Start-up Funding | |
Start-up Expenses to Fund | $49,739 |
Start-up Assets to Fund | $1,004,748 |
Total Funding Required | $1,054,487 |
Assets | |
Non-cash Assets from Start-up | $986,748 |
Cash Requirements from Start-up | $18,000 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $18,000 |
Total Assets | $1,004,748 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $0 |
Long-term Liabilities | $691,487 |
Accounts Payable (Outstanding Bills) | $0 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $691,487 |
Capital | |
Planned Investment | |
Roger Black | $121,000 |
Sebastian Stote | $121,000 |
Daley Thompson | $121,000 |
Additional Investment Requirement | $0 |
Total Planned Investment | $363,000 |
Loss at Start-up (Start-up Expenses) | ($49,739) |
Total Capital | $313,261 |
Total Capital and Liabilities | $1,004,748 |
Total Funding | $1,054,487 |
All self-storage facilities that could be found in Westbury or the area bordering Westbury were surveyed with the following results:
Oliver St. Mini Storage | 5X10 | $48 |
– | 10X10 | $75 |
E-Z Mini Storage | 5X5 | $37 |
S. Centreport | 5X10 | $67 +$25 deposit |
Extra Space Storage | 5X5 | $49 + $9 fee |
– | 10X10 | $106 (second floor) |
– | – | $139 (ground floor) |
Washington | 8X6 | $50 |
47 State | 9X9 | $50 (second floor) |
Public Storage | 5X5 | $35 |
Merrick Road. | 5X10 | $55 |
– | 10X10 | $95 |
– | 10X15 | $129 |
– | 10X20 | $147 |
North Shore Self | 5X5 | $45 + $5 fee |
Storage | 5X10 | $70 (second floor) |
– | 10X15 | $130 |
U-Haul | 5X10 | $42.95 |
– | 10X10 | $95 |
Prices average at $1.20 per sq. ft. per month. Mean price is closer to $1.40.
In a similar split experienced by management’s existing storage facilities, Westbury Storage is expecting to rent 70% of its available units to non-commercial renters and the remaining 30% to the commercial sector of the market. A total of 300 self-storage units of various sizes will be created and offered for rent by Westbury Storage in a central location in downtown Westbury. The present supply of these units is insufficient to meet the demand as evidenced by a survey of all self-storage facilities within easy reach of Westbury residents. The price realized by these existing units is more than double the national average.
Self-storage units are needed by residential customers for storage of personal items as well as by commercial customers for storage of stock. It is envisaged that 70% of the planned self-storage units will be taken up by the residential segment of the market and the remaining 30% will be directed toward the commercial segment. This split is expected based on the existing customers of management’s present self-storage facilities in Plainview. The commercial segment are small businesses, many of which are run out of people’s homes such as an interior designer who needs space to store hundreds of expensive sample fabric books, or a retail shop with inadequate on premises storage.
The market research shows that the annual market potential for the commercial self-storage service in the Westbury area is about 10,000 customers. As stated above, these are mostly small businesses. The residential segment potential is substantially higher at 150,000 customers per year and is based on the Self Storage Association’s assumption that 40% to 55% of population has used self-storage facilities. This estimate includes individuals who need storage facilities due to moving arrangements or to store excess household property. Both of the market segments are expected to grow at a 5% annual rate. The table and chart below outline the market potential for the both customer segments.
Market Analysis | |||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
Potential Customers | Growth | CAGR | |||||
Commercial | 5% | 10,000 | 10,500 | 11,025 | 11,576 | 12,155 | 5.00% |
Residential | 5% | 150,000 | 157,500 | 165,375 | 173,644 | 182,326 | 5.00% |
Total | 5.00% | 160,000 | 168,000 | 176,400 | 185,220 | 194,481 | 5.00% |
Since the demand for local self-storage services substantially exceeds the local supply, Westbury Storage will simultaneously market its services to the two major customer segments–residential customers and small business customers. The company will not pursue large business segment due to the limited service scope it can provide to such customers at the existing facilities.
The market analysis shows that local self-storage rates are substantially higher than the national averages. Westbury Storage will position itself to the both customer segments as a conveniently located and affordable quality self-storage facility. Both customer segments will be effectively reached via the local Yellow Pages ads and through the referrals of Stote Movers owned by one of the Westbury Storage’s co-owners.
Customer needs in the self-storage industry have certain similarity across different market segments. The underlying need is for a reliable, safe, dry and accessible self-storage facility. Due to the overwhelming demand, customers are less price sensitive and consider convenient location as the major buying decision criterion.
Residential customers use self-storage facilities to temporarily store their property while moving to a new location. This need originates in the mobility of the American population and the affordability of rental accommodations. Such customers usually rent 25 to 100 square feet depending on the size of their household and they rent on a weekly or monthly basis. The other cluster of residential customers rents self-storage facilities for longer periods to keep their oversize property like boats or other equipment that either does not fit in their garages or is not used on a constant basis.
Small business customer segment requires self-storage facilities to temporarily store their stock or merchandise. These customers may use the storage facilities more often than residential customers and they benefit from convenient loading areas, extended operating hours and better equiped storage units of bigger size.
According to an article in the November 15th issue of Inside Self-storage the national industry average rental income generated by self-storage units is $6.00 per square foot per year, or $.50/sq. ft. per month. In the market to be served by Westbury Storage the average storage rate (see section on Competitive Comparison) is more than double this amount. Washington Storage in Westbury is a typical example. They charge $50/month for an 8X6 ft unit which works out to $12.50 per sq. ft. per year. A 9X9 unit on the second floor also rents for this same amount only because there is no elevator. All of their units are fully rented! All units within the area were surveyed. The average rate is $1.20/sq. ft. per month ($14.40 per year) and the mean was closer to $1.40/sq. ft. per month ($16.80 per year). The story concerning availability was uniform. Either the facility was full or only had one or two available units to chose from. E-Z Mini Storage in S. Centreport said, “There’s some turn-over at the end of every month. Leave your name and we will call you when one becomes vacant.” Extra Space Storage in Springfield said, “We need one week advanced notice.” North Shore Self-Storage said, “We have nothing available on the ground floor.” U-Haul reported, “We have one small unit available, otherwise we are all full.”
The self-storage industry really only started in the late 1960’s when a few far-sighted people recognized the growing need for residential and commercial storage. The industry has doubled in size each decade. Returns on investment have been very impressive–often twice that of other forms of real estate investment. The reasons for this have been the mobile society, the tendency to live in rental apartments, and the general increase in the accumulation of property, especially leisure articles such as skis, wind-surfers, exercise equipment, etc.
It could be argued that the higher than national average rates enjoyed by local self-storage facilities may not continue indefinitely, but there is no indication of any downward pressure at this time. It should also be pointed out that during an economic down-turn the self-storage industry does not suffer to the extent that other industries suffer.
Should the supply of self-storage units begin to outstrip demand, Westbury Storage should be well positioned to deal with the competition due to its ability to offer heated units (nearly all competing units are unheated) and its ability to supply electric outlets to individual units (for hobby/workshop purposes).
Although there are a few nation-wide players in the self-storage market, the industry is still fairly dispersed in which many small companies take part. (See the section on Competitive Analysis for a complete listing.)
Convenience is probably the single most import factor in the decision of where to rent a self-storage unit. For example, Hicksville and Huntington have no self-storage facilities. Residents choose to rent one in a nearby town probably based on proximity to the route taken by the renter to and from work. If no units are available nearby, then renters will travel further afield. Units on the ground floor are favored, especially if no elevator is available.
See the section on Competitive Comparison for names of competitors. In the present market situation, competition plays a very weak role.
The sales and marketing strategy is fairly simple by virtue of the fact that self-storage facilities are in short supply. Westbury Storage will simply have to inform the public of its existence by advertising in local newspapers, and by placing Yellow Pages ads.
Although the current local demand exceeds the supply and Westbury Storage will have no problems fully utilizing its capacity, the market situation may change in the future. The company will fully utilize its management’s seasoned experience in the storage business in order to establish a strong foothold in the local community. This will be reached by providing excellent service and offering extra service features like the heated and well-lit rental units, which will supplement the great location of the storage facility.
Most inquiries will come through the Yellow Pages ads. Proper telephone manners and professional handling of on-site inquiries are essential. Even though there is an excess of demand over supply, an unfriendly manager or clumsiness over the telephone will cause needless lost sales.
As is the case with the owners’ present self-storage facility in Plainview, many sales are directed through Stote Movers, who are in constant contact with people on the move and, therefore are most likely to require temporary storage.
Due to the fact that demand has been outstripping supply in this market, Westbury Storage may well be able to rent out all of its new units within the first year of operation. Prices paid for self-storage units reflect this strong market demand. The ground floor units will rent at $1.40 per sq. ft. per month and the upper floors, served by an over-sized elevator will rent for $1.20/sq. ft. per month. It is assumed that half of the units will rent in the first six months of operation. The second half of 1999 will see a further 25% of the total space rented, leaving the final 25% to be reached in the year 2000. Within these time spans, the growth, for projection purposes, will be assumed to be straight line, i.e. the first 50% of the total space will be reached in equal monthly increments during the first six months, and so forth.
The building measures 240 ft. X 80 ft. A section at one end (40′ X 80′ =3,200 sq. ft. per floor) will be reserved for future offices. This leaves total space dedicated to self-storage units of 48,000 sq. ft. (16,000 per floor). Some space is lost when the partitioning is done. Floor plan “D” suggests a way to partition an area 200 ft. X 40 ft. Doubled, this is exactly the space available in the Westbury building after deducting the office area. This 16,000 sq. ft. (200′ X 40′ X 2′) would be reduced somewhat to allow walkway/passages on the sides. So instead of 16,000 sq. ft. of rental space per floor, we would end up with about 15,000 sq. ft. Total self-storage net rentable space would be 45,000 sq. ft. The 15,000 sq. ft. on the ground floor would rent for $21,000 monthly and each of the other floors would rent for $18,000 each on a monthly basis.
Sales for the first month would be $4,750 (50% of total $57,000 divided by 6). The second month would have $9,500 in sales, etc.
Many self-storage companies charge administration fees to first-time customers. Deposits are also not uncommon. In addition to these sources of income, the sale of certain related items such as cardboard boxes, tape, packing materials, storage containers, plastic mattress covers, etc. can be substantial. However, for projection purposes, it is assumed that income from these sources will wash out any credit losses.
Sales Forecast | |||
Year 1 | Year 2 | Year 3 | |
Sales | |||
Unit Rentals | $320,625 | $605,625 | $684,000 |
Admin Fees | $0 | $0 | $0 |
Other | $0 | $0 | $0 |
Total Sales | $320,625 | $605,625 | $684,000 |
Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
Unit Rentals | $0 | $0 | $0 |
Admin Fees | $0 | $0 | $0 |
Other | $0 | $0 | $0 |
Subtotal Direct Cost of Sales | $0 | $0 | $0 |
An important strategic alliance is the common ownership connection to Stote Movers. By virtue of its contact with people changing addresses, Stote Movers is in a position to direct a lot of storage business to Westbury Storage.
The following table shows the milestones that Westbury Storage has established.
Milestones | |||||
Milestone | Start Date | End Date | Budget | Manager | Department |
Purchase Building | 6/1/1998 | 6/1/1998 | $550,000 | Black/Stote | Mngmt |
Elevator Contract | 7/1/1998 | 7/1/1998 | $89,760 | Black/Stote | Mngmt |
Conversion Contract | 7/1/1998 | 7/1/1998 | $300,000 | Black/Stote | Mngmt |
Opening Ads | 12/15/1998 | 12/15/1998 | $1,000 | Black/Stote | Mngmt |
Brochures/Stationery | 12/15/1998 | 12/15/1998 | $6,000 | Black/Stote | Mngmt |
Totals | $946,760 |
The management of Westbury Storage will rest with Roger Black and Sebastian Stote, both of whom are successful in the moving and self-storage industries.
Operating hours are planned to be 7 a.m. to 7 p.m. Monday through Friday and 9 a.m. to 5 p.m. on Saturdays. Westbury Storage will be closed on Sundays.
The manager will work a normal 40 hour week at an annual salary of $35,000. A maintenance man will be employed at a salary of $24,000. A night watchman will be employed at a salary of $24,000.
Personnel Plan | |||
Year 1 | Year 2 | Year 3 | |
Manager | $35,000 | $35,000 | $35,000 |
Maintenance Man | $24,000 | $24,000 | $24,000 |
Night Guard | $24,000 | $24,000 | $24,000 |
Other | $0 | $0 | $0 |
Total People | 3 | 3 | 3 |
Total Payroll | $83,000 | $83,000 | $83,000 |
A commercial loan needs to be negotiated to finance approximately 70% of the total project costs. A 15-year mortgage will be applied for with an 8.5% interest rate. First drawdown upon agreement of the seller and buyer concerning the terms of sale of the building. Last drawdown around the end of the year when all conversion to self-storage units should be completed. First repayment of principle is planned in April of 1999 with monthly installments of interest and principle to continue until the loan is fully repaid in 2013.
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 8.50% | 8.50% | 8.50% |
Long-term Interest Rate | 8.50% | 8.50% | 8.50% |
Tax Rate | 37.33% | 38.00% | 37.33% |
Other | 0 | 0 | 0 |
The following chart shows the benchmarks for Westbury.
The following table and chart show our Break-even Analysis.
Break-even Analysis | |
Monthly Revenue Break-even | $14,477 |
Assumptions: | |
Average Percent Variable Cost | 0% |
Estimated Monthly Fixed Cost | $14,477 |
Property taxes ($11,946) are projected at the actual rate of the tax year 7/1/96-6/30/97. Significant increases are not expected.
Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $320,625 | $605,625 | $684,000 |
Direct Cost of Sales | $0 | $0 | $0 |
Other | $0 | $0 | $0 |
Total Cost of Sales | $0 | $0 | $0 |
Gross Margin | $320,625 | $605,625 | $684,000 |
Gross Margin % | 100.00% | 100.00% | 100.00% |
Expenses | |||
Payroll | $83,000 | $83,000 | $83,000 |
Sales and Marketing and Other Expenses | $54,422 | $52,622 | $50,822 |
Depreciation | $15,000 | $15,000 | $15,000 |
Rent | $0 | $0 | $0 |
Leased Equipment | $0 | $0 | $0 |
Utilities | $10,800 | $10,800 | $10,800 |
Payroll Taxes | $10,500 | $10,500 | $10,500 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $173,722 | $171,922 | $170,122 |
Profit Before Interest and Taxes | $146,904 | $433,704 | $513,879 |
EBITDA | $161,904 | $448,704 | $528,879 |
Interest Expense | $58,776 | $58,776 | $58,776 |
Taxes Incurred | $34,658 | $142,472 | $169,905 |
Net Profit | $53,469 | $232,455 | $285,197 |
Net Profit/Sales | 16.68% | 38.38% | 41.70% |
The following chart and table represent the cash flow for Westbury Storage.
Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $320,625 | $605,625 | $684,000 |
Subtotal Cash from Operations | $320,625 | $605,625 | $684,000 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $0 |
Subtotal Cash Received | $320,625 | $605,625 | $684,000 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $83,000 | $83,000 | $83,000 |
Bill Payments | $149,735 | $271,974 | $298,696 |
Subtotal Spent on Operations | $232,735 | $354,974 | $381,696 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $232,735 | $354,974 | $381,696 |
Net Cash Flow | $87,890 | $250,651 | $302,304 |
Cash Balance | $105,890 | $356,540 | $658,845 |
The following table presents the balance sheet for Westbury Storage.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $105,890 | $356,540 | $658,845 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $105,890 | $356,540 | $658,845 |
Long-term Assets | |||
Long-term Assets | $986,748 | $986,748 | $986,748 |
Accumulated Depreciation | $15,000 | $30,000 | $45,000 |
Total Long-term Assets | $971,748 | $956,748 | $941,748 |
Total Assets | $1,077,638 | $1,313,288 | $1,600,593 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $19,421 | $22,617 | $24,724 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $19,421 | $22,617 | $24,724 |
Long-term Liabilities | $691,487 | $691,487 | $691,487 |
Total Liabilities | $710,908 | $714,104 | $716,211 |
Paid-in Capital | $363,000 | $363,000 | $363,000 |
Retained Earnings | ($49,739) | $3,730 | $236,185 |
Earnings | $53,469 | $232,455 | $285,197 |
Total Capital | $366,730 | $599,185 | $884,382 |
Total Liabilities and Capital | $1,077,638 | $1,313,288 | $1,600,593 |
Net Worth | $366,730 | $599,185 | $884,382 |
Business ratios for Westbury for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 4225, General Warehousing and Storage, are shown for comparison.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | n.a. | 88.89% | 12.94% | 4.70% |
Percent of Total Assets | ||||
Other Current Assets | 0.00% | 0.00% | 0.00% | 24.60% |
Total Current Assets | 9.83% | 27.15% | 41.16% | 46.00% |
Long-term Assets | 90.17% | 72.85% | 58.84% | 54.00% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 1.80% | 1.72% | 1.54% | 32.40% |
Long-term Liabilities | 64.17% | 52.65% | 43.20% | 29.60% |
Total Liabilities | 65.97% | 54.38% | 44.75% | 62.00% |
Net Worth | 34.03% | 45.62% | 55.25% | 38.00% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 100.00% | 100.00% | 100.00% | 100.00% |
Selling, General & Administrative Expenses | 82.72% | 61.12% | 57.95% | 82.90% |
Advertising Expenses | 1.74% | 0.62% | 0.29% | 0.30% |
Profit Before Interest and Taxes | 45.82% | 71.61% | 75.13% | 1.80% |
Main Ratios | ||||
Current | 5.45 | 15.76 | 26.65 | 1.35 |
Quick | 5.45 | 15.76 | 26.65 | 1.09 |
Total Debt to Total Assets | 65.97% | 54.38% | 44.75% | 62.00% |
Pre-tax Return on Net Worth | 24.03% | 62.57% | 51.46% | 3.50% |
Pre-tax Return on Assets | 8.18% | 28.55% | 28.43% | 9.30% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 16.68% | 38.38% | 41.70% | n.a |
Return on Equity | 14.58% | 38.80% | 32.25% | n.a |
Activity Ratios | ||||
Accounts Payable Turnover | 8.71 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 28 | 29 | n.a |
Total Asset Turnover | 0.30 | 0.46 | 0.43 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 1.94 | 1.19 | 0.81 | n.a |
Current Liab. to Liab. | 0.03 | 0.03 | 0.03 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $86,469 | $333,924 | $634,121 | n.a |
Interest Coverage | 2.50 | 7.38 | 8.74 | n.a |
Additional Ratios | ||||
Assets to Sales | 3.36 | 2.17 | 2.34 | n.a |
Current Debt/Total Assets | 2% | 2% | 2% | n.a |
Acid Test | 5.45 | 15.76 | 26.65 | n.a |
Sales/Net Worth | 0.87 | 1.01 | 0.77 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
Sales Forecast | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | |||||||||||||
Unit Rentals | 0% | $4,750 | $9,500 | $14,250 | $19,000 | $23,750 | $28,500 | $30,875 | $33,250 | $35,625 | $38,000 | $40,375 | $42,750 |
Admin Fees | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Other | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Sales | $4,750 | $9,500 | $14,250 | $19,000 | $23,750 | $28,500 | $30,875 | $33,250 | $35,625 | $38,000 | $40,375 | $42,750 | |
Direct Cost of Sales | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Unit Rentals | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Admin Fees | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Direct Cost of Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Personnel Plan | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Manager | 0% | $2,916 | $2,917 | $2,916 | $2,916 | $2,917 | $2,916 | $2,917 | $2,917 | $2,917 | $2,917 | $2,917 | $2,917 |
Maintenance Man | 0% | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 |
Night Guard | 0% | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 |
Other | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total People | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | |
Total Payroll | $6,916 | $6,917 | $6,916 | $6,916 | $6,917 | $6,916 | $6,917 | $6,917 | $6,917 | $6,917 | $6,917 | $6,917 |
General Assumptions | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Plan Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
Current Interest Rate | 8.50% | 8.50% | 8.50% | 8.50% | 8.50% | 8.50% | 8.50% | 8.50% | 8.50% | 8.50% | 8.50% | 8.50% | |
Long-term Interest Rate | 8.50% | 8.50% | 8.50% | 8.50% | 8.50% | 8.50% | 8.50% | 8.50% | 8.50% | 8.50% | 8.50% | 8.50% | |
Tax Rate | 30.00% | 38.00% | 38.00% | 38.00% | 38.00% | 38.00% | 38.00% | 38.00% | 38.00% | 38.00% | 38.00% | 38.00% | |
Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Pro Forma Profit and Loss | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | $4,750 | $9,500 | $14,250 | $19,000 | $23,750 | $28,500 | $30,875 | $33,250 | $35,625 | $38,000 | $40,375 | $42,750 | |
Direct Cost of Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Cost of Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Gross Margin | $4,750 | $9,500 | $14,250 | $19,000 | $23,750 | $28,500 | $30,875 | $33,250 | $35,625 | $38,000 | $40,375 | $42,750 | |
Gross Margin % | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | |
Expenses | |||||||||||||
Payroll | $6,916 | $6,917 | $6,916 | $6,916 | $6,917 | $6,916 | $6,917 | $6,917 | $6,917 | $6,917 | $6,917 | $6,917 | |
Sales and Marketing and Other Expenses | $4,535 | $4,535 | $4,536 | $4,535 | $4,535 | $4,535 | $4,536 | $4,536 | $4,534 | $4,535 | $4,535 | $4,535 | |
Depreciation | $1,250 | $1,250 | $1,250 | $1,250 | $1,250 | $1,250 | $1,250 | $1,250 | $1,250 | $1,250 | $1,250 | $1,250 | |
Rent | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Leased Equipment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Utilities | $900 | $900 | $900 | $900 | $900 | $900 | $900 | $900 | $900 | $900 | $900 | $900 | |
Payroll Taxes | 13% | $875 | $875 | $875 | $875 | $875 | $875 | $875 | $875 | $875 | $875 | $875 | $875 |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Operating Expenses | $14,476 | $14,477 | $14,477 | $14,476 | $14,477 | $14,476 | $14,478 | $14,478 | $14,476 | $14,477 | $14,477 | $14,477 | |
Profit Before Interest and Taxes | ($9,726) | ($4,977) | ($227) | $4,524 | $9,273 | $14,024 | $16,397 | $18,772 | $21,149 | $23,523 | $25,898 | $28,273 | |
EBITDA | ($8,476) | ($3,727) | $1,023 | $5,774 | $10,523 | $15,274 | $17,647 | $20,022 | $22,399 | $24,773 | $27,148 | $29,523 | |
Interest Expense | $4,898 | $4,898 | $4,898 | $4,898 | $4,898 | $4,898 | $4,898 | $4,898 | $4,898 | $4,898 | $4,898 | $4,898 | |
Taxes Incurred | ($4,387) | ($3,753) | ($1,947) | ($142) | $1,662 | $3,468 | $4,370 | $5,272 | $6,175 | $7,077 | $7,980 | $8,882 | |
Net Profit | ($10,237) | ($6,123) | ($3,177) | ($232) | $2,712 | $5,658 | $7,129 | $8,602 | $10,076 | $11,547 | $13,020 | $14,492 | |
Net Profit/Sales | -215.51% | -64.45% | -22.30% | -1.22% | 11.42% | 19.85% | 23.09% | 25.87% | 28.28% | 30.39% | 32.25% | 33.90% |
Pro Forma Cash Flow | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Cash Received | |||||||||||||
Cash from Operations | |||||||||||||
Cash Sales | $4,750 | $9,500 | $14,250 | $19,000 | $23,750 | $28,500 | $30,875 | $33,250 | $35,625 | $38,000 | $40,375 | $42,750 | |
Subtotal Cash from Operations | $4,750 | $9,500 | $14,250 | $19,000 | $23,750 | $28,500 | $30,875 | $33,250 | $35,625 | $38,000 | $40,375 | $42,750 | |
Additional Cash Received | |||||||||||||
Sales Tax, VAT, HST/GST Received | 0.00% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Investment Received | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Received | $4,750 | $9,500 | $14,250 | $19,000 | $23,750 | $28,500 | $30,875 | $33,250 | $35,625 | $38,000 | $40,375 | $42,750 | |
Expenditures | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Expenditures from Operations | |||||||||||||
Cash Spending | $6,916 | $6,917 | $6,916 | $6,916 | $6,917 | $6,916 | $6,917 | $6,917 | $6,917 | $6,917 | $6,917 | $6,917 | |
Bill Payments | $227 | $6,842 | $7,516 | $9,322 | $11,126 | $12,931 | $14,706 | $15,609 | $16,511 | $17,413 | $18,316 | $19,218 | |
Subtotal Spent on Operations | $7,143 | $13,759 | $14,432 | $16,238 | $18,043 | $19,847 | $21,623 | $22,526 | $23,428 | $24,330 | $25,233 | $26,135 | |
Additional Cash Spent | |||||||||||||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Spent | $7,143 | $13,759 | $14,432 | $16,238 | $18,043 | $19,847 | $21,623 | $22,526 | $23,428 | $24,330 | $25,233 | $26,135 | |
Net Cash Flow | ($2,393) | ($4,259) | ($182) | $2,762 | $5,707 | $8,653 | $9,252 | $10,724 | $12,197 | $13,670 | $15,142 | $16,615 | |
Cash Balance | $15,607 | $11,348 | $11,166 | $13,928 | $19,635 | $28,289 | $37,541 | $48,265 | $60,462 | $74,132 | $89,275 | $105,890 |
Pro Forma Balance Sheet | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Assets | Starting Balances | ||||||||||||
Current Assets | |||||||||||||
Cash | $18,000 | $15,607 | $11,348 | $11,166 | $13,928 | $19,635 | $28,289 | $37,541 | $48,265 | $60,462 | $74,132 | $89,275 | $105,890 |
Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Current Assets | $18,000 | $15,607 | $11,348 | $11,166 | $13,928 | $19,635 | $28,289 | $37,541 | $48,265 | $60,462 | $74,132 | $89,275 | $105,890 |
Long-term Assets | |||||||||||||
Long-term Assets | $986,748 | $986,748 | $986,748 | $986,748 | $986,748 | $986,748 | $986,748 | $986,748 | $986,748 | $986,748 | $986,748 | $986,748 | $986,748 |
Accumulated Depreciation | $0 | $1,250 | $2,500 | $3,750 | $5,000 | $6,250 | $7,500 | $8,750 | $10,000 | $11,250 | $12,500 | $13,750 | $15,000 |
Total Long-term Assets | $986,748 | $985,498 | $984,248 | $982,998 | $981,748 | $980,498 | $979,248 | $977,998 | $976,748 | $975,498 | $974,248 | $972,998 | $971,748 |
Total Assets | $1,004,748 | $1,001,105 | $995,596 | $994,164 | $995,676 | $1,000,133 | $1,007,537 | $1,015,539 | $1,025,013 | $1,035,960 | $1,048,380 | $1,062,273 | $1,077,638 |
Liabilities and Capital | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Current Liabilities | |||||||||||||
Accounts Payable | $0 | $6,593 | $7,207 | $8,953 | $10,697 | $12,442 | $14,187 | $15,059 | $15,932 | $16,803 | $17,676 | $18,548 | $19,421 |
Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $0 | $6,593 | $7,207 | $8,953 | $10,697 | $12,442 | $14,187 | $15,059 | $15,932 | $16,803 | $17,676 | $18,548 | $19,421 |
Long-term Liabilities | $691,487 | $691,487 | $691,487 | $691,487 | $691,487 | $691,487 | $691,487 | $691,487 | $691,487 | $691,487 | $691,487 | $691,487 | $691,487 |
Total Liabilities | $691,487 | $698,080 | $698,694 | $700,440 | $702,184 | $703,929 | $705,674 | $706,546 | $707,419 | $708,290 | $709,163 | $710,035 | $710,908 |
Paid-in Capital | $363,000 | $363,000 | $363,000 | $363,000 | $363,000 | $363,000 | $363,000 | $363,000 | $363,000 | $363,000 | $363,000 | $363,000 | $363,000 |
Retained Earnings | ($49,739) | ($49,739) | ($49,739) | ($49,739) | ($49,739) | ($49,739) | ($49,739) | ($49,739) | ($49,739) | ($49,739) | ($49,739) | ($49,739) | ($49,739) |
Earnings | $0 | ($10,237) | ($16,359) | ($19,537) | ($19,769) | ($17,056) | ($11,398) | ($4,269) | $4,333 | $14,409 | $25,956 | $38,976 | $53,469 |
Total Capital | $313,261 | $303,024 | $296,902 | $293,724 | $293,492 | $296,205 | $301,863 | $308,992 | $317,594 | $327,670 | $339,217 | $352,237 | $366,730 |
Total Liabilities and Capital | $1,004,748 | $1,001,105 | $995,596 | $994,164 | $995,676 | $1,000,133 | $1,007,537 | $1,015,539 | $1,025,013 | $1,035,960 | $1,048,380 | $1,062,273 | $1,077,638 |
Net Worth | $313,261 | $303,024 | $296,902 | $293,724 | $293,492 | $296,205 | $301,863 | $308,992 | $317,594 | $327,670 | $339,217 | $352,237 | $366,730 |
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Have you ever found yourself surrounded by a lot of stuff and wondered where to place those extra furniture or boxes of memories?
But you’re not alone; there are so many individuals who can’t get enough of all their belongings. And that’s where self-storage comes into the picture!
The self-storage facility stores people’s stuff by charging some rental fees. It offers a secure haven for your cherished items, from lockers to outdoor spaces.
Surprisingly, if you are planning to start a new self-storage or warehouse business, you will need a solid business plan for a successful business.
So, we have created this sample business plan for you to get a better idea about how a business plan should look and what details you have to include in your self-storage unit business plan.
But before diving right into a detailed business plan, let’s consider a few things you need to understand.
As per statistics, the global self-storage market is projected to reach an astonishing value of $71.37 billion by 2027, with a CAGR of 5.65% from 2021 to 2027.
The primary reason for this rapid market growth is due to the increasing need for commercial and residential storage.
The self-storage companies provide secure spaces and various storage unit types such as containers, compartments, lockers, and outdoor spaces. So that, customers can safely store and retrieve their belongings anytime.
In fact, the self-storage industry has been the fastest-growing sector in commercial real estate since it started in the 1960s.
And the cool part is that self-storage unit operators don’t need a ton of staff, utilities, or maintenance. So, it makes sure that your self-storage facilities earn substantial profits.
Now that you know a little about the industry, it’s time to discover what to include in your self-storage business plan.
An executive summary is a brief overview of your entire business plan. Although it is the first section of the plan, entrepreneurs write it at the last when the whole plan is ready.
This section highlights the most important points, from business concept and mission-vision statements to financial outlook.
You may start this section with a compelling introduction to your self-storage business, including the business name, owners, location, and type of business you are running.
Give a brief overview of your market opportunity, service offerings, management team, and marketing strategies. Highlight financial projections if you’re seeking funding.
Most of the readers will go through the executive summary before making a judgment. So, make sure to keep it clear, concise, and engaging to grab readers’ attention.
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The company overview section is a detailed description of your business, including the business idea, name, location, future goals, history, and other business-related facts.
This section helps you provide an in-depth understanding of your business, introducing and positioning your business as an ideal solution for your target audience. So, write it in a clear and concise yet impactful way.
First, you may discuss the basic details of your storage facility and what type of storage business you are operating. It could be a warehouse, portable containers, vehicle storage, lockers, climate-controlled storage, etc.
Have a look at Maxwell’s business introduction written using Upmetrics AI Assistant :
Apart from that, your company analysis section should include the following information:
The industry analysis section is an overview of the specific industry and market. It supports you in a better understanding of the external business environment.
While it seems unnecessary, it helps you develop strategies that maximize business opportunities and lower potential risks.
By doing thorough research, you may learn a lot about the storage industry and the market that you will serve. And this will show your readers that you are an industry expert.
So, start this section with a quick introduction to the self-storage industry. Describe the self-storage business in terms of size(in dollars) and mention whether the market is falling or growing in the USA.
You may conduct detailed market research to examine previous trends and market growth potential. This helps you identify the top competitors in the industry and their market shares.
Don’t forget to highlight a few factors that affect the industry, including regulatory rules, market trends, and other businesses’ competitive activities .
The customer analysis section of your self-storage business plan provides the details of the customers you serve or intend to serve.
It helps you identify your target customers, evaluate their needs, and explain how your services cater to them.
You may consider some examples of customer segments, such as business owners, families, individuals who are relocating, and students. Try to break your target market in terms of their psychographic and demographic profiles.
For a demographic profile, you should include details of the age, gender, location, and income level of the customers. Most self-storage facilities mainly serve customers staying in the same town or city.
You may explain the target customers’ wants and needs for demographic profiles. If you properly understand these demands, it will help you attract and retain customers.
You may refer to the below example written from Upmetrics’ self-storage business plan:
Target Market of Maxwell – Storage and Warehouse
We are aware of the fact that for any business to thrive so well in profit, it has to first and foremost define its market. The target market for self-storage and warehouse facilities cuts across people from different walks of life.
The fact that people need a secure place to keep their properties for a short period of time makes the self-storage and warehouse rental business a thriving and growing business.
Maxwell – Storage and Warehouse, LLC will work towards providing services, facilities, and an environment that will help us reach out to our target market. These are the categories of people that we intend to market our self–storage and warehouse facility to:
Competitive analysis is essential to recognize key competitors within the industry, including direct and indirect competitors.
Also, this section will help you know your storage business’s unique selling propositions along with market positioning.
You may start by identifying direct and indirect competitors & other alternative self-storage companies in the industry.
Direct competitors can be other self-storage facilities that provide the same self-storage services as yours. While indirect competitors can be other options or storage businesses with their own storage space.
After specifying such competition, you need to focus more on your direct competitors. Such self-storage facilities are the most threatening to your self-storage company.
Describe an overview of their businesses. Describe their strengths & weaknesses and try to find out key things like:
After conducting the above analysis, understand the areas of competitive advantage. For instance, consider your superior self-storage services, unique offerings, better prices, and excellent customer service.
You may perform a SWOT analysis like below to get your storage business’s strong points.
Your business’s marketing plan provides a detailed outlook of sales strategies and promotional techniques you will use to reach your target audience.
It will help you streamline your marketing efforts and create impactful marketing campaigns to acquire new customers and retain existing ones.
Here are some of the sales and marketing strategies for your self-storage company:
Specify the USPs that sets your self-storage facility apart from other self-storage businesses. Emphasize a few aspects such as quality services, security features, competitive pricing, etc.
For a successful self-storage business, social media engagement can be very helpful. Use popular social media platforms to target specific audiences. Create visually appealing ads and content to drive traffic.
Establish collaborations with local businesses to promote your storage facilities and generate referrals. This can benefit your self-storage company and local partners.
Having a website can establish a strong, professional brand and help you reach a wider audience. Showcase all your storage services on the website and consider the online reservation procedure.
Try to retain existing customers with the help of loyalty programs, special offers, and referral incentives. This can encourage your customers to refer new clients.
The operations plan chapter outlines the daily processes and activities centered on achieving the business objectives mentioned in the earlier sections.
A detailed operations plan helps you and your team define responsibilities, daily tasks, and short-term goals you need to accomplish, keeping track of your long-term objectives.
So, briefly discuss operational planning, highlight how it directly impacts the quality of services, and pique the reader’s interest.
Here are a few key elements to add to this section:
Describe your staffing plan, prioritize training programs, and foster a collaborative work environment for smooth administrative processes and excellent customer service.
Consider including security systems to provide the highest level of security for storage units. Also, mention regular maintenance checks to keep the condition and cleanliness of the facility.
Describe the technology and software you use to easily reserve, access, and manage storage units. This will enhance your customer service and contribute to effective business operations.
As the name suggests, the management team section introduces the owners and key managers, along with their roles & responsibilities, qualifications, work experience, and compensation plan.
A strong management team is essential to weigh authority and helps potential investors to be confident about your storage company’s idea and vision.
You may start this section with an introduction of the storage owner and team members, including the facility manager, admin & HR manager, sales & marketing executive, accountant, customer care executive, or front desk officer.
Highlight their responsibilities, industry experience, educational background, and skills that can benefit your business. For a better understanding, you may refer to the below example:
You might include an organizational structure that depicts the reporting lines and the flow of the decision-making hierarchy. Also, discuss the compensation plan for each individual, part of your management.
If you have any advisory board members, mention them and emphasize their experience in managing self-storage companies or small businesses.
The financial plan is the most important and demanding aspect of business planning.
When it comes to convincing potential investors and banks to invest in your business or lend money, a financial plan is one of the crucial factors.
This section of your plan describes your self-storage facility’s financial information and how it will achieve its financial goals or how much revenue potential it has.
Here are a few essential elements and financial statements you must add or provide while making a financial plan:
An income statement is generally called a profit and loss(P&L) statement. It defines the revenue and then deducts your self-storage operating expenses to show your gross profitability.
For this, you have to make practical assumptions that help you measure the actual profit margin of your business. Here’s an example of a projected profit and loss statement for 3 years:
A balance sheet helps you show your assets and liabilities. While it includes a lot of information, you may simplify it to highlight the most important details, like equity, goodwill, debt ratio, or other intangible assets.
Your cash flow statement helps you determine how much money you need to start a new self-storage business or grow an existing facility. It also makes sure that you never run out of money.
Once your business is started, you should maintain these cash flow projections even for certain months before you start making profits.
Well, in most cases, you earn profits but still face financial problems that could lead you to bankruptcy. So, you will need proper cash flow planning to avoid such possibilities.
You can access different funding sources to support your self-storage startup or expansion efforts. Here are some common sources to get funding from:
Many entrepreneurs use personal savings as initial capital for starting a self-storage business without attracting investments or borrowing money from banks.
After deciding how much money you’ll need to start a business, you may ask family & friends to invest in your self-storage business. Show a solid business plan to the interested ones and assure them that they will make a profit.
The most common source of funding is to cover startup costs and self-storage facility expenses. However, banks will ask for a professional self-storage business plan to make sure that you’ll be able to pay money back with interest.
Bring in some external capital by seeking investors or partnering with individuals or businesses interested in your self-storage industry.
Apart from the above, you may explore other funding sources for your self-storage business:
Are you ready to start writing your self-storage business plan? Here you go; download our free self-storage business plan pdf to get started.
It’s a modern business plan template specifically designed for your storage business. Use this sample business plan as a guide for creating your own plan.
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No doubt, creating a comprehensive business plan is daunting; but it’s a lot smoother with the help of Upmetrics! It offers easy-to-follow steps, 400+ sample business plans, and AI support that will serve you perfectly.
If you are not good enough at finances, our financial forecasting tool will help you create realistic financial forecasts for 3 or more years.
Whether you’re venturing into a new business or aiming for expansion, Upmetrics provides valuable resources to create successful, professional business plans.
So, what are you waiting for; start planning now!
Frequently asked questions, what are the key components of a self-storage business plan.
A successful self-storage unit business plan involves the following key components:
Depending on the location, size of the self-storage units, and operational efficiency, the average profit margin for self-storage facilities may range from 30 to 50%.
A self-storage unit business should consider various legal and regulatory aspects:
The capital required to start a self-storage business may differ widely. On average, the startup costs can range between $500,000 to $1 million for a small self-storage facility, while larger facilities need the initial capital of several million dollars.
There are various types of self-storage units, including:
About the Author
Vinay Kevadiya
Vinay Kevadiya is the founder and CEO of Upmetrics, the #1 business planning software. His ultimate goal with Upmetrics is to revolutionize how entrepreneurs create, manage, and execute their business plans. He enjoys sharing his insights on business planning and other relevant topics through his articles and blog posts. Read more
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Our Comprehensive Guide to Launching a Profitable Self-Storage Rental Unit Business in 2023
We’re about to dive deep into the thriving, fast-paced world of the self storage business.
Believe it or not, this under-the-radar sector of commercial real estate has been steadily growing, churning out a staggering $39 billion in annual revenue as of 2023, with the U.S. leading the charge. It’s a veritable gold rush, and it’s time you staked your claim.
So, you might be thinking, “That sounds great, but how do I start a self-storage business?”
Don’t worry, we’ve got your back.
In This Article
Brand awareness, customer service, property selection, getting to grips with the landscape of the mini storage unit business, identifying the key drivers of demand when starting a self-storage business, licenses and permits, zoning laws, business structure, average occupancy and facility size, construction costs, technology and operations, revenues and profit margins, startup costs, financing options, establish a strong brand identity, build a robust online presence, implement a referral program, collaborate with local businesses, deciphering the average cost, implementing a pricing strategy, the most in-demand cities for self storage units, revenue generation, wrapping up: starting and running a successful self storage business – a recap, self-storage keys to success.
Adapt your storage unit prices to the ever-changing demand in your local market.
Integrate your company into the community and make sure residents know who you are!
Meet your customer’s needs to reduce turnover and increase word-of-mouth advertising.
Find land that is affordable, yet accessible. Work with a real estate agent to identify the best fit.
This comprehensive guide is packed to the brim with all the crucial information you’ll need. From breaking down financial projections to unraveling the complexities of operational strategies, and even unveiling insights from industry case studies, we’ve left no stone unturned.
After navigating through this guide, you won’t just understand the ins and outs of how to kick-start a storage business, you’ll be pumped and ready to plunge into your very own storage unit venture.
So, are you ready to turn the key and open the door to your future in the self storage business?
Let’s hit the ground running!
Let’s flip the lid and take a peek at the vast expanse of the self-storage industry. Now, if you’re wondering whether there’s room for one more in this arena, let’s crunch some numbers. As of 2023, this buzzing beehive of a business is generating a hefty $39 billion in annual revenue right here in the U.S. alone. That’s no small change, my friends! And get this, the U.S. is not just playing in the big leagues, it’s practically owning the entire stadium, accounting for 90% of the global self-storage inventory.
But what about the competition, you ask? Well, there’s no sugarcoating it – the storage business is a bustling marketplace. With over 182,000 storage businesses operating nationwide, you’re certainly not alone. But don’t let that intimidate you! This number also serves as a testament to the industry’s robust nature and the vast demand for storage space.
Annual Revenue (U.S) | $39 billion |
Global Self Storage Inventory (U.S Share) | 90% |
Operating Storage Businesses (Nationwide) | 182,000+ |
The beauty of the storage unit business lies in its versatility. From folks looking to declutter their homes to businesses in need of extra space storage, there’s a demand across the board. And that’s precisely what makes this business such a good bet. It caters to a need that’s not going away anytime soon.
Starting a self storage business may seem like a daunting task, but with the right plan, resources, and a dash of entrepreneurial spirit, it’s a mountain you can conquer. So, are you ready to ride this wave and make your mark in the storage industry? Let’s roll up those sleeves and get down to business!
Now, let’s get down to brass tacks and look at who is driving the demand in the mini storage business. As a potential new business owner, understanding consumer demand is the compass that’ll guide your storage unit business towards success. Here’s a snapshot of the movers and shakers in the storage market:
It’s clear as day that the storage business is not a one-size-fits-all kind of deal. The key to running a successful storage business lies in understanding the unique needs of these consumer groups and tailoring your services to meet them. And with the right approach, you could be well on your way to turning your business idea into a thriving self-storage business in 2023!
When you’re ready to start your mini storage business, it’s crucial to get your ducks in a row when it comes to legal and regulatory requirements. It might seem like you’re jumping through hoops, but each step is essential for getting your business off the ground and avoiding potential hiccups down the line. Here’s a breakdown:
Every business, including a storage facility, requires specific licenses and permits to operate legally. Typically, you’ll need a general business license, but depending on your location and the nature of your business, additional permits may be required. For instance, if your self-storage unit business plans on offering RV storage, you might need extra permits. Remember, it’s important to register your business and open a business bank account to keep your finances in order.
Do you know the saying, “location, location, location”? Well, it’s not just about finding a spot with high demand. Zoning laws can dictate what type of business you can run in certain areas. These laws vary widely, so you’ll need to check with your local planning or zoning department to ensure your storage facilities are in compliance.
Here’s the deal: starting a self-storage business in 2023 without the right insurance policies is like walking a tightrope without a safety net. Different types of insurance, such as property insurance, liability insurance, and workers’ compensation insurance, will protect your business from potential financial losses. It’s also worth considering specialized insurance that covers customers’ belongings in storage.
Deciding on your business structure isn’t just a box to tick—it’s a decision that can impact your business in many ways, from how much you pay in taxes to your personal liability. You can choose to set up as a sole proprietorship, partnership, corporation, or Limited Liability Company (LLC). Each type of business entity has pros and cons, so it’s essential to get advice from a professional or the Small Business Administration.
Starting a storage business involves more than just renting out storage units—it requires a good understanding of the legal and regulatory landscape. However, with a little bit of elbow grease and the right guidance, you can navigate these waters and launch your business with confidence.
Starting a mini storage business is no small task—it requires careful planning and efficient operations management. It’s not just about having space; it’s about making the best use of that space and providing exceptional customer service. To give you an idea of what you’re stepping into, here’s a bit of data and a few considerations for you.
If you’re thinking about starting a storage company, the numbers are promising. In the U.S., the average occupancy rate for storage facilities sits at an impressive 96.5 percent.
96.5% | 56,900 square feet |
When it comes to facility size, the average mini storage facility in the U.S. covers approximately 56,900 square feet. This doesn’t mean your facility must fit this mold—it’s just the average. Your facility size will depend on factors like location, demand, and your business plan.
When it comes to construction costs, figures can range from $1.25 million to $3.5 million. The costs can vary depending on factors like location, land cost, facility size, and construction materials.
$1.25 million | $3.5 million |
Remember, starting a business is an investment, and the initial costs can be steep. However, with the right planning, management, and a good business loan, you can navigate these costs and set up a profitable storage unit business.
In today’s digital age, the incorporation of technology into your storage business operations is more of a necessity than a luxury. There’s a wealth of management software and online booking systems available that can streamline your operations and enhance the customer experience. Consider the following:
Starting a self storage business might seem daunting, but with the right planning and a clear understanding of the industry, it’s a journey you can confidently embark on. Remember, every business requires dedication and hard work—yours will be no exception. So, are you ready to take the leap?
Money makes the world go ’round, and it certainly sets the wheels in motion for your storage business. Understanding the financial aspects, from revenues and profit margins to startup costs and financing options, is crucial. So let’s dive into the numbers, shall we?
Let’s talk earnings. The average annual revenue for a self-storage business is about $450,000, boasting a healthy profit margin of 41%.
$450,000 | 41% |
These figures can vary based on factors like location, unit sizes, number of units, and additional services you may offer. So, while you might start a bit lower as a newcomer, with strategic planning and excellent customer service, there’s potential for growth.
The start-up cost for a mini storage business can seem a tad intimidating, ranging from $1.5 million to $2.4 million, averaging around $2 million. These figures account for land acquisition, construction, operational setup, and initial marketing efforts.
$1.5 million | $2.4 million | $2 million |
While it might seem like a lot, remember that starting a business is a significant investment. It’s about putting in the capital now to reap the benefits later.
With numbers like these, it’s no wonder you might be considering financing options. One viable route is through SBA (Small Business Administration) loans. These loans are designed to help entrepreneurs like you get their dreams off the ground.
Remember, it’s crucial to have a solid business plan when applying for these loans. The lenders want to see that you’ve thought things through and have a plan for making your business profitable.
The journey of starting a self storage business might seem daunting, especially when you’re staring at these numbers. But don’t let it deter you. With the right planning, a clear understanding of your costs, and the help of financial tools, you’re one step closer to opening for business. Remember, every successful business started with someone taking that first daunting step. Are you ready to take yours?
In a world where competition is fierce and standing out is vital, setting up a winning marketing and customer acquisition strategy for your storage business is a must. From brand identity to digital marketing, let’s roll up our sleeves and dive into the nuts and bolts of getting your business noticed and attracting customers.
A strong brand identity sets your business apart from the competition. This goes beyond just your business name. It includes everything from your logo and tagline to your company’s mission and values.
In 2023, your digital footprint matters more than ever. From your website to social media, make sure your self-storage company is easy to find and hard to forget.
Word-of-mouth is a powerful marketing tool. Implement a referral program that incentivizes your existing customers to refer their friends and family.
Build relationships with local businesses and explore potential collaboration opportunities.
Last but not least, invest in advertising. This can range from traditional methods like print ads and billboards to digital advertising like Google Ads or social media promotions.
Starting your self-storage business involves many moving parts, and marketing and customer acquisition are crucial pieces of the puzzle. Implementing these strategies will help you attract and retain customers, ensuring your business doesn’t just survive, but thrives in the competitive storage industry. Ready to make your mark?
Taking the plunge into starting a storage business can be a lucrative venture, but let’s not skip over the crucial aspect of pricing and revenue generation. After all, a well-thought-out pricing strategy could be the difference between a storage facility that’s half-empty and one that’s making bank.
The price is a major determinant for customers choosing between different storage companies. As of 2023, the average monthly cost for a storage unit is a cool $100.04. Now, you might be wondering, “How much does it cost to provide these storage units?” Well, that’s where your cost analysis comes in. It’s vital to consider expenses like maintenance, security, and overhead when setting your prices.
For a mini storage business, utilizing market-based and target-based pricing approaches can help you set competitive and profitable unit prices.
This approach involves setting your prices based on the going rate in your specific market. It’s a simple concept – you’re essentially pricing your units similar to (or slightly lower than) your competitors to attract customers. However, it’s vital that you’re still covering your costs and securing a profit.
Target-based pricing, on the other hand, is when you price your units based on the profit margin you aim to achieve. You calculate this by adding your desired profit to the cost of running a storage unit. This approach requires a solid understanding of both your costs and the value your customers place on your service.
While Houston, TX, holds the crown as the most in-demand city for self storage units, it’s not the only city with a buzzing market. The demand for storage units varies greatly from city to city, often in line with factors such as population growth, real estate trends, and local economic conditions. Below is a table highlighting the top five cities in the U.S. for self-storage demand and their average monthly prices.
Houston, TX | $87.27 |
Los Angeles, CA | $112.35 |
New York, NY | $176.42 |
Dallas, TX | $91.87 |
Chicago, IL | $98.73 |
The City of Angels comes in second place, with an average monthly price of $112.35 for a unit. Given its dense population and high real estate prices, it’s no surprise that people in LA are turning to self-storage as a space-saving solution.
With space at a premium in The Big Apple, New Yorkers are willing to pay an average of $176.42 per month for storage. This city is a prime example of high demand driving up prices in the storage industry.
Texas makes the list again with Dallas, where the average price for a storage unit is $91.87 per month. The city’s growth, combined with a strong economy, has led to an increased demand for storage units.
Chicago, the Windy City, rounds out our top five with an average monthly storage unit price of $98.73. Like the other cities on this list, Chicago’s dense population and urban living conditions contribute to the demand for storage facilities.
Aside from rental income from your storage units, there are other revenue streams to tap into:
It’s worth noting that running a self-storage business requires a keen understanding of your local market and a flexible approach to pricing. Keep an eye on your competitors, stay aware of the need for storage in your area, and adjust your pricing strategy as necessary to keep your business thriving. Remember, starting a self storage business is not just about providing space – it’s about offering a service that meets your customers’ needs at a price they’re willing to pay.
As we wrap up this guide on how to start a self storage business, it’s clear that the storage industry presents a significant business opportunity. With the average occupancy rate of self storage facilities standing at an impressive 96.5% and a robust annual revenue, it’s no wonder entrepreneurs are drawn to starting such a business. However, running a storage business requires a comprehensive understanding of the market, strategic planning, and a credible business plan to ensure success.
When considering the cost to launch a self storage business, it’s crucial to factor in both the initial construction or acquisition costs and the ongoing operational expenses. Remember, there are various ways to open a storage business, each with their pros and cons. For those starting with no money, options like small business loans and other financing alternatives can make your business dreams a reality.
The key to a successful self storage company in 2023 and beyond will be in offering competitive rental storage rates, providing excellent customer service, and staying ahead of the technological curve. The storage market is evolving, and those who adapt will thrive. Don’t forget, the location of your storage units plays a crucial role in your business’s potential success, with cities like Houston, Los Angeles, and New York being particularly in-demand.
In conclusion, starting your own self-storage business is one venture with immense business potential. However, you need to know the ins and outs, from average storage unit prices to ways to generate business income. With this guide as your starting point, you’re well on your way to carving out your own corner in the storage industry. Go ahead, learn how to start, run the business like a pro, and get ready to open for business!
LaunchKit Founder
Tim loves building businesses and has a long history of buying, developing, and selling them successfully. He was featured on Entrepreneur.com as a top online entrepreneur and has now dedicated his career to helping others launch their own business in pursuit of personal and financial freedom.
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October 13, 2022
Adam Hoeksema
IBIS World gives us a general insight into the $23 billion a year self-storage and warehouse leasing industry raging in the US. Over 182,000 businesses have opened nationwide to take their share of the pot. Increasing in both 2020 and 2021, despite the pandemic, profit is expected to reach the highest share of revenue since 2002 with a growth of 2.5% every year.
The average profit for a storage unit business owner is $184,500 annually. Of course the potential profit for any specific storage unit facility will depend on the size of the facility, the market rate for rent in the area, and the operating efficiency of the business. We estimated the annual profit of $184,500 by taking the average storage unit facility size of 50,000 square feet x the average annual rental rate of $9 per square foot = $450,000 in annual revenue. Then taking a profit margin of 41% gives us a forecasted annual profit of $184,500.
We will dive into the sources for these assumptions and the ranges in revenue and profit margins in the article below, and show you how to use our templates to create your own projections. We have three templates that I will reference throughout the article:
Such promising revenue numbers beckon forward when it comes to making the decision to start such a business. Let’s review some of the most common steps needed for a successful and profitable business.
The average cost to start a self storage unit business is $2 million.
Three sources ( Storable , LovetoKnow , MakoSteel ) give us estimated startup costs of starting a new self-storage unit business.
The majority of the expenses incurred during the startup process fall into the following categories:
The average size of a storage unit facility in the US is 56,900 square feet according to Easy Storage Solutions . For easy math throughout this article we will use a 50,000 square foot facility as an example.
The layout of your storage facility is going to be determined based on the land that you have. Details around road access, drainage, zoning, etc. The cost of your land and location will also determine whether you are building a multi story storage facility or spreading out the units on the same level. Obviously the construction cost per unit will be more expensive if you build a multi-story facility, but if the land is expensive or you are landlocked your only option may be to build up. Ultimately the goal of your layout will be to maximize your rentable square feet of storage space.
Once you have solidified your facility layout that will maximize your rentable square feet, next you need to determine what your self storage unit mix should be.
On average you can fit between 130 and 215 storage units per acre assuming a 10 ft x 10 ft “standard” unit.
We were able to calculate this based on the following assumptions:
Of course if your average storage unit is larger than 100 square feet you will be able to fit fewer units per acre.
According to a survey of 10,000 storage unit facilities the average number of storage units per facility was 546.
There is not a one size fits all unit mix when it comes to self storage facilities. Although you might be able to charge a higher rate per square foot if you had all very small units, the reality is that your customers will need a more diverse mix of storage units. If your target market is in the city, and your customers are typically in small apartments, then you might need more small storage units. If you are located in a suburban area where the average home is 4,000 square feet, you are likely going to have more customers that need a larger unit.
According to Inside Self Storage the average unit mix for self storage is as follows:
Unit Type | Unit Size | Unit Mix Percentage |
---|---|---|
Small | 5 x 10 sq ft | 15% |
Medium | 10 x 10 sq ft | 40% |
Large | 10 x 15 sq ft | 25% |
Commercial - Small | 10 x 20 sq ft | 10% |
Commercial - Large | 10 x 25 sq ft | 5% |
Other | Other | 5% |
The average cost to construct a storage unit facility can range from $1.25 million to $3.5 million. We estimate this range based on an average size 50,000 square foot facility and a construction cost of $25 to $70 per square foot based on information provided by Storable . This does not include the cost of the land or other operational startup costs.
Our self storage developer template will allow you to build a construction budget for your self storage facility as seen below:
Rather than spending $1.25 to $3.5 million to build a new storage unit facility, you might want to consider acquiring an existing storage facility . Although an existing facility would be older and might require some additional repairs and maintenance, if the facility is already fully operational and leased up with tenants, you will be able generate positive cash flow faster. It can take 2 to 4 years to reach a stabilized occupancy rate for a new 50,000 square foot storage unit facility, so acquiring an existing facility with tenants can really speed things along.
You can find hundreds of self storage facilities for sale on LoopNet .
One of the great things about our self storage financial models is that they will allow you to easily compare the differences between acquiring an existing facility versus constructing a new storage facility. You can enter assumptions about the purchase price or construction price into the model, details about financing, and the number of units available to rent.
Bonus Video Content - How to Acquire a Storage Unit Facility .
The potential revenue for any business varies due to a number of factors. The size of the self-storage facility, whether it’s one or two floors, the market need for storage in the area, and how many units are likely to get rented at any time.
The price of each unit is the key to running a successful business and making a profit. The revenue potential is held within this business element. There are two approaches to setting the right price.
A quick and simple approach to setting a price is completing market research. Staying competitive in the market can make all the difference and it’s not time-consuming. Search engines provide quite a bit of information on prices in the same area.
This approach will require more work than the first, but it has an end goal in mind. Rather than setting the price to match those of competitors, you work to set the price of potential gross profit margin.
The typical profit margin of a self-storage business, according to Storable , is around 41%. Target-based pricing means setting the price in such a way that you’ll meet that goal. According to QT Business Solutions , there are around $3 in operating expenses for every raw square footage of the facility.
Calculating the amount to charge per storage unit will depend on a couple of factors. For example, you’ll need the exact amount of square footage of the facility and the sizes of the units, and their number. Once you have the information, you can double any potential expenses to get to the required revenue to meet at least the 41% profit, unless you are aiming higher.
The average rent per square foot for self storage space in the US was $1.28 in 2022 according to Statista . Although this is the average, the rate that you will be able to charge is going to differ based on your location. Additionally, the rate per square foot for self storage units is related to the size of the units that you are renting. You can check out SpareFoot for the most up to date rent per square foot data. As of February 2023 you can see their estimates and the major differences in rent per square foot for small vs. large units.
Self-storage unit businesses run year-round which alleviates one potential worry. However, estimating revenue will depend on how many renters there will be. QT Business Solutions explains that most facilities see an occupancy rate sitting at around 90% in today’s market.
Though most businesses in the industry will shoot for occupancy of around 80% to 90%, Storable tells us that 65% of occupancy will at least cover the operating and debt expenses of the business.
With the current trend in downsizing homes and apartment versus home rentals, self-storage units are a popular choice among millennials. 2020 showed an occupancy average of 91.7% , and those numbers have been holding steady, if not growing.
Of course, those who own a self-storage unit business should not shoot for anything higher than around 90% so that there is always storage to rent. You do not want to find yourself shooting for 100% occupancy and have nothing left for new customers.
The revenue potential for a self-storage unit business is quickly calculated once you have all the right information on hand.
To start with our example, let’s say we are using a facility the size of 50,000 square feet -- the average for these types of businesses. To cover the expenses required to run the business, Truic advises setting the price at around $9 per square foot, per year.
This estimates the yearly revenue around $450,000, or $37,500 monthly. Of course, this number is for 100% occupancy, which means we need to deduct vacancies of at least 10%. This brings us to a total of $405,000 a year before any other expenses are taken into account.
Self-storage unit business annual revenue.
The average revenue for a self storage business is $450,000 per year.
Three sources ( Truic , SweatyStartUp , BizFluent ) tell us the expected revenue amount for a 50,000 square foot self-storage unit business.
The common operating expense categories for self storage units include:
The average operating cost as a percentage of revenue for self storage facilities is roughly 35%.
We calculated this number based on the SEC financial statement filings for Extra Space Storage, one of the largest and most diversified storage facility owners in the US. In 2021 and 2022 their property operational costs and their general and administrative costs amounted to roughly 35% of revenue in both years. This does not include depreciation or amortization costs. Because depreciation costs can vary dramatically based on accelerated depreciation, we wanted to look at true operating costs only which are more stable. Your depreciation and amortization costs will vary depending on your specific property and financing details.
Based on a report from CBRE that analyzed 808 self storage facilities, the average operating cost per square foot was $4.03. This is based on 2017 data, so you can expect these costs to have increased, but we can still gain some valuable insight from this information.
Expense Type | Percentage of Revenue (effective gross income) |
---|---|
Real Estate Taxes | 10% |
Property Insurance | 1% |
Utilities | 2% |
Repairs and Maintenance | 3% |
Administrative Costs | 4% |
Off-Site Management | 5% |
On-Site Management | 7% |
Advertising | 2% |
Miscellaneous | 0% |
Once we have estimated our expenses, we can now estimate our net operating income.
Profit from a self-storage unit business will vary drastically. Depending on the area, the size, and the market need, this business has the potential for a high return on investment.
The average profit margin for a self storage business is 41%.
Three different sources ( Storable , BizFluent , RoadLessTraveledFinance ) provide us with the expected profit margin for a self-storage unit business so that you too know what goals to set.
Whether you are looking to finance an acquisition of a storage facility or finance the new construction, a self storage SBA loan can be an excellent option for you. Because a storage unit facility can be used as collateral and since the primary use of the proceeds will be for real estate, you will likely be able to secure a longer term than average with an SBA 7a loan. SBA 7a loans offer terms of up to 25 years for real estate loans.
You will only be able to borrow a percentage of the acquisition price or construction cost of your storage unit facility, so you will need to raise some investment. That could be your own personal investment into the business, or you might look to pitch investors to join you in the business. If you are pitching investors, you should have a good understanding of what the internal rate of return that your potential investors expect. Once you create a set of cash flow projections for your storage facility, you can calculate the IRR - internal rate of return that you expect investors would be able to generate. This video will teach you how to calculate IRR with our projection templates.
The average IRR for a self storage facility was 16.9% between 2009 and 2018 according to Forbes . So as you are calculating your forecasted IRR you will want to make sure that the facility can get within the range of returns that investors expect. You can use our developer template as a self storage IRR calculator .
Once you complete your storage unit projections you will be able to see how your facility compares to industry standards in our Profit and Loss at a Glance table as seen below:
If you’re exploring starting your own self-storage facility and need to create comprehensive financial projections for planning, investors, or lenders we offer a CPA-developed, easy-to-use, and affordable template built specifically for self storage businesses, please check out our self storage pro forma template .
If you are moving forward with starting or buying a self storage business, your SBA lender may ask you for a business plan. Here is a quick business plan outline that you can use for your self storage startup.
You can get the self storage financial projection template.
The template is simple to use and will save you loads of time while still producing professional looking storage unit business projections. ProjectionHub has helped more than 50,000 businesses create financial projections so you can be confident that you can do it too.
5 Year Self Storage Pro Forma Financial Statements
CPA Developed & Completely Customizable
Free Support & Projections Review
Compatible with Google Sheets
Free expert review of your completed projections
The template is easy to use and you do not need to be an excel wizard to fill it out. Editable cells are highlighted in blue, a video guide is included, and our team is available to answer any questions you have.
You can see the complete walkthrough and demonstration of the storage unit business forecast template here:
Get the template today for just $99
If you have any questions before purchasing, please feel free to begin a live chat or email us at [email protected]
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Top Right Photo by Ketut Subiyanto from Pexels
Adam is the Co-founder of ProjectionHub which helps entrepreneurs create financial projections for potential investors, lenders and internal business planning. Since 2012, over 50,000 entrepreneurs from around the world have used ProjectionHub to help create financial projections.
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This article is a guide on learning more about how to start a non-emergency medical transportation business and the key financial assumptions necessary to create reliable financial projections.
Learn 5 key tips to make your startup business plan stand out and secure an SBA loan, from demonstrating market potential to creating realistic financial projections.
Learn practical steps to increase your SBA loan approval odds. This guide offers 8 straightforward strategies from an experienced SBA loan officer.
Image of AD Storage - Lacon, IL
A ccording to Mordor Intelligence , the public storage industry is expected to experience continued growth in the next five years. The optimism doesn't stop there. According to Mini-Storage Messenger , the industry historically shows resilience from broader economic pressures too.
In 2020, there were over 49,000 self storage facilities in the United States. Will the need for all this self storage end?
The answer is a resounding NO! In fact, the demand is only increasing.
Storage solutions continue to be required all over the U.S. for a variety of reasons, including:
Strategizing and planning to meet those current and future demands will be essential for your success.
Costs center around the choices you make at the beginning. Choices regarding location, facility type, feasibility study results, and creating a solid business plan could make or break your budget and, ultimately, your business. Let’s take a look at each of these areas.
1. Location
Like any real estate purchase, location is still the name of the game. Whether you're leaning towards rural, urban, or metropolitan, deciding what type of market you will serve is the trick to nailing down a desirable location. In each situation, there must be easy access to the facility to attract renters.
According to Nicole Roberts, self storage owner and customer support for Unit Trac self storage management software, one trend to watch is development around smaller towns. She suggests visiting with local developers to help locate the good neighborhoods and growth areas.
" No matter where or what type of location you choose, always do your homework. " - Nicole Roberts, self storage owner, and Unit Trac Customer Support
2. Facility Types
Because of the type of building required, self storage has a total development cost that is usually much less than multi-family, office, or retail properties. You may want to get into a niche section of the industry like offering storage for boats or RVs, or you may want to keep it simple and provide a basic dry storage unit. Your choices here obviously will impact your overall costs.
Some of your facility options include:
3. Feasibility Study
Collecting information that determines whether or not your new business can be a success is what the feasibility study does for you. It's critical due diligence that helps you recognize any pitfalls before they occur.
Issues that may arise from a thorough feasibility study include:
Hiring a professional firm is the best way to ensure an accurate and helpful feasibility study. Local referrals will help you find a firm with a good reputation, or you can call the Small Business Association for guidance.
4. Business Plan
Not only is a business plan an excellent way to steer your new venture in the best direction, but it will also be essential if you require any type of loan. You can pick a format that suits your style, but it should answer the following questions:
Buying an existing "turn-key" self storage facility will get you set up right away. On the other hand, developing your first facility from the ground up will allow you to build your vision. Take a look at the costs of the pros and cons to consider before you make your choice.
Like any small business, your self storage business will need to tackle the details and some red tape to get established. Here is a “to-do” list to get you started.
1. Name the business: It should be meaningful to not only you but also the customers you're trying to attract. Get help and check on the availability of your choice to make sure it's not already taken. It always helps draw customers when the name of the business includes explanatory terms (storage, warehouse, etc).
2. Form a Business Entity: For tax purposes, you'll need to form a business entity. Your business can be created under four types of entities: Entity Name, Trademark, Doing Business As (DBA), or Domain Name. The SBA can help you decide which fits your business model best and show you how to set it up.
3. Register for business licenses and permits: Requirements for certifications, licenses, and permits vary from state to state but are critical in operating your business legally. Research your state's website for assistance on what department you need to contact and get to know your local officials, especially the department of revenue.
4. Open a business bank account: When you're ready to start accepting or spending money as a business, it's time to open a business bank account. Shop around for the best bank* for the way you like to do business and find a banker who will help you navigate the process smoothly.
*Many banks have fees associated with business accounts, so ask about those before opening an account.
5. Get business insurance: Protect yourself from the unexpected with appropriate insurance that will cover you and your business. Lawsuits, accidents, and even natural disasters are events you'll want to consider when choosing a policy. A licensed, reputable agent will be able to help you find the best plan.
6. Establish your rental agreement: Will you be using an existing rental agreement or creating your own? If you are creating your own, check with your local Self Storage Association for a state-specific rental agreement or work with an attorney. You'll need one for your renters, and your insurance agent will want a copy of the agreement too.
7. Set up an accounting system: At the beginning, you can certainly run your business on paper, but many chose to utilize accounting software or a reliable self storage management system . It will be an invaluable tool to keep track of not only your accounts but also improve communication with your existing and potential customers.
" Don’t forget to integrate credit/debit card processing within your management software system. It will make it so much easier for your renters to pay you every month. " - James Smallenberger, self storage owner and Co-founder of Unit Trac self storage management software
Before opening the doors of your self storage business, you've got to let people know that it's open. This is where you'll want to create a great marketing plan and put it into action. Your business plan should have considered your market and the customers you're serving, but if not, you'll want to start with a market analysis .
Your marketing plan will speak to that audience. The more you know about them, the better your message and the delivery system will be.
Create the most generous marketing budget possible to jump-start your business. Keep in mind if you can't be found, you won't fill units. When starting a new business, the budget will be tight, which may mean borrowing or self-funding.
With marketing, being consistent, having flexibility, and rewarding loyalty goes a long way. Keep this in mind when deciding what marketing approaches you'll be comfortable using. These include tactics like:
Your very first marketing campaign can simply be posting a "Coming Soon" sign at the site with the telephone number for more information and the facility opening date. Include the new facility's name and details on how to reserve their space.
In most cases, self storage doesn't require a huge staff, but it does require a dedicated one. Most likely, you'll be managing the day-to-day operations of your own facility or may have help from family members, friends, or possibly an employee.
Of course, efficient operations rely on a commitment to accurate data. Make life easier for you and your staff by securely maintaining customer information with online self storage business software you can rely on. Doing so makes that data immediately available for your next sign-up or rent payment no matter where you are or what time it is.
Maintenance is another never-ending commitment. Plan regular inspections and review items that can quickly become issues like roofs, doors, insulation, plumbing, HVAC, gates, lighting, pavement, landscaping, etc.
Inevitably, the longer you're open, the more you'll continue to learn what to look for and the valuable skills you'll need to make your new business a success.
Soon, you might even start thinking about ways to expand your facility or invest in more property. Case studies from people who have been through it will be an invaluable resource when you're ready to make that move.
Some final insider tips for your self storage business
As you can see, while offering self storage is a simple concept, starting a good storage facility takes a lot of hard work. The life of a storage facility owner can be exciting and rewarding. However, it is up to you to determine what the self storage industry has to offer and how you make it part of your financial goals and future dreams.
Learn more about the cost-effective solution that’ll help manage your self storage business and make life easier for your new business. Unit Trac is cloud-based software that's designed by self storage owners for self storage owners just like you.
Profitability is in the eye of the beholder. But, generally speaking, a self-storage business can be profitable. In fact, it can be more profitable than many other types of business out there.
“Self-storage has evolved from the homely stepsister to the Cinderella of the commercial real estate industry. Once relegated to sites unsuitable for other productive uses and stigmatized as unsightly metal buildings, self-storage properties historically haven’t attracted sophisticated investors’ attention,” according to the CCIM Institute , a commercial real estate network. “Yet in recent years, the segment’s solid performance and stable returns have piqued the interest of a growing number of investors.”
What makes a self-storage facilities profitable? A self-storage facility is an attractive investment because of the relatively low operating costs. It requires less upkeep than an office building or multifamily complex, for instance, and demands less overhead — namely in the form of labor — than most other kinds of income-generating real estate .
Furthermore, aside from the main business of renting out storage units, a self-storage facility can make money by selling locks, cardboard boxes, packing tape, insurance, and other products and services.
Additionally, the month-to-month nature of self-storage leases enables a facility owner to raise rent more easily than for properties that traditionally offer long-term leases, such as office buildings and multifamily complexes. This allows for more frequent pricing increases if desired.
As noted by Marc Goodin , co-founder of Storage Authority Franchising, “a properly planned, operated and funded facility can be a very rewarding and profitable business.” This includes creating and adhering to a self-storage business plan , which most lenders will want to see from someone considering the purchase or construction of a storage facility.
Among the five pros and five cons of owning a self-storage business are:
As you’re mulling the pros and cons of a self-storage business and you’re pondering the moneymaking potential, keep in mind that there’s not necessarily one right or wrong way to look at profitability. In many cases, someone may use the word “profit” as a proxy for financial success.
For instance, one self-storage business owner might measure profitability based on the profit margin. According to one estimate, a self-storage facility generates a typical profit margin of 41% .
Meanwhile, another self-storage investor might focus on net operating income, or NOI. Owners of income-generating properties use NOI as a yardstick for profitability. To come up with NOI for your small business, you subtract operating expenses from revenue.
The five publicly traded self-storage REITs in the U.S. like to emphasize NOI when they are reporting financial results to investors.
Public Storage, the largest of the REITs, posted same-store NOI (an apples-to-apples financial comparison of facilities open at least a year) of nearly $1.75 billion in 2020. Public Storage forecasts same-store NOI growth of 9.4% to 11.9% in 2021 versus the previous year.
Extra Space Storage, another self-storage REIT, notched same-store NOI of nearly $770 million in 2020. For 2021, the company predicts NOI growth of 13.5% to 15.5% compared with the previous year.
Revenue is only one part of boosting NOI, controlling expenses for your small business is the other. Some major expenses that can hamper your facility’s profitability include property taxes, snow removal, and debt service.
Another way to approach profitability, in the loosest sense of the word, is to examine the return on investment, or ROI. In self-storage, there are two key types of ROI: cash-on-cash ROI and cap-rate ROI.
According to Investopedia, cash-on-cash ROI measures — normally on an annual basis — the amount of cash flow relative to the amount of cash invested in a property. Cash-on-cash ROI is expressed as a percentage. “It is considered relatively easy to understand and one of the most important real estate ROI calculations,” the website says.
Then there’s cap-rate ROI. As Chron.com explains, the cap-rate ROI is the profitability ratio obtained when you divide ROI by the purchase price of a storage facility. In the self-storage industry, you’ll often hear folks refer not to the cap-rate ROI but simply to the cap rate, or capitalization rate, of a facility.
In calculating the cap rate, “the purchase price is used rather than down payment because down payments can vary widely, which can skew the results; your cash-on-cash ROI for the identical facility using the same NOI will be a lot different if you buy a facility with a 20% down payment compared to a 5% down payment,” Chron.com says.
A cap rate in self-storage might be 6.5%, whereas the cap rate for a retail or office building might be 5%. Cap rates vary according to a property’s fundamentals and location, and fluctuate over time.
Of course, the profitability equation almost certainly will change if you’re going to build a new facility from the ground up instead of buying an existing facility.
The Millionacres investment website points out that developing a facility “is the most cost- and labor-intensive method for investing in this industry; however, it can be extremely lucrative if done properly. It takes a high level of experience, knowledge and resources to help make this a successful endeavor.”
Bottom line: development costs and construction costs can eat into your business venture’s profits if you aren’t careful.
Regardless of whether you build or buy a self-storage facility, the business’ long-term profitability and viability rests largely on maintaining healthy occupancy numbers. While a 65% occupancy rate might cover operating and debt expenses, experts generally recommend shooting for an occupancy rate of 80% to 90%. Buoyed by pandemic-driven demand, the industrywide occupancy rate averaged 91.7% in 2020.
Industry observers say the robust occupancy rates achieved during the pandemic and the accompanying economic downturn further underscored the recession resilience of the self-storage sector. The sector’s resilience likely will remain for some time to come, with one forecast indicating an annualized growth rate of 8% in the U.S. market from 2020 to 2025.
In August 2021, Joe Russell, president and CEO of Public Storage, said the rise of hybrid work arrangements “gives us confidence that overall adoption of self-storage will continue to grow, and is looked upon favorably by consumers and businesses as a cost-efficient alternative to storing goods in residential or commercial space.”
The long term feasibility of the self-storage industry seems to be stronger than ever.
Need a little inspiration for advertising your self-storage facility? Check out these three examples to get your creative juices flowing. Keep Reading
When you’re looking to develop a self-storage facility, you obviously must decide where to build it. Be prepared, finding a great site for storage can be tricky. Keep Reading
Launching a self-storage business for the first time? Start here and learn everything you need to know before you buy or build. Keep Reading
We earn commissions if you shop through the links below. Read more
Self Storage Business
Back to All Business Ideas
Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on March 3, 2022 Updated on August 20, 2024
Investment range
$301,550 - $604,100
Revenue potential
$168,000 - $230,000 p.a.
Time to build
1 – 3 months
Profit potential
$67,000 - $90,000 p.a.
Industry trend
Starting your self-storage business? Here are the most vital considerations:
Interactive Checklist at your fingertips—begin your self storage business today!
You May Also Wonder:
How profitable is a self-storage business?
A self-storage business can be very profitable and is a great way to get a nice passive income. Your best bet to be successful is to offer superior customer service and provide value added services like valet storage services.
How can I find the right location for a self-storage facility?
To find the right location for a self-storage facility, consider factors such as population density, proximity to residential areas, accessibility to major roads or highways, and competition in the area. Conduct thorough market research to assess the demand for self-storage services and identify underserved areas.
How can I attract customers and market my self-storage services?
To attract customers and market your self-storage services, utilize various strategies. Develop a user-friendly website that showcases your facility’s features, security measures, and pricing options. Utilize online platforms and social media to promote your services and engage with potential customers. Implement targeted online advertising or local directories to increase visibility in your area.
How can I differentiate my self-storage business from competitors in the market?
To differentiate your self-storage business from competitors, focus on providing exceptional customer service and unique features. Implement top-notch security measures, such as video surveillance, access control systems, and well-lit facilities. Offer convenient amenities, such as 24-hour access, climate-controlled units, or online reservation and payment options.
Pros and cons.
Starting a self-storage business has pros and cons to consider before deciding if it’s right for you.
Industry size and growth.
Trends in the self-storage industry include:
Challenges in the self-storage industry include:
Startup costs for a self-storage business range from $300,000 to $600,000. These costs are for purchasing an existing self-storage facility. Alternatively, you could purchase land and build the self-storage units, but you’ll easily spend well over $1 million.
Start-up Costs | Ballpark Range | Average |
---|---|---|
Setting up a business name and corporation | $150 - $200 | $175 |
Business licenses and permits | $100 - $300 | $200 |
Insurance | $100-$300 | $200 |
Business cards and brochures | $200 - $300 | $250 |
Website setup | $1,000 - $3,000 | $2,000 |
Down payment on a self storage property | $300,000 - $600,000 | $450,000 |
Total | $301,550 - $604,100 | $452,825 |
The average monthly rate for a self-storage unit is around $100. If your facility has 200 units, your profit margin will be about 40% after your mortgage payment and overhead costs.
In your first year or two, you could have 70% of your units rented year-round, bringing in $168,000 in annual revenue. This would mean more than $67,000 in profit, assuming that 40% margin. As your marketing efforts bring in more business, you could have 95% of units rented. With annual revenue of nearly $230,000, you’d make $90,000.
The only barrier to entry for a self-storage business is the high startup costs. You’ll need at least a 30% down payment and most storage facilities cost $1 million or more.
Step 2: hone your idea.
Now that you know what’s involved in starting a self-storage business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research self-storage businesses in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a self-storage business that offers pick-up, or valet service.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as climate-controlled units for ecommerce businesses.
This could jumpstart your word-of-mouth marketing and attract clients right away.
In addition to storage unit rentals, you could offer valet services, moving truck rental, storage box sales, and even packing services.
Prices vary based on the size of the units and whether they are climate-controlled. They could range anywhere from $40 per month up to $200 per month. The average storage unit price across the country is around $100. You should check other storage facilities in your area to see what they charge to make sure that you’re competitive. Your costs will be for your mortgage payment and overhead. You should aim for a profit margin of at least 40%.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will be very broad. You should spread out your marketing to include sites like TikTok, Instagram, and Facebook. You should also market on LinkedIn, which is where you’re likely to find local ecommerce business owners.
The location of your self-storage business is a critical factor in its success. Look for a spot in a busy commercial district with high visibility and easy access, such as near major highways or busy intersections.
Also, consider the demographics of the area, such as population density, income levels, and the presence of businesses or residential areas that may require storage solutions.
When selecting your location, ensure that it meets all necessary zoning and regulatory requirements for self-storage businesses.
By strategically choosing the right location for your self-storage business, you can establish a profitable and successful enterprise that meets the needs of customers and stands out from competitors.
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
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Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to self-storage businesses.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your self-storage business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have.
Choose Your State
We recommend ZenBusiness as the Best LLC Service for 2024
The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist , and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best options, other than friends and family, for funding a self-storage business.
Starting a self-storage business requires obtaining a number of licenses and permits from local, state, and federal governments.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account .
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your self-storage business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as TRACKUM , Storable , or easystorage , to manage your units, billing, and payments.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using services like WordPress, Wix, or Squarespace . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your self-storage business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your self-storage business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a self-storage business or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in self-storage for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in self-storage. You’ll probably generate new customers or find companies with which you could establish a partnership.
You may just want to work alone, or you may need workers to fill various roles. Potential positions for a self-storage business include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
People have so much stuff it often doesn’t fit in their homes, which is why the self-storage industry is worth $23 billion. Starting your own self-storage business takes a significant investment, but it can provide a relatively passive income for a very long time. Demand for storage units is always high, so you shouldn’t have trouble keeping your units full.
Now that you know the business side, it’s time to jump into self-storage entrepreneurship!
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Home » Sample Business Plans » Real Estate
Are you about starting a self storage unit business? If YES, here is a complete sample self storage unit business plan template & feasibility study you can use for FREE . If you live In the united states and are interested in owning a business portfolio in the real estate industry and you have not made up your mind on what kind of business to engage in, then you should consider starting your own self storage unit business.
Although, you can also start a self – storage business in London or some couple of cities in Canada and Europe, but the United States of America still remains the only country where this type of business is indeed a big industry. First and Foremost, what you need to do before venturing in into self – storage business is to carry out your survey.
1. industry overview.
Self – storage units are mini storage spaces created for people to store their belongings for a short period of time, i.e. on a monthly basis and it is subject to renewal. The storage space could be lockers, rooms, boxes, containers or even an empty space in a secured environment. It is important to state that self – storage unit isn’t open for people to rent and live in it.
It is strictly for storing of personal belongings and goods. For instance’ if you rent a storage space, in a facility, you will be the only one with the key to the storage unit / space and as such the goods you choose to store in your space won’t be covered by the facility insurance.
In the united states, the Self – Storage and Warehouse Facility Leasing industry experienced a solid rebound over the last five years. It is important to state that with increase in demand from households and businesses the revenue generated in the industry is expected to continue to experience appreciable growth and indeed there is a bright future for players in the industry.
Other factors that will boost revenue growth for the industry are steady population growth, increases in the residential rental market, rising per capita disposable income and the number of relocations by families and individuals.
The entry barriers for new operators in this industry can vary significantly by state and city. Overall, barriers are moderate, but are increasing across the United States. Costs to purchase or lease land or facilities vary across regions and are a major barrier to entry.
These expenses can be more manageable, though, in well-established, highly populated cities, whereas land costs can be significantly lower in smaller cities and suburban regions. There are several regulatory requirements that must be met by companies in the storage and mini warehouse business. The most difficult of these generally relates to zoning and land development conditions
The Self – Storage and Warehouse Leasing Facility industry is indeed a large industry and pretty much thriving in developed countries such as United States of America, Canada, United Kingdom, Germany, Australia and Italy et al.
Statistics has it that in the United States of America alone, there are about 32,437 licensed and registered self – storage and warehouse leasing facilities responsible for employing about 131,990 employees and the industry rakes in a whooping sum of $33bn annually with an annual growth rate projected at 6.1 percent. Public storage Inc. is the market leader in this industry.
Right from when self – storage unit became a business enterprise in 1958 in Fort Lauderdale – Florida, loads of investors have made money from the industry and loads of investors are still making huge profits from this line of business and the industry is still very much open for new investors. It is indeed a capital intensive business and at the same time, highly profitable especially if you are strategically located.
Over and above, starting a self – storage and warehouse leasing business in the United States of America can be started by anybody as long as you have the start – up capital to acquire a property and then design the property to fit into the purpose you want to use it for.
Safe Lock® Self – Storage and Warehouse, LLC is a licensed, standard and secured self – storage and warehouse facility that will be located in a growing community in Asheville – North Carolina. Our basic aim of setting up the business is to make available self – storage and warehouse facility for our clients who are resided in Asheville and neighboring cities.
We have been able to secure a standard facility in a central and easy to locate location in Asheville. Our self – storage facility has a Five-by-5-foot storage spaces, Five-by-10-foot storage spaces, 10-by-10-foot storage spaces, 10-by-15-foot storage spaces, 10-by-20-foot storage spaces, 10-by-25-foot storage spaces, and 10-by-30-foot storage spaces available for rental or short – term leasing. We are well equipped to services the whole of the community as well as visitors and travelers.
We conducted a thorough research and feasibility studies and we were able to come to the conclusion that Asheville community is the right place to start our sport and recreation facility. We will ensure that we offer our facilities at an affordable fee that won’t in any way put a hole in the pocket of our clients.
At Safe Lock® Self – Storage and Warehouse, LLC, our client’s best interest would always come first, and everything we do is guided by our values and professional ethics. We will offer trusted self – storage and warehouse facility services to all to our individual clients, and corporate clients and also ensure that we work hard to meet and surpass our clients’ expectations whenever they rent or lease our self – storage facilities.
Safe Lock® Self – Storage and Warehouse, LLC will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible.
We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely. We will cultivate a working environment that provides a human, sustainable approach to earning a living, and living in our world, for our partners, employees and for our clients.
Our plan is to position the business to become one of the leading brands in self – storage and warehouse line of business in the whole of Ashville, and also to be amongst the top 20 self – storage and warehouse companies in the United States of America within the first 10 years of operations.
Safe Lock® Self – Storage and Warehouse, LLC is owned by Pearce Gordon and Henry Michael his business partners for many years. The business will be managed by both of them since they have adequate working experience to manage such business. Pearce Gordon has well over 10 years of experience working at various capacities in the real estate industry in the United States of America.
Safe Lock® Self – Storage and Warehouse, LLC is in the self – storage and warehouse facility business to provide safe short – term storage facilities for residence of Asheville – North Carolina which is why we have been able to put up a facility that can help us achieve the goal.
We are optimistic that everyone who make rent or lease our self – storage and warehouse facility will definitely derive huge value for their money. These are the amenities and services that will be made available to our clients;
Our Business Structure
Safe Lock® Self – Storage and Warehouse, LLC is in business to become the leading self – storage and warehouse facility in the whole of Asheville – North Carolina and we are fully aware that it will take the right facility, management and organization – structure to achieve our goal.
We will ensure that we recruit only the best hands that can help us achieve all that we are set to achieve. Our business will not be built only for the purpose of giving our members / customers value for their money, but also we will ensure that we make our work environment highly conducive for all our employees.
We will provide them with facilities that will help them stay motivated and deliver on their various tasks and goals et al. In view of that, we have made provisions for the following positions to be occupied by highly qualified and experienced staff;
Facility Manager
Admin and HR Manager
Marketing and Sales Executive
Chief Executive Office:
Client Service Executive / Front Desk Officer
Security Officers
Safe Lock® Self – Storage and Warehouse, LLC engaged the services of a core professional in the area of business consulting and structuring to assist the firm in building a well – structured self – storage and warehouse rental business that can favorably compete in the highly competitive self- storage and warehouse services industry.
Part of what the team of business consultant did was to work with the management of our organization in conducting a SWOT analysis for Safe Lock® Self – Storage and Warehouse, LLC. We hired the services of Dr. Garry Larson, a HR and Business consultant with bias in business structuring to help us conduct SWOT analysis for our company and he did a pretty good job for us.
We know that if we get things right before starting our self – storage and warehouse rental business, we will not have to struggle before attract loyal clients and building the business to a level where we can easily breakeven in record time.
Here is a of the result we got from the SWOT analysis that was conducted on behalf of Safe Lock® Self – Storage and Warehouse, LLC, Asheville – North Carolina;
One of the obvious strength that will definitely stand as a plus for Safe Lock® Self – Storage and Warehouse, LLC is the fact that our facility is centrally located in a densely populated – residential area in Asheville – North Carolina; our location and high level of security is in fact our major strength.
We equally have a team that can go all the way to give our clients value for their money; a team that are trained and equipped to pay attention to details and to deliver excellent services. Lastly our rental package is one of the best that anybody living in Asheville – North Carolina can get; it is cheap and affordable.
We critically looked into our Business model and we were able to identify two major weakness. One is the fact that we are a new business and the second is the fact that we may not have the financial resources required to match up with existing and well established self – storage and warehouse facility rental companies when it comes to acquiring large facilities in choice areas.
We are centrally located in one of the busiest area and densely populated area in Ashville – North Carolina and we are open to all the available opportunities that the city has to offer. We will be open 24 hours in a day during weekends (Fridays to Sundays) and from 6:00 am to 12 midnight from Mondays to Thursdays giving us the advantage to leverage on any available opportunity.
Some of the threats that are likely going to confront Safe Lock® Self – Storage and Warehouse, LLC are unfavorable government policies, demographic / social factors, downturn in the economy which is likely going to affect consumers spending and lastly, the emergence of new competitors within the same location where our self – storage and warehouse facility is located.
The trend in the self – storage and warehouse rental industry is such that if a self – storage and warehouse facility is well positioned in a residential area or a place where people can easily access without much stress, there is the likelihood that the facility will enjoy high patronage.
Just like in other business ventures, the owner of self – storage and warehouse facilities are always looking for ways to increase their market share; they go as far as signing deals with merchants, importers and also business men and women et al to make use of their facility.
It is a common trend that as self – storage and warehouse facility grow (fully occupied throughout the year), it becomes necessary for them to develop new service offerings or install new facilities that will help them attract more people. In order words, it is very important for self – storage and warehouse facilities to continue to improvise if they want to grow their business and generate their target revenues.
We are aware of the fact that for any business to thrive so well in profit, it has to first and foremost define its market. The target market for self – storage and warehouse facilities cuts across people of different walks of life. The fact that people would need a secured place to keep their properties for a short period of time makes the self – storage and warehouse rental business a thriving and growing business.
Safe Lock® Self – Storage and Warehouse, LLC will work towards providing services, facilities and environment that will help us reach out to our target market. These are the category of people that we intend marketing our self – storage and warehouse facility to;
Our Competitive Advantage
We also know that competition is one of the best things that could happen to a business because it makes any business tap more from within and be at their best at all times. No doubt, the Self – Storage and Warehouse Rental industry is indeed a profitable and highly competitive industry.
Clients will only rent your self – storage and warehouse facility if they know that your facility is highly secured and spacious enough to contain whatever property they want to store in your facility.
Our competitive advantage is that Safe Lock® Self – Storage and Warehouse, LLC is centrally located in a densely populated – residential area in Asheville – North Carolina; our location and high level of security is in fact our major strength.
Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category (self – storage and warehouse facility rental businesses in the United States) in the industry. It will enable them to be more than willing to build the business with us and help deliver our set goals and achieve all our business aims and objectives.
Safe Lock® Self – Storage and Warehouse, LLC is established with the aim of maximizing profits in the Self – Storage and Warehouse Facility Rental industry and we are going to go all the way to ensure that we do all it takes to attract both individual clients and corporate clients on a regular basis and to ensure that our facilities are fully occupied at any given time.
Safe Lock® Self – Storage and Warehouse, LLC will generate income by offering the following amenities and services;
From the very beginning it pays to have a sales forecast because this helps to go the extra mile in working so hard to meet the sales goals. It is important to state that our sales forecast is based on the data gathered during our feasibility studies and also some of the assumptions readily available on the field.
It would be hard to create a sales forecast with a newly opened business like self – storage and warehouse facility rental business. This is simply because the statistics that will be provided will be on a short term basis.
Experts said that usually a business should be in operation for at least one year before they can generate the statistics that will be need to help in accurate forecasting; statistics should be at least one year old in order to show the trends and pattern in consumer spending.
We expect to attain 65 percent occupancy of our self – storage and warehouse facility within our first year of operations and then in subsequent year we will grow to full occupancy (between 80 and 100 percent occupancy). Below are the sales projection for Safe Lock® Self – Storage and Warehouse, LLC, it is based on the location of our facility and the services and amenities that we will be offering to our clients;
N.B: This projection is done based on what is obtainable in the industry and with the assumption that there won’t be any major competitor offering same additional services as we do within 4.5 miles radius from our self – storage and warehouse facility.
Our marketing strategies will be directed towards achieving specific objectives that support the strategic goals of the organization. The truth is that all we do will be geared towards creating new market channels, increasing sales and increase our market share. We will leverage on improving on our services and facility to ensure that we win new clients and retain old clients.
At Safe Lock® Self – Storage and Warehouse, LLC, our marketing strategies will be consistent throughout the marketing mix and we will take into consideration facility improvement, promotion, and price. As part of our sales and marketing strategies, we will pay attention to the promotion of our self – storage and warehouse facility so as to attract people to rent or lease our facilities.
Our unique selling proposition is that we are well positioned and people can easily access our facility, our prices are affordable and we have a complete package for families, schools and sport clubs. Part of the marketing and sales strategies that we will adopt are;
We have been able to work with our branding and publicity consultants to help us map out publicity and advertising strategies that will help us walk our way into the heart of our target market. We are set to become the number one choice for both corporate clients and individual clients in the whole of Asheville – North Carolina which is why we have made provisions for effective publicity and advertisement of our self – storage and warehouse facility.
Below are the platforms we intend to leverage on to promote and advertise Safe Lock® Self – Storage and Warehouse, LLC;
Our pricing system is going to be based on what is obtainable in the industry, we don’t intend to charge more (except for premium and customized services) and we don’t intend to charge less than what our competitors are charging their members in Asheville – North Carolina.
Be that as it may, we have put plans in place to offer discount services once in a while and also to reward our loyal customers especially when they refer clients to us or when they rent or lease of facility for a longer period. The prices of our services will be same as what is obtainable in the United States’ open market.
At Safe Lock® Self – Storage and Warehouse, LLC, our payment policy will be all inclusive because we are quite aware that different clients would prefer different payment options as it suits them. Here are the payment options that we will make available to our clients;
In view of the above, we have chosen banking platforms that will help us achieve our plans with little or no itches.
In setting up any business, the amount or cost will depend on the approach and scale you want to undertake. If you intend to go big by renting a place, then you would need a good amount of capital as you would need to ensure that your employees are well taken care of, and that your facility is conducive enough for workers to be creative and productive.
This means that the start-up can either be low or high depending on your goals, vision and aspirations for your business. The tools and equipment that will be used are nearly the same cost everywhere, and any difference in prices would be minimal and can be overlooked.
As for the detailed cost analysis for starting a self – storage and warehouse facility rental business; it might differ in other countries due to the value of their money. However, this is what it would cost us to set up Safe Lock® Self – Storage and Warehouse, LLC in the United of America;
This is the key areas where we will spend our start – up capital on;
We would need an estimate of $1.5 million to successfully launch a standard and well – equipped self – storage and warehouse facilities in Asheville – North Carolina. It is important to state that the testing and evaluating expenses would be high because of the large amount of needed to secure a large facility in a good location.
Generating Funding / Startup Capital for Safe Lock® Self – Storage and Warehouse, LLC
Safe Lock® Self – Storage and Warehouse, LLC is a business that will be owned and managed by Pearce Gordon and his friend and business partner Henry Michael. They are the sole financial of the business which is why they decided to restrict the sourcing of the start – up capital for the business to just three major sources.
These are the areas we intend generating our start – up capital;
N.B: We have been able to generate about $500,000 (Personal savings $350,000 and soft loan from family members $150,000) and we are at the final stages of obtaining a loan facility of One Million USD from our bank. All the papers and document has been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.
The future of a business lies in the numbers of loyal customers that they have the capacity and competence of the employees, their investment strategy and the business structure. If all of these factors are missing from a business (company), then it won’t be too long before the business close shop.
One of our major goals of starting Safe Lock® Self – Storage and Warehouse, LLC is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running.
We know that one of the ways of gaining approval and winning customers over is to rent or lease of our self – storage and warehouse facility is to ensure that our facility is not just strategically locate, but also highly secured and affordable.
Safe Lock® Self – Storage and Warehouse, LLC will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and re – training of our workforce is at the top burner.
As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of ten years or more. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.
Check List / Milestone
Main Sections In This Post Steps To Starting A Self Storage Business Points to Consider Resources Knowledge Is Power Featured Video
This post offers knowledge about starting a self storage business. We’ll provide you with a step-by-step guide to consider and a valuable collection of resources.
There’s a lot of information to cover, so it might be beneficial to bookmark this page for future reference. Additionally, if you find this post valuable, we kindly ask you to share it with others.
Let’s get started with the steps.
1. gaining an overview of what you’re getting into.
In this section, we will provide valuable insights and guidance to aid you in making informed decisions for your self storage business.
When achieving success in the self storage industry, the key factor is none other than you. Your personal involvement and dedication play a crucial role in the outcome of your business venture.
It is vital to clearly understand your feelings and motivations towards owning and running a business.
Taking the time to explore this aspect will significantly contribute to making well-informed decisions when starting your self storage business.
Passion is an indispensable ingredient for achieving success in the self storage industry.
Having a strong passion will fuel your determination to succeed. It will motivate you to seek solutions when faced with challenges and will be the driving force behind your commitment to overcoming obstacles.
Let’s consider the following scenario:
Imagine you win a lottery. You generously help your loved ones and contribute to charitable causes.
Over the next few years, you embark on global adventures, purchase your dream home, and secure a vacation property for relaxing weekend retreats. You have all the cars and gadgets you’ve ever desired. Anything you wish to buy is readily accessible at your fingertips.
Even after indulging in these luxuries, you still have millions of dollars remaining in cash and investments, giving you the freedom to live on your own terms.
Now, let’s reflect on an important question:
In such a scenario, would you still choose to start a self storage business?
If your answer is a resounding yes, it demonstrates your genuine passion for venturing into the self storage business, and you’re heading in the right direction.
However, if your answer is no, it prompts another important question:
What alternative path would you prefer to pursue? Perhaps, it’s worth considering focusing on that path instead.
The above exercise aimed to shift your focus away from solely considering monetary gains and guide you towards selecting a business based on your true passion.
For More, See How Passion Affects Your Business . Also, see, Considerations Before You Start Your Business to identify key points for a new business owner.
Running a self storage business requires dedication and involves various responsibilities. Here’s a neutral overview of what it’s like to be in charge:
Responsibilities:
Average Day:
Running a self storage business entails a balance of customer service, facility maintenance, marketing, financial management, and security measures to provide customers a smooth and secure experience.
To succeed in the self storage business, consider the following key points:
Remember, success in the self storage industry relies on managing the business effectively, marketing strategies, and efficient budgeting practices.
Running a self storage business poses various challenges that need to be addressed to ensure long-term success. Here’s an overview of some key challenges:
Addressing these challenges is key to running a successful self storage business, allowing for steady growth, customer satisfaction, and long-term sustainability.
There are various types of self storage business setups, each with its own unique business model. Here are some common setups and their corresponding business models:
Single Facility, Owner-Operated:
Multi-Facility Chain:
Conversion Facilities:
Climate-Controlled Storage:
Portable Storage Units:
Specialty Storage:
These are just a few examples of self storage business setups and their corresponding business models. Each model has its advantages, considerations, and target markets, allowing entrepreneurs to choose the one that best aligns with their goals and resources.
Pros of Running a Self Storage Business:
Cons of Running a Self Storage Business:
Note: This is a brief summary, and there may be additional pros and cons specific to individual circumstances and locations.
Customers have certain expectations when it comes to self storage businesses. Here’s a brief overview of what customers generally expect:
Meeting and exceeding these customer expectations is crucial for building trust, fostering positive relationships, and ensuring customer satisfaction in the self storage industry.
To make a self storage business stand out, consider implementing the following ideas:
Implementing these ideas can help differentiate your self storage business from competitors and attract customers looking for exceptional service and added value.
Consider offering the following add-ons to enhance your self storage business:
These add-ons can generate additional revenue, attract customers seeking convenience, and provide comprehensive storage solutions for your clients.
Self storage business research.
Before embarking on your self storage business venture, conducting thorough industry research is crucial. Familiarizing yourself with the field will provide valuable insights and ensure you’re well-prepared for what lies ahead.
Accessing quality information is paramount for making informed decisions and determining if this business fits you.
One effective way to acquire reliable information is by connecting with industry professionals with firsthand experience.
Engaging with experienced individuals can be invaluable, allowing you to gain insights from their years of expertise.
I’ve crafted an article that offers guidance on identifying the right people to approach and how to approach them.
To gain a comprehensive understanding of the self storage industry and set yourself up for success, I highly recommend reading the article linked below before launching your business
It will provide you with valuable insights and knowledge for the journey ahead.
See An Inside Look Into the Business You Want To Start for all the details.
Understanding your target market is essential when starting a self storage business. It involves gaining insights into the people likely to be interested in your offerings.
By understanding your target market, you can tailor your marketing efforts and better meet their needs.
Potential customers who may be interested in self storage include:
Understanding your customers’ preferences enables you to improve advertising strategies and enhance sales.
For more in-depth guidance on understanding your target market, please refer to How To Understand Your Target Market.
Welcome to the section that provides an overview of startup costs, monthly expenses, revenues, and profits for your self storage business.
Startup Costs:
For more detailed information, refer to my article on Estimating Startup Costs.
Sales and Profit:
Understanding and effectively managing startup costs, sales, and profitability are key factors for a successful self storage business.
For More, See Estimating Profitability and Revenue
Sample Financial Lists As a Starting Point
Estimated Costs for a New Self Storage Business in the USA:
Grand Total Estimated Startup Costs: $1,667,000 – $2,840,000
Estimated Monthly Expenses for a Self Storage Business in the USA:
Grand Total Estimated Monthly Expenses: $10,500 – $20,700
Projected Revenue and Profit for a Self Storage Business in the USA:
Total Monthly Revenue: $21,000 – $42,000
Monthly Profit: $10,500 – $21,300
You can use these as a starting point for your research.
Note: Every situation is different, and many factors come into play, but these lists will give you a starting point to build ones for your self storage business.
Remember, these are just estimates and your actual costs or revenue could be higher or lower. Starting a business involves careful planning and consideration. Always seek professional advice when calculating your business’s startup costs, expenses, and potential revenue.
Selecting the right location for your self storage business can significantly impact its success. It is crucial to consider the following factors:
Choose a location where there is sufficient demand for self storage services. Ensure there is a market for what you have to offer to avoid launching in an area with limited demand.
Competition:
Avoid areas with excessive competition that may hinder your ability to make sales. Strive for a balance where there is reasonable competition alongside market demand.
Affordability :
Assess the financial feasibility of operating in a particular location. Determine if the potential for increased exposure and profitability justifies the higher costs associated with highly populated areas.
Evaluate if the location aligns with the target market you aim to serve. A cheap operating location may not be viable if it lacks sufficient demand to support your business goals.
Choosing the right location is a critical factor in achieving success. Thoroughly research and analyze potential locations to ensure you make an informed and advantageous choice for your self storage business.
For more about business locations, see Choosing The Best Location for Your Business.
When selecting a name for your self storage business, it’s important to choose a catchy and appropriate name that is easy to pronounce and memorable.
Take the time to find a name that aligns with your company and will stand the test of time.
Remember, the name you choose will likely remain with your business, so it’s essential to select one you’ll be satisfied with now and in the future.
Additionally, securing a matching domain name for your online presence is crucial while ensuring another business does not already register it.
Below are business name ideas for a self storage business:
Remember, the list above inspires your creativity in creating a unique and original name that is not already used by another business and is available for registration.
For this important step, see How to Choose a Business Name.
Registering your self storage business is a vital step in establishing and operating your venture legally and responsibly. Here’s an overview of its importance, considerations, and the permits and licenses to consider:
Importance of Registering:
Considerations for Registration:
Permits and Licenses to Consider for a Self Storage Business:
Note: The required permits and licenses may vary depending on your location. It’s crucial to consult with local authorities and professional advisors to ensure full compliance with all applicable regulations.
See, How to Register your Business for more.
A Corporate ID, also known as corporate identity, is a design that visualizes your self storage business. It plays a crucial role because you want to make a positive first impression on potential customers.
Having a consistent and professional design helps establish credibility and professionalism. It communicates your brand values and creates a cohesive visual identity for your business. A well-crafted Corporate ID can help attract and retain customers by building trust and recognition.
A Corporate ID consists of various components such as your logo , business cards , website , stationary, business sign , promotional items, etc.
Consider the following elements for your Corporate ID:
See A Complete Introduction to Corporate Identity Packages for more.
A Business Plan is a vital document for your self storage business. It serves multiple purposes, including acquiring funding and attracting investors. Additionally, it acts as a roadmap to guide you through the startup phase and daily operations.
Writing a comprehensive business plan requires time and careful consideration as you envision the future of your business. It’s an opportunity to express the details and intricacies of your operation.
The effort invested in creating a business plan is worthwhile. Once completed, it clearly outlines the steps to start and operate your self-storage business effectively.
When developing your business plan, remember that you have options available:
Regardless of the approach you choose, active participation is crucial. This ensures that your business plan stands out and effectively communicates the nature of your self storage business.
Keep in mind that your business plan is a dynamic document that can be optimized and modified as you gain experience.
Regularly reviewing and making necessary adjustments is advisable to align it with the evolving needs of your business.
By creating a well-crafted and adaptable business plan, you can lay a solid foundation for your self storage business and set yourself up for success.
SAMPLE Business Plan for a Self Storage Business
Executive Summary:
This business plan outlines the objectives, strategies, and financial projections for XYZ Self Storage, a new self-storage facility based in Anytown, USA. The company aims to provide clean, secure, and easily accessible storage units for both individual and business clients.
Company Description:
XYZ Self Storage is a new venture dedicated to providing a range of storage solutions. We plan to offer a variety of storage unit sizes, as well as amenities such as climate-controlled units, vehicle storage, and sale of packing and moving supplies.
Market Analysis:
The self storage industry in the USA is growing due to factors like urbanization, downsizing by baby boomers, and growth in the housing market. Anytown, with its growing population and robust small business sector, presents an opportunity for our business.
Organization and Management:
XYZ Self Storage will be a Limited Liability Company owned by [Owner’s Name(s)]. The day-to-day operations will be handled by a facility manager, with additional staff as required for customer service and maintenance.
We will offer self-storage units of various sizes, including options for climate-controlled units and vehicle storage. We will also sell moving and packing supplies. We aim to differentiate ourselves through top-tier customer service, well-maintained and secure facilities, and convenient access hours.
Marketing and Sales Strategy:
Financial Projections:
The financial goal for XYZ Self Storage is to achieve steady growth in rental occupancy and sales, reaching profitability within the first two years of operation.
Funding Request:
We are seeking an initial investment of $X to cover land acquisition, construction costs, and operational expenses for the first year. This funding could come from a combination of owner’s equity, bank loans, or potential investors.
Exit Strategy:
If the need to dissolve the business arises, assets such as land, buildings, and equipment can be sold. Additionally, the business could be sold to a larger storage company or other interested party.
Conclusion:
With a comprehensive understanding of the market, a dedicated team, and a strong marketing strategy, XYZ Self Storage aims to provide an exceptional service to Anytown’s residents and businesses. Our business model and financial projections indicate a promising opportunity for success and growth.
This sample business plan serves as a guideline and may require adjustments based on your local market, specific business model, and personal business goals. Always seek professional advice when creating a business plan.
For information on creating your business plan, see, How to Write a Business Plan.
When operating a self storage business, choosing a nearby bank that specializes in serving business owners is beneficial. Consider the following points regarding banking for your business:
Business Account:
Professional Relationship:
Merchant Account:
Banker Relationship:
By selecting a bank that understands the requirements of business owners and establishing a professional rapport with your banker, you can access essential financial services and support for your self storage business, such as business accounts, merchant services, and potential funding opportunities.
For more, see, How to Open a Business Bank Account. You may also want to look at, What Is a Merchant Account and How to Get One.
When starting and operating a self storage business, securing funding is a crucial step. Consider the following aspects:
Funding Options:
Meeting with a Loan Officer:
Sample List of Documents for a Business Loan Application:
Understanding your funding needs, exploring various options, and preparing a comprehensive loan application will increase your chances of obtaining the necessary funds to start and operate your self storage business successfully.
See, Getting a Small Business Loan for more.
When running a self storage business, the right software is crucial for efficient operations. Here are some key points to keep in mind:
Software Considerations:
Software Used for a Self Storage Business:
Choosing the right software can enhance productivity, streamline processes, and improve overall efficiency in your self storage business.
Evaluate your specific needs and consider software options tailored to the industry to optimize your operations.
Check out Google’s latest search results for software packages for a self storage business.
When seeking insurance coverage for your self-storage business, addressing specific concerns is important to ensure adequate protection. Consider the following:
Insurance Considerations for a Self Storage Business:
Property Coverage:
Protecting your physical property, including storage units, office space, and equipment, against risks such as fire, theft, or natural disasters.
Liability Coverage:
Safeguarding against potential claims or lawsuits from customers, employees, or visitors who may suffer injury or property damage on your premises.
Customer Belongings Coverage:
Providing insurance options for customers to protect their stored belongings, either through offering coverage directly or recommending third-party insurance providers.
Business Interruption Coverage:
Considering coverage to mitigate financial losses in the event of unexpected disruptions, such as a fire or natural disaster, that temporarily halt business operations.
Workers’ Compensation:
Ensuring coverage for employees in case of work-related injuries or illnesses, providing medical expenses and lost wages.
Professional Liability Insurance:
If offering additional services such as packing, moving assistance, or document shredding, obtaining professional liability insurance to protect against claims of negligence or errors.
Home-Based Business Considerations:
Informing your home insurance agent if you plan to operate or manage your self storage business from your home, as it may affect your existing home insurance policy.
Consulting with a competent insurance broker who specializes in commercial insurance can guide you through the process and help identify the appropriate coverage options tailored to your self storage business’s unique needs.
For more, see What to Know About Business Insurance . You can also browse the latest Google search results for self storage business insurance .
The physical setup or layout of a self storage business plays a crucial role in providing a functional and accessible space for customers to store their belongings securely.
It strategically organizes storage units, driveways, and access points to optimize convenience and efficiency.
You will want to consult with a professional to ensure the layout of self storage operation is laid out in a way to maximize units. At the same time, it’s convenient for customers to store their belongings.
Setting up signage is essential for a self storage business.
Besides installing your main business sign, it is important to add signs to all relevant locations, such as parking lots, exits, and special areas. Well-designed signs guide people, direct them to specific areas, and demonstrate professionalism in your operation.
Office Setup:
Managing your self storage business will take up most of your time in the office. Therefore, having an organized office is crucial to increase productivity and efficiency.
Your office should be fully equipped with everything you need to manage your business effectively, including necessary furniture, computer systems, storage for paperwork, and office supplies.
A well-equipped and well-organized office enables you to handle customer inquiries, administrative tasks, financial management, and other essential operations smoothly and professionally.
See, Here are Considerations for The Setup of Your Office, for tips and ideas to make your office work for you. Also, have a look at our article About Company Signs.
Having a website for your self storage business offers several benefits. It serves as a virtual storefront, allowing potential customers to find and learn about your services online.
A website provides convenience and accessibility, allowing customers to reserve units, make payments, and access information anytime. It enhances your credibility and professionalism, showcasing your business in a competitive market.
Additionally, a website enables effective marketing, reaching a broader audience and promoting your unique features and offerings.
Overall, having a website boosts visibility, customer engagement, and growth opportunities for your self storage business.
For more, see How to Build a Website for Your Business .
Building an external support team of professionals is crucial for your self storage business. These experts provide valuable advice and services without being part of your payroll.
Ideally, you can engage them to peruse, contract, or hourly. While you may already work with some individuals, recognizing them as part of your team helps acknowledge their significance and encourages adding more members over time.
You don’t need to assemble the entire team before starting, as building professional relationships takes time. However, it’s important to continuously work on expanding and strengthening your team.
Your support team may include an accountant, lawyer, financial advisor, marketing specialist, technical advisor, consultants, and more. Having a strong team of professionals ensures you have reliable support whenever you need their expertise.
For more, see, Building a Team of Professional Advisors for Your Business.
At the early stages of your self storage business, it may be feasible to operate independently without hiring employees. This approach helps minimize payroll expenses, particularly during the initial phase.
However, managing and operating everything single-handedly may become challenging as your business grows. Hiring employees can significantly enhance productivity and efficiency, provided you select the right individuals for the job.
The following are job positions or outsourced services you may want to consider as your self storage business grows and becomes successful:
As your self storage business grows, considering these positions and services can help you manage operations more effectively and efficiently.
For more, see, How and When to Hire a New Employee.
Getting customers through the door.
Attracting customers is essential for the success of your self storage business. Initially, it can be challenging as your operation is new and unfamiliar to people. However, as time passes and you build a good reputation, attracting customers becomes easier.
To gain traction in the early stages, I recommend reading the following article that provides ideas on how to get customers through the door for a new business.
Implementing effective marketing strategies, creating awareness in the local community, and leveraging online platforms can help increase customer visibility and drive traffic to your self storage facility.
As you gain experience and establish a solid reputation, word-of-mouth referrals, and positive customer reviews will attract new customers.
Continuous marketing efforts and excellent customer service will help you build a loyal customer base and ensure the success and growth of your self-storage business.
See our article How To Get Customers Through the Door ; you’ll find a few ideas you can use.
Marketing your self storage business is a continuous endeavor that yields increased revenue. While you can engage a marketing agency or expert, it is not always necessary. Simplify the marketing process by raising awareness about your business whenever opportunities arise.
Bringing awareness to your self storage business can be achieved through various strategies and tactics. Investing time and effort in effective marketing techniques can attract more customers and boost your revenue.
For ideas and insights on bringing awareness to your self storage business, refer to our marketing section, where you can find articles that offer valuable tips and techniques.
These resources will help you develop effective marketing strategies and enhance your overall marketing efforts to drive success in your self storage business.
See our marketing section for articles that will provide ideas to bring awareness to your self storage business.
Focusing on your skill set and evaluating if you possess the necessary abilities is crucial when running a self storage business. Recognize any skill gaps and determine whether to acquire the skills through learning or by hiring someone with expertise in those areas.
Essential Skills for a Self Storage Business Owner:
Hours of Operation to Consider for a Self Storage Business:
Selecting the appropriate hours of operation depends on your target market, customer preferences, and operational feasibility for your self storage business.
Here’s a list of equipment you may need to run a self-storage business:
This list provides a general guideline. Your specific needs may vary depending on the size of your business, the services you offer, and your local regulations and conditions.
In this section of the post, you will find valuable resources to support your self storage business during its operation.
These resources are designed to enhance your understanding of the industry and offer practical tips for improving your business.
Explore these resources to gain insights, stay updated on industry trends, and access valuable information that can contribute to the success and growth of your self storage business.
Examining industry trends and statistics offers several benefits for a self storage business. It provides valuable insights into market demand, customer preferences, and emerging opportunities.
By staying informed, businesses can make informed decisions, adapt strategies, and stay competitive in a dynamic industry.
See the latest search results for trends and statistics related to a self storage business.
Trade associations provide various benefits, such as industry news updates, networking opportunities, and valuable events, enhancing knowledge and connections within the business community.
See the search results for self storage associations.
If you’re planning to install new self storage units instead of purchasing an existing business, it’s important to research the products and services available that meet your specific needs.
Use the link below to explore companies in your area that can provide guidance and assistance with your facility setup.
See the latest search results for the self storage construction companies.
Examining established self storage businesses can inspire innovative ideas to fill gaps in the industry or identify overlooked aspects within your business.
It offers an opportunity to learn from successful practices, discover untapped potential, and enhance the overall operations of your self storage business.
See the latest search results for the top self storage businesses.
Researching the future of the self storage industry provides valuable insights for aspiring entrepreneurs.
It helps identify emerging trends, market opportunities, and potential challenges.
By understanding the industry’s future, individuals can make informed decisions, develop strategic plans, and position their self storage business for long-term success.
See the search results for the future of the self storage industry.
Researching industry prices offers several benefits for someone starting their own self storage business.
It provides insights into pricing strategies, market rates, and competitive pricing.
This knowledge helps in setting competitive prices, maximizing profitability, and attracting customers in a competitive market.
See the latest self storage prices.
Buying an existing self storage business that’s already operational has both advantages and disadvantages:
Benefits of buying an established self storage business:
Disadvantages of buying an existing self storage business:
Consider these pros and cons carefully to make an informed decision about whether buying an existing self storage business aligns with your goals and resources.
See self storage – businesses for sale to browse the latest listings.
Considering a self storage franchise has its advantages and disadvantages, but it’s worth exploring as an alternative to starting a business from scratch.
Pros of buying a self storage franchise:
Cons of buying a self storage franchise:
Carefully evaluate the pros and cons to determine if buying a self storage franchise aligns with your goals, resources, and desired level of control and autonomy.
See self storage franchise opportunities to browse the latest listings.
Knowledge is a powerful tool for your self storage business. Utilize valuable online resources to gather industry insights during research, startup, and operations.
Access the provided links for valuable information to make informed decisions and stay updated on industry trends. Empower your business with knowledge for success.
“A Day in the Life of a self storage business owner” provides valuable tips and insights from industry professionals, offering a comprehensive overview of what to expect in managing a self storage business.
Gain valuable insights and guidance from those with firsthand experience in the industry.
See the search results for a day in the life of self storage business owners.
Interviews with self storage business owners provide crucial information and insights for understanding the industry.
Spending time on this section offers diverse perspectives and valuable insights, helping you gain a comprehensive understanding and set realistic expectations for your own venture.
See the search results for interviews of self storage business owners.
Publications are an excellent source for staying updated on the latest information and trends in the self storage business.
They provide valuable insights, industry news, and best practices, keeping you informed and equipped to make informed decisions for your business.
See the search results for publications related to a self storage business.
Engaging in self storage forums offers the opportunity to participate in discussions on trending topics.
Active forum participation fosters relationship-building with industry peers, facilitating knowledge sharing and networking within the self storage community.
See the latest search results for the top self storage forums.
Courses related to the self storage business offer valuable opportunities to learn, enhance skills, and stay updated in the industry.
These courses provide knowledge and practical insights to improve your expertise and keep pace with the evolving trends in the self storage industry.
See the latest courses related to running a self storage business.
Subscribing to self storage blogs offers a valuable resource for generating ideas and staying informed about industry trends.
By subscribing to relevant blogs and curating a collection of informative sources, you can access a continuous stream of valuable information to support your self storage business.
Look at the latest search results for self storage blogs to follow.
Keeping up with the news is a reliable method to stay updated on the latest developments in the self storage industry.
Setting up alerts ensures timely notifications whenever relevant media coverage occurs. Stay informed and make informed business decisions.
See what’s in the news related to a self storage business?
Watching videos about the self storage industry provides valuable tips and insights. Additionally, exploring related videos suggested by YouTube can uncover new topics and perspectives that you may not have considered before. Expand your knowledge and gain fresh perspectives through video content.
See the links to YouTube Videos Below.
Home » Real Estate
Self-storage facilities rent space on a short-term basis (often month-to-month, though options for longer-term leases are available) to individuals (usually for storing household goods) or to businesses (usually for storing excess inventory or archived records). Some facilities offer boxes, locks, and packaging supplies for sale to assist tenants in packing and safekeeping their goods, and may also offer truck rentals.
Studies show that the industry was worth $38 billion in 2018. Modern storage facilities grew slowly through the 90s, at which time demand outpaced supply and caused a rush of new self-storage developments. From 2000 to 2005, over 3,000 new facilities were built every year in America.
At year-end 2019, there were 47,539 self-storage facilities in the United States on industrial and commercial land parcels. There are more than 1.9 billion square feet of available self-storage in space in the U.S. The six largest publicly traded storage operators (four REITs, and U-Haul) own or operate approximately 18 percent of all self-storage facilities.
1. conduct market research.
The first step in conducting market research for a storage business is to develop market-based research questions in line with your overall business goal and objective. In this regard, you should source information that will help you maximize your business, help you know what your potential market is looking for from a storage facility, and also help you operate your storage business with less stress, thus helping you gain a fair share of the available market in your city.
Yes, the storage service business is quite profitable. Statistics show that the industry generates an average of $33 billion annually in the United States of America. Self-storage facilities can earn around $361,000 to $798,800 gross per year with the states of Maryland, Arkansas, and New York winning the highest number of sales.
It might also interest you to note that, from 2009 to 2018, self-storage facilities averaged an annual ROI of 16.9%. This number was higher than office, industrial, retail, or apartments during that time. Due to such elevated ROI, the self-storage industry is a highly sought-after form of real estate and can often be difficult to find.
No, there are no existing niche ideas when it comes to the storage business, but a self-storage business may also operate as a mobile storage and moving company.
Yes, there are county or state regulations and zoning laws for a storage service business. In the United States, self-storage facilities can be classed as Class A, Class B, and Class C properties, and you cannot legally register a self-storage unit as your business location nor can you invite employees to work from it with you as an official office space. You can, however, run your business from a storage space by using it as a place to store your stock or tools.
Yes, there are franchise opportunities for the storage service business, and here are some of them;
A. what type of business structure is best for storage business.
Even though there are several options when it comes to the business structure of a storage service, the one that most players in this line of business consider is LLC. It is common to consider LLC because providers want to protect themselves from lawsuits.
Please note that an LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed below. Most new single-member LLCs classified as disregarded entities will need to obtain an EIN.
These are some of the certifications you can work towards achieving if you want to run a storage service business;
These are some of the basic legal documents you are expected to have if you want to legally run a storage service business in the United States of America;
If you are considering starting a storage service business, you may not need to file for intellectual property protection, copyright, patent, or trademark. This is because the storage service business does not require one except on rare occasions.
A. how much does it cost to start a storage business.
When it comes to starting a storage service business, the startup cost will vary and it can range from $250,000 to over $1.5 million. This is because, on average, a single-story storage facility costs $25 to $45 per square foot to build, while multi-story costs $42 to $70 per square foot for construction. A high-end storage unit facility has 60,000 and 80,000 rentable square feet and costs $45 to $65 on construction per square foot as estimated by Mako Steel.
It is not compulsory to build a new facility for your storage business, but if you have the required finance, it will pay you to build your storage facility from the scratch. The truth is that building or reconstructing a storage facility will help you come up with an edifice that will conform to what is expected of a standard self-storage in your city.
A. executive summary.
Safe Lock® Self – Storage and Warehouse, LLC is a licensed and secured self–storage facility that will be located in a growing community in Asheville – North Carolina. Our basic aim of setting up the business is to make available self–storage space for our clients who are resided in Asheville and neighboring cities.
We have been able to secure a standard facility in a central location in Asheville. Our self–storage facility has a Five-by-5-foot storage space, Five-by-10-foot storage spaces, 10-by-10-foot storage spaces, 10-by-15-foot storage spaces, 10-by-20-foot storage spaces, 10-by-25-foot storage spaces, and 10-by-30-foot storage spaces available for rental or short–term leasing.
Our mission for establishing Safe Lock® Self – Storage and Warehouse, LLC is to build a standard facility that can favorably compete in the industry in the United States of America.
Our Vision of starting Safe Lock® Self – Storage and Warehouse, LLC is to build a brand that will become one of the top choices of residents and businesses in the whole of Ashville – North Carolina. Our vision reflects our values: integrity, service, excellence, and teamwork.
The goals and objectives of the storage service business are to provide a space on a short-term basis (often month-to-month, though options for longer-term leases are available) to individuals or businesses who want to store their household goods or goods meant for sale et al).
A. swot analysis.
One of the obvious strength that will stand as a plus for Safe Lock® Self – Storage and Warehouse, LLC is the fact that our facility is centrally located in a densely populated residential area in Asheville – North Carolina; our location and high level of security is our major strength.
We equally have a team that can give our clients value for their money; a team that is trained and equipped to pay attention to details and to deliver excellent services. Lastly, our rental package is one of the best that anybody living in Asheville – North Carolina can get; it is cheap and affordable.
We critically looked into our business model and we were able to identify two major weaknesses. One is the fact that we are a new business and the second is the fact that we may not have the financial resources required to match up with existing and well-established self–storage companies when it comes to acquiring large facilities in choice areas.
We are centrally located in one of the busiest and densely populated areas in Ashville – North Carolina and we are open to all the opportunities that the city has to offer. We will be open 24 hours a day during weekends (Fridays to Sundays) and from 6:00 am to 12 midnight from Mondays to Thursdays giving us the advantage to leverage any available opportunity.
Some of the threats that are likely going to confront Safe Lock® Self – Storage and Warehouse, LLC are unfavorable government policies, demographic/social factors, the downturn in the economy which is likely going to affect consumer spending, and lastly, the emergence of new competitors within the same location where our self-storage and warehouse facility is located.
Storage service businesses make money by providing space for businesses, organizations, and individuals to rent and store their personal or business belongings.
A. how much should you charge for your product/service.
We will charge based on storage unit sizes and average monthly cost and they are as follow;
It depends, but typically, a self-storage facility still makes a profit at 60 percent to 70 percent of full occupancy. Currently, the industry average occupancy stands near 90 percent, according to Statista. Many self-storage owners run family operations. However, those not interested in hands-on management simply hire a qualified manager.
The profit margin of a storage service business is not fixed; to a large extent, it will depend on some factors that are unique to your location. But on average self-storage units earn up to 11 percent return on investment per year.
Below is the sales forecast for a Storage service business based on the location of the business and other factors as it relates to such startups in the United States;
A. how do you choose a perfect location for a storage business.
You should be prepared to purchase different types of locks and keys, crates, boxes and pallets et al and also forklifts. You will also need computers and laptops, internet facility, a telephone, a fax machine, and office furniture (chairs, tables, and shelves), and all these can be gotten fairly used.
When it comes to hiring employees for a standard storage service business, you should make plans to hire a competent chief executive officer (owner), facility manager, sales and marketing executive, accountant, facility assistants, front desk officer, and security guards.
It is the norm for new businesses to organize a grand opening party to officially launch their business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party.
The bottom line is that with a proper launching of the storage service business, you will be able to officially inform people in your city that your storage service is open for business.
By: Author Tony Martins Ajaero
Home » Business ideas » Real Estate Industry » Storage Unit
A storage unit business, also known as a self-storage or storage facility business, involves renting out storage space to individuals or businesses on a short-term or long-term basis.
Customers typically rent storage units to store personal belongings, household items, business inventory, or other items that they may not have space for in their homes or offices.
The storage units are usually secure, climate-controlled, and accessible to customers, allowing them to store and retrieve their belongings as needed.
These facilities come in various sizes, ranging from small lockers to larger units that can accommodate furniture, vehicles, or other large items.
Storage unit businesses often provide security features such as surveillance cameras , access control systems, and on-site personnel to ensure the safety of stored items.
Additionally, some facilities offer amenities like 24-hour access, climate-controlled units, and packing supplies for added convenience.
Yes, you can start a storage unit business with no money. A good percentage of the people who started storage units, started the business because they have a space or a facility that they are not making use of. In essence, you can start a storage unit business from a facility you are not using or even from a shipping container.
The whole idea of a storage unit is to provide a safe and secure place where people can store their belongings for a short time.
The only niche storage unit business you may not be able to start with no money is a cold storage unit and a mobile storage unit business.
Conduct market research.
Conducting market research is crucial for understanding the demand, competition, and potential success of a storage unit business.
First, you start by clearly outlining your research goals. Understand what specific information you need, such as the size of the target market, customer preferences, competitor analysis, and potential growth opportunities.
Next, you are expected to define your target customer demographic. Consider factors like age, income, location, and storage needs.
Understand the specific needs and preferences of potential customers in the area where you plan to establish your storage unit business. Examine the local demographics of the area where you plan to operate.
Look at population size, income levels, lifestyle patterns, and other relevant factors. This information will help you tailor your services to meet the specific needs of your target market.
Determine the demand for storage units in your chosen location. Look for signs of increasing population density, a growing number of businesses, or other factors that suggest a need for additional storage space. Identify existing storage unit facilities in the area.
Analyze their services, pricing, and customer reviews. Understand their strengths and weaknesses. This information will help you differentiate your business and identify areas where you can offer better value.
Lastly, develop a marketing strategy based on your research findings. Identify the most effective channels to reach your target audience and promote your storage unit business.
A storage unit business has the potential to be profitable , but like any business, success depends on various factors.
Available data shows that the self-storage market size is estimated at USD 58.26 billion in the current year and is expected to reach USD 72.15 billion by the end of the forecast period, registering a CAGR Of 4.37% during the forecast period.
Keep in mind that profitability might not be immediate; it often takes time to establish a customer base and build a reputation in the market.
Yes, there are existing niches when it comes to storage unit business, and some of them are:
Yes, regulations and zoning laws for storage unit businesses in the United States are typically determined at the local level, which means that they can vary from county to county and state to state.
Zoning laws dictate where certain types of businesses, including storage facilities, can be located and under what conditions they can operate.
Different areas within a municipality or county are designated for specific types of land use. Zoning laws determine whether a storage unit business is allowed in a particular zone.
Storage unit businesses often require permits from local authorities. These permits may cover aspects such as construction, occupancy, signage, and environmental impact.
Zoning laws may specify requirements for the design and appearance of storage facilities, including building aesthetics, landscaping, and signage.
Some local regulations may outline security measures that storage unit facilities must implement to ensure the safety of stored items and the surrounding community.
Local regulations may address the environmental impact of storage facilities, including issues related to stormwater management, waste disposal, and hazardous materials storage.
Zoning laws may include provisions related to traffic flow, parking requirements, and the impact of the storage facility on local transportation infrastructure.
Yes, there are franchise opportunities for storage unit business, and some of them are;
When looking to start a business, before you can begin to file the necessary documents with the constituted authorities or start your website, it is necessary that you come up with a name that you will be recognized with.
It is essential that the name you come up with can easily be pronounced, is unique and easily memorable. Some of the catchy business name ideas suitable for a storage unit business are;
A. what type of business structure is best for storage unit business.
The ideal business structure for a storage unit business is determined by a variety of factors, including the size of the company, the number of owners, the level of personal liability the owners are ready to accept, and the tax consequences of the various business structures.
However, we normally recommend that you start the business with minimal liability. An LLC is a hybrid corporate form that provides the flexibility of a partnership while also providing its owners with limited liability protection.
An LLC can have one or more owners, and the owners are not personally accountable for the debts or liabilities of the business. This business form is frequently used for small to medium-sized organizations.
There is no specific certification required to start a storage unit business.
For a storage unit business, the need for a trademark, copyright, or patent depends on the specific aspects of your business and the services you provide.
If you have a unique company name, logo, or tagline associated with your storage unit business that you want to protect, you might consider registering a trademark. This can help prevent others from using similar marks.
In the context of a storage unit business, you might consider copyright if you create original marketing materials, website content, educational resources, or software. For instance, if you develop unique storage unit software, you could potentially protect them through copyright.
In the context of a storage unit business, patents might be relevant if you develop a new and innovative technology or method that provides a unique advantage in the industry.
A. how much does it cost to start a storage unit business.
The cost to start a storage unit business can vary widely depending on factors such as the size of the business, location, equipment, and supplies needed, staffing costs, marketing expenses, and more.
However, a rough estimate could range from $120,000 to $500,000 or more, depending on the type, size (number of storage units) and scope of the business.
It is not necessary to build a new facility for your storage unit business , especially if you choose to operate from a leased facility. But, if you have the required finance, it will pay you to build your own facility.
The truth is that building or reconstructing a facility for your storage unit business will allow you to come up with a facility that will perfectly fit into your overall business goals and vision.
A. executive summary.
Auckland Group™ Storage Unit Company, LLC is a dynamic and innovative storage unit business set to redefine the storage solutions landscape in San Francisco, California.
Our company is committed to providing secure, convenient, and customizable storage options to meet the diverse needs of individuals and businesses in the bustling urban environment of San Francisco.
Strategically situated in San Francisco, our storage facility is easily accessible to clients. The prime location ensures convenience and meets the growing demand for secure and accessible storage in the city.
Auckland Group™ Storage Unit Company, LLC aims to establish a state-of-the-art storage facility equipped with cutting-edge security features, climate-controlled units, and a user-friendly online booking system. Our commitment is to offer a seamless storage experience for customers seeking reliable and flexible storage solutions.
“At Auckland Group™ Storage Unit Company, LLC, our mission is to redefine the storage experience by providing secure, convenient, and personalized solutions.
We are committed to offering a safe and accessible space for individuals and businesses to store their belongings, coupled with exceptional customer service.
With a focus on innovation and community engagement, we aim to exceed expectations and become the trusted choice for storage solutions in San Francisco.”
Our vision at Auckland Group™ Storage Unit Company, LLC is to be the premier storage destination in San Francisco, setting the standard for excellence in the industry.
We envision a future where our state-of-the-art facilities, cutting-edge technology, and commitment to sustainability make us the go-to choice for customers seeking reliable, flexible, and secure storage options.
The goals of a storage unit business are to provide secure and convenient storage solutions for individuals and businesses.
Objectives include implementing cutting-edge security measures, offering climate-controlled units, fostering a user-friendly experience, achieving financial sustainability, and becoming a trusted leader in the storage industry.
A. swot analysis.
Storage unit businesses generate revenue by renting out storage space to individuals and businesses on a short-term or long-term basis. Customers pay a recurring fee based on the size of the rented unit and the duration of use.
Additional revenue streams may include charges for climate-controlled units, security deposit fees, and fees for added services like packing supplies.
A. how much should you charge for your product/service.
Base Rental Fee: The primary charge is based on the size of the storage unit, typically expressed every month.
Climate-Controlled Unit Fee: Additional charges for units equipped with climate control.
Security Deposit: Refundable upfront payment to cover any potential damages or unpaid fees.
Insurance Premium: Optional or mandatory insurance coverage for stored items.
Access Hours Fee: Some facilities may charge extra for extended access hours or 24/7 access.
Late Payment Fee: Penalties for payments made after the due date.
Admin or Move-In Fee: A one-time fee covering administrative costs and initial setup when renting a unit.
Packing and Moving Supplies: Charges for boxes, tape, locks, and other packing materials available for purchase.
Unit Upgrades or Downgrades: Charges associated with changing to a larger or smaller storage unit.
Transfer Fee: A fee for transferring items between units within the facility.
Special Promotions or Discounts: Discounts for long-term rentals, promotions for new customers, or referral incentives.
Cleaning Fee: A fee for cleaning and preparing the unit after it has been vacated.
The annual profit for storage unit business owners varies widely based on factors like location, facility size, and management efficiency.
On average, small to mid-sized facilities may generate profits ranging from $30,000 to $100,000 per year, while larger operations in high-demand areas can exceed $500,000 annually.
The profit margin of a storage unit business typically ranges from 11% to 30%. Profitability is influenced by factors such as location, occupancy rates, operating expenses, and effective marketing. Well-managed facilities in high-demand areas can achieve higher profit margins within this range.
A. how do you choose a perfect location for a storage unit business.
Hiring employees for a new storage unit business is essential for efficient operations and customer service. Trained staff can handle customer inquiries, maintain security, and ensure the facility’s smooth day-to-day functioning.
Key employees include a facility manager to oversee operations, customer service representatives to assist clients, maintenance personnel for upkeep, and security personnel to monitor the premises.
Organizing an opening party for a new storage unit business can be a good way to introduce your business to the community and create awareness about your services. However, whether or not to have an opening party is ultimately a decision that depends on your business and goals.
If you want to organize a proper launch for your storage unit business, then you must make sure to invite members of the community who may be interested in your services.
On a typical day at a storage unit business , staff engage in customer interactions, assisting with inquiries, reservations, and payments.
Facility maintenance is ongoing, ensuring cleanliness and order. Security measures are regularly monitored, including surveillance systems and access controls.
New units may be prepared for occupancy, and existing units may undergo inspections. Administrative tasks, such as record-keeping and responding to emails or phone calls, contribute to operational efficiency. Marketing efforts, both online and onsite, may be implemented to attract new customers.
Profit and opportunity analysis, how to start a self storage business.
If you've been thinking about starting a self storage business, we make it easy at General Steel. Our self storage building packages require a low initial investment, feature expandable walls so you can accommodate a variety of customers and can be easily expanded in the future. Most importantly, our self storage kits can be erected in a matter of days which allows you to get your business up and running quickly and easily.
Explore the profit analysis below based on industry averages for vacancy and rental rates to uncover the opportunity that exists in the self storage business currently.
No matter where you are in the process of building, General Steel has a solution for you. From our simple 3 step building quote to our growing library of project resources, General Steel is the company you've been looking for.
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In today’s fast-paced world, finding enough space to store personal or business belongings can be challenging. Whether you’re downsizing, relocating, or simply running out of space at home, self-storage offers a practical solution. Self-storage facilities provide a secure environment where you can store items that you don’t need on a daily basis but don’t want to part with either. The following six reasons highlight why self-storage might be the ideal solution for your needs.
Downsizing is a common reason people turn to self-storage. As families grow older, children move out, or lifestyle changes occur, the need for a large home diminishes. However, even when moving into a smaller space, there are often sentimental items, furniture, or seasonal decor that you may not want to discard. Instead of cramming these items into every available nook in your new home, a self-storage unit offers a convenient place to keep them safe. This approach allows you to keep your living space uncluttered while still holding on to items that are important to you.
For business owners, managing inventory can be a challenge, especially if your business involves physical products. Retailers, online sellers, and even service providers can benefit from having extra storage space. A self-storage unit provides a cost-effective way to store inventory, office supplies, or equipment without needing to lease expensive commercial space. This is particularly beneficial for small businesses that are just starting out or for those that experience seasonal fluctuations in inventory. By storing items off-site, you can free up valuable office or retail space, making your operations more efficient. Furthermore, self-storage units often offer flexible terms, allowing you to scale your storage needs up or down as your business grows or changes.
Moving can be one of the most stressful life events, and often, the timing between moving out of one place and into another doesn’t align perfectly. This is where self-storage becomes invaluable. Instead of rushing to move everything at once or worrying about where to keep your belongings if there’s a gap between homes, you can store your items securely in a self-storage unit. This gives you the flexibility to move at your own pace, reducing stress and allowing you to settle into your new home more comfortably. In large cities or areas with high demand, such as self storage units in San Antonio , the convenience of having a nearby storage option can make all the difference during a hectic move. Moreover, knowing your belongings are safe and accessible offers peace of mind during an otherwise chaotic time.
Home renovations, while exciting, often come with the challenge of protecting your belongings from dust, debris, and potential damage. Whether you’re remodeling a single room or undertaking a whole-house renovation, moving your furniture and personal items into a self-storage unit can safeguard them during the construction process. This not only prevents damage but also creates a clear space for contractors to work more efficiently. Additionally, storing your belongings temporarily allows you to better visualize and plan your renovation, as the space will be empty and easier to measure, design, and furnish once the work is complete. Once the renovation is finished, you can move your items back into the updated space, knowing they’ve been kept in pristine condition.
Certain items are only used during specific times of the year, such as holiday decorations, winter clothing, or summer sports equipment. Rather than letting these items take up valuable space in your home year-round, self-storage offers a practical solution. By rotating your belongings in and out of storage based on the season, you can maintain an organized and clutter-free living environment. For example, during the summer, you can store your winter gear, freeing up closet space for summer essentials. When winter rolls around, you can swap out your summer items for holiday decorations and cold-weather gear. This approach not only keeps your home tidy but also ensures that you always know where to find the seasonal items you need.
Life is full of unexpected changes—whether it’s going through a divorce, experiencing the loss of a loved one, or even transitioning into retirement. During these times, you may find yourself needing to temporarily store belongings as you navigate through the transition. Self-storage provides a secure and flexible option to keep your items safe while you focus on adjusting to your new circumstances. For instance, if you’re handling the estate of a deceased family member, a storage unit can serve as a temporary holding space for their belongings until you’re ready to sort through them. Similarly, if you’re retiring and planning to travel, you can store your household items until you decide on your next steps.
Self-storage is a versatile solution that can accommodate a wide range of needs, from managing business inventory to navigating major life transitions. By providing a secure, accessible, and cost-effective option for storing your belongings, self-storage helps you maintain an organized and clutter-free life. Whether you’re downsizing, moving, or simply need extra space for seasonal items, self-storage can make your life easier and more manageable.
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Energy bills will rise by 10% from 1 October, when the main price cap run by Ofgem, the regulator, will increase from £1,568 to £1,717 a year – a rise of £149 in cash terms.
The price cap, updated each quarter, limits what suppliers can charge for each unit of gas and electricity and associated daily standing charges. It does not control the size of bills, which are always determined by the amount of energy used.
The figure of £1,717 reflects the usage of a typical household on a standard credit tariff paying by direct debit. Those paying quarterly by cheque or cash will see an increase in the cap from £1,668 to £1,829, a rise of £161 – these bills are higher because of the associated administrative costs.
The cap for those with prepayment meters will increase from £1,522 to £1,669 a year, a £147 increase. Ofgem will continue to provide additional support to households at risk of losing their energy supply because they cannot afford to top-up their meter.
The upcoming hike reflects increases seen in wholesale markets in recent weeks triggered by fears of supply disruption because of the threat of conflict in the Middle East.
The October cap is £117 cheaper than it was in the fourth quarter of 2023, but the increase follows two successive reductions in April and July and deals a fresh blow to bill-payers who saw average annual energy costs soar above £2,000 in the wake of Russia’s invasion of Ukraine.
Prior to the invasion, the cap stood at £1,277.
There are fears that the increase in energy bills at a time of peak consumption could eventually feed through into inflation figures. The annual rate at which prices are rising edged up from 2% to 2.2% in July.
The hike will also coincide with the withdrawal by the government of the Winter Fuel Payment for those who do not receive Pension Credit.
Joanna Elson at financial support charity Independent Age said: “We urge the government to delay its Winter Fuel Payment decision to ensure the lives of older people in financial hardship are not put at risk as we approach winter.
“Last winter we spoke to too many older people who were forced to make painful cutbacks to reduce their energy bills. We heard distressing accounts of people going to bed in hats and coats and living in only one room as it was cheaper to heat.
“If the government goes ahead with restricting the Payment, before it has an effective way to ensure everyone who needs the financial support receives it, this could be the reality for more and more older people.”
Ofgem has also issued a discussion paper reflecting its ongoing consultation on the use and level of standing charges, which cover the cost of energy infrastructure and support schemes such as the Warm Home Discount.
These charges make a significant contribution to the size of bills and which are criticised for not reflecting consumption levels – someone using no power is still required to pay them.
The regulator is proposing that tariffs be introduced without standing charges, with the costs moved to unit charges, thus incentivising energy saving. But the problem here is that households that have no choice but to use large amounts of energy – perhaps because of essential medical equipment or poor quality housing – would end up on the most expensive tariffs.
Ofgem is inviting views on standing charges . Its consultation closes on 20 September 2024.
The typical bill for household energy could rise by £146 a year in the lead-up to winter, according to the latest trusted forecasts, writes Mark Hooson.
Cornwall Insight, leading analysts in the energy market, has predicted that the price cap for October for a typical dual-fuel household will be £1,714 per year. That’s up by around 9% compared to the current cap of £1,568 a year.
The official figures will be published on Friday (23 August) when the energy market regulator Ofgem makes its quarterly announcement.
Cornwall Insight’s prediction is based on data observed between 1 August and 16 August. The cap is expected to rise again the following quarter starting from January 2025.
Dr Craig Lowrey, principal consultant at Cornwall Insight commented: “Following two consecutive falls in the cap, I’m sure many hoped we were on a steady path back to pre-crisis prices. However, the lingering impact of the energy crisis has left us with a market that’s still highly volatile and quick to react to any bad news on the supply front.”
Dr Lowrey added that, while a return to the extreme prices of recent years is not expected, it’s unlikely that bills will return to what was once considered normal without ‘significant intervention’.
He said: “The government will need to adopt a two-pronged approach to tackle rising energy bills. Immediate action is needed to ease the financial burden on households – such as the introduction of social tariffs, or reform of the price cap – but that’s only part of the solution. We must also develop a long-term strategy to secure our energy future. This means a fundamental overhaul of our energy system, with a strong emphasis on increasing domestic energy production.
“Simply waiting for prices to drop on their own isn’t an option, we need a proactive and forward-thinking approach to ensure long lasting energy affordability and security.”
Richard Neudegg, director of regulation at energy comparison website Uswitch.com, said: “This prediction compounds the worry that energy bills are going to rise just as we reach the season to switch the heating back on.”
However, he added that bill payers can take action now to lock in certainty on how much they pay: “There are a number of 12-month fixed deals available at rates cheaper than today’s firm prediction, so run a comparison to see what energy tariffs are available to you.”
The latest prediction follows news that the new Labour chancellor Rachel Reeves will scrap the universal Winter Fuel Payment , with payments being made only to those on means-tested benefits, including Pension Credit.
The annual payments, worth between £100 and £300, were previously paid automatically to anyone claiming the state pension.
While some have welcomed the move, pointing out that wealthier pensioners and even some expats in other countries were eligible for the payments, charity Age UK has launched a petition to reverse the decision, claiming that two million pensioners who badly need the money will not receive it.
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Today, 1 July 2024, sees the energy market’s domestic price cap fall by 7%, taking it from £1,890 to £1,568 – a fall of £122. But this is almost almost £300 above the level of the cap prior to Russia’s invasion of Ukraine in February 2022, when the cap was £1,277.
The cap, set by the regulator, Ofgem, limits what suppliers can charge per unit of gas and electricity consumed along with associated standing charges. It is not a cap on the size of bills, which are determined by consumption.
The £1,568 figure represents the annual energy bill for a household with average consumption on a dual-fuel tariff and paying by direct debit. It applies to households in England, Wales and Scotland – Northern Ireland has its own energy market, which is not regulated by Ofgem.
For an average household paying by prepayment meter the cap has fallen to £1,522 a year, while for an average household paying by standard credit (cash or cheque) the cap is £1,668 a year.
The average household is said by Ofgem to use 2,700 kWh of electricity and 11,500 kWh of gas a year. Those paying by direct debit and prepayment meter pay less because of lower administration costs.
Ofgem reviews the price cap and sets a level on how much a supplier can charge every three months. The next price cap will be announced on 27 August 2024 and will come into effect on 1 October 2024.
Market Analyst Cornwall Insight is predicting that the main cap will then increase by £156 to £1,723.
Dr Craig Lowrey, principal consultant at Cornwall, said: “We are still facing an average 10% increase in bills from October, and as winter approaches this will put a strain on many household finances.
“While long-term solutions are being developed, it’s critical to focus on immediate strategies to manage energy bills. Most political parties have proposed reforms to how energy bills are structured, with a review of standing charges front and centre. However, any change to bills creates winners and losers, so we urge whoever is in government come 5th July to proceed with caution.
“Additionally, we would encourage greater discussion on other reforms, such as social tariffs, which could support the pursuit of lower bills over the following months and years.
“Looking to long-term bill reduction, we’ve heard pledges about investing in wind farms, solar power, nuclear energy, and other renewable infrastructure from various parties. However, concrete details on the implementation of these plans are scarce. It’s essential to be transparent with the public, these initiatives require substantial investment – and therefore cost – and time to come to fruition.
“While renewables are the path to sustainable bill reductions, it will take a long time for households to see these changes reflected in their bills.”
Mike Thornton, chief executive of Energy Saving Trust, said: “Today’s confirmation that energy prices are coming down for the next quarter is very welcome. However, no one should take this lower price cap as a sign of stability. Forecasts show that energy prices are set to rise again this autumn and will stay high overall for the next decade.
“After the election the incoming UK government must prioritise policies that support people to use less energy and install cost effective energy efficiency improvements in their homes. This will be fundamental to bringing down energy bills, reducing carbon emissions and guaranteeing our energy security for the long term.
“A co-ordinated, long term retrofit plan for England which incentivises measures from improved insulation to electrified heat must be central to any incoming UK government’s ambition. Now is the time to commit to making our homes ready for a net zero future and ending our dependence on volatile international fossil fuel markets for good.”
Although energy prices are at their lowest rate since February 2022, when Russia’s invasion of Ukraine triggered a global energy crisis, the cost of energy remains higher than pre-pandemic levels.
Currently, the cheapest energy deal for a typical dual fuel customer, paying by direct debit is just under £1,490 – around £78 cheaper than the price cap. The EDF Energy EDF Ensure Jul25 is a variable rate tracker deal.
Although this deal is currently the cheapest, it is subject to change every three months in line with Ofgem’s price cap. That means if the price cap increases, this tariff will become more expensive.
Customers may be able to save money by opting for a fixed rate energy tariff. That’s because a fixed rate deal locks in a set price for the duration of the deal. The cheapest fixed rate deal is the Outfox the Market Super Fix’d 12m Jun-24 v3.0 tariff.
A typical household can expect to pay around £130 per month or just over £1,560 for this deal. It levies an exit fee of £25 per fuel should you switch to a different tariff more than 49 days before this deal ends. For more money-saving tips, read our guide on how to cut your energy bills .
Domestic energy bills will fall in July when the latest price cap drops from £1,690 a year for an average household to £1,568 – but prices remain almost £300 above where they stood before Russia’s invasion of Ukraine in February 2022, when the cap was £1,277.
The cap is set by the regulator Ofgem each quarter, so the upcoming 7% reduction will apply until the end of September. The fall is attributed to lower wholesale energy prices, which rose steeply when western nations imposed sanctions on Russia following the outbreak of hostilities.
The cap does not limit the size of bills, which are always determined by consumption. Instead, it sets a maximum rate per unit of energy used, along with a cap on associated standing charges, which are paid regardless of usage.
Ofgem is conducting a review of the way the cap works. Critics argue that standing charges should be reduced or scrapped because they do nothing to incentivise energy saving, but the counter argument is that resulting higher unit charges would penalise many vulnerable consumers, including the sick and elderly, who use large amounts of energy.
Energy prices are expected to feature prominently in the manifestos of political parties in the run-up to the General Election on 4 July.
The revised July cap means:
The component of the cap represented by standing charges is unchanged, with reductions in gas and electricity unit prices accounting for the fall.
The cap – which applies in England, Wales and Scotland (Northern Ireland has its own energy market which is not regulated by Ofgem) – was introduced by Theresa May’s government in 2019, when it stood at £1,137. It rose to over £3,500 at the peak of the energy crisis, as which point the present government introduced subsidies to keep bills at around £2,100 a year.
In January 2022 the cap stood at £1,277, but the following April it leapt to £1,971 following the embargo on imports of Russian natural gas.
Domestic energy bills for typical households could fall by over £100 a year from July, according to analyst Cornwall Insight, writes Brean Horne.
The energy price cap, which represents the annual cost of gas and electricity for a household with average consumption on a dual-fuel tariff and paying by direct debit or using a prepayment meter, is set each quarter by the regulator, Ofgem. It fell by 12% on 1 April to £1,690 a year thanks to lower wholesale prices, and Cornwall Insight believes it will fall a further 7% for the third quarter of the year to £1,574.37.
Energy supplier EDF is forecasting the Q3 cap could fall to £1,568, again for a household with average consumption levels (2,700 kWh of electricity/11,500 kWh of gas per year).
If the predictions are correct, this drop would represent a 25% decrease compared to last summer, with prices around £500 lower than July 2023.
Energy prices are at their lowest level since February 2022, when Russia’s invasion of Ukraine sparked a global energy crisis. However, even with July’s predicted fall, they remain higher than pre-pandemic norms.
Dr Craig Lowrey at Cornwall Insight said: “We must recognise lower prices don’t erase all the problems. The very fact we are still seeing bill levels which are hundreds of pounds above pre-crisis levels underscores the ongoing challenges faced by households.
“Although a reduction in the price cap could save households money, the affordability of energy bills remains a concern.”
Ofgem is reviewing the way the price cap operates. This includes whether standing charges, the fixed daily amount that you pay on your bill regardless of how much energy you use, should be changed.
Mr Lowrey said: “While the cap is certainly not the ticket back to long-term energy bill affordability, Ofgem’s review could pave the way for fairer, more efficient energy bills. However, given the breadth of reforms being considered by the regulator, it is worth remembering that such changes will inevitably lead to trade-offs.
“For example, reducing standing charges, while seemingly beneficial for low-energy users, could lead to higher unit prices. This could disproportionately impact those in less energy-efficient homes or with greater energy needs, some of whom could be vulnerable. Finding the right balance is crucial.
“The path forward for energy pricing remains uncertain, and with stakeholders advocating for reforms – coupled with a general election on the horizon – energy bills are likely to be an area of continued debate and transformation in the months ahead.”
Switching to a fixed-rate energy deal could help households lock in a cheaper rate and save money. Shopping around and comparing deals can help reveal the best option.
But you’ll need to watch out for extra charges, such as early exit fees, that could affect the overall savings made if you switch to a fixed-term deal.
Currently, the cheapest fixed rate deal for a typical dual fuel customer who pays via direct debit is just under £1,620 per year, putting it £45 higher than the forecast Q3 cap (based on data from Uswitch for a typical dual fuel customer paying by direct debit).
The deal – EDF Essentials 1Yr Jun25 – levies a £25 per fuel exit fee, charged if you choose to switch to a different deal before the 12-month contract is up. However, under Ofgem’s rules, exit fees don’t apply if you switch within 49 days of your deal coming to an end.
Signing up for this tariff means you agree to have a smart meter installed if you do not already have one.
For more money-saving tips, read our guide on how to cut your energy bills .
Our energy partner, uSwitch , is offering a new 12-month fixed-rate tariff from EDF which is priced at £110 below the regulator Ofgem’s energy price cap for 1 April – 30 June 2024.
It’s the cheapest energy-only fixed-rate tariff available on the switching site since October 2021.
The price cap stands at £1,690 a year for a household using a typical amount of gas and electricity (2,700 kWh of electricity/11,500 kWh of gas per year) and paying by direct debit, putting the EDF equivalent cost at £1,580.
Note, however, that the cap does not limit the size of your bill. It controls how much suppliers can charge for each unit of energy consumed, as well as associated standing charges. Actual bills are always determined by consumption.
The new deal – EDF Essentials 1yr May25 – comes with a £25 per fuel exit fee. This will be levied if you decide to switch again within the 12-month term (although Ofgem rules say such fees cannot be levied within 42 days of the deal coming to an end).
uSwitch points out that analyst Cornwall Insight is predicting that the price cap could fall by around 8% from £1,690 to £1,560 for the three months from July to September 2024, which may in turn trigger the release of cheaper deals than those currently available.
The new EDF plan requires paperless billing and, when bought through uSwitch, is not available to existing EDF customers or to those with prepayment or pay-as-you-go meters (only standard and Economy 7 meters can access the deal).
Forecasters are optimistic about prices in the near term because of falling wholesale prices, particularly for natural gas, which is used in the UK to power electricity generation.
Citizens Advice has issued a warning about increasing levels of court action being taken against people who are behind on their energy bills.
The number of customers the charity is helping with county court judgments (CCJs) issued on behalf of energy firms is increasing. Between 2020 and 2022 Citizens Advice saw a 30% increase in the number of people affected, but last year that number nearly doubled, jumping from 179 in 2022 to 349 in 2023.
The charity is concerned this could force bill payers further into debt, since CCJs can leave people paying higher rates of interest on borrowing.
Madison Stefanuik, a debt caseworker at Citizens Advice, said: “People are coming to us about this problem more and more often. It’s usually people who are struggling to make ends meet, often trying to prioritise rent and council tax. As a result, they’ve fallen behind on energy bills and have been hit with a CCJ.
“Since rules were tightened on prepayment meters, we’ve noticed some energy suppliers are increasingly using CCJs and sending in bailiffs to force customers to pay their debts.
“What’s troubling is that energy debts aren’t regulated by the Consumer Credit Act, meaning suppliers can go to the High Court quite quickly after a CCJ has been granted – at which point bailiffs can get involved. This is when people usually come to us for help, because they’ve got aggressive bailiffs knocking at the door and don’t know what to do.”
Dame Clare Moriarty, Citizens Advice chief executive, said: “Getting a CCJ can be devastating. It can ruin people’s finances and plunge them further into debt. That’s why Ofgem must introduce new permanent protections to halt this worrying trend as soon as possible.”
The latest analysis from Ofgem shows energy debt rose by £2.8 million a day in the last six months of 2023, reaching a record figure of £3.1 billion.
Citizens Advice is calling for a long-term plan to tackle spiralling energy debt, including new protections for people who are in debt to their supplier. Currently, there are no rules on when it is acceptable for suppliers to use CCJs.
Energy suppliers are expecting to pay over £540,000 in compensation to 2,500 ‘vulnerable’ customers who were wrongly moved onto prepayment meters, according to data from the industry watchdog Ofgem, writes Brean Horne.
The regulator ordered providers to review cases where prepayment meters were involuntarily fitted between 1 January 2022 and 31 January 2023 to identify customers eligible for compensation because of their vulnerable status, as defined by Ofgem.
So far, suppliers have paid £342,450 in compensation to 1,502 customers, with £200,000 to be paid to a further 1,000. Compensation levels for each customer vary depending on their circumstances and the harm they experienced.
Involuntary fitting of prepayment meters is allowed where the customer is heavily in debt with their credit meter account and shows no signs of paying, unless the household is deemed vulnerable under Ofgem’s definition (see below).
Last year a report in The Times revealed that customers were being forced to accept a prepayment meter despite their being classed as vulnerable. As a result, involuntary installation was paused by Ofgem while an investigation took place. It restarted earlier this year, with only a limited number of suppliers allowed to carry it out.
Currently, these are E.ON, EDF, Octopus, Scottish Power, Tru Energy, Utilita and Utility Warehouse.
The compensation figures for British Gas are not included because the energy firm – Britain’s biggest, with seven million customers – is being investigated separately by Ofgem.
Energy suppliers are identifying affected customers by looking at the accounts of people with known vulnerabilities, or where complaints have been made. They have also contacted all prepayment meter customers to check whether it is still a suitable way for them to pay.
A spokesperson for Ofgem said: “We are working closely with suppliers to make sure they identify all eligible consumers and pay appropriate levels of compensation promptly.”
The news follows the publication of Ofgem’s ‘multiyear’ strategy – ‘Protect, Build, Change, Deliver’ – which sets out how it intends to deliver “clean, secure and fairly-priced” energy.
The strategy is designed to help customers deal with the financial impact of the 2022 energy crisis, which saw debt levels reach record highs. Ofgem also aims to achieve a net zero energy system and transition from gas to renewable energy sources as part of its plans.
You may be eligible for compensation if your energy company wrongfully installed a prepayment meter or switched you from a smart meter to prepayment meter mode.
If you think you have been affected, contact your energy supplier to explain your circumstances and make a complaint. Your supplier will investigate your case and your complaint may be referred to the Energy Ombudsman and Extra Help Unit if you need extra support.
Suppliers must be approved by Ofgem and follow strict rules before they can install a prepayment meter without a customer’s permission.
This includes making at least 10 attempts to contact the customer about their energy bill arrears and conducting a welfare visit before the prepayment meter is installed.
Under current rules, suppliers must protect vulnerable customers and are not allowed to force-fit prepayment meters in households with:
The list of approved suppliers is subject to change but customers can check whether a firm is authorised to force-fit a prepayment meter on Ofgem’s website .
If you are worried about affording your energy bills, it’s important to contact your supplier as soon as possible. Our guide on how to get help with your energy bills also shares more support available to assist with keeping on top of your energy bills.
Today, 1 April 2024, sees the energy market’s domestic bill price cap fall by 12.3%, taking it from £1,928 to £1,690. This is the amount an average household can expect to pay in a year if they have a dual fuel gas and electricity tariff and pay by direct debit or have a prepayment meter.
Households using average amounts of energy should see their bills fall by around £20 a month. However, the start of April also sees hefty increases in council tax, water bills, broadband and mobile phone tariffs, and vehicle excise duty for most cars, reducing the net benefit in many instances.
The energy cap, which re-sets every three months based on historic wholesale prices monitored by Ofgem, the regulator, does not limit the size of actual bills. It is a cap on how much suppliers can charge for units of gas and electricity consumed and associated standing charges.
Typical consumption rates for an average household – 11,500 kWh per year of gas and 2,700 kWh per year of electricity – are used to work out the cap amount.
Most people are on energy tariffs that reflect the cap’s limits on the price per unit of energy and on standing charges, but there are a small number of cheaper deals where the price is fixed, usually for 12 months. You can run a quick comparison to see what is available here .
These fixed-rate tariffs usually come with an exit fee if you wish to move tariff before the end of the fixed period. These start at around £50 per fuel but can be much higher, so are worth considering if you think there’s a possibility you might want to switch in the near future if the cap falls further (note that exit fees cannot be charged if you are within 42 days of the tariff end date).
Market analyst Cornwall Insight predicts that the price cap will fall again from £1,690 to £1,560 on 1 July before rising to £1,631 on 1 October. Its estimate for the first quarter of 2025 is £1,634, but it is generally agreed that predictions further into the future are inherently less reliable because of the vulnerability of wholesale prices to world events and weather-driven demand.
In the winter of 2021-22, the price cap was below £1,300, so even with today’s, it remains at an elevated level in historical terms. The regulator, Ofgem, has opened a consultation on the future of pricing regulation, having concluded that the current arrangement will not work efficiently as new tariffs emerge with variable pricing structures based on supply and demand (see story below).
Market regulator Ofgem is consulting on the future of its price cap, which limits how much suppliers can charge customers for each unit of gas and electricity they use, as well as for associated standing charges.
The cap is set quarterly. At present it stands at £1,928 but from 1 April 2024 it will fall by 12.3% to £1,690. This is the amount an average household can expect to pay in a year if they have a dual fuel gas and electricity tariff and pay by direct debit.
Actual bills are always determined by consumption – the cap does not limit how much you will pay. It is determined by movements in wholesale energy prices in the three months before it comes into force.
Ofgem says the cap, which was introduced in 2019, has helped protect customers from the worst effects of the spike in energy prices that followed the Russian invasion of Ukraine. But critics point out that the government stepped in to limit typical bills to £2,500 a year when the cap soared above £3,000 in October 2022 and £4,200 in January 2023.
The consultation, which runs until 6 May, will explore ways in which the cap might be developed “so customers remain protected as the energy market evolves to a smarter, more flexible system.”
This refers to the introduction of ‘time of use’ tariffs that offer electricity at different prices during the day, allowing consumers to use appliances and devices when general levels of demand are low and unit prices are cheaper.
Tariffs designed to cater for the increasing number of households charging their electric cars overnight are also starting to appear.
Ofgem said: “Energy markets are changing as increasing numbers of consumers change their energy consumption and begin using electric vehicles, heat pumps and solar panels.
“Our increasingly renewables-dominated electricity sector will also reward consumers for shifting the time of their electricity consumption, which will in turn reduce costs for everyone.
“As customer diversity grows, and more households adopt time-of-use tariffs, it could become harder to retain a universal price cap that is suitable for everyone. [We are] considering how the price cap, and energy regulation as a whole, needs to adjust to ensure customers are protected, they continue to pay a fair price for their energy, and they get to realise all the benefits of net zero.”
As part of consultation discussion paper, Ofgem has set out a range of options for the future of the price cap, including:
Acquisition-only tariffs are deals that are only available to new customers. There is currently a temporary ban on such offers, recently extended for 12 months, which was introduced to prevent suppliers from subsidising such deals with profits from existing customers.
Ofgem is also currently reviewing over 30,000 responses to its call for input on standing charges , which closed in January.
Responses to the price cap consultation can be sent to [email protected] by Monday 6 May 2024.
Ofgem, the energy market regulator, is reducing its price cap on the cost of gas and electricity by over 12% from 1 April, a move which will knock £238 a year off typical bills, writes Kevin Pratt.
The cap limits what suppliers can charge for each unit of power they supply and for associated standing charges. For an average household with a ‘dual fuel’ gas and electricity tariff paying by direct debit, the cap will work out at £1,690 when it is changed at the start of the next quarter.
This is a 12.3% fall on the current cap of £1,928.
The estimated four million customers with prepayment meters will be subject to the same level of cap, as Ofgem is permanently removing the ‘premium’ that has previously been added to their bills.
Those who pay on receipt of their bill by cheque or cash will continue to pay around 5% more for their energy because of the administration costs involved.
The cap, which is updated every quarter, does not limit the size of bills, which are always determined by consumption. The cap’s assumed ‘average consumption’ figures are 11,500 kWh per year of gas and 2,700 kWh per year of electricity.
Ofgem says the change in April will see energy prices reach their lowest level since Russia’s invasion of Ukraine in February 2022, which helped push wholesale prices for gas and electricity to record levels. Domestic prices followed suit, prompting the government to intervene in October of that year with its Energy Price Guarantee.
This capped bills at an average of £2,500 a year. Government payments totalling £400 were then paid to households over the winter of 2022/23 to subsidise bills further.
The price cap was as low as £1,300 as recently as early 2021. Ofgem concedes that customers are struggling with the high cost of bills, pointing to record consumer energy debt levels of £3.1 billion.
The new cap includes a payment of £28 per household, spread across a year, to enable suppliers to write-off unrecoverable debt. Those on prepay meters will not be charged this sum because, due to the nature of their payment method, debt levels are not as chronic as for credit meter customers.
Jonathan Brearley, Ofgem’s chief executive, says the regulator is working on measures to address levels of existing debt: “We’ll be stepping back to look at issues surrounding debt and affordability across the market for struggling consumers, which we’ll be announcing soon.
“These steps highlight the limitations of the current system – we can only move costs around – so we welcome news that the government is opening the conversation on the future of price regulation, seeking views on how standard energy deals can be made more flexible so customers pay less if using electricity when prices are lower.
“But longer term we need to think about what more can be done for those who simply cannot afford to pay their energy bills even as prices fall. As we return to something closer to normality we have an opportunity to reset and reframe the energy market to make sure it’s ready to protect customers if prices rise again.”
Ofgem says it is encouraging the return of switching tariff, where customers move to a more competitive deal, by reducing the time it takes to switch to five days. It is also removing the ‘market stabilisation charge’, which requires companies to pay compensation to a new customer’s previous supplier when they switch.
However, the regulator has extended its ban on ‘acquisition-only’ tariffs by 12 months, a move which is being seen as a potential barrier to competition.
These tariffs enable companies to offer deals exclusively to new, not existing, customers. They were banned because of fears that aggressive pricing during periods of wholesale price uncertainly could put companies’ financial stability at risk if wholesale prices moved against them.
Ofgem says it decided against removing the market stabilisation charge and the ban on acquisition-only tariffs because to do both simultaneously might jeopardise “a phased and responsible return towards normality in the market.”
It says it wants to prevent “a return of the risky behaviours which contributed to the high number of supplier failures during the energy crisis.”
The energy price cap will incorporate a £16 ‘adjustment’ for the year April 2024 – March 2025 if proposals put forward by the regulator to tackle bad debt are given the green light.
The amount – equivalent to around £1.33 a month for credit meter billpayers – would be used by suppliers to fund a range of consumer support measures introduced by Ofgem.
These took effect yesterday (14 December) having been announced on 18 October (see story below). They include helping customers who are in debt by:
Ofgem argues that current levels of debt – estimated at £3 billion – pose a risk to supplier viability. If companies were to fail, additional costs would be heaped on consumers as the market absorbed ‘orphaned’ customers whose supplier had gone bust.
The cost of allocating customers of around 30 failed firms during the energy crisis triggered by the war in Ukraine in February 2021 is reckoned to be around £6 billion pounds.
In Ofgem’s terms, ‘bad debt’ refers to the amount of money owed by customers across the energy market which is unlikely to be repaid. The regulator says the adjustment to the price cap is crucial to ensure that the burden of this increased debt falls as fairly as possible.
It said: “The scale of this debt means that it is crucial that suppliers have sufficient funding to ensure they can meet the strict regulations Ofgem has in place around how they treat customers facing payment difficulties. This adjustment to the price cap will ensure suppliers have the resources to support customers struggling with debt.
“Other sectors already commonly make provisions within their prices for bad debt costs. However, the regulated nature of the energy sector means that Ofgem is able to use the price cap mechanism to ensure these costs are recovered as fairly and efficiently as possible.”
Under Ofgem’s proposals, any extra costs added to the price cap would not be passed onto customers with prepayment meters.
This reflects the fact that many of these customers do not build up the same level of debt as credit customers (who pay in arrears) because prepay meters work on a ‘pay-as-you-use’ basis.The consultation runs until 17 January 2024. Details, including how to respond, can be found on the Ofgem website .
Ofgem, the energy market regulator, is increasing its price cap on domestic customer bills by 5% from 1 January 2024, effective for the first quarter of the year. The latest figures from the Office for National Statistics show inflation running at 4.6% in October.
For an average household paying by direct debit for a dual fuel tariff (gas and electricity from the same supplier), this means a rise of £94 in annual bills from £1,834 to £1,928.
For customers who pay by standard credit on receipt of a bill (cash or cheque) , the default cap will increase by £99 from £1,959 to £2,058 for typical dual fuel consumption, while the cap for prepay customers will increased by £99 from £1,861 to £1,960, again for average dual fuel consumption.
Ofgem says the increase “is driven almost entirely by rising costs in the international wholesale energy market due to market instability and global events, particularly the conflict in Ukraine.”
It says it will use “all levers” to ensure costs are spread fairly and customers struggling with bills are supported.
‘Average consumption’ is deemed to be 11,500 kWh per year of gas and 2,700 kWh per year of electricity. Ofgem’s cap does not put a ceiling on bills, which will always be determined by the amount of energy consumed.
The price cap is updated every quarter and limits how much customers can be charged per unit of energy and in standing charges.
Earlier this month, Ofgem opened a consultation into possibly replacing or overhauling standing charges, which are paid regardless of consumption and are seen by many as a disincentive to reducing consumption (this runs until 19 January – see story below for details on how you can submit your views).
Ofgem boss Jonathan Brearley said: “This is a difficult time for many people, and any increase in bills will be worrying. But this rise – around the levels we saw in August – is a result of the wholesale cost of gas and electricity rising, which needs to be reflected in the price that we all pay.
“It is important that customers are supported and we have made clear to suppliers that we expect them to identify and offer help to those who are struggling with bills.
“We are also seeing the return of choice to the market, which is a positive sign and customers could benefit from shopping around with a range of tariffs now available offering the security of a fixed rate or a more flexible deal that tracks below the price cap.
“People should weigh up all the information, seek independent advice from trusted sources and consider what is most important for them whether that’s the lowest price or the security of a fixed deal.”
Today’s announcement confirms plans to remove the ‘prepayment meter premium’ to ensure that prepay customers are charged the same standing charge as direct debit customers.
Previously, customers with prepay meters have been charged more to cover additional costs.
In addition to its proposal to remove the prepay premium permanently once government subsidies are removed in April, Ofgem also wants to overhaul the way the costs of bad debt are shared among standard credit customers (those who pay on receipt of a monthly or quarterly bill for the exact amount of energy used) and those who pay by direct debit.
If adopted in the round, the proposals would save pre-pay customers around £50 a year, reduce standard credit bills by around £45 a year but add around £20 a year for direct debit customers.
Ofgem is keen to hear views on this proposal from all interested parties.
The price cap to take effect in April will be announced in February. Analyst Cornwall Insight is predicting that the main cap will fall back to around £1,850 at that point.
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Ofgem, the energy market regulator, wants to know what people think about standing charges, and how they might be replaced, writes Mark Hooson.
Energy customers pay standing charges at a daily rate to their suppliers as part of their bills, regardless of how much gas or electricity they use. Critics say this can act as a disincentive to cutting consumption.
Under the current energy price cap, customers can be charged up to 53 pence per day standing charge for electricity, and 30 pence per day for gas. A new cap will be announced in the coming days to take effect from 1 January 2024.
Analyst Cornwall Insight is predicting that the energy price cap – currently £1,834 ayear for a typical household paying by direct debit – will rise by 5% to £1,931 on 1 January 2024. It says the figure will be £1,853 for the second quarter of the year, £1,824 for Q3 and £1,863 for Q4.
It is forecasting a steep increase in the electricity standing charge from April – up to 61 pence per day from 53 pence – on account of a reform of network charges by Ofgem.
Standing charges can be likened to line rental on a phone contract. Suppliers spend the income they generate on maintaining the infrastructure they use to deliver energy.
Last month, figures from the Office for National Statistics showed around 4 in 10 adults (39%) who pay energy bills said it was ‘very or somewhat difficult’ to afford them.
Today, 16 November, energy regulator Ofgem is asking charities, consumer groups, businesses, suppliers and bill payers for their views on standing charges, and wants ideas for what they might be replaced with.
Any interested parties, including bill payers, can email their views to: [email protected] by Friday 19 January, 2024.
Tim Jarvis, Ofgem’s director for markets, said: “We know that standing charges have provoked a huge amount of debate in recent months and, with wider cost of living pressures meaning customers will continue to struggle with bills, now is the right time to look at this again.”
Standing charges are covered by the energy price cap, which limits how high suppliers can set them, but many still see them as unfair.
Standing charges vary by region, with those on Merseyside and in north Wales paying more than those in the south east of England. Energy customers on pre-pay meters have also historically paid more in standing charges than direct debit bill payers.
Pre-pay customers are currently subsidised through the government’s Energy Price Guarantee, but that support is due to end in March 2024. Ofgem says it is working on a replacement for the scheme.
While most suppliers do levy standing charges, they’re not obliged to. The few that don’t have standing charges, such as Utilita, instead add the cost to the unit prices of the energy they supply.
On the one hand this means customers only pay for what they use, but higher unit costs might disadvantage customers who cannot reduce their energy consumption, such as those with disabilities, the elderly and those dependent on medical equipment.
Mr Jarvis said: “It’s a complex issue and, while an upfront set fee to cover a supplier’s fixed costs works for some, it doesn’t work for others. Equally, spreading the costs differently might help some, but our previous analysis has found it can also penalise some really vulnerable households.
“However we proceed, there is a difficult balance to be struck, which is why it is important that as many people as possible respond to our call for input with their experiences of it, how it affects them and what the alternatives could be.”
Ofgem analysis found that, while moving to a charge related to how much energy customers use would benefit low-income households overall, there could be a significant number of customers made worse off.
Its case studies show that around 1.2 million low-income, high-usage households with electric heating would be worse off by roughly twice as much as those who would benefit.
Energy bills will rise next year, according to analyst Cornwall Insight’s forecasts for the regulator’s price cap, writes Candiece Cyrus .
The cap, which limits the amount suppliers can charge their customers in standing charges and for each unit of gas and electricity they use, is set quarterly by Ofgem, based on wholesale energy prices.
Cornwall Insight predicts the cap, which is adjusted quarterly, will rise in January from its current level of £1,834 a year to £1,923 a year (figures are for an average energy consumption household on a dual fuel tariff paying by direct debit). This is steeper than the rise to £1,898 a year it predicted in September.
The analyst forecasts that the cap will rise to £1,929 a year in April, fall to around £1,880 in July and rise again to around £1,917 in October, keeping it above its current level throughout 2024.
In September, the analyst predicted the cap would fall below its current level from April next year to £1,820, then £1,781 in July before rising to around £1,825 in the fourth quarter.
Cornwall Insight’s new forecasts take into consideration volatility in the market caused by the Israel-Hamas conflict, industrial action at liquid natural gas facilities in Australia and damage to Finland’s Balticconnector gas pipeline.
Similar to Russia’s invasion of Ukraine, these events highlight the potential threat of disruption to the UK’s energy supply, particularly this winter, as temperatures drop.
The National Grid ESO confirmed earlier this year that it would offer the Demand Flexibility Service this winter, offering households and businesses with smart meters the opportunity to earn discounts on their electricity bills by using less energy during peak usage hours.
The service is only used when there is a threat of energy demand outstripping supply.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “The jump in price cap predictions since September has once again highlighted the vulnerability of UK energy prices – and customer bills – to geopolitical events.
“The Russian invasion of Ukraine demonstrated there is a delicate balance in the global energy market which can easily be disrupted by unexpected events, and it looks as though the current situation is repeating that pattern.
“The government needs to take steps to proactively limit the impact that such situations have on the UK’s energy market, and already stretched households, rather than reacting to events as they occur. Stop-gap measures such as social tariffs and one-off payments are helpful, but they are not a long-term solution.
“While the UK will never be entirely protected from global price increases, reducing the country’s reliance on imported energy and prioritising sustainable, domestically sourced energy will help protect the country from international energy shocks, and work to stabilise prices over the next decade.”
Energy customers could see almost £3 billion added to their bills to cover the cost of protecting consumers when their suppliers went bust during the energy crisis in 2021, writes Candiece Cyrus.
The House of Commons Public Accounts Committee says around £2.7 billion of taxpayer money was used to cover the cost of transferring customers of 28 failed firms, with the expectation being that this will be recouped through energy bills.
But the Committee says this figure could rise to over £2.9 billion once the cost of rescuing 1.5 million customers of the largest corporate failure, Bulb, are taken into account.
The Bulb case alone cost taxpayers a total of £3.206 billion, and the government is only expected to recoup £2.96 billion from Octopus, which acquired Bulb’s customers – and that figure is dependent on Octopus’s commercial success.
The Committee fears the estimated £246 million shortfall may be borne by bill-payers at a time when household budgets are already stretched by the cost of living crisis.
The Committee added that some households that need support with their bills are not receiving it, saying only 76% of credit vouchers that were issued to households on prepayment plans last winter have been redeemed.
Some energy customers have reported not receiving their vouchers.
Dame Meg Hillier MP, chair of the Committee, said: “Our report is a sobering reminder that we are still living with the fallout of the failure of so many energy suppliers in 2021-22. While the Government and regulators did the right thing in moving swiftly to protect consumers, the uncomfortable truth remains that the recovery of that investment hangs on the commercial success of one company. The public can ill afford such uncertainty, particularly in challenging economic times.”
An Ofgem spokesperson said: “Protecting consumers is our top priority and we worked tirelessly with government to put measures in place to shield customers from the impact of Bulb going out of business. Since then, we have taken a range of firm steps to strengthen the resilience of the sector to reduce the risk of future supplier failures and to limit the impact on consumers if they do fail.
“We can and do decline licence applications by new energy companies where we are not convinced the organisation is resilient enough to weather the volatility of the current energy market. We also require organisations to assess their management control frameworks and provide assurance to Ofgem.”
Energy suppliers are to be required by Ofgem, the market regulator, to contact customers if they miss two monthly payments or one quarterly payment, to check if they are struggling financially and, if so, to offer support. This could be via an affordable payment plan or repayment holiday, writes Candiece Cyrus.
Additionally, suppliers will need to be available via multiple contact methods (such as telephone as well as email or via the website), prioritise enquiries from the vulnerable, such as the elderly and the disabled, and offer free contact methods (such as a freefone number) for those struggling to pay their bills.
They will also be required to publish Citizens Advice customer service ratings on their websites to enable households to make informed decisions when switching. The ratings are updated quarterly and cover factors such as call waiting times, email response times, bill accuracy and complaints data.
The obligations, effective 14 December, are part of a bid by regulator Ofgem to improve standards. They are the outcome of a consultation between Ofgem, customers, suppliers, consumer groups and charities, conducted in May.
Jonathan Brearley, head of Ofgem, said: “With recent global events increasing pressure on gas prices, it’s likely that bills will rise further. This is why the industry needs to do all it can to ensure good customer services and provide help with managing debt, especially for the most vulnerable.
“In the last year, we have seen some good examples of suppliers stepping up their support for customers. However, despite this, the feeling of those on the frontline working with vulnerable households is that more still needs to be done.
“Long wait times to speak to someone on the phone. Letters not replied to. Lack of empathy for people’s personal circumstances. This needs to change and today we are setting out our expectations of suppliers this winter, and how they will be held to account to ensure consumers can get hold of them more easily. In particular for vulnerable customers, we expect more proactivity and a more sympathetic response.”
Energy UK, which represents suppliers, has aligned with Ofgem and Citizens Advice to develop its Winter 2023 Voluntary Debt Commitment, outlining ways the participating 14 suppliers should support customers ( see update below ).
However, Ofgem also proposed a temporary increase to energy bills from April 2024 to prevent suppliers from going bust, as customer debt hit £2.6 billion in the summer ( see update below ).
Households may face a one-off rise in their energy bills of up to £17 a year to prevent suppliers from going bust, writes Candiece Cyrus .
Regulator Ofgem has proposed the move as part of a consultation on ways to protect suppliers from going bust because of customer debt, which reached £2.6 billion this summer, its highest recorded level.
In 2021, around 30 suppliers folded when they were unable to pass rising wholesale costs on to customers quickly enough. The cost of administering the transfer of their customers to other firms and maintaining energy supplies added £82 to every household’s energy bills.
The crisis also prompted Ofgem to move to quarterly rather than six-monthly adjustments to the cap, making it more responsive to wholesale price movements.
The temporary rise would be applied with next April’s price cap and last for three months, adding around £1.50 to the average household’s bills per month (equivalent to £17 a year). The cap dictates the maximum amount suppliers can charge households per unit of energy, and in standing charges.
Such adjustments to the cap are permitted under its terms to allow suppliers to recoup otherwise unrecoverable debt.
The cap fell from £2,074 in the last quarter to its current level for Q4 2023 of £1,834 a year for a typical consumption household, based on Ofgem’s revised lower average usage figures which it will refer to from this month, October. Based on its old figures, the cap would be £1,923 a year for a typical household.
The cap is expected to rise again in January 2024 to £1,898 a year and fall to £1,820 in April, according to analyst Cornwall Insight.
Unaffordable energy bills led to charities, campaigners and MPs sending an open letter to the government last month to urge it to fulfill its pledge to introduce a subsidised ‘social’ tariff for low-income households ( see update below) .
Tim Jarvis, director general for markets at Ofgem, said: “We know that households across the country are struggling with wider cost of living challenges, including energy, so any decision to add costs to the price cap is not one we take lightly.
“However, the scale of unrecoverable debt and the potential risk of suppliers leaving the market or going bust, which passes on even greater costs to households, means we must look at all the regulatory options available to us.”
Dame Clare Moriarty, chief executive of charity Citizens Advice, said: “Even before winter hits we’re helping more people who can’t keep up with their energy bills than ever before. Worryingly, more households are running up energy debts during the warmer months, with some having to borrow money to try and keep the lights on.
“High energy prices mean millions of people remain at risk of falling behind in the coming months. An increase in the price cap to pay for higher debts will make people’s bills even more unaffordable. Any change must be in the best interest of all consumers.
“For now, the government must provide additional bill support this winter for those at most risk.”
Energy UK, which represents suppliers, has also published the Winter 2023 Voluntary Debt Commitment, developed with Citizens Advice and Ofgem. It sets out the steps 14 participating suppliers will take to provide support such as:
The firms involved are British Gas, E, Ecotricity, EDF Energy, E.ON Next, Good Energy, Octopus, Ovo, Rebel Energy, Shell Energy Retail Limited, Scottish Power, So Energy, Utilita and Utility Warehouse.
With the energy market price cap set to change on Sunday, an open letter signed by 140 charities, campaigners and MPs is urging the government to fulfill its pledge to protect low-income households against volatile energy prices by introducing a social tariff, writes Candiece Cyrus.
The cap limits the amount suppliers can charge households per unit of gas and electricity and in associated standing charges. Set quarterly, it will fall from £2,074 to £1,834 a year for a typical consumption household from 1 October (see story below).
The new cap level, which is based on Ofgem’s revised lower usage figures in effect from October, and would be £1,923 a year for a typical households, based on its old figures, remains high in historic terms. As recently as March 2022, the cap stood below £1,300.
Poverty campaign group National Energy Action, Age UK and Citizens Advice are among those asking the government to help individuals “whose bills have become so unaffordable that they are having to make the desperate choice nobody should have to make – between heating and eating.”
The letter is also signed by independent MP Angus MacNeil MP, chair of the Energy Security and Net Zero Committee, and Plaid Cymru’s Ben Lake MP, chair of Fuel Poverty and Energy Efficiency All-Party Parliamentary Group.
Separately, Mr MacNeil has criticised energy companies for holding onto what he says is an excessive amount of customer money in the form of credit on their accounts. BBC research revealed that firms effectively held £8bn of their customers’ money in the first quarter of the year.
With regard to a social tariff, the government committed in last year’s Autumn Statement “to develop a new approach to consumer protection in energy markets, which will apply from April 2024 onwards” and to “work with consumer groups and industry to consider the best approach, including options such as social tariffs.”
A social tariff is priced to make it more affordable for those struggling to pay their bills. Water, broadband and phone companies already provide this type of tariff, but one has not yet been introduced for energy customers.
To qualify, an individual usually has to be receiving certain means-tested benefits such as Universal Credit or Pension Credit or have a chronic medical condition that necessitates above-average energy consumption.
The campaign group says UK households behind on their energy bills now owe £2.25 billion, an increase of more than 70% over the past three years.
The energy price cap, which determines the amount suppliers can charge households per unit of gas and electricity and in associated standing charges, will fall for a consecutive quarter on Sunday 1 October, writes Candiece Cyrus.
The cap, which is set by market regulator Ofgem every three months to reflect movements in wholesale energy prices, will stand at £1,834 a year until 31 December. This figure is down from £2,074 a year in the three months to October.
It is based on a typical energy consumption household on a dual fuel tariff, paying by direct debit, according to Ofgem’s revised lower average usage figures, which the regulator will refer to from next month. Based on its old figures, the cap would stand at £1,923 a year for a typical household. Ofgem is also lowering the similar price limits that apply to energy customers paying by other methods.
The cap does not limit the size of a household’s bill, which is always determined by how much energy it uses. Bills also vary according to the location of the customer, reflecting the cost of supply in a particular region.
Direct Debit | Prepayment | Standard Credit | Economy 7 (Direct Debit) | |||||
---|---|---|---|---|---|---|---|---|
£2,074 | £2,077 | £2,211 | £1,400 | |||||
£1,923 | £1,949 | £2,052 | £1,298 | |||||
Tariff | Term (months) | Details (prices quoted relate to average consumption levels for dual fuel consumers) | ||
---|---|---|---|---|
EDF Essentials 1yr Oct24 | 12 | £2,074 a year, £75 exit fee per fuel, available as a dual fuel or electricity-only tariff. Only available to direct debit customers | ||
E.on Next Fixed 12m v2 | 12 | £2,040 a year, £75 exit fee per fuel, available as a dual fuel or electricity-only tariff | ||
Sainsbury’s Fixed/Reward 12 month v1 | 12 | £2,050 a year, £79.50 per fuel exit fee, available as a dual fuel or electricity-only tariff. Dual fuel customers receive two additional points for each pound spent in Sainsbury’s stores (triple points), and single fuel customers receive one additional point (double points), up to a maximum of 3,500 points per fuel a year | ||
Help Beat Cancer Green Flexi October 2024 | 13 | £2,067 a year, £100 exit fee per fuel, available as dual fuel or electricity/gas-only tariff. Donation made to charity Cancer Research UK for every month you are on the tariff | ||
OVO 1 Year Fixed | 12 | £2,082 a year, £75 exit fee per fuel, available as a dual fuel or electricity-only tariff | ||
OVO 1 Year Fixed & Boiler Cover | 12 | £1,982 a year, £75 exit fee per fuel, available as a dual fuel or electricity-only tariff | ||
So Energy So Juniper | 12 | £2,047 a year, £75 exit fee per fuel, available as a dual fuel or electricity-only tariff | ||
Shell Energy Energy Nov 2024 | 14 | £2,040 a year, £75 exit fee per fuel, available from supplier via phone/online as a dual fuel or electricity-only tariff | ||
E.on Next Fixed 24m v1 | 24 | £2,048 a year, £150 exit fee per fuel, available as a dual fuel or electricity-only tariff | ||
EDF Essentials 3Yr Sep26v4 | 36 | £2,073 a year, £200 exit fee per fuel, available as a dual fuel or electricity-only tariff. Only available to direct debit customers | ||
Tariff | Term length (months) | Details | ||
---|---|---|---|---|
Octopus Energy Loyal 12M Fixed Sept 2023 | 12 | £1,907.87 a year, £75 exit fee per fuel. Available as a dual fuel and electricity-only tariff direct from the supplier | ||
OVO 1 Year Fixed & Greener Energy | 12 | £2,182 a year, £75 exit fee per fuel, available as a dual fuel or electricity-only tariff | ||
IMAGES
COMMENTS
Pricing strategy. Roughly speaking, monthly rents for a self-storage facility in a high-population area can be anywhere from 50 cents to $4 per square foot. Menu of product and service offerings, including a rundown of the unit sizes, like 5×5, 10×10 and 10×20. Sources of capital.
Steps to Start a Self-Storage Business. Self-Storage Business Planning and Market Research. Prepare your Self-Storage Business Plan. Choose the Location for your Storage Facility. Register Self-Storage Business. Acquire Essential Licenses and Permits. Insure the Self-Storage Facilities. Open a Business Bank Account.
Download a business plan template and start drafting your own self-storage business plan. Dive deep into a recent market analysis to determine any possible cash flow outcomes. Understand that your first year as a startup might be your most challenging. Read various feasibility studies, and talk to your peers in the industry.
Marketing Plan. Traditionally, a marketing plan includes the four P's: Product, Price, Place, and Promotion. For a storage business, your marketing plan should include the following: Product: In the product section, you should reiterate the type of storage business that you documented in your Company Analysis.
A self storage business plan is a plan to start and/or grow your self storage business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections. You can easily complete your self storage business plan using our Self Storage Business Plan ...
A self storage business is a venture that 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. A Chron report indicates that over 80% of self storage facilities are privately owned and operated.
Explore a real-world self-storage business plan example and download a free template with this information to start writing your own business plan. ... costs, and pre-opening expenses (see section on Start-up Summary). Based on current and projected strong demand for self-storage units, rental revenue is projected to grow rapidly as units fill ...
Things to Consider Before Writing a Self-Storage Business Plan. As per statistics, the global self-storage market is projected to reach an astonishing value of $71.37 billion by 2027, with a CAGR of 5.65% from 2021 to 2027. The primary reason for this rapid market growth is due to the increasing need for commercial and residential storage.
The Plan. Our self-storage business plan is structured to cover all essential aspects needed for a comprehensive strategy. It outlines the business's operations, marketing strategy, market environment, competitors, management team, and financial forecasts. Executive Summary: Offers an overview of your self-storage business's concept, market ...
Business Plan Development. ... Like any business venture, starting a self-storage unit business requires adequate funding. Evaluate your startup costs specific to the storage unit business, including land acquisition, construction or renovation expenses, equipment purchases, marketing initiatives, and operating capital. ...
Startup Costs. The start-up cost for a mini storage business can seem a tad intimidating, ranging from $1.5 million to $2.4 million, averaging around $2 million. These figures account for land acquisition, construction, operational setup, and initial marketing efforts. Low-End Cost.
The average cost to start a self storage unit business is $2 million. Three sources ( Storable, LovetoKnow, MakoSteel) give us estimated startup costs of starting a new self-storage unit business. Minimum startup cost for a self-storage business = $1.5 million. Maximum startup cost for a self-storage business = $2.4 million.
A Self Storage Business Plan and Needed Research. Costs center around the choices you make at the beginning. Choices regarding location, facility type, feasibility study results, and creating a solid business plan could make or break your budget and, ultimately, your business. ... " - Nicole Roberts, self storage owner, and Unit Trac Customer ...
Here's how to craft a business plan for your self-storage business in four steps: Define your vision and mission. Analyze the market. Create an operating plan. Develop financial projections. 1. Define your vision and mission. Consider why you want to start a self-storage business and what you hope to achieve.
This includes creating and adhering to a self-storage business plan, which most lenders will want to see from someone considering the purchase or construction of a storage facility. Pros and cons of owning a storage unit business. Among the five pros and five cons of owning a self-storage business are: Pros. Pro: Great potential for profit.
Step 3: Brainstorm a Storage Facility Business Name. Here are some ideas for brainstorming your business name: Short, unique, and catchy names tend to stand out. Names that are easy to say and spell tend to do better. Name should be relevant to your product or service offerings.
A Sample Self Storage Unit Business Plan Template. 1. Industry Overview. Self - storage units are mini storage spaces created for people to store their belongings for a short period of time, i.e. on a monthly basis and it is subject to renewal. The storage space could be lockers, rooms, boxes, containers or even an empty space in a secured ...
Define your brand by thinking about what makes your business stand out from the crowd and who your self-storage units are primarily aimed at. ... Contact our team today and we will help you get your self-storage business plans off the ground. Patrick McCallister December 27, 2023. Facebook 0 Twitter Tumblr Pinterest 0 0 Likes.
SAMPLE Business Plan for a Self Storage Business. Executive Summary: This business plan outlines the objectives, strategies, and financial projections for XYZ Self Storage, a new self-storage facility based in Anytown, USA. The company aims to provide clean, secure, and easily accessible storage units for both individual and business clients.
Step 2: Write a Business Plan. After coming up with the idea, the next step in starting your business should be to write a self-storage business plan. Beyond acting as an internal guide, a business plan is often a requirement if you're seeking external funding from banks, investors, or other financial institutions.
When it comes to starting a storage service business, the startup cost will vary and it can range from $250,000 to over $1.5 million. This is because, on average, a single-story storage facility costs $25 to $45 per square foot to build, while multi-story costs $42 to $70 per square foot for construction.
The annual profit for storage unit business owners varies widely based on factors like location, facility size, and management efficiency. On average, small to mid-sized facilities may generate profits ranging from $30,000 to $100,000 per year, while larger operations in high-demand areas can exceed $500,000 annually.
Self Storage Business Profit Analysis. Explore the profit analysis below based on industry averages for vacancy and rental rates to uncover the opportunity that exists in the self storage business currently. Starting a self storage business is easy. All you need is a steel self storage building package, business plan, and demand in your area.
A self-storage unit provides a cost-effective way to store inventory, office supplies, or equipment without needing to lease expensive commercial space. This is particularly beneficial for small businesses that are just starting out or for those that experience seasonal fluctuations in inventory.
The firm is now up to 5,900 self-storage units with a pending purchase of another 1,000 units in a project in Santa Clarita that will soon close. ... It's in the process of refurbishing Village Park center and putting together a new business plan. A year ago, Brunswick said office sellers weren't capitulating yet. Now he's optimistic that ...
1 July: Forecasters Expect Costs To Rise In October. Today, 1 July 2024, sees the energy market's domestic price cap fall by 7%, taking it from £1,890 to £1,568 - a fall of £122.