How to Start a Self-Storage Business: The Ultimate Guide

So you want to start your own storage business? It can be a great way to generate passive income and build equity in real estate. However, there are many steps involved to get a storage facility up and running. From finding the right location and building to marketing your new business, starting a storage company requires a major time commitment.

If you're up for the challenge, the rewards can be substantial. The self-storage industry continues to grow year after year, and by following some key best practices, you can position yourself to tap into this increasing demand. In this guide, we'll walk you through everything you need to know to start your own successful storage business. By the end, you'll have a blueprint to get your new company off the ground and onto the path of profitability.

The Self-Storage Market Landscape

The self-storage industry is a large and growing market, especially in the U.S. and other Western nations. According to the Self Storage Association, there are over 58,000 self-storage facilities in the U.S. alone, generating over $32 billion in annual revenue. The target audience for storage units is very broad, ranging from residential customers to small business owners.

Most storage facilities target the general mass market, offering affordable and secure storage for household goods and business inventory/files. However, some facilities choose to focus on more niche markets like RV/boat storage, wine storage, or business records storage. The market you choose to target will depend on the local demand and competition in your area.

Whether you operate a basic or more specialized storage facility, the key to success is providing great customer service, competitive rates, and a safe, secure environment for people to store their belongings. By meeting these core needs, you'll put yourself in a good position to tap into the consistent demand for self-storage.

Developing Your Storage Product

The core product for a storage business is, of course, storage units for rent. However, you need to determine what types of units you want to offer and any additional features or services that will set you apart. The most common options include:

•Indoor units: The most basic option, ranging from 5x5 feet up to 10x30 feet or more. Climate-controlled units are also popular for temperature-sensitive items.

•Outdoor units: Typically used for RV, boat, and vehicle storage. Need to be fully enclosed and secure.

•Drive-up units: Allow customers to drive up to their unit, making loading and unloading more convenient. Require wider aisles and more space.

•Climate-controlled units: For an additional fee, these units provide heating and cooling for items that could be damaged by extreme temperatures.

•Additional services: Some facilities offer moving supplies, truck rentals, packaging services, and more. These added offerings provide extra convenience for customers and revenue streams for your business.

The types of units and services you provide will depend on the demand in your local market and the space/budget you have available. It's best to start with a basic offering of high-demand unit sizes and potentially add more options over time as your business grows. Be sure to highlight any key features, like 24-hour security or climate control, that will set you apart from competitors. Your goal should be to provide the best overall solution for your customers' needs at a competitive price.

The Economics of Self-Storage

To run a profitable storage business, you need to understand the key costs involved and set pricing that will cover your expenses while still being competitive. The major costs for a storage facility include:

•Property costs: This includes the land, building(s), and any renovations needed to convert the space into storage units. Property costs are often the single biggest expense for a new storage business.

•Insurance: You'll need insurance to cover liability, property damage, and loss of goods stored in customers' units. Business insurance for a storage facility can cost $2,000-$5,000 per month or more depending on the value of your property and services.

•Staffing: Most storage facilities operate with a small staff, typically 1-3 employees depending on the size. Expect to pay $25,000-$50,000 per employee for a manager and assistant manager. You'll also need part-time gate attendants and maintenance staff.

•Utilities: Electricity, lighting, and in some cases climate control can cost $5,000-$15,000 per month or more for a typical storage facility.

•Maintenance: Budget at least $3,000-$5,000 per month for routine maintenance, repairs, landscaping, pest control, and general upkeep of the property and storage units.

•Administrative: Accounting, billing, marketing, and office expenses can cost $2,000-$4,000 per month.

With all costs considered, you'll want to set rental rates that will generate a minimum of $10,000-$20,000 in gross profit per month for a small to mid-sized storage facility. Price per square foot can range from $0.50 up to $3 or more depending on your location and offerings. Be sure to compare rates of competitors in your area to determine pricing that will attract customers while still covering your costs.

Marketing Your Storage Business

Marketing is key to attracting new customers and filling up your storage units. Here are some of the top strategies to employ:

•Search Engine Optimization (SEO): Optimize your website and online listings to rank higher in search results for terms like "self storage" and "storage units" in your city. Focus on location pages and content highlighting your features and amenities. SEO is one of the best ways to drive organic traffic and leads for a local business like storage.

•Social Media Marketing: Build your presence on platforms like Facebook, Instagram, and Google My Business. Post photos of your facility, staff, and available units. Engage with your followers by replying to their comments and messages. Run paid ads on social media to reach new potential customers in your area.

•Direct Mail: Send postcards or letters to households and businesses in the surrounding neighborhoods. Highlight your amenities, rates, and any current special offers. Direct mail still generates response rates far higher than most digital channels for local businesses.

• Sponsor Local Events: Increase your visibility in the community by sponsoring local sports teams, charities, school events, and more. This is an affordable way to raise brand awareness and give back to your customers.

• Online Advertising: Run pay-per-click ads on search engines like Google Ads as well as display ads on websites and social media. Target ads to people searching for storage units in your city or zip code. Online ads are an easy way to generate more traffic and leads to your website.

•Referral Program: Offer existing customers a discount or reward for referring new customers. Word-of-mouth marketing and referrals are one of the most effective ways to gain new business. Incentivizing referrals with a discount or reward can encourage more people to spread the word about your storage facility.

By employing a mix of digital marketing and traditional local advertising strategies, you can build brand awareness, increase traffic to your website, and keep your storage units full. Be sure to track the results of each initiative to determine what's working and make adjustments to optimize your marketing budget and efforts.

Sales Strategies for Your Storage Business

To maximize revenue for your storage facility, focus on efficient sales processes and strategies to convert more leads into customers. Some key best practices include:

•Offer a self-guided tour option on your website. This allows potential customers to view photos and learn about your units and amenities at their own pace before contacting you. The more informed the lead, the higher the chance of conversion.

•Have a sales script and FAQ ready for phone and in-person inquiries. Ensure all staff can knowledgeably discuss your offerings, rates, lease terms, and address any common questions. Consistent, professional communication is key.

•Incentivize your employees with sales commissions or bonuses. This motivates your staff to actively work to convert leads and retain/upsell existing customers. For many storage facilities, staff are the frontline for sales.

•Run promotions and special offers, especially when you first open. Discounts on select unit sizes or free truck rentals/moving supplies are examples. Special offers drive traffic and new renters. You can then upsell customers to larger, more profitable units over time.

•Require a deposit to hold a unit. Once a customer expresses interest in a unit, take a deposit to have them commit to renting from you. This also prevents the unit from being sold to another lead, ensuring maximum occupancy and revenue.

•Upsell existing customers when possible. If a customer's needs change, encourage them to rent a larger unit. Offer a discount on upgraded units for loyal customers. An existing customer base is the best source for higher-value sales.

•Cross-sell additional services. If customers are already renting a unit, they may be interested in supplies, truck rentals, or other services you offer. Mention any current promotions or package deals on additional services each time you interact with the customer.

By focusing on professional sales processes, incentivizing your staff, offering promotions, requiring deposits, upselling and cross-selling to existing customers, you can maximize revenue for your self-storage business. Be sure to track key sales metrics like lead response time, conversion rate, and average order value to determine what's working and continue optimizing your sales strategies.

Operations and Execution

The day-to-day operations are key to running an efficient storage business. Some important areas to focus on include:

•Staffing: Hire qualified managers and attendants to oversee the facility and provide great customer service. Conduct regular training to ensure staff are knowledgeable about policies, procedures, and customer interactions.

•Move-ins/Move-outs: Have a standard process for renting units, completing contracts and payments, and providing access to units. Also have a professional move-out process for collecting keys/access cards and final payments.

•Billing and collections: Set up automatic billing for rental fees. Send late notices for past due accounts and have a collections process in place for delinquent customers. Monitor for any issues to minimize revenue loss.

•Maintenance: Conduct regular maintenance checks on the property, units, access gates, lighting, and any other equipment. Address any repairs or issues promptly to keep the facility safe, secure, and appealing to customers.

•Access control: Use a gated keypad or card access system to control access to the property and units. This provides added security for customers' belongings. Ensure all access codes/cards are updated when customers move in and out.

•Unit inspections: Perform routine inspections of storage units to check for any lease violations, damage, or other issues. This also allows you to see which units may soon become available to rent again.

•Customer service: Train staff to provide friendly, helpful service to all customers and leads. Address any complaints or issues promptly and professionally. Strong customer service is key to reputation, retention, and referrals.

By focusing on efficient operations, staffing the facility properly, optimizing move-ins/move-outs, billing and collections, performing routine maintenance and inspections, controlling access, and prioritizing customer service, you can run a storage business successfully. Track key metrics like occupancy rate, late payments, move-in/out times, and customer complaints to identify any areas for improvement. Smooth operations are essential to maximizing revenue and building a reputable brand in the self-storage industry.

Legal Requirements and Regulations

When starting any business, it's important to understand the legal and regulatory requirements. For a self-storage facility, you'll need to research zoning laws to ensure you can operate a storage business on the property. There may also be permits, licenses, and inspections needed before opening. You'll also need to set up the proper business structure, tax registrations, and insurance for your company.

Consult with legal counsel to determine all requirements for your area. Regulations can vary in different cities and states, so get advice specific to your location. Failure to comply with regulations could result in legal trouble, fines, or even having to cease operations. It's worth the investment to do things properly from the beginning. Once you understand all the necessary requirements, you can proceed confidently knowing you built your business on a solid legal foundation.

Summary: How to Start a Successful Storage Business

Starting your own storage business can be a rewarding endeavor if you go in with a solid plan. Find a suitable property in an area with demand for storage units. Develop your facility by offering high-demand unit sizes and additional services that meet customers' needs. Price units competitively based on your costs and local market rates.

Market your business through channels like search engine optimization, social media, advertising, and community sponsorships. Focus on professional sales processes and strategies to maximize revenue from both new and existing customers. Run efficient operations by hiring good staff, optimizing move-ins/outs, billing properly, performing maintenance, controlling access, and prioritizing customer service.

Understand all legal requirements for permits, licenses, zoning, and business registration in your area. Regulations vary, so consult legal counsel for guidance specific to your location. By following industry best practices for starting and running a storage facility, you can build a successful self-storage business that generates consistent income and rewards you for years to come.