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July 19, 2024
Business

Starting Your Own Self-Storage Business in 6 Steps

self storaged business

Are you considering starting a self-storage business? It’s no secret the self-storage industry is flourishing and growing steadily over the years. The industry creates profits for property owners, investors, and everyone involved. So, how do you get started in the industry and set up your own business?

As the industry is seeing a steady increase in demand for storage spaces, more and more facilities are opening up in the UK. This increases the competition so before starting your own self storage business consider doing some research on your facility’s location. 

Now that you have an understanding of the self-storage business landscape, let’s start with some benefits.

The Appeal of Starting a Self Storage Business

Starting a self-storage business has several appealing benefits:

  • Stable Income: Self-storage businesses generate reliable income through monthly rentals. Once your units are occupied, you can expect a steady cash flow.
  • Low Maintenance: Compared to other real estate investments, self-storage facilities need less maintenance and staff.
  • Flexibility: You can offer various unit sizes and rental terms. Hence, you can cater to a range of customers, from individuals to businesses.
  • Growing Demand: The need for extra storage space is ongoing. Hence, the demand for self-storage units continues to rise which results in a strong market for your business.

Now, before you dive into starting a self storage business, there are a few important factors to consider:

  • Understand your local market. Identify your potential customers and their storage needs. 
  • Choose a strategic location that is easily accessible and visible. 
  • Consider the regulations and permits required to operate a self-storage business in your area. 
  • Determine your budget and funding sources. Take into account the costs of land, construction, permits, and marketing.
  • Secure your facility with features like CCTV, secure locks, and gated access. 
  • Develop a marketing plan to attract customers. Online platforms, local advertising, and partnerships are some of them.

Here’s a step-by-step guide to help you navigate the process of starting a self storage business smoothly and make informed decisions along the way.

Step 1: Choose the Right Location

The right location for your self storage business can determine its success. You may use mapping tools to calculate ideal commute distances and search radii. Using these tools, you can find areas that are convenient and easy to access for your customers. A location within a 15-20 minute drive for residents is ideal.

Demographic Research

Demographic research can help you select the right location. Through resources like the Census Bureau and Statistics, you can gather data on population density, income levels, and housing trends. Using these insights, you can understand the potential self-storage demand in different areas.

Leverage insights from experts like Wigwam Storage Management to simplify this process and make your self storage business venture more data-driven.

Comparing Storage Space per Capita

If you’ve already determined a location with unmet demand for self-storage or are struggling to find areas with unmet demand, try to compare their storage space per capita. An area with lower storage space per capita means the demand for storage is high. 

Storage Space Per Capita = Population / Total Storage Space​

Using this information, you can choose a location with less competition and more growth opportunities.

Step 2: Decide Your Investment Amount

Start by setting a clear budget for your self-storage business. Calculate how much capital you have and how much you may need to raise. You can factor in costs like land acquisition, construction, permits, and marketing. 

With a clear financial plan, you can manage your resources effectively and avoid overspending. Here are some things to consider:

Property Costs and Operational Models

When choosing a property for your self storage business, take into account both the cost and operational model. You can either buy land and build a facility from scratch or convert existing buildings into a storage facility. Each option comes with its pros and cons.

If you’re considering building your facility from scratch, you can customise your property as per your preferences. However, it’s more expensive. Converting an existing building is cheaper and faster. However, this option has limitations if you want to modify the design and layout of your building structure. 

The Phased Investment Approach

You can manage your finances better using a phased investment approach. It involves starting with a smaller facility and expanding your business as it grows. Using this approach, you can test the market, understand customer needs, and generate revenue. 

After you’ve gained some experience, you can then start making further investments. Phased investment reduces the financial risk that comes with starting a self storage business. Plus, it offers flexibility in scaling your business.

Adopting a phased investment approach with guidance from seasoned professionals like Wigwam Storage Management reduces risk and boosts growth.

Step 3: Find Your Premises

Choosing the right property is crucial for your self-storage business. 

  • Look for properties with high visibility and easy access. A location on a busy road or near a residential area can attract more customers. 
  • Evaluate self-storage demand in the area. High-density residential areas or places with a lot of businesses are ideal locations.

Finding Potential Sites

  • To find potential sites, start by exploring real estate websites. They offer detailed listings and can help you understand the market prices. 
  • You may also explore local areas. It can help you find properties not listed online. This type of local knowledge is also important to understand the demand and competition in the area.
  • Create a scoring system that will help you evaluate potential sites. You can score based on factors like visibility, accessibility, price, and proximity to high-demand areas. 

Step 4: Plan Your Storage Type and Size

When you’re planning your self storage business, you may need to decide on the type of storage you wish to offer. There are three main types to consider:

Indoor Storage: These units are located within a building and offer better protection. They are ideal for storing items that need to be kept in a climate-controlled environment.

Outdoor Storage: These units are generally less expensive to build and maintain. They are suitable for items that do not require climate control.

Drive-Up Storage: These units allow customers to drive their vehicles directly to the door of their storage unit. This makes it easier to load and unload items. They can store large items like furniture or vehicles.

Investment Requirements 

Each type of storage facility has different investment requirements:

Indoor Storage: Typically requires more investment due to the need for climate control and security systems. However, these units also charge higher rental rates.

Outdoor Storage: Generally less expensive to develop, but may generate lower rental income than indoor units.

Drive-Up Storage: Offers a middle ground when it comes to cost and potential income. As it’s convenient, it can attract a broad customer base while balancing costs and returns.

Investment Inflators

Many factors can inflate your investment costs, such as:

  • The cost of land or existing buildings can change widely depending on location.
  • Building new facilities or converting existing structures requires major costs, such as materials, labour, and permits.
  • Ongoing maintenance will help you keep the facility in good condition and ensure customer satisfaction. So, take into account the budget for regular repairs and unexpected issues.

Experts at Wigwam Storage Management can guide you through selecting the most cost-effective and profitable storage type for your business model.

Step 5: Select an Operational Model

When setting up your self storage business, you must decide on an operational model from these options:

Staffed Operations

In this model, you’ll have staff on-site during business hours. They can assist customers, handle security, and manage day-to-day operations. While this model offers better customer service, it also comes with higher staffing costs.

Unmanned Operations

In this model, there are no staff on-site. Customers use automated systems to access their units and make payments. This model reduces operational costs but requires strong security and technology systems for smooth operation.

Semi-Manned Operations

This model combines both staffed and unmanned operations. Staff may be on-site during peak hours or available by appointment. This reduces staffing costs while still offering customer support when needed.

Each operational model has its perks and drawbacks. Consider your budget, target market, and operational capabilities when choosing a model.

  • Staffed operations offer better customer service but come with higher costs. 
  • Semi-manned operations balance customer service and cost efficiency. 
  • Unmanned operations are the most cost-effective but require investment in technology and security. 

On-Premise Vs Remotely Managed Operations

You also need to decide whether your operations will be managed on-premise or remotely. 

Consideration On-Premise Operations Remotely Managed Operations
Customer Service Better customer service with on-site staff Customer service handled through automated systems and remote support
Initial Investment Higher due to the need for on-site facilities and staff Potentially lower, saving on initial setup and staffing costs
Operational Costs Higher due to staffing and on-site facilities Lower, as it reduces the need for on-site staff and facilities
Security Staff can monitor security in real-time Requires robust technology for remote security management
Maintenance On-site staff can handle immediate maintenance issues Maintenance needs to be scheduled and managed remotely
Scalability May be limited by the need for on-site staff Easier to scale as additional sites can be managed remotely

Wigwam’s remote management solutions give you the flexibility and efficiency needed to scale your business effortlessly.

Step 6: Research the Red Tape

It is highly important to understand the local laws and regulations that apply before starting your self storage business. These can include zoning laws, building codes, and health and safety regulations. 

It is essential to conduct thorough research as each area may have different requirements. Here are some considerations:

    • Planning Permission: Planning permission makes sure your business complies with local development plans.
  • Building Control: Building control checks if your facility meets safety standards.
  • Insurance: Obtain the right insurance that protects your business against risks such as theft, damage, and liability. Check out Self Storage Insurance Comparison for UK Home and Business Purposes for insights.

Essential Legal Considerations

Other legal considerations include drafting rental agreements, setting up a business entity, and understanding tax implications.

  • Rental agreements should clearly outline terms and conditions, such as payment schedules, unit usage, and termination policies.
  • Setting up a business entity, such as a limited company, can offer legal protection and tax benefits for your self storage business. 
  • Make sure to comply with tax regulations to avoid penalties and maintain your business’s financial health.

Final Thoughts

Using these 6 essential steps you can get started on setting up your self storage business. Now, it’s time to focus on attracting customers and turning your self-storage dream into a reality.

However, entering and making a presence in the self-storage industry is not as easy as it looks. You may have to consider expert assistance in navigating the market. These experts know the industry inside-out, how to handle legal requirements, and leverage technology to their advantage.

That’s exactly what Wigwam Storage Management offers. Wigwam specialises in remotely managed facilities, resulting in lower operating costs for you and potentially higher return on investment. We utilise Bluetooth cloud-based locks and other high-tech solutions to keep the facilities secure and convenient for customers. 

Partner with Wigwam Storage Management and unlock the potential of your self-storage business. Head over to the Wigwam Storage Management to learn more about our development, investment, and management services.

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