Funding Your Dream: How to Start a Self Storage Business

Self storage is a hot industry that doesn’t show signs of slowing down. Whether you’re thinking about opening your first or fifth self storage facility, there is always one important challenge to address- how will you get funding? 

For some, this challenge will seem more daunting than others. But with the right planning, you’ll be well-positioned to approach lenders and investors with confidence.

Decide What Type of Storage Facility You Are Starting

Self storage is a broad business with many specialty facilities. The type of storage facility you should start depends on the needs of your region. Good market research will tell you what you need to know about what the people around you are looking for in storage, and what competitors are doing to meet those needs. This can help you figure out what type of storage facility would be most profitable for you to start. Self storage units, Rv and Boat storage, Vehicle storage, Container storage, and Pallet storage are the big types to consider, but details like indoor or outdoor, and climate-controlled are also important in this decision.

Storage Acquisition vs New Construction?

Once you have nailed down your storage type, you need to determine if you will be buying an existing storage facility or building a new one. Your path to storage success will be different for each, so it’s very important to know this from the start. Let’s look at a few of the things you’ll need to do for each.

Acquisition: 

Purchasing an existing self storage facility can still be a complicated process. You’ll need to gather a lot of information from the former facility owners. Hopefully, they’ve been keeping good records! Collect profit and loss statements, occupancy records, income statements, your market research, as well as your management plan. You’ll also need to develop a business plan showing how your ownership will improve and add value to the business.

New Construction: 

Building a new storage facility is a huge undertaking, but a feasible one if you get all your ducks in a row. You’ll need a qualified team, a great design, a lot of permits and documentation, and a timeline for equipment and materials delivery and site work, just to start. 

Build a Solid Storage Business Team

One of the most important decisions you can make about starting any business is WHO you will be in business with. That’s a major legal commitment! Choose your business partners carefully. Ideally, they’ll be good communicators, financially responsible, open-minded, passionate about the business, reliable, and good at building professional relationships. Also, consider how hands-on each partner will be in the business. Will there be additional management and staff? How will you go about finding the right people for those positions? Do you already have a lawyer or financial advisor?

If you’re taking the construction route, you’ll also need to put together a great team to handle the design and build. An architect, civil and structural engineers, general contractor, and subcontractors will all be needed to get your project off the ground. 

Create Your Self Storage Business Plan

Developing a business plan for a self storage facility is another important step in starting and running a successful business. The great news is if you follow the steps mentioned above, you’re halfway to completing your business plan package! Here are some key components to gather when creating your business plan, and how to organize it.

Executive Summary: 

This is a brief overview of your self storage facility and its key features. It should include your mission statement, target market, and unique selling points.

Market Analysis: 

This section should describe the self storage market in your area, including the size of the market, the competition, and any trends or opportunities that you can take advantage of.

Product and Service Offerings: 

Detail the types of storage units you will offer, such as climate-controlled units or units with drive-up access. Also, consider any additional services you will offer, such as packing and moving supplies, tenant insurance, or online reservation and payment options.

Marketing and Sales Strategy: 

Outline your plan for attracting and retaining customers, including your target market, pricing strategy, and marketing channels.

Operations and Management: 

Describe how you will manage and operate your self storage facility, including details about your staff, facility maintenance, and security measures.

Financial Projections: 

Include detailed financial projections for your self storage facility, including projected income, expenses, and profitability.

Approach Lenders and Investors

Starting a self storage facility requires a significant investment of capital. 

Luckily, Having the above plans in place when you begin your hunt for funding will make you appear more professional and your business more attractive to lenders and investors. And there are several funding options you can pursue. Here are a few to get you started.

Traditional Bank Loans: 

You can apply for a business loan from a bank to fund your self storage facility. Banks may require collateral, such as property or equipment, and will also consider factors such as your credit score and business plan when evaluating your loan application.

SBA Loans: 

The Small Business Administration (SBA) offers a variety of loan programs that can help you fund your self storage facility. These loans may have lower interest rates and more flexible repayment terms than traditional bank loans.

Venture Capital: 

If you have a strong business plan and are looking for a significant amount of funding, you may be able to attract venture capital investors. Venture capitalists typically invest in high-growth companies and will expect a significant return on their investment.

Private Equity: 

Private equity firms also invest in high-growth companies, but they typically take a more hands-on approach to supporting the business. In exchange for their investment, private equity firms may take an ownership stake in your company and provide management support.

Succeed with Self Storage Solutions from 6Storage

Regardless of the funding source you choose, it’s important to have a clear business plan and financial projections to demonstrate the viability of your self-storage facility. It may also be helpful to seek the advice of a financial advisor or business mentor to help you navigate the startup and funding process.

Owning and operating self storage facilities requires a strong foundation in order to succeed. Accelerate achievements with smart self storage solutions. 

From Mac-supported, cloud-based self storage management software to a reliable remote gate access system, 6Storage offers user-friendly support to the self storage industry. In addition, 6Storage offers website services and an advanced 3D storage calculator.

If you’re looking for affordable self storage solutions designed by industry experts offered at competitive prices, look no further than 6Storage! Contact us to level up your storage business and experience our white-glove service.