How to Start a Self-Storage Business in 4 Steps

A detailed business plan is the foundation of your business. Not only does it help you organize your business and identify challenges, but lenders will also want to see your business plan before loaning you money. While business plans vary, there are common elements:

Market Analysis

An essential part of your business plan is a market analysis. Conduct market research for your new business to determine if there is a need for another self-storage business in your community.

• Look at your area’s demographics. Who are your potential customers, and what do they want? Climate-controlled units? 24-hour security?

• Evaluate other local self-storage facilities. What do they offer, and what rental rates do they charge per square foot? What are the most popular unit sizes?

• How can you differentiate your business from your competitors? How will you reach your target market? What are your marketing strategies?

Finances

Another critical piece of your business plan involves money and determining how much you need as an initial investment to launch your business.

• Will you build a new facility or purchase or lease an existing self-storage facility? If building a new business, you will have real estate acquisition and construction costs. If you are leasing, you must factor in the monthly rental cost.

• What are your startup costs? Will you build a new facility or purchase or lease an existing self-storage facility? If building a new business, you will have real estate acquisition costs, or if leasing, you must factor in the monthly rental cost.

• What are your monthly operating expenses for things such as upkeep, maintenance, security, pest control, and property insurance? Will you need to hire on-site attendants?

• How many self-storage units will you have, and how much revenue will it generate? What is your projected monthly cash flow, and will it cover your monthly operating costs?

Learn as much as you can about the self-storage industry and what makes a successful business when putting your business plan together. For example, industry experts estimate that the average occupancy rate for self-storage space is 83.85%. Find out what the typical profit margin is for this type of business. The U.S. Small Business Administration (SBA) assists with business plans.

When starting any business, it is critical to separate your business debts and liabilities from your personal assets. Entrepreneurs often form corporations, limited partnerships, or limited liability companies (LLCs) to shield their personal assets from their business activities.

Many sole business owners form a single-member LLC. The benefits of an LLC are that they are easy to create and maintain, they do not require bylaws or corporate minutes, and they offer flexible tax treatment. You can include the business’ profits or losses on your personal income tax return, eliminating double taxation. If you are going into business with partners, you can form a multi-member LLC, and each member’s share of the company goes on their tax return.

You can form an LLC with your Secretary of State’s office or you can let our trusted partner LegalZoom handle your business formation filing for $99 plus filing fees.

Your business may need a business license issued by the state or your local jurisdiction. Find out if you need any permits or special zoning authorization for your storage buildings. Apply for your business license and permits before you start operating your business. Your self-storage property may also have to comply with building codes or land use permits.

Taking these steps before launching your own self-storage business organizes your business, protects your personal assets from your business activities, and sets up your business for success.

You should also investigate what business insurance you need for your self storage operation. You want to protect against property damage, theft, and personal injury. Talk to an experienced insurance agent about what insurance policies are best for your situation.