Self-storage is one of the businesses that are getting a lot of traction recently. While it has been popular a little while back, it actually had been around in its initial forms back in the 1960s. Being one of the good businesses around, it’s great if you can strategize your business well so that it would be a success. Here are some key points for you to consider when entering a self-storage business, according to National Mini Storage (http://www.nationalministorage.co.nz/), an Auckland-based affordable self-storage solution provider.
A cashflow analysis is a tool that allows you to identify the total potential profits that your business can generate. There is a number of items that you should never forget when doing a cashflow analysis and this includes the space your business will take, the amount you’ll pay in rent, the forecast of occupancy of your self-storage, operating expenses, and potential losses brought about by uncontrollable circumstances.
There is a number of potential financial models that you can mimic in order to come up with your cashflow analysis. However, make sure that you make it tailor fit for your business. In coming up with your assumptions, always be realistic on how your market really is. Don’t be too optimistic so that you won’t expect unrealizable goals.
Development cost is not taken very seriously by some business owners, leading to an attractive self-storage business. Don’t do this mistake so be sure you put much weight on how much you’re putting in the business.
For a self-storage business, the biggest consideration is the land cost. You are extremely lucky if you own a huge parcel of land that can accommodate a self-storage business. But if you are not as lucky, you have the choice of either buying or leasing land. When you choose a location, always consider zoning ordinances, features of the land, and of course, how much is being offered to you. Don’t readily accept an offer – check how much the market rate would be and compare to the offer to you so you know you’re getting the right deal.
Another consideration is construction cost. The amount would largely depend on what kind of facility you plan to set up. Consider of course, that your self-storage should be very secured so don’t settle for sub-standard building materials. Your customers would depend on it for keeping their property secured.
Also consider the initial marketing costs because you will need to spread the word on your business. You might need to start a website, give away flyers, put up posters, and the like.
Financial projection is another tool that should not be taken for granted in any business. Financial projections help you determine the return on your investment. You should come up with a number of scenarios like how much you’ll earn at the best case, on a regular case, and at the worst case. Projecting on these different scenarios will help you know how long you’ll get back the money you put in the business, depending on how it fares when you start operating. Experiment on what the realistic scenarios are, and tell if this will give you back your investment in reasonable time. Remember, the longer you get your investment back, the more likely that this business is not the best business to start.
The End User
The popularity of self-storage business is largely due to the way people behave nowadays. Self-storage facilities are great for e-commerce business looking for locations to keep their inventories, or startup companies who would need temporary storage. There being many different kinds of users, you should consider following the market-established rates that are being used right now. Personal use of self-storage falls somewhere between $6 and $12 per square foot while more commercial users would be around $14 to $24 per square foot. Keep your rates within the range to make your business appealing to different kinds of users and make sure that your facility is best for different kinds of users as well.
Self-storage businesses truly are thriving right now because it is safe and practical. If you would like to take a chance on this growing industry, it’s best to start in a smart way. Our tips above can help give you the jumpstart you need so you enter a self-storage business with confidence.