-storage and warehouse facility is located.
b. How Do Storage Service Business Make Money?
Storage service businesses make money by providing space for businesses, organizations, and individuals to rent and store their personal or business belongings.
- Payment via bank transfer
- Payment via credit cards
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
- Payment via bank draft
c. Sales & Advertising Strategies
- Open your self–storage and warehouse facility with a big party.
- Advertise your self–storage and warehouse facility on community-based newspapers, local TV, and radio stations
- Promote your self–storage and warehouse facility online via your official website and all available social media platforms
- Introduce your self–storage and warehouse facility by sending introductory letters alongside your brochure to businesses, sports clubs, schools, corporate organizations, households, and key stakeholders in your city
- Print out fliers and business cards and strategically drop them in offices, libraries, public facilities, and train stations et al.
- Make use of attractive handbills to create awareness and also to give direction to your self–storage and warehouse facility
- Adopt a direct mailing coupon marketing approach
- Position your signage/Flexi banners at strategic places in and around your city
- Create a loyalty plan that will enable us to reward loyal clients especially those that refer their family members and friends to us
a. How Much Should You Charge for your Product/Service?
We will charge based on storage unit sizes and average monthly cost and they are as follow;
- Small (5×5–5×10 ft.) – $90 (per month)
- Medium (5×15–10×15 ft.) – $160 (per month)
- Large (10×20–10×30 ft.) – $290 (per month)
b. How Much Profit Do Storage Business Owners Make a Year?
It depends, but typically, a self-storage facility still makes a profit at 60 percent to 70 percent of full occupancy. Currently, the industry average occupancy stands near 90 percent, according to Statista. Many self-storage owners run family operations. However, those not interested in hands-on management simply hire a qualified manager.
c. What Factors Determine the Amount of Profit to Be Made?
- The capacity of the storage service business
- The location the storage service business is covering
- The management style of the storage service business
- The business approach of the storage service business
- The advertising and marketing strategies adopted by the storage service business.
- The number of years the storage service is in business
d. What is the Profit Margin of a Storage Business?
The profit margin of a storage service business is not fixed; to a large extent, it will depend on some factors that are unique to your location. But on average self-storage units earn up to 11 percent return on investment per year.
e. What is the Sales Forecast?
Below is the sales forecast for a Storage service business based on the location of the business and other factors as it relates to such startups in the United States;
- First Fiscal Year (FY1): $360,000
- Second Fiscal Year (FY2): $480,000
- Third Fiscal Year (FY3): $650,000
Set Up your Office
a. How Do You Choose a Perfect Location for a Storage Business?
- The demography of the location
- The demand for the services offered by storage service businesses in the location
- The purchasing power of businesses and residents of the location
- Accessibility of the location
- The number of storage service facilities in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
b. What State and City are Best to Open a Storage Business?
- Little Rock, Arkansas
- Los Angeles, California
- Chicago, Illinois
- New York City, New York
- Las Vegas, Nevada
- Phoenix, Arizona
- Baltimore, Maryland
- Portland, Oregon
- Richmond, Virginia
- Green Bay, Wisconsin
- Dallas, Texas
c. What Equipment is Needed to Operate a Storage Business?
You should be prepared to purchase different types of locks and keys, crates, boxes and pallets et al and also forklifts. You will also need computers and laptops, internet facility, a telephone, a fax machine, and office furniture (chairs, tables, and shelves), and all these can be gotten fairly used.
When it comes to hiring employees for a standard storage service business, you should make plans to hire a competent chief executive officer (owner), facility manager, sales and marketing executive, accountant, facility assistants, front desk officer, and security guards.
Launch the Business Proper
It is the norm for new businesses to organize a grand opening party to officially launch their business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party.
The bottom line is that with a proper launching of the storage service business, you will be able to officially inform people in your city that your storage service is open for business.
a. What Makes a Storage Business Successful?
- Having an innovative business idea
- Following a clear vision
- Creating a solid business plan
- Developing missing skills
- Finding the right talent and network
- Being financially prepared
- Building a strong company culture
- Maintaining excellent customer service and outreach
- Analyzing your competitors
- Being open to change
- Security consciousness
- Accepting and learning from feedback
b. What Happens During a Typical Day at a Storage Business?
- The business is open for the day’s work
- The to-do list is reviewed
- Employees go straight to their job description (customers are attended to and in some cases, their goods are stored and they are charged appropriately or they come to collect their goods or belongings that are stored in the facility)
- On some occasions, goods stored are delivered as requested.
- The business is closed for the day.
c. What Skills and Experience Do You Need to Build a Storage Business?
- Good managerial and human development skills
- Facility information and technology management.
- Excellent communication and negotiation skills.
- Organizational skills.
- A strong understanding of the self-storage industry
- Attention to detail and the ability to inspect goods
- The ability to analyze quality or performance.
- Good supervisory skills
- Familiarity with all aspects of self-storage trends
- Experience in working as a facility or warehouse manager
- Experience in managing people
- Experience in business administration