How to start a storage business

Starting a storage business can be a lucrative venture in 2024, with the industry showing steady growth and resilience.

Before diving into the specifics of how to start your own storage business, it’s important to understand the market landscape and potential.

By familiarizing yourself with the key steps and considerations involved, you can set your storage business up for success from the outset.

What is a Storage Business?

A storage business provides consumers with their own space to store goods. The enterprise has exploded in popularity over the past few decades, hitting a global market value of $51.32 billion in 2021.

Privately owned and operated: A Chron report indicates that over 80% of self storage facilities are privately owned and operated. This means people use private self storage facilities for storing their belongings more often than government-owned enterprises — the latter make up only 30% of self storage clients.
Flexibility for various needs: Customers who require storage space for travel or a temporary move tend to take advantage of the ease and adaptability offered by self storage services. Similarly, businesses typically deem renting a storage container as a more cost-effective means to accommodate their goods than moving to larger quarters.
No long-term commitment: With self storage, there’s no binding long-term commitment, and this in itself is a significant selling point that attracts patronage. Notably, the average person rents storage space for 11 months, and the average business rents for 24 months. This flexibility makes it a good fit for a wide variety of customers’ demands.

Why Invest in a Storage Business?

A self storage business is usually successful because it provides an essential service that many people need. The more people who need this service, the better for your business.

If you decide to start a self storage business in 2024, know that you won’t be alone. The need for storage space has increased in recent years, leading to the proliferation of storage facilities in unexpected places like shopping malls and downtown areas.

A fairly recent Multi-Housing News post opined that the self storage industry is more resilient to economic downturns than most sectors of the real estate market. Self storage units continue to be a valuable solution for the storage needs of modern society as more and more people relocate and need somewhere to keep their valuables.

Steady cash flow: Self storage facilities generally generate healthy, stable cash flow. With a facility that’s newly constructed or being repositioned, a new owner often will face a lease-up period of 18 to 36 months before a facility reaches occupancy stabilization. Positive cash flow also could be years down the road.
Attractive returns: The good news is that the breakeven occupancy rate for a self storage facility falls well below other asset classes. By one measure, the breakeven point is 40% to 45% occupancy in self storage, versus 60% or more in the multifamily sector. Furthermore, self storage facilities boast some of the best shorter-term and longer-term returns in commercial real estate.
Fewer complexities: There are speculations that the self storage market presents fewer complexities than residential housing since the human element is less pronounced in the former. A facility manager may have to deal with tenants, for instance, if they can’t keep up with payments, but otherwise, their paths rarely intersect. However, it’s not a passive investment and has more in common with retail than real estate.

How to Start a Storage Business

Starting a storage business in 2024 involves several key steps. Here’s an overview of what you need to do:

Determine Your Investment Budget
Find the Right Location
Choose Your Storage Type and Size
Acquire Your Facility
Select an Operational Model
Develop Your Business Plan
Obtain Necessary Licenses and Permits
Create a Professional Brand Identity
Implement a Marketing Strategy

1. Determine Your Investment Budget

When starting a storage business, you first need to decide how much money you’re willing and able to invest. Your budget will influence key decisions like:

Location: The amount you can afford will determine where you can set up your storage facility, as property costs vary widely by area.
Facility type and size: Your investment will dictate whether you opt for an indoor, outdoor, or drive-up facility and how large it can be.
Amenities and features: The more you can invest upfront, the more high-end amenities and advanced security features you can offer to attract customers.

Keep in mind that you don’t necessarily need to invest your entire budget all at once. Consider a phased approach to limit risk and scale up gradually.

Start small: Begin with a smaller facility or fewer units to test the market demand and iron out operational kinks before expanding.
Reinvest profits: As your business generates income, reinvest a portion of the profits into adding more units or upgrading your facility over time.
Secure additional funding: Once you have a proven track record, explore options like business loans or investors to fund further growth.

By being strategic about your investment budget and taking a staged approach, you can minimize financial risk while still positioning your storage business for success.

2. Find the Right Location

Choosing the optimal location for your storage business can make or break its success. Here’s what you should consider:

Research population density and housing options

Analyze the population density and housing options in potential areas. Densely populated regions with a variety of housing types, such as apartments, condos, and single-family homes, often have a higher demand for storage solutions.

Look for underserved markets

Identify areas where the current supply of storage facilities doesn’t meet the potential demand. These underserved markets present an opportunity for your business to fill the gap and capture market share. Use tools like radius maps to visualize competitor coverage and pinpoint promising locations.

Consider commute time and accessibility

Evaluate the ease of access to potential locations. Most customers prefer storage facilities within a 3-5 mile radius of their homes or businesses. Look for sites near major highways, public transportation hubs, or high-traffic areas to maximize visibility and convenience for your customers.

Assess the competitive landscape

Research existing storage facilities in the area to gauge the level of competition. While some competition can indicate a healthy demand, an oversaturated market may make it challenging for a new facility to gain traction. Analyze competitors’ pricing, amenities, and occupancy rates to identify gaps you can fill or ways to differentiate your business.

Don’t overlook smaller markets

While urban areas may seem like the obvious choice, don’t discount the potential of smaller towns and suburbs. These markets often have lower real estate costs, fewer competitors, and untapped demand. Plus, it’s easier to establish your brand and build a loyal customer base in tight-knit communities.

3. Choose Your Storage Type and Size

Once you’ve found a promising location, the next step is deciding what type of storage facility to open. Your investment budget will play a role in this decision.

Outdoor storage: If you have between $61K and $122K to invest, outdoor storage or drive-up storage are likely your best options. Both involve buying or leasing land and providing either uncovered or semi-covered space for customers to store their belongings.
Drive-up storage: Another option in this budget range is drive-up storage, where you fill your land with storage containers or units with roll-up doors. Customers can park directly in front of their unit for easy loading and unloading. Buying containers as you grow allows you to limit risk and scale gradually.
Indoor storage: If you have $122K or more to invest, an indoor storage facility may be feasible. This involves buying or leasing a warehouse and fitting it out with individual storage units. To manage upfront costs, you can complete the build-out in multiple stages as occupancy increases.

The next consideration is determining the optimal unit mix for your target market. If you’re in an urban area with many apartment dwellers, smaller units (like 5×5 or 5×10) may be in higher demand. In suburban areas with larger homes, you may need more medium and large units.

When planning your facility layout, aim to maximize rentable square footage while allowing for easy navigation and accessibility. Consider factors like:

Wide driveways for truck access
Adequate spacing between buildings
Well-lit and secure premises
Climate-controlled units if needed in your market

Choosing the right storage type and size based on your budget, location, and target market is key to starting a successful storage business in 2024.

4. Acquire Your Facility

Once you’ve determined your investment budget, found the right location, and chosen your storage type and size, it’s time to acquire your facility. You have two main options: buying an existing storage facility or building a new one from the ground up.

Buying an Existing Facility

Faster startup: Purchasing an established storage business allows you to start generating revenue more quickly, as the facility is already built and may have existing customers.
Proven demand: An operational facility demonstrates that there is a market for storage services in the area, reducing some of the risk associated with starting a new business.
Potential for improvement: Look for underperforming facilities that you can acquire at a lower price and then optimize through renovations, better management, or enhanced marketing to increase profitability.

Building a New Facility

Customization: Constructing a new facility from scratch allows you to tailor the design, layout, and amenities to your specific vision and target market’s needs.
Modern features: A brand-new facility can incorporate the latest technology, security features, and energy-efficient systems, which can be a selling point for customers and help you save on operating costs.
Expansion potential: If you build on a larger plot of land, you’ll have room to expand your facility as your business grows and demand increases.

Regardless of whether you buy or build, you’ll need to navigate various logistical and legal requirements. Research zoning regulations in your chosen location to ensure that a storage facility is permitted. Secure the necessary construction permits and approvals from local authorities.

You’ll also need to budget for the various costs associated with acquiring your facility. In addition to the purchase price or construction costs, factor in expenses such as:

Property taxes
Utilities
Insurance
Security systems
Access control and management software
Signage and branding
Initial marketing and advertising

By carefully evaluating your acquisition options, understanding the legal requirements, and budgeting for all the necessary startup costs, you’ll be well-prepared to take the next steps in starting your storage business in 2024.

5. Select an Operational Model

The operational model you choose for your storage business will impact your day-to-day management, customer experience, and bottom line. Consider these key factors when deciding:

Staffing Level

Fully staffed: Having on-site staff during all business hours provides a high level of customer service and security but comes with higher labor costs.
Semi-manned: A mix of staffed hours and self-serve kiosks or remote management can balance customer support and cost-efficiency.
Unmanned: Fully automated facilities with 24/7 self-service access are the most cost-effective but may limit personal interaction with customers.

Management Style

On-premise management: An on-site manager can handle daily operations, customer inquiries, and maintenance issues directly but requires a dedicated office space and salary.
Remote management: Technology like cloud-based software, security cameras, and smart locks allows you to manage your facility remotely, saving on overhead costs but potentially reducing face-to-face customer service.

Technology Integration

Investing in technology can streamline operations, enhance security, and improve the customer experience. Some options to consider include:

Online reservation and payment systems
Automated access control and gate systems
24/7 video surveillance and monitoring
Climate control and energy management systems

Ultimately, the right operational model for your storage business will depend on your target market, budget, and goals. A fully staffed facility with on-site management may be ideal for a high-end, customer-focused business, while an unmanned, technology-driven model may be more suitable for a budget-conscious, self-serve market.

6. Develop Your Business Plan

A well-crafted business plan serves as a roadmap for your storage business, helping you define your objectives, strategies, and financial projections. Here’s what to include:

Outline your mission, vision, and value proposition

Clearly articulate your storage business’s purpose, long-term goals, and unique selling points. Conduct a thorough market analysis to identify your target customers, assess the demand for storage services in your area, and analyze the competitive landscape.

Detail your business structure and offerings

Describe your ownership structure, whether it’s a sole proprietorship, partnership, or corporation. Outline the types of storage units and services you’ll offer, along with your pricing strategy. Consider factors like unit sizes, amenities, and rental terms when setting prices.

Project your financials

Develop detailed financial projections for your storage business, including:

Revenue streams: Estimate your monthly and annual income based on projected occupancy rates and rental prices.
Expenses: Account for all startup and ongoing costs, such as property acquisition, construction, utilities, insurance, staff salaries, and marketing.
Financing: Determine how much capital you’ll need to start and operate your business, and outline your funding sources, whether it’s personal savings, investors, or loans.

Create a marketing plan

Describe how you’ll attract and retain customers for your storage business. This may include tactics like:

Developing a user-friendly website with online reservation capabilities
Leveraging search engine optimization (SEO) to improve your visibility in local search results
Running targeted pay-per-click (PPC) advertising campaigns on platforms like Google Ads
Building partnerships with local businesses and organizations for referrals
Offering promotions or discounts for new customers or long-term rentals

A solid business plan demonstrates that you’ve thoroughly thought through every aspect of your storage business and increases your chances of securing funding from lenders or investors.

7. Obtain Necessary Licenses and Permits

Never launch a storage business without securing the appropriate licenses and permits. Operating without proper authorization can result in hefty fines or even forced closure.

Research local requirements: Investigate the specific licenses, permits, and registrations needed to legally operate a storage facility in your chosen location. Visit your local government’s website or contact them directly for the most up-to-date information.
Secure necessary paperwork: Obtain all required documents before opening your doors. These may include a business license, certificate of occupancy, zoning permits, and safety inspections. The exact requirements will vary by jurisdiction.
Maintain compliance: Regularly review and renew your licenses and permits to ensure ongoing compliance with local regulations. Stay informed about any changes in laws or ordinances that may affect your storage business.

Investing time upfront to navigate the legal requirements will save you from costly mistakes and disruptions down the line. Work closely with local officials and consider seeking guidance from a business attorney to ensure a smooth and compliant startup process.

8. Create a Professional Brand Identity

A strong brand identity sets your storage business apart from competitors and helps you attract your ideal customers. Here’s how to create a professional brand that resonates with your target market:

Develop a memorable business name and logo

Choose a business name that’s easy to remember, reflects your brand personality, and is available as a domain name for your website. Use an online logo design tool to create a visually appealing logo that represents your storage business and will look great on signage, business cards, and your website.

Define your unique value proposition

Identify what makes your storage business unique, whether it’s your location, amenities, customer service, or pricing. Craft a compelling value proposition that clearly communicates the benefits you offer and why customers should choose your facility over others.

Establish a consistent visual identity

Ensure that all your branding elements, including your logo, color scheme, font choices, and imagery, are consistent across all customer touchpoints. This includes your website, social media profiles, marketing materials, and on-site signage. A cohesive visual identity helps build brand recognition and trust.

Develop customer personas

Create detailed profiles of your ideal customers, including their demographics, storage needs, preferences, and pain points. Use these personas to guide your branding and marketing efforts, ensuring that your messaging and visuals resonate with your target audience.

9. Implement a Marketing Strategy

A well-executed marketing strategy will help you attract customers and grow your storage business. Start by building a user-friendly website that showcases your facility’s features, amenities, and pricing. Optimize your site for search engines to improve your visibility in local search results.

Invest in digital marketing channels like pay-per-click advertising, social media marketing, and email campaigns to reach your target audience. Claim your business listings on platforms like Google My Business and Yelp to ensure potential customers can easily find and contact you.

Don’t overlook the power of local advertising and community partnerships. Consider sponsoring local events, joining the chamber of commerce, or partnering with local businesses for cross-promotions. Encourage satisfied customers to leave online reviews and refer their friends and family to your storage facility.

Offer promotions or discounts for new customers, long-term rentals, or referrals to incentivize people to choose your storage business over competitors. Continuously monitor and adjust your marketing efforts based on performance to ensure you’re getting the best return on your investment.

Is Starting a Storage Business Right for You?

Deciding to start a storage business involves careful consideration of your goals, resources, and the market landscape. With the storage industry’s growth and the potential for steady profits, it represents an appealing opportunity for many entrepreneurs.

Growth potential: The storage industry continues to expand, fueled by ongoing trends like downsizing, increased mobility, and the need for flexible storage solutions.
Profitability: Storage businesses often enjoy attractive returns on investment, thanks to their resilience to economic downturns and ability to generate steady cash flow.
Market demand: The consistent demand for storage, driven by both individual and business needs, provides a stable foundation for your business.

However, success in this field requires thorough planning, understanding of the market, and effective execution of your business plan. It’s not just about having the capital to invest; it’s about leveraging that investment to meet a genuine market need in a way that aligns with your business goals and values.

Making the Right Choices for Your Storage Business

Starting a storage business in 2024 means making strategic decisions about your investment, location, and the types of storage services you offer. It also means navigating the regulatory landscape, developing a compelling brand identity, and implementing a marketing strategy that resonates with your target audience.

Strategic investment: Your initial and ongoing investment decisions will shape the scope and scale of your business, influencing everything from the location and size of your facility to the types of storage services you can offer.
Market research: Understanding the needs and preferences of your target market is key to positioning your storage business for success. This includes choosing the right location, determining the optimal mix of storage unit sizes, and setting competitive prices.
Operational efficiency: Your choice of operational model, whether it’s fully staffed, semi-manned, or unmanned, will impact your customer experience, security measures, and overall profitability.

Conclusion

Starting a storage business offers a unique blend of challenges and opportunities. With the right approach and careful planning, you can tap into a growing market and build a successful, profitable business. Remember, your brand identity plays a crucial role in attracting and retaining customers.

LogoMaker can help you create a professional logo that captures the essence of your storage business and appeals to your target market. With our easy-to-use tool, you can design a logo that sets you apart from the competition and builds recognition for your brand.

Create a business logo today and take the first step towards launching your storage business.