How to Start a Storage Unit Business: Everything You Need to Know
How to start a storage unit business tends to be one that requires a lot of capital to get started.3 min read
2. Market Research and Feasibility Studies
3. Outline Your Goals
4. Determine Your Start-Up Costs
5. Ensure You Comply With Tax and Legal Regulations
The Rental Storage Unit Business: Industry Overview
How to start a storage unit business tends to be one that requires a lot of capital to get started. It can also consume a lot of your time. But, there is one area of real estate that is not capital intensive nor is it time-consuming. That area is the rental storage unit industry.
People use storage units to keep their belongings secure when they can't fit it into their living quarters. A unit can be a box or a locker, containers or rooms, or even an empty lot. The amount of construction of new storage unit facilities is on the low side which means there is room for new players to enter the market.
The storage unit industry started in 1958 and has been an industry that makes money for investors. The potential for profit is there if you do your research and make sure you have a strategic location. Storage units are susceptible to supply and demand forces, but people will always look for extra room to store their stuff. Rents may not always stay high, but there's almost a guarantee of income for the long run.
Market Research and Feasibility Studies
Just as with any other business you might want to get into, you need to do your research. Gaining an understanding of this industry before you commit your time and money into getting a business off the ground is important. You need to understand the demand for storage in the area you have chosen, along with the potential costs and profits. Ask yourself what type of facility you want to operate. Do you want a facility with:
- Units locked by the renter
- Self-storage rental warehouse
- Coin-operated lockers
Understanding the competition is also important to your market research. Location trumps all when it comes to running a storage unit facility. You may find you are able to charge more than your competition due to the location. Or you may find your competition is willing to do what it takes to get as much business as possible and undercut you. That means you pay the premium for a high-profile location but still wind up losing money. The more you can learn about the lengths your competition will go to rent units, the better you can counter their efforts.
Outline Your Goals
Once you know as much as you can possibly learn about the local market conditions for storage units, you should focus on a clear-cut business plan. Do you want a small business that you can run part-time from home and supplement income? Or, do you consider this a stepping stone that you can grow into a larger business? Remember, you can always start small and grow your business over time, especially if you're not ready to fully commit to operating a fully-fledged storage unit facility.
Determine Your Start-Up Costs
Now that you have an idea of what it is you want to do, and where you want to place your facility, you need to estimate your start-up costs. These are known as sunk costs or the costs you have to pay to get the business started. These costs are separate from your ongoing maintenance and business costs. It's important to make sure you can raise the money first.
Some of these costs may include:
- Land acquisition
- Franchise fees if working with a franchisor
- Website design and hosting
- Promotional materials
Leave aside some money to deal with any unexpected costs during this time.
Ensure You Comply With Tax and Legal Regulations
You need to make sure that you are registered and in compliance with all the relevant tax and regulations that apply to the storage unit industry. If you do not think that you are able to do this research on your own, you should hire an attorney who is capable of informing you of the laws, licenses, and regulations that you need to follow. Your attorney may also have information about grants and financial aid that exist for small businesses. You might be eligible for financial support from the government as you start your first storage unit facility.
If you need help with starting a storage unit business, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.