Reading this, you might already have one of the key necessities for setting up a self-storage business. You might have a lot of land that is not built up and does not have any other apparent use at the moment, the perfect foundation for buildings, storage containers, or whatever you need. Perhaps you see a need in your community for storage and a lack of competition, leaving open an opportunity that other people have not taken advantage of (and you want to). Maybe you want to provide better rates and services than nearby competitors who have become complacent and know you can turn a profit by doing so.
No matter your reasoning, if you are reading this, you want to start a self-storage business, and you are looking for all the information about how to do it successfully. Fortunately, we know a thing or two about the topic and can help you get started. All you need to do is keep on reading below:
Refine Your Idea
You might have the idea that you want to start a self-storage business, but that can involve a lot. Do you have a property in mind where you will set up? Will it be a good and affordable spot for your business? Would there be an opportunity to expand on-site? While you do not need to think of every possibility ten years down the line, you do need to consider what might be possible and know that you can adapt to those possibilities.
The first step to take is to create a more precise idea for your business. Simply saying, "I want to start a self-storage business," will not make it so. What type of self-storage business do you want to make? Do you have an answer to all the fundamental questions of running a business (we'll run down most of them later)? Do you understand your current life situation and whether you can support yourself during the turbulent startup period? If so, this is good, and you should proceed. If not, you need to sit down and think.
At this point, you also might want to come up with a name, determine your target demographic, and other planning tasks. You will be filling out some paperwork soon and answering questions, and having all the answers and information you need ahead of time can make the whole process a lot easier. Having the info ready for people you talk to about your business can help gauge interest and create a more realistic outlook for yourself.
With some obvious exceptions, there are no right or wrong answers about your idea, only answers that work and those that won't.
Prepare Your Capital
Always keep in mind that there will inevitably be some unexpected expenses to deal with when starting a business. There could be repairs that need doing that you did not expect, or you might have underestimated the shipping costs of a unit or two. In any case, things will happen, and you do not want to be caught without enough money in the bank to cover your monthly expenses before your business even gets off the ground.
Also, you need to have the capital to support your business (and yourself and any employees you want to hire) until your business becomes profitable, which may not be for some time. Most businesses are not profitable for several years, and while you can probably count on some income if you are doing things right, it will not be in the green for a while.
As for your financing options:
- You can fund it yourself with money saved up. While this comes at a risk to yourself and your savings, you have much more freedom and will have to explain yourself to no one.
- You can try to find partners and investors willing to invest in your business. This spreads out the burden, but your investors will expect results and returns, which may be challenging to come by at first. It would be difficult to say the business is entirely your own, and working with more people can cause complications.
- You may be able to get a business loan depending on how well your business plan is developed and your potential credit. For more information on business loans, we recommend this source.
What is best for you will depend on your situation, location, and relationships, and we are not financial advisors. Instead, we encourage you to find professional help along those lines if you feel it would help you.
Finding Storage Units
For storage units, we recommend using shipping containers. They come in roughly the sizes people might be looking at for storage, are easy to acquire and cost-effective, are sturdy, and for the most part, protected from the elements. Also, you can more easily move containers than other buildings or structures if necessary.
There might be some modifications needed, and there is also the issue of which containers to get and whether you should get them new or used. Let's look at those first:
Providing a Range of Options
The size of the containers should be your first consideration. This will determine how much space you give people renting space from your business. You may want to provide a few options to potential customers, or you may wish to specialize. The choice is yours.
You can potentially offer a variety of container sizes, including:
- A standard 20' container, which you have likely seen before. These will be the easiest to come by, the most often used by competitors, and the most popular with customers.
- A much larger 40' container. These hold a whole host of goods but might be difficult for people to navigate and more difficult for you to place on your property.
- There is the smaller 10' container which will not be as popular. Yet, it might be handy to have a few at a slightly discounted rate to make the most of your space and appeal to people with fewer items they need to store.
- There may be alternative container sizes as well, but they will be hard to come by, and we generally would not recommend using them.
In many cases, people might not be interested in the entirety of a container. Still, you can subdivide a container and then sell unit rentals by an available amount of square footage.
If you are willing to think outside of the box a little, you can use alternative containers for additional storage options. Generally, these will not be worth the investment unless you know exactly what you are doing or are specifically requested by clients. Even in those cases, standard shipping containers of the above sizes should make up most of your business. However, if you are catering more to business clients, you might get more mileage out of the alternative containers, but it would require a different business plan.
New or Second-Hand?
When getting storage containers for your business, assuming you are using them, you need to figure out whether you will buy them new or used. Just make sure that you go over this carefully, as once you commit, it will not be easy to go back.
To help you with the choice, here are some pros and cons of each option:
Many people will opt for new containers when working on a project, not wanting to risk the unknown. With some shifts in the market and companies knowing the many uses for a shipping container, you can easily buy however many you need online and have them shipped to the location of your choosing, provided you have space and money.
- You can be sure of their quality. Also, you can trust they will last their already long lifecycle of decades, especially if you plan on treating them properly and making sure they are not abused. While unlikely for a self-storage business, the unexpected can happen.
- You know a previous owner did not use them to transport anything. While unlikely, they might have used shipping containers to transport toxic or potentially hazardous materials. This would require treatment, meaning an additional expense.
- You can often get a guarantee or a warranty on their quality, allowing you to be confident about such things and let you make a return or get a repair if there is an issue.
- They will almost certainly be more expensive, and shipping might also be more expensive. The amount of money will likely scale by the number of containers that you get, and while you might be able to get a discount on a bulk buy, new containers are a significant investment.
- New containers are generally more modifiable into homes, etc. While you will be doing some modification, you likely do not need the full extent of this.
- Given the modifications you will be making, the blemishes or minor dents found on used containers won't matter all that much for your needs.
Second-hand containers are a bit more of a mixed bag. However, with the right effort and knowledge, using them can allow you to save on startup costs while providing the same level of service to your customers.
As for where and how to get them, you can find a second-hand dealer, or you might be able to peruse sales listings if you are willing to buy a couple or even one at a time. Just be aware, an official dealer has a reputation to uphold and is far less likely to sell you faulty goods or try and rip you off.
- The price for each container will undoubtedly be lower compared to new containers. It is quite possible some sellers just want to get them off their hands (though in this case, quality might come into question). On average, you can expect to save about $1000 per container, which adds up when you are getting at least a dozen of them and have other expenses to consider.
- Nearly all of the containers you will come across will be structurally sound and perfectly fine for storing goods. This is especially the case if you will be renovating them slightly anyway, perhaps giving them some paint and branding to go along with your business.
- If one of the used containers is not up to your standards, you can move forward with your business plans regardless. It is not as much of a hit as the people who only want one container for a home or office would take while they figure out a replacement or solution.
- The condition of a used shipping container will obviously not be pristine. While you are unlikely to be sold a defective or outright structurally unsound container, there is a likelihood that the container will have a few scratches or dents.
- You will be more likely to work with an unknown dealer. You will want to take great care researching the seller's reputation if there is even any information or reviews available.
- Some might already have modifications made to them, making it harder for you to use them for your intended purpose. While you can reverse some modifications, the cost of doing so can be prohibitive.
- If you are getting new containers, you will likely get all your supply from one source. That might not be the case for used containers.
- Shipping might be more difficult, especially if you buy from a person, business, or facility that does not usually deal with shipping containers. As shipping containers require specialized shipping, the cost difference might get eaten quickly.
Storage containers and similar structures are built to store goods and to keep them safe from the outside world. However, at the start, they certainly do not look like the storage containers you see at already functioning self-storage businesses.
Some common modifications might include:
- Switching out the original door or doors for ones customers can fully pull up or take to the side, allowing for larger items to be taken in. This can be instead of or on top of a more traditional door if the customer only needs to move something smaller. If you are not concerned about its security and want to make a more luxury improvement, you can add an automatic opener to ensure everyone can get access.
- Many storage facilities install multiple doors on the side of a single shipping container and add walls to separate spaces within each container. Storage containers are big, and you can likely fit numerous spots for storage inside. However, there will also be clients looking for the space of an entire container. You will want to balance both.
- Paint the containers on the exterior and interior. The paint can help you with branding, making the units look uniform, and making units more durable. Be sure to prepare the surface properly and give the paint enough time to settle and dry properly.
- Fix up the interior to make it look nicer and more functional as a storage container. You don't need to do too much, but you might want to add some lighting for convenience and put in a few simple switches.
- Installing vents is an excellent and possibly necessary safety measure to prevent an unfortunate incident in the future.
- You may want to make sure the walls are smooth so that the potential for damage from the corrugated steel is minimized. You do not need to do anything crazy, and solid floors and smooth walls are all you need (and would be preferred.) Also, ensure that the space looks professional and well-maintained, both at the start and between renters, if possible.
There are, of course, other modifications you could make depending on how you want your storage units to look and operate. We recommend looking at the competition to see what they do (both well and poorly) as a source of inspiration.
People want to make sure their things will be safe in their storage containers. You want the same to keep your reputation strong (no one will want to store their items at an unsecure facility). Fortunately, security is available, and you do not need to hire someone or invest in super-expensive security systems to get a good reputation in this regard. We recommend the following tips and measures:
- Unless the other benefits greatly outweigh the disadvantages, we strongly recommend you start your business in a low-crime area, or at the very least not in a noted high-crime area. If you do start your business in a high-crime area, make sure to invest in the added security to match.
- Choose a site you can lock up if needed, likely with a gate and high, difficult to climb, fence. There are plenty of options, but you need something to focus your security on a few main points.
- The keyword here is access control, and by extension, an access control system of one form or another. It might use a series of keys, number pads, swipe cards, or even smartphone apps. What will be best will depend on your budget, how comfortable your expected customers will be with tech and a few other factors.
- A camera system is a worthwhile investment and not nearly as expensive as it used to be. Be sure to install cameras at all major entrances and exits, as well as be able to track movement throughout your facility. Blind spots are not good, and make sure that you can keep tapes for a while in the event of any crime.
- On a similar note, good lighting can help both with security and camera footage quality. It also helps ensure that your customers feel more confident about the facility.
- Do not ever get complacent about security measures. Upgrade your equipment if needed, and regularly remind employees about best practices and what suspicious behavior might look like.
- You may want to require insurance for people to rent a unit at your facility to prevent extreme damages and to ensure people do not hold you responsible should an incident occur.
There may be other measures and local issues that you will want to consider, but the above can be an excellent start to making sure people feel safe leaving their items in your units.
Legal Needs and Concerns
Unfortunately, you cannot just set up shop, say you are starting a business, and leave that be. You need to set up your business legally, and with that comes all the registrations, tax setup, incorporation, etc. There will likely be zoning concerns you will need to check up on and requirements to ensure your business is safe for people to use. If construction is involved, that comes with its own set of needs and concerns. You may want to get help with this, but also remember that help is expensive. Do some research ahead of time so you can make the most of the services you do employ.
We are not legal experts and cannot advise you on the specifics of this process. You might want to speak to a professional about navigating these waters. You will also need to check any local laws regarding both self-storage and getting your business off the ground.
Your Business Model
How are you going to make money from your self-storage business? Sure, you figure you will rent out the storage units to people for a fee, which is correct. Yet, there will be a bit more to consider than that, and the nuances make all of the difference.
Some things you will want to consider include:
- Your standard billing period. You can either bill weekly (uncommon) or monthly (far more common and easily administrated). However, you might also want to offer a discounted rate for people willing to pay upfront for using a container for three, six, or even twelve months. That sustained business is very valuable and reduces client turnover.
- How much are you going to charge per billing cycle? Will you calculate the fee strictly on square feet for the unit offered? Will you have a flat rate? Will you offer promotions or discounts?
- Strangely enough, you might not want to be too cheap with your rate, especially if there is little competition in the area. While you should make sure to keep things going for yourself and be able to pay yourself and any employees you have, you also want to take into account that having too low of a price can make your business look cheap, even scaring some customers away.
- How will you take payment? You will be accepting cash, of course, but you also need to be able to take credit cards, etc., quickly and professionally. If you can set up an online payment system, we would strongly recommend it. People like being able to pay bills online or automatically without hassle and get digital receipts.
- Will people be able to check on and access their storage container at all hours of the day? Will there be days or times where it is closed?
- Will there be any additional perks or services on offer for a fee?
- Will it be entirely self-storage and self-serviced, or will help be available when needed?
Every business will run itself differently, and we do not want to tell you how to run yours. This is another situation we recommend you check out the competition to get ideas.
Marketing, Hours, and Additional Concerns
Once you have all of the above taken care of and are confident you are going to open, you will want to take care of a few other details involving the operation of your business. This could include the following:
- Marketing is vital and will always be critical to your success. Few people will drive by your facility, especially if it is somewhat out of the way (which is a perfectly reasonable choice, given the nature of the business). Getting that first marketing push should be near the top of your priority list.
- As part of this, people will need to know how to search for you and look up your prices. A good website is important, and you will want to make sure that your site has all of the following:
- Standard rates for shipping containers of all sizes and all term lengths.
- Address and contact info, including an email or online contact form that you check regularly.
- A list of policies, rules, and features related to your business.
- Testimonials, reviews, and other good publicity if possible.
- There may be local newspapers or publications you can advertise in. While most people look online, getting your business' name in the heads of the local population can be helpful, and the ads are often affordable.
- While not something you can directly control, word of mouth is incredibly useful. Create a good reputation for your business, and people will come.
- We would not recommend expensive radio or TV ads when starting up. They can be tricky to produce, and your budget will likely be limited.
- Figure out your hours of operation. You cannot be there all day, and you should not overwork yourself to the point of burnout. While we are confident you are enthusiastic about your business and are willing to put in the hours, people simply aren't designed for endless hours every single week without a break or some relaxation. The first few months before and after the official opening date may be busy. Afterward, you should consider taking some time for yourself to recharge.
- How will you handle the regular finances of your business? We recommend getting a business bank account.
- Similarly, we recommend getting business insurance for things such as liability, criminal activity, and more.
- You may be hiring employees as part of this, and larger businesses will undoubtedly want to do this. Will you rely on part-time help or hire a few full-time employees to take the load off? How much will you offer in pay, and will you offer benefits? What is required of you as an employer in your state? Being an employer is a job in itself, so make sure to read up on these considerations.
Final Thoughts and Disclaimer
Again, we cannot provide a complete guide on starting a self-storage business or even a business in general. There are so many specific individual factors; we suggest meeting with a professional consultant (perhaps professionals of several types) to truly get off the ground. This article is intended as a guide, containing some action points and food for thought.
It will be a complex process, and you might not get everything done as quickly as you would like. Still, with the proper planning, the right setup, and a lot of effort, you can create a successful self-storage business using shipping containers, some land, and some good ideas.
Remember that you will likely see losses initially, and you should plan for this. The more prepared you are through good planning and strong discipline over time, the better you will do.
Starting a business is a complex process. It will likely take you weeks, if not months, to get your idea off the ground, even if you are well-versed in self-storage. There is a lot more information and guidance you likely need to be confident in your success, but we have sought to provide a starting point for you. We hope that the above information has provided you with some solid ideas, and you learned a bit more about the shipping containers that can make a self-storage business possible. Good luck with your venture!