storage rental business plan

How To Start a Storage Business

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

Flexible Pricing

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.

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:

• The Nomads: With life on the move becoming the norm, moving remains the primary reason folks seek out mini storage solutions. Be it a job relocation, downsizing, or even a gap year spent globetrotting, having a safe space to store their belongings offers peace of mind during these transitional periods. So, if you’re wondering how to start a self storage business that resonates with this demographic, consider offering flexible rental terms and hassle-free access to the storage units.
• The Space Savers: Did you know that over 1 in 5 renters in the U.S. utilize self storage units? That’s a significant market slice to cater to! From apartment dwellers looking to declutter their space to small businesses needing extra inventory storage, the demand spans across various user groups. Offering a range of unit sizes can help you cater to this diverse clientele.
• Generation X: Representing a considerable user group within the self-storage industry, Gen Xers often require storage space for myriad reasons. From moving homes to storing inherited items, their demand for storage facilities is quite robust. To start a storage business that appeals to this demographic, you might want to consider offering services like controlled storage or extra space storage.
• The Ladies: Female renters constitute another significant user group in the self-storage industry. Safety and cleanliness are often high on their priority list. To attract this demographic, focus on ensuring well-lit facilities, 24/7 surveillance, and immaculate storage units.

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!

Comprehending Legal and Regulatory Essentials for Running a Self Storage Unit Business

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. 

Planning Facilities and Operations for Your Startup Self Storage Business

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.

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.

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:

• Management Software : These tools can help you track your occupancy rate, manage rental rates, and handle other administrative tasks.
• Online Booking Systems : These can offer convenience to your customers, allowing them to book storage units at their leisure and streamline the rental process.
• Security Systems : High-quality surveillance systems and access control are a must for any self-storage unit business. Customers need to know that their belongings are safe.
• Website : Your business online is essential in this digital age. An intuitive, user-friendly website can help you reach more customers and provide them with the information they need about your storage services.

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?

Financial Aspects to Consider: From Business Plan to Small Business Loan

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%.

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.

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.

• SBA 7(a) Loans : This is the most common type of SBA loan. It can be used for a variety of purposes, including purchasing land or buildings, construction costs, or even as working capital.
• SBA CDC/504 Loans : These loans are specifically for purchasing major fixed assets like land or buildings. If you’re looking at building a new facility, this could be a great option.

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?

Mastering Marketing and Customer Acquisition for Your Self Storage Business

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.

• Choose a Unique Business Name : Research existing storage businesses to avoid duplication and check if the name is available for trademark. Your business name should be easy to spell, pronounce, and remember. It should also hint at the services you provide. Use tools like a business name generator for inspiration and don’t forget to check domain availability for your website.
• Design a Memorable Logo : Your logo should reflect the nature and values of your business. Consider hiring a professional graphic designer who can bring your vision to life. Tools like Canva also offer easy-to-use design templates for those on a budget. Remember, your logo will be on your website, marketing materials, and possibly even on the signboard of your storage facility, so it’s worth the investment.
• Define Your Mission and Values : This involves a deep understanding of your business, your goals, your customers, and the market you operate in. A mission statement should clearly communicate what your business does, who it serves, and how it does it. Your values should reflect the principles and beliefs that guide your company’s actions. These will help you to create a business culture and a brand that resonates with your target audience.

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.

• Website : Your website is your virtual storefront. Make sure it’s clean, easy to navigate, and mobile-friendly. Highlight your services, provide clear pricing information, and include a simple booking system. It’s also crucial to have your contact information prominently displayed.
• SEO : SEO, or search engine optimization, is about making your website more visible on search engines like Google. This involves keyword optimization, quality content creation, and building backlinks. Consider hiring an SEO expert or using SEO tools like SEMRush or Yoast SEO.
• Social Media : To start, choose the social media platforms where your target customers spend most of their time. Create engaging content that provides value to your followers. This could be tips on how to pack a storage unit or a behind-the-scenes look at your facility. Be consistent in your posting and engage with your followers by responding to comments and messages.
• Google My Business : To set this up, go to the Google My Business website and follow the prompts to add your business. Include as much information as possible, like your address, hours of operation, and photos of your facility. Encourage happy customers to leave reviews to boost your credibility.

Word-of-mouth is a powerful marketing tool. Implement a referral program that incentivizes your existing customers to refer their friends and family.

• Offer Discounts : For every successful referral, you might offer your existing customer a percentage off their next month’s rent. The key is to make the discount enticing enough that customers want to participate.
• Provide Extra Services : This could include providing a free moving truck for a day, offering complimentary moving supplies, or providing a free upgrade to a larger storage unit for a certain period.

Build relationships with local businesses and explore potential collaboration opportunities.

• Moving Companies : Reach out to moving companies in your area and propose a partnership. This could be as simple as distributing each other’s marketing materials or as formal as a referral fee agreement.
• Real Estate Agencies : Similar to moving companies, real estate agencies can be a great source of referrals. Introduce your business and offer promotional materials they can share with their clients.

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?

Pricing Strategies and Revenue Generation in the Storage Unit Business

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.

Market-based Pricing

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

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.

Los Angeles, CA

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.

New York, NY

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, IL

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:

• Late Fees : It’s common practice to charge late fees when customers don’t pay their rent on time. Make sure these fees are clearly outlined in your rental agreement.
• Sales of Packing Supplies : You can offer boxes, packing tape, bubble wrap, and other packing supplies for sale at your facility. It’s a convenient option for your customers and an additional revenue stream for you.
• Insurance : Many self-storage companies offer optional insurance coverage for the items stored in their facilities. If a customer chooses to purchase this, it can add to your revenue.
• Truck Rentals : If you have the resources, offering truck rentals can be a profitable add-on service.

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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As I was reading through your post, one question popped into my mind: With the self-storage market being so competitive, how can new businesses set themselves apart from the existing players and attract customers? With over 182,000 storage businesses operating nationwide, it’s crucial to find unique strategies that can give entrepreneurs an edge. Any ideas?

Hey Michael!

Great question. Pricing and branding would be the obvious first places to start. Undercutting your competition and potentially taking an early loss to get customers in the door could mean a fruitful year 2. On the other hand… investing in high quality marketing efforts from the start could allow you to charge more. Be very careful about selecting a business name that lends itself to a memorable campaign.

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Ultimate Guide to Starting a Storage Unit Rental Business

While storage units may not seem like a great way to make money, this business can be extremely lucrative.

Renting out your storage units is an amazing source of passive income that requires somewhat little ongoing work to operate. Each month, your renters will send you a check for the space they use.

In this guide, I’ll explore everything it takes to build a storage unit business including the costs of building storage units, how to start a storage unit rental business, and some helpful tips to making more money with storage units. Let’s get started.

Why Start a Storage Unit Business?

As previously mentioned, a storage unit business is one of the best methods to build passive income. Once your units are built, there is a relatively low time and money commitment to keep them operating.

The largest barrier to entry is the land on which your units will reside. This often scares many investors away because of how costly land can be. However, it’s not always as expensive as you may think.

So why start a storage unit business? Here are my 3 top reasons:

• Storage units establish a passive income stream .
• The market can be undersaturated in many locations.
• There is a potential to make a large amount of money.

How Much Money Can You Make Renting Storage Units?

The amount of money you can make will depend on several factors including your location, the size and type of storage unit, and any amenities you might offer.

It is common to rent your units anywhere from $75 to over $500 per month depending on the size and location. Multiply this by the number of units you plan to build and you can easily see how profitable your business can become.

Location of Storage Units

The largest factor in determining how much money you can make renting your units is where they are located.

Units closer to large cities are likely to rent for significantly more than those placed further out. It’s common to see prices of storage units in larger cities over 100% more than their rural counterparts.

It’s a good idea to spend some time researching market rates for your area before you decide to get started.

Size and Type of Unit

Another great factor in determining your rental price is the size and type of unit you offer.

There are some benefits and drawbacks of building larger units.

If offering larger units you can expect to receive a larger rent payment each month however it might be more difficult to find tenants. You’ll also want to consider the opportunity cost of breaking the unit into 2 units. Could you rent out 2 smaller units for more than a single larger offering?

These are a few questions to consider when planning your business.

Storage Unit Amenities

Will your operation offer 24/7 access? Will there be security on guard?

Renters will take these ammonites into account when choosing which storage complex is right for them. By offering these amenities, you’ll be able to charge a higher price but your costs will also increase.

How Much Does it Cost to Start a Storage Unit Business?

The costs to get started range depending on the size and location of your business. For those living in a low cost of living area, you can expect to spend much less to get started than those located in a large city.

The main costs to start your storage unit business include the cost of land and the construction of the units themselves.

For those planning on building a multi-unit complex, you can expect to spend $25,000+ to start your operations.

For those looking to construct a single storage unit on their current property, you could get started for less than $2,000.

How to Start a Storage Unit Business

Starting a storage unit business will take some time and money to get started. You'll need to cover the cost to build your units and marketing expenses when establishing your business.

Below, I’ll break down the steps to starting your rental storage unit side hustle .

Plan Your Business

Before investing in any business, you'll want to do your research to ensure it has the potential to become profitable and make you money. This is true when it comes to starting your storage unit business.

You’ll need to have a few things to get started:

• Land to build your storage units
• Money to cover the cost of building your storage units and operational expenses

You'll want to understand the most common sizes of rental units in your area. The most common sizes include 10×10, 10×15, 10×20, and 10×30.

Furthermore, you’ll need to examine rental rates in your area for a comparable unit to guarantee that there is a market for your offering.

After completing your market research, if you still believe your business is capable of succeeding, move on to the next step.

Purchase Land (If Necessary)

Once you’ve planned your storage unit business, it’s time to get started. The first thing you’ll need is space to build your units.

Depending on the complexity of your business, you’ll want to find commercial real estate that is easy to get in and out of.

For those looking to get started with less cash, you can consider building your storage unit on your own property to save money. While this option is less expensive, you’ll want to keep in mind the possibility of a decreased rental price because of less convenience for your customer. You can also opt to have your purchase financed, enabling you to get started with less money.

Build Your Storage Units

Once you’ve obtained land to build your business, you’ll need to construct your storage units.

You can choose to build them yourselves or outsource this work to a contractor.

There are several different kinds of storage units for your customers' needs.

Basic Enclosed Storage Units

These storage units are the most simple to build with a solid foundation and garage-style door for easy access. These units will be the most cost-effective and are great for investors just getting started.

Related: How to Start a Laundromat Business

Climate Controlled Storage Units

More seasoned investors might want to consider offering climate-controlled storage units to increase their income. Because these are more difficult to find, you can charge significantly more than a basic unit.

The downside? They are very costly to produce and maintain. Depending on your location, you’ll need to have both air conditioning and heating in the unit to keep it at a constant temperature.

Indoor Storage Units

Some storage units are climate controlled and are located indoors. This offers a few benefits for customers and will come with a larger price tag.

As expected, these units are more expensive to build but can be a worthwhile investment.

Finalize Amenities and Operations

If you plan on offering any additional amenities like security this is your chance to plan these operations.

You should also finalize how you will bill customers, how they will pay, and any other basic business operations such as who will answer the phone, etc.

Market Your Storage Business

Now that you’ve finalized your operations, it’s go time.

There are many methods of marketing your storage unit business. Below are a few of my favorites.

Post Your Units on Craigslist

Craigslist is full of people looking for odds and ends products and services making it a great option to promote your storage unit service. You can often find people interested in storing random items like old vehicles or large furniture.

Post Your Units on Facebook

You’ll be surprised about how many friends and family might be interested in renting your units. Be sure to publish your offerings on social media websites to get the word out.

Pass Out Flyers

Flyers are an excellent method to reach residential customers, those likely to need your services. You can print flyers with all of the information for less than $0.10 each, making it a cost-effective tactic to gain customers.

Your flyers should include information about your business including how they can contact you, where your location is, and starting prices for your units.

Create a Company Website

A website is an easy way to give potential customers access to all the information they need before deciding to use your services.

You can choose to develop the site yourself or outsource this to a local marketing company for a cost.

Tips to Growing a Storage Unit Business

Below are some helpful tips for starting and growing your storage unit business.

Start Small

While you might be enticed to go all-in from the beginning, starting small will give you the opportunity to fix any kinks in your business model without costing you a fortune.

One Up the Competition

At the beginning stages of your business, you'll want to provide your customers with a leg up over your competition. This might mean pricing your units at a lower price or having slightly larger units.

This will give customers a reason to choose your services over others giving you the opportunity to keep them for a lifetime.

Offer Discounts

By offering discounts to potential customers they’re more likely to pull the trigger on your services. You can consider offering the first month free for new clients or offer a percentage discount.

Related:  Best Things to Rent

How to Start a Mobile Storage Unit Business

When you think of storage units, you’ll most likely think they tend to be at a physical location but in the 21st century, just about everything is mobile, including storage units.

There are several companies that have mastered this concept like Pods . The business model is simple. A large container will be delivered to your location that you can temporarily store your items in until you no longer need it. Then the container will be picked up from your property.

Benefits of a Mobile Storage Unit Business

Starting a mobile storage unit business comes with several benefits. One of the largest benefits comes with not having to make a massive investment in a physical location. Because your operation is mobile, you’ll only need space to store your units.

The other main benefit is the scalability of your business. Where a physical storage unit business would require you to obtain more land in order to expand your operations, a mobile business would only require a small investment in the amount of space needed to expand your operations.

Drawbacks of a Mobile Storage Unit Business

Just because you don’t need a large track of land to get started doesn’t mean your costs will be limited. In fact, a mobile business might be more costly to operate.

You’ll need to consider the costs of your units themselves, how you will deliver them, and the employees required to drop off and pick up units when they are no longer needed.

You’ll also need space to store units if they are not currently being used.

Conclusion: Is a Storage Unit Business Right For You?

Growing a storage unit business can be extremely lucrative and offer an excellent passive income stream for your finances.

While the upfront costs can be somewhat restricting for larger complexes, you can always get started by building a storage unit on your personal property.

The amount of money you can make renting storage units is limited to the number of units you have available, meaning your limit is essentially endless.

Like any business, starting a storage unit business won’t be easy, but it can be extremely worthwhile.

Self Storage Business Plan Template

Written by Dave Lavinsky

Self Storage Business Plan

You’ve come to the right place to create your Self Storage business plan.

We have helped over 10,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Self Storage companies.

Below is a template to help you create each section of a storage unit business plan.

Executive Summary

Business overview.

Secure Self Storage is a startup self storage company located in Nashville, Tennessee. The company is founded by Bill Williams, an experienced self storage manager who has been working in the self storage industry for over a decade. Bill has recently earned a bachelor’s degree in Business Administration. Now that Bill has obtained the education and experience that will allow him to successfully navigate the process of starting a business, Bill is ready to open his own company, Secure Self Storage. Bill plans on recruiting a team of highly qualified professionals to help manage the day to day responsibilities of running a successful self storage facility – marketing, security, maintenance, accounting, and rent collection.

Secure Self Storage will provide a convenient, safe, and secure self storage solution for anyone in the Nashville area who needs to store their belongings. Secure will ensure that every storage need of the customer is being met. Secure Self Storage will be the ultimate choice in Nashville for self storage solutions while being the best-priced company in the area.

Product Offering

The following are the self storage solutions that Secure Self Storage will provide:

• Small Storage Units (5×5)
• Medium Storage Units (10×10)
• Large Storage Units (10×25)
• Vehicle Storage Units
• Temperature Controlled Units
• Extra Security Units
• Pickup & Delivery Services
• Disposal Services

Customer Focus

Secure Self Storage will target adults 18 years old and over in Nashville who need a storage unit for any reason such as moving, decluttering, doing home renovations, or those who need storage for business, college, or to store an automobile. No matter the customer, Secure Self Storage will deliver the best communication, service, and security.

Management Team

Secure Self Storage will be owned and operated by Bill Williams. Bill has a bachelor’s degree in Business Administration and has been working as a self storage manager for another local storage facility for over a decade. Now that Bill has obtained the education and experience that will allow him to successfully navigate the process of starting a business, Bill is ready to venture out and open his own self storage company. Bill will be the owner and manager of Secure Self Storage.

Bill has recruited his peer, Ken Smith, a financial professional with a Masters degree and fifteen years of experience doing financial work for various construction companies, to be the financial manager. Ken will help manage all of the finances for the company from finding a cost-effective location to set up shop to reporting and budgeting to make sure the facility is profitable.

Success Factors

Secure Self Storage will be able to achieve success by offering the following competitive advantages:

• Self storage units are easily accessible 24 hours a day, temperature controlled, and have the latest security technology to keep customers’ belongings safe and secure.
• On-site security guards are deployed 24 hours a day to ensure belongings, customers, and employees are safe at all times.
• On-site staff to answer questions, help customers, and keep the facility clean.

Financial Highlights

Secure Self Storage is seeking $250,000 in debt financing to launch its self storage business. The funding will be dedicated towards securing the facility space and purchasing equipment and supplies. Funding will also be dedicated towards three months of overhead costs to include payroll of the staff, rent, and marketing costs. The breakout of the funding is below:

• Self storage facility build-out: $50,000
• Equipment, supplies, and materials: $20,000
• Three months of overhead expenses (payroll, rent, utilities): $150,000
• Marketing costs: $15,000
• Working capital: $15,000

The following graph below outlines the pro forma financial projections for Secure Self Storage.

Company Overview

Who is secure self storage.

Secure Self Storage is a newly established high security self storage company in Nashville, Tennessee. Secure Self Storage will be the most convenient, secure, and customer-focused choice for storage unit renters in Nashville. Secure will provide a variety of self storage solutions for anyone looking for a secure storage option. The company’s customer-centric approach will include 24/7 on-site security and customer service staff, the latest security technology, and temperature controlled units.

Secure Self Storage will give customers peace of mind that their belongings are secure. The management team is composed of experienced professionals including business managers, security officers, and maintenance technicians. Secure Self Storage removes all headaches of the self storage unit renter and ensures all issues are taken care off expeditiously while delivering the best customer service.

Secure Self Storage History

Secure Self Storage is owned and operated by Bill Williams, an experienced self storage manager who has a bachelor’s degree in Business Administration from the University of Tennessee. Bill has worked for a local self storage company in Nashville for over a decade. Bill’s tenure with the self storage company combined with his education has given him the skills and knowledge required to venture out on his own and start his own company.

Since incorporation, Secure Self Storage has achieved the following milestones:

• Registered Secure Self Storage, LLC to transact business in the state of Tennessee.
• Has scouted a few location options and reached out to the owners for more information.
• Reached out to numerous contacts to include former customers to let them know about the upcoming facility.
• Began recruiting a staff of accountants, maintenance workers, security, and other facility personnel to work at Secure Self Storage.

Secure Self Storage Services

Industry analysis.

The United States self storage industry generates an estimated $39.5B in annual revenue with over 49,000 storage facilities throughout the country. The total rentable self storage space is approximately 1.9B square feet. An estimated 10.6% of U.S. households are currently renting a self storage unit. The average self storage space used per person is 5.9 square feet. The average monthly cost to rent a self storage unit is $90.

Self storage construction spending has nearly doubled in the past five years. According to the Self Storage Almanac, the market is highly fragmented with 31% of space being owned by six large public companies, 16% being owned by the next top 94 companies, and 53% being owned by small businesses. Self storage industry operators have the potential to achieve highly lucrative businesses if they manage them smartly. The average self storage company’s profit margin is around 11 percent, which is much higher than many other small businesses in other industries that are often closer to 3-5 percent.

Customer Analysis

Demographic profile of target market.

Secure Self Storage will target adults 18 years of age and older requiring self storage services in Nashville, Tennessee. The company will target people in need of storage space for a variety of reasons including moving, renovating, college, business, or to store a vehicle.

The precise demographics for Nashville, Tennessee are:

Customer Segmentation

Secure will primarily target the following customer profiles:

• People who are in the process of moving
• People who need storage space for a vehicle
• People who need storage for business
• People who need storage for college
• People who are renovating their homes

Competitive Analysis

Direct and indirect competitors.

Secure Self Storage will face competition from other companies with similar business profiles. A description of each competitor company is below.  

Nashville Self Storage

Nashville Self Storage is a temperature controlled self storage facility operating in Nashville, Tennessee. The facility has 400 units of varying sizes from 2×5 up to 30×30. Nashville Self Storage uses state of the art security systems with cameras throughout the facility to keep its patrons and their belongings safe and secure. The company currently has one facility with plans to open a second location in the next few months. The owners of Nashville Self Storage have been working in the storage industry for over 20 years and pride themselves on providing exceptional customer service.  

ALottaStuff Self Storage

ALottaStuff Self Storage is a Nashville-based self storage facility that provides outstanding service and storage solutions for its customers. ALottaStuff Self Storage takes the risk out of leaving your valuables in an unsecure storage facility by providing 24/7 secure monitoring of all of its units. They have temperature controlled units available in addition to non-temperature controlled units. Customers can depend on ALottaStuff Self Storage to handle their belongings with the best of care. The company provides pickup and delivery services for an extra fee.  

In-Boxes Self Storage

In-Boxes Self Storage is a trusted Nashville self storage company that provides superior service to customers in Nashville and the surrounding areas. They are able to provide a convenient storage solution for a wide range of customers with multiple locations throughout the city. In-Boxes Self Storage offers low prices for do-it-yourself storage facilities. Drive-up units are available for a flat monthly fee and indoor temperature controlled units are available for an additional charge. In-Boxes Self Storage maintains a clean, secure atmosphere with friendly staff available during office hours to assist with customers’ storage needs.

Competitive Advantage

Secure Self Storage will be able to offer the following advantages over their competition:

• On-site staff are available to answer questions, help customers, and keep the facility clean at all times.

Marketing Plan

Brand & value proposition.

Secure Self Storage will offer the unique value proposition to its customers:

• Experienced team of security professionals, customer service associates, and maintenance staff on-site 24/7 to help customers and keep the facilities clean, safe, and secure.
• Unbeatable pricing to its clients – Secure Self Storage offers competitive pricing with promotions and discounts for new and returning customers.

Promotions Strategy

The promotions strategy for Secure Self Storage is as follows:

Word of Mouth/Referrals

Bill Williams has built rapport with an extensive list of customers over the years by providing exceptional service during his tenure as a self storage manager. Many have communicated to Bill that they referred their friends to the storage facility because they were happy with the service he was providing. Once Bill advised them he was leaving to open his own self storage business, many contacts have committed to help spread the word of Secure Self Storage.

Professional Associations

Secure Self Storage will become a member of professional associations such as the Self Storage Association, the Nashville Self Storage Association, and Inside Self Storage. Bill will attend industry expos and events to promote the company.

Print Advertising

Secure Self Storage will have print ads and flyers made for newspapers, magazines, direct mailers, and to post around the city and hand out at industry events.

Website & Content Marketing

Secure Self Storage will create and maintain an easy to navigate, well organized, informative, website that will list all of the available storage options and pricing. The website will also contain an informative blog with storage related posts.

SEO Marketing

The company will use SEO marketing tactics so that any time someone types in the Google or Bing search engine “Nashville self storage” or “self storage near me”, Secure Self Storage will be listed at the top of the search results.

Social Media Marketing

Secure Self Storage will create and maintain an active presence across social media platforms including LinkedIn, Facebook, Instagram, Twitter, TikTok, and YouTube.

The pricing of Secure Self Storage will be competitive so customers feel they receive value when purchasing their services.

Operations Plan

The following will be the operations plan for Secure Self Storage.

Operation Functions:

• Bill Williams will be the Owner and Manager of the company. He will oversee all staff and operations. Bill has spent the past year recruiting the following staff:
• Ken Smith – Financial Manager who will provide all accounting, budgeting, tax payments, and monthly financial reporting.
• Shannon Bowman – Marketing Manager who will provide all sales and marketing initiatives for Secure Self Storage including management of the company website and social media accounts.
• Benjamin Stephens – Maintenance Manager who will oversee all maintenance of the facility.
• Micheal Brown – Head of Security who will provide all security for the facility and oversee a small team of on-site security guards.

Milestones:

Secure Self Storage will have the following milestones complete in the next six months.

8/1/2022 – Finalize contract to lease facility space.

8/15/2022 – Finalize personnel and staff employment contracts for the management team.

9/1/2022 – Begin build out of the facility.

9/15/2022 – Begin networking and marketing campaign.

9/22/2022 – Begin moving into the Secure Self Storage facility.

10/1/2022 – Secure Self Storage opens its facility for business.

Bill has recruited the help of his peer, Ken Smith, a financial professional with a Masters degree and fifteen years of experience doing financial work for various construction companies. Ken will help manage the finances for the company from finding a cost-effective location to set up shop to reporting and budgeting to make sure the facility is profitable.

Financial Plan

Key revenue & costs.

The revenue drivers for Secure Self Storage are the self storage fees that will be charged to the customers for their services. The company will charge a monthly fee for unit rentals. The fee will vary depending on the size of the unit.

The cost drivers will be the overhead costs required in order to staff a self storage facility. The expenses will be the payroll cost, utilities, maintenance costs, and marketing materials.

Funding Requirements and Use of Funds

Secure Self Storage is seeking $250,000 in debt financing to launch its self storage business. The funding will be dedicated towards securing the facility space and purchasing equipment and supplies. Funding will also be dedicated towards three months of overhead costs to include payroll of the staff, rent, and marketing costs for the print ads and association memberships. The breakout of the funding is below:

Key Assumptions

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.

• Average number of occupied units per month: 200 out of the total 500 units (40%)
• Average fees per month: $30,000 (average $150.00 per medium sized unit)
• Annual Lease on Facility: $100,000

Financial Projections

Income statement, balance sheet, cash flow statement, self storage business plan faqs, what is a self storage business plan.

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 Template here .

What are the Main Types of Self Storage Businesses?

There are a number of different kinds of self storage business , some examples include: Portable container, Climate controlled storage, and Vehicle storage.

How Do You Get Funding for Your Self Storage Business Plan?

Self storage businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Self Storage Business?

Starting a self storage business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Self Storage Business Plan - The first step in starting a business is to create a storage facility business plan pdf or doc that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.  

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your self storage business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your self storage business is in compliance with local laws.

3. Register Your Self Storage Business - Once you have chosen a legal structure, the next step is to register your self storage business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 

4. Identify Financing Options - It’s likely that you’ll need some capital to start your self storage business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 

7. Acquire Necessary Self Storage Equipment & Supplies - In order to start your self storage business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your self storage business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

Learn more about how to start a successful self storage business:

• How to Start a Self Storage Business

Is a Self-Storage Business Profitable?

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.”

Starting a storage business

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.

Pros and cons of owning a storage unit business

Among the five pros and five cons of owning a self-storage business are:

• Pro:  Great potential for profit.
• Pro:  Growing demand.
• Pro:  Low overhead compared to other real estate investments.
• Pro:  Often-minimal management.
• Pro:  Prospects for lucrative add-on products and services.
• Con:  Self-storage facility is a business, not just a piece of property.
• Con:  Possibility of picking poor location.
• Con:  Up-and-down movement in occupancy and rental rates.
• Con:  Constant concerns about hiring and managing employees.
• Con:  Stiff competition from other storage operators, particularly ones with a big regional or national footprint.

Profit margin of a self-storage business

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% .

Net operating income of self-storage units

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.

Return on investment for self-storage businesses

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.

Building a self-storage facility

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.

Maintaining occupancy

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.

Long term outlook

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.

Building a Fortress: A Guide to Self-Storage Security

Need a little inspiration for advertising your self-storage facility? Check out these three examples to get your creative juices flowing. Keep Reading

How Much Does it Cost to Build a Self-Storage Facility?

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

How to Start a Self-Storage Business

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

• Business Ideas
• Registered Agents

How to Start a Storage Business in 14 Steps (In-Depth Guide)

Updated:   March 6, 2024

BusinessGuru.co is reader-supported. When you buy through links on my site, we may earn an affiliate commission. Learn more

Self storage is getting more popular. As of 2023, the market hir more than $58 billion with a projected compound annual growth rate (CAGR) of 7.5%. As of 2030, the storage industry could reach $89.9 billion.

Careful site selection, competitive pricing, and utilizing technology to maximize efficiency will be key factors in successfully starting a storage business.

In this guide, we’ll explain how to start a storage business. Topics include market research, competitive analysis, registering an EIN, obtaining business insurance, and more. Here’s everything you need to know to start a self storage business.

1. Conduct Storage Market Research

Market research is important in a multitude of ways to a new self storage facility. When starting a self storage business you need to know your target market, the local market saturation, competitor pricing, service trends, and more.

Several key factors are driving this continued growth and presenting a strong market opportunity:

• Population growth and urbanization lead to more demand for storage. The US population grew by 7.4% between 2010-2020 according to US Census data . The higher population density in urban areas also fuels demand.
• Downsizing trends like tiny homes and minimalism require more separate storage space. Google searches for “tiny homes” have grown over 500% since 2010.
• Small businesses need offsite space for inventory, equipment, files, etc. Small business revenue has grown 27% over the past 5 years.
• Consumers want storage for recreational vehicles, collectibles, seasonal items, and more. RV ownership hit a new high in 2021 with over 11 million households owning an RV so offering RV storage space is a viable idea.
• Moving/relocations create temporary storage needs. US relocation rates have increased in recent years, with almost 16% of Americans moving each year per US Census data .

The self-storage business model has several attractive attributes for investors:

• Steady and predictable cash flow once occupied. Typical occupancy rates range from 85% to 90% for established storage facilities according to industry data.
• Limited staffing requirements compared to other business models. Many locations can be efficiently operated by just 1-2 employees.
• Scalable by adding new units/locations. Storage can be expanded on existing land or replicated with new facilities.
• Recession resilient. Demand held up reasonably well even during the 2008 financial crisis.
• Leverage. Traditional financing is available at 60% to 80% loan-to-value ratios.

While initial capital outlay can be significant, storage offers an essential service with proven demand. Careful underwriting and site selection to choose locations with strong populations and job growth is key. Utilizing industry-specific technology platforms and implementing best practices can provide a significant advantage.

2. Analyze the Competition

Thoroughly evaluating the competitive landscape is crucial when starting a storage facility. This involves assessing both local brick-and-mortar rivals as well as analyzing your online presence versus competitors.

Some ways to evaluate local self storage businesses include:

• To evaluate nearby storage businesses, drive around the area and note current facilities, occupancy rates, conditions, and amenities.
• Talk to managers to learn pricing. Check reviews on Google Maps to see feedback. Look for well-rated facilities doing high volume.
• Consider the distance to the closest competitors. Having facilities very close together eats into demand. But being too far reduces convenience.
• Optimal distance is 2-3 miles according to industry experts like Jake Ramage.
• For online competition, search industry keywords on Google to see which rivals rank highest. Check their websites for design, messaging, ease of booking, pricing, and promotions.
• Set up Google Analytics and Search Console for your website to track traffic sources, top pages, conversions, and keywords. See where you rank for target terms vs. competitors.
• Build online reviews via Google, Facebook, and industry sites like SpareFoot . Positive reviews build credibility and SEO.
• Use paid ads via Google, Facebook, and Instagram to gauge customer demand and cost per click/conversion in your market. Start limited testing early.

Ongoing competitive analysis lets you continually refine pricing, offerings, and marketing to stand apart. This market intelligence fuels smarter strategies to compete.

3. Costs to Start a Storage Business

Starting a storage facility requires significant upfront capital investment, with ongoing expenses related to staffing, property maintenance, utilities, taxes, and financing costs. Here are typical start-up and ongoing costs to expect:

Start-Up Costs

• Land Acquisition: $500,000 to $2 million+ depending on location and acreage needed for planned storage capacity. Prime locations near population centers typically start around $1 million.
• Permits & Fees: $5,000 – $20,000 for zoning approvals, construction permits, municipal fees, and professional services.
• Site Development: $150,000 – $500,000 for grading, paving, fencing, lighting, gate system, security cameras, and utility access.
• Storage Construction: $50 – $100 per square foot based on materials (steel vs wood) and unit sizes. A 50,000 sq ft facility would cost $2.5 – $5 million.
• Office & Amenities: $100,000+ for leasing office, restrooms, moving carts, and package supplies.
• Initial Marketing: $20,000 – $50,000 for brand identity, website, brochures, signage, and grand opening.
• Start-up Admin & Professional Fees: $30,000 approximately for business licensing, legal fees, and accountant.
• Initial Staffing Costs: $5,000 – $10,000 for training wages, uniforms, and background checks.
• Total Start-up Costs: $2 million – $8 million depending on size and components.

Ongoing Costs

• Staffing Expense: Manager ($35k salary), assistant mgr ($30k), part-time staff ($15/hr). Total around $100,000/year.
• Property Taxes: 1-1.5% of assessed value annually. Could be $40,000+ on a $5 million facility.
• Insurance Premiums: $10,000 – $20,000 may cover property, liability, worker’s comp.
• Utilities: Electricity, gas, water, phone/internet. Around $6,000/month or $72,000 annually.
• Financing Costs: 5-7% on bank loans or 8-10% on private capital. $200,000+ annually on a $5 million build.
• Maintenance & Supplies: $7,500+ monthly for repairs, cleaning, carts, locks, admin supplies.
• Advertising: $1,500+ per month for PPC ads, flyers, signage.
• Professional Services: Legal, accounting, IT, marketing help. $3,000+ monthly.
• Miscellaneous Expenses: Credit card fees, theft/damage, taxes. Estimate 5% of revenue.
• Total Ongoing Costs: $600,000+ per year excluding loan payments.

Starting a storage facility requires major capital outlays upfront. However, the model can generate strong cash flow over time given adequate occupancy. Conducting diligent cost analysis and creating detailed financial projections is key to determining viability.

4. Form a Legal Business Entity

When establishing a storage business, the legal structure you choose determines taxation, liability protection, and ease of expansion. For most storage entrepreneurs, a limited liability company (LLC) offers the best blend of benefits.

Sole Proprietorship

A sole proprietorship is the simplest structure with no formal registration required. The owner reports all income and expenses on their tax return. However, the owner has unlimited personal liability for debts and lawsuits against the business. This poses a major risk when accidents occur like customer injury on the property.

Sole proprietorships also lack credibility with banks/investors and have limited options for bringing on co-owners. While simple, this structure has considerable downsides for those starting a storage facility.

Partnership

A partnership allows two or more co-owners to establish and grow a storage business together. Profits pass through to owners who report their share of income on personal tax returns. However, similar to sole proprietors, each partner has unlimited personal liability.

The actions of one partner can expose the other’s assets to risk. Partner disputes can also cause major issues. Overall, partnerships have many drawbacks for those launching a storage startup.

Limited Liability Company (LLC)

Establishing an LLC provides legal and tax advantages including liability protection and pass-through taxation. LLC owners have limited liability–the company’s debts/lawsuits are not the responsibility of individual members. An LLC limits exposure if customers get injured on the property.

LLCs also allow unlimited owners, making it easy to bring on investors and partners. Owners can get taxed at the individual rate while avoiding corporate double taxation. LLCs provide the most flexibility and protection for storage entrepreneurs.

Corporation

A corporation is a more complex entity with additional regulations, legal requirements, and corporate taxes. Corporations limit liability for shareholders but have double taxation where income is taxed at both the corporate and shareholder level.

A corporation can raise investment capital by issuing stock but often makes sense at a larger scale. Overall an LLC provides simplicity and flexibility for the needs of most storage startups.

5. Register Your Business For Taxes

One key legal step for starting a storage business is obtaining an Employer Identification Number (EIN) from the IRS. An EIN acts like a social security number to identify your business for tax and banking purposes.

Acquiring an EIN is mandatory if you have employees, operate as a corporation or partnership, or need business bank accounts. An EIN is free and easy to obtain directly from the IRS.

Here is the step-by-step process for applying online:

First, gather any information you may need like names/SSNs of owners, business name, and address. Then go to the IRS EIN Assistant and click “Apply Online Now”.

You will answer a short eligibility questionnaire. When asked the reason for applying, select “Started a new business”.

On the application, provide basic information about your storage business – legal name, address, ownership structure, start date, and industry classification.

Submit your contact details and owner/officer information. The primary person listed should match the identified owner/founder.

Carefully review the application summary before submitting it to ensure accuracy. Once submitted, you will receive an EIN assignment immediately on the screen.

The EIN is also mailed to you within 2-5 weeks for your records along with instructions for filing requirements.

With your EIN, you can open business bank accounts, apply for required permits/licenses, hire employees, and operate legally.

In addition to the federal EIN, make sure to register with your state to obtain sales tax IDs/permits, any needed specialty licenses, and cannabis permits as applicable. Many states allow online or one-stop registration.

6. Setup Your Accounting

Maintaining accurate financial records is critically important for storage entrepreneurs. Proper accounting helps optimize profits, manage cash flow, track deductible expenses, and stay compliant with IRS regulations.

Accounting Software

Using small business accounting software like QuickBooks can automate much of the process. QuickBooks seamlessly syncs with bank/credit card accounts to log transactions and generate financial reports. This eliminates manual entry and reduces errors. For around $20/month, Quickbooks provides essential accounting capabilities tailored for storage businesses.

Hire an Accountant

However, it is advisable to partner with an accountant for additional services like:

• Setting up a foolproof bookkeeping system
• Handling payroll, taxes, and quarterly filings
• Performing reconciliations and auditing books
• Guiding tax planning and strategy
• Preparing and filing annual tax returns

A full-service accountant may cost $1,000 – $3,000 annually but provides invaluable expertise. At a minimum, engage an accountant for year-end tax preparation to maximize deductions and avoid IRS issues. Expect fees of around $500+ for tax prep.

Open a Business Bank Account

Maintaining completely separate finances for your storage business is crucial. Open dedicated checking/savings accounts to keep personal and business funds apart. Never co-mingle money to simplify accounting and avoid tax headaches.

Apply for a Business Credit Card

Also, apply for a small business credit card in your company’s name. Business cards don’t use your credit – you’ll need to provide your EIN, business financials, and ownership information. Approved limits are lower than consumer cards but sufficient for operating expenses.

7. Obtain Licenses and Permits

Before opening your storage business, it is essential to acquire all required federal, state, and local licenses and permits. Get information on federal licenses through the U.S. Small Business Administration . The SBA also offers a local search tool for state and city licensure requirements.

Business License

Nearly all jurisdictions require a general business license to commercially operate within city/county boundaries. Business licenses verify you are compliant with zoning ordinances and registered with the Secretary of State. Fees are typically under $100 annually.

Building Permits

Construction projects like developing a storage facility require multiple permits for each phase. These include grading permits, utilities permits, demolition permits, and building permits for the units themselves. Each permit has its application process and fees based on the scope of work.

Fire Department Permits

You may need permits for the fire suppression system, fire alarms, emergency lighting, hazardous material storage, and more. Fire inspections are also required to ensure life safety before opening. Keeping up with the fire code is crucial for any commercial property.

Signage Permits

Most areas regulate the types, sizes, and placement of business signage. You’ll need approvals for monument signs, building signs, directional signs, and any digital displays. Make sure to follow sign codes for proper permitting.

Stormwater Management

New construction requires plans for erosion control and preventing contaminant runoff. You may need stormwater drainage permits and regular inspections after the buildout. Proper drainage is also important for customer access.

Zoning Approval

Your property must be properly zoned for commercial use as a storage facility. If not, you’ll need to file for a zoning variance with the planning department before proceeding. Even with correct zoning, site plans usually require separate zoning permits.

8. Get Business Insurance

Carrying proper business insurance is strongly advised when starting a storage facility to mitigate risk. Without coverage, a single incident could lead to financial ruin.

Insurance protects against scenarios like:

• The customer slips and falls, sues the facility, and wins a $100k+ judgment.
• An electrical fire sparks from outdated wiring and destroys half the storage units, causing $1 million in repairs.
• A disgruntled employee deliberately crashed a truck into the building, resulting in $500k of damage.

The right insurance policies safeguard against the many threats that can affect a storage business. Common coverages to carry include:

• General liability – protects against bodily injury, property damage, and personal injury claims.
• Property – covers damage to your buildings, equipment, and inventory from perils like fire, storms, theft, and vandalism.
• Business interruption – provides an income if you cannot operate due to a covered loss.
• Workers’ comp – mandated coverage for injuries/illnesses employees sustain on the job.
• Umbrella liability – additional liability limits above general liability and other policies.

To get insured, first, assess your risks and required coverages. Look for an insurance brokerage experienced in commercial policies. They will shop rates with multiple providers. You’ll need to provide details on operations, premises, security, occupancy, and financials. Coverage for a $5 million storage facility may run $25,000 annually.

Protect your livelihood by securing business insurance before opening. The Small Business Administration provides guidance on the types of policies to consider. Don’t wait until it’s too late!

9. Create an Office Space

Having a professional office space helps meet with prospects, and handle paperwork, and administrative tasks when launching a storage business. The right office setup projects an established image while providing functionality.

Home Office

Working from home can offer convenience and cost savings initially. Expect around $2,000 in expenses for a basic home office setup—desk, computer, phone, filing cabinets, and supplies. However, working where you live has downsides like distractions and lack of separation between work/personal life. It may also feel unprofessional to meet clients at your residence.

Coworking Space

Shared coworking spaces like WeWork provide an upscale, collaborative environment for around $300/month per desk. Coworking offers office infrastructure without the hassle of leasing your own space. Networking with other entrepreneurs is also beneficial. The only potential downside is the lack of privacy for sensitive conversations.

Retail Office

If planning to operate an on-site leasing office, properly furnishing this space creates convenience for renters. Invest around $5,000-$10,000 for reception seating, desks, filing, decor and supplies. An inviting rental office also projects professionalism. Ensure compliance with ADA and local ordinances.

Commercial Office Lease

Leasing dedicated office space provides the most professional setup but also carries the highest cost. Expect to invest around $20,000 for the first month’s rent, security deposit, and office build-out/furnishings for 750-1,000 square feet of space. While optimal for meeting clients, the ongoing expense may not make sense initially for tighter budgets. virtual office services could be an interim solution.

10. Source Your Equipment

Launching a storage facility requires acquiring ample equipment for site construction, units, office furnishings, and daily operations. Here are the top options for procuring necessary materials and equipment:

Purchasing shiny new equipment from dealers and retailers provides reliability and warranty protection. Storage-specific suppliers like Janus International and Trachte Building Systems offer steel storage units, doors, and building components for delivery and installation.

Buying Used

Major savings can come from buying gently used equipment from prior storage operators. Check industry forums, Craigslist , Facebook Marketplace , and auction/liquidation sites for constructed units, office fixtures, surveillance systems, and maintenance equipment coming from storage businesses that closed.

Renting certain equipment on a short-term basis can make sense for the construction phase. Consider renting excavators, bulldozers, trenchers, and compactors rather than purchasing this heavy machinery. Cranes and boom lifts may also need temporary renting during vertical building. Avoid buying equipment needed only temporarily.

Leasing storage units themselves through a dealer partnership lets you launch operations without huge upfront unit purchases. Look for lease-to-own options so monthly payments eventually gain you ownership.

11. Establish Your Brand Assets

Developing a strong brand identity is crucial for storage startups to stand out, connect with customers, and build recognition. Essential steps include:

Getting a Business Phone Number

A professional business phone number establishes credibility and provides a centralized contact option for prospects. Options like RingCentral offer toll-free and local numbers with call routing, voicemail, and analytics starting around $30/month. A dedicated business line makes your storage operation look legit.

Creating a Logo and Brand Assets

A logo encapsulates your brand visually. Consider bright colors and simple designs given the storage industry. Use style guide elements like fonts, colors, and graphic treatments consistently across platforms. Services like Looka offer fast logo creation starting at $20.

Business Cards and Signage

Professionally printed business cards establish credibility when meeting vendors, investors, clients, and more. They also make it easy for happy customers to refer others. Signage like monument signs, directionals, and building signage help route customers on-site. Order affordable cards and signs from Vistaprint .

Purchasing a Domain Name

Secure a domain name that matches your storage brand for customer discoverability and an authoritative web presence. Use target keywords if possible. Extensions like .com and .storage work best. Registrars like Namecheap offer domains for around $15/year.

Building a Website

Every business needs a website to showcase services, attract leads, and publish info for customers. Build one yourself via user-friendly website builders like Wix or hire a freelancer from Fiverr for around $500. Keep it simple initially. Focus on easy booking, basic pages, and establishing your brand online.

12. Join Associations and Groups

Joining relevant organizations and networking groups is highly beneficial for storage facility owners to gain insider knowledge, partnerships, and marketing exposure. Great options include:

Local Associations

Area storage associations provide the chance to regularly connect with other local facility owners and managers. Top groups include regional chapters of the Self Storage Association and independent associations like the California Self Storage Association . Membership fees are reasonable (under $500/year) for access to events, resources, and promotions.

Local Meetups

Attend local small business meetups and storage-specific trade shows to make connections. Sites like Meetup help find regular networking events nearby. The Inside Self Storage Expo is one of the largest national shows attracting storage operators across the U.S. Rub shoulders with seasoned vets to learn winning strategies.

Facebook Groups

Dozens of niche Facebook groups provide storage tips from fellow facility owners nationwide. Top examples include Self Storage Owners, Operators, and Investors . Read other members’ questions and join discussions. Online groups offer free peer knowledge day and night.

13. How to Market a Storage Business

Implementing an ongoing marketing strategy is essential for storage entrepreneurs to fill units, boost visibility, and drive referrals. With the right methods, robust promotion can happen without breaking the bank.

Personal Networking

To start, tap into your inner circle and existing customer base. Satisfied customers are likely to recommend you to friends, and family, and on sites like Yelp. Make it easy for happy renters to share your business. Offer a referral bonus of one month free for any new customer they bring in.

Next, focus on digital and traditional marketing across multiple channels:

Digital Marketing

• Google/Facebook paid ads targeted locally by interest and intent
• Search engine optimization to rank for terms like “storage units near me”
• Active social media pages with special offers and facility photos
• YouTube videos showcasing your storage business and processes
• Local business citations on directories like Yelp, YellowPages, etc
• Retargeting ads that follow site visitors across the web
• Email newsletters with helpful storage tips and promotions
• Partnerships with moving companies, realtors, and colleges
• Online reviews via Google, Facebook, SpareFoot, Yelp

Traditional Marketing

• Direct mail flyers to neighborhood homes and businesses
• Attending local networking events as the “storage expert”
• Domain-specific billboard ads on frequented roads
• Local TV commercials if the budget allows
• Radio spot ads on popular stations
• Promotions at high-traffic community events
• Yard signs and banners near your facility
• A monthly newsletter to existing customers

The most effective approach blends digital and traditional marketing for omnichannel visibility. Focus on affordable tactics like optimizing your Google Business profile, cultivating reviews, social media outreach, and leveraging partnerships.

14. Focus on the Customer

Providing exceptional customer service needs to be a top priority when starting a storage business to drive referrals, boost retention, and build your reputation.

Some ways to increase customer focus in self storage units include:

• Small touches like greeting all visitors, quickly answering phones and questions, and addressing issues promptly can set you apart from the competition. Make renters feel valued.
• Going above and beyond with existing self storage customers also pays off. When renters access their unit, offer to assist with moving items or provide moving equipment like dollies and blankets for free. Help protect their treasures.
• Follow up after key interactions via phone or email to ensure satisfaction. Check-in periodically on longer-term renters and ask if they need any help.
• Consider periodic perks like free coffee and donuts on the weekends for your customers. Send a birthday or holiday card to make them feel special.
• Train staff to be storage experts who can educate clients and provide solutions. Take time to explain options and recommend ideal unit sizes and features.
• If a customer has a problem or files a complaint, address it immediately and offer a concession like a free truck rental. Turn frustrations into goodwill.

With self-storage largely a commodity business, stellar customer service creates a true competitive advantage. Word spreads quickly about great experiences, driving referral business your way.

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April 9, 2024

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How To Start a Self Storage Business In 6 Steps

Follow these six prep and planning steps to learn how to start a self storage business that’s primed for success from the ground up.

Starting a new business in an unfamiliar industry can be a bit daunting. But you’re not alone; most new self storage facilities are started by folks who are completely new to self storage. You’ve probably had a successful career in another sector, heard tales of the generous returns self storage generates for investors (they’re true!), and are now pretty set on starting this new adventure. We’ve been there , and we’re here to help.

How to start a self storage business?

Before you get caught up in picking a catchy business name and looking at fit outs, there are six prep and planning steps we recommend in order to give your new business the strongest chance of success:

• Decide your investment amount
• Choose the right location
• Plan your storage type + size
• Find your premises
• Decide your operational model
• Research the red tape

Here’s what to do.

1. Decide your investment amount

Work out how much you have to invest, because during this planning phase, your budget will affect:

• where you can afford to get property;
• which types of self storage are feasible; and
• which operational model will be your best option.

Later on, your budget will influence the spec of your fit out, how sophisticated you can get with technology, etc.

Phase your investment?

Starting a self storage business doesn’t have to be an all-at-once proposition. In fact, self storage lends itself particularly well to a phased, modular approach. So when working out your budget, it’s worthwhile breaking out how much you want to invest now, and how much more capital you’re certain you could invest in a year or so to complete your facility if things go well (either from your own funds or with the help of external investors). For example, when our CEO started a self storage business for the first time, he used an initial $130k investment to cover one-off set up costs (taking out a long lease, signage, website and tech costs) and fitted out 1/3rd of the total space, just 49 units initially. Then, a year later, he released a further $120k of home equity to complete the final two fit out stages, taking the facility to 149 units.

2. Choose the right location

Will your facility be in your hometown, the next town over, near where your office is located? Will you spend your days manning the site or will you run it remotely without staff there? Or will you have staff there and you’ll simply check in now and again? Finding the right location for your business makes success more likely.

Every business requires some degree of face-time, so a good starting point is to decide the max you’re willing to commute a few times per week to manage operations, or to commute every day if you plan to work from there. Even if this diminishes over time as you’re able to delegate work, when getting set up (and especially during the fit out phase), you’ll be back and forth a lot.

Starting your search

Use a map like this to work out your search radius (we know it’s not the prettiest tool, but it works!). For example, input your full home address (city, state, zipcode, etc) and the distance you’re willing to travel, then click ‘New Circle’. Make a note of all of the cities/towns in your catchment area.

Researching populations

To decide which locations are viable contenders, list out the towns or cities within your commute area in a table or spreadsheet and work out their populations. This can take a bit of time depending on how many places are on your list and where in the world you’re researching, but here are few links to help you:

• US Census Bureau —Scroll to the ‘Incorporated Places’ section and click on your state. An Excel file will download listing every town’s/city’s population as of 2020 and a 2021 projection.
• Statistics Canada —Scroll midway down the page to use their city/zip code search box.
• United Kingdom—Getting population details on all UK towns and cities still isn’t easy online, but you can use the Scotland Census Area Overview (2011 stats), and try this Area Explorer for Northern Ireland data. In addition, non-government sites like citypopulation.de aggregate publicly-available population data worldwide, and you can search English or Welsh town names to view 2020 population estimates (we just don’t know how accurate their data is).
• Ireland’s Central Statistics Office— Download this spreadsheet of the 2016 census’ total populations for 874 towns in Ireland.
• Australian Bureau of Statistics —Enter your town name in the ‘Search by Area’ field. A search results section will appear a little further down the page. Click its ‘All Persons’ button to quick-view the ‘People’ stats for that location.

Finding unmet demand

With your population table complete, the next step in picking your location is to work out which area presents you with the best business potential.

Start by applying your country’s figure for the average square footage per person. Most Self Storage Associations have this figure available on their website.

In the US, it’s 9.44 sq.ft./head, so you’d multiply the population of each town by this to determine how much self storage the area can support. So a town of 20,000 people could support 188,800 sq.ft. of rental storage space.

The next question: How much self storage space is already on offer in each location on your list? Go online, find out approximately how much space your competitors have built in each town/city and add this to your spreadsheet. Then subtract the two values for each town to see how much space is up for grabs in each area. The more space for the taking, the better your returns should be.

If you want to get even more precise about potential vs competitor capacity, go back to your radius map and plot 3 or 5-mile radius circles around each competitor’s address. Most customers won’t drive more than 5 miles from their home for self storage, and this could help you visualise any lucrative unclaimed locations between your competitors’ catchments.

It’s worth noting that the current supply of self storage per head isn’t necessarily the same as the current demand. There’s likely to be significant unmet demand in most markets. The biggest opportunities are often found in smaller towns. They can present a number of benefits including:

less-expensive commercial properties than cities;

lower property taxes;

less or no competition for business;

faster word-of-mouth promotion;

nobody to outbid in online advertising; and

nobody to get into a price war with.

3. Plan your storage type + size

Once you’ve found a good area to base your business in, you need to decide what type of self storage business you want to open. It might surprise you to hear that there are dozens of types of storage businesses to choose from, including climate controlled storage, portable/mobile storage, vehicle storage, student storage, military storage, boat storage, business storage, 24 hour storage and more. But most of these fall into one of three simple categories: indoor storage, outdoor storage and drive-up storage. At this step, your investment size comes back into play.

What $61K–$122K will buy

If you have between $61K and $122K to invest, outdoor storage or drive-up storage are probably your best options. Both involve buying or leasing some land.

With outdoor storage, you provide a plot where goods are stored unsheltered or semi-sheltered (perhaps with a canopy covering overhead but no walls). A private parking lot is a familiar example of outdoor storage, where cars or large camper vans are stored.

With drive-up storage, on the other hand, you either fill your land with storage containers (usually shipping containers) or rows of units with rollup doors like on your home’s garage. Customers park their vehicles in front of their unit to load and unload, and they store their belongings within these—fully covered and better protected from the elements, their fellow storers using your facility, or passersby. What’s great about the containers approach is you can buy them as you grow. You can limit your risk by buying a few and seeing how long they take to rent out. And if you end up with more than you can fill, they’re easy to sell on to others and relocate.

What $122K+ will buy

If you have $122k or more, then, depending on you can afford to go the indoor route. For this type of self storage business, you buy or lease a warehouse and fit it out with indoor storage units. To keep initial costs down, you can do this fit out across multiple stages, too.

Investment inflators

There are a few variables worth mentioning that will push up your initial investment:

Buying instead of leasing—Obviously buying land or a warehouse will cost you more upfront than leasing will.

Extent of construction and repairs—The more work needed, the more money you’ll need. For example, outdoor sites may require you to tarmac the ground for cars and build a high, quality fence and gate for security. Indoor sites might require a mezzanine floor or a new roof.

To help you fine tune your numbers, try our free self storage financial modeller to work out the initial and maximum funding you’ll need for your self storage business in years one through four.

4. Find your premises

When it comes to visibility, footfall, demand, ease of access, your precise property location matters. So when you’ve narrowed down your location(s), start shopping for premises:

Check out every real estate website there is.

Drive around the towns or cities.

Pay attention to where the outdoor advertising billboards are located.

Meet with realtors and let them know what you’re looking for.

It’s impossible to get the perfect site, but look out for (and perhaps score each site against) benefits such as:

Lots of passing traffic with a building visible from the road

Lots of nearby houses and businesses

Ideally new home building going on nearby

Not too much competition in the area

The ability to rent or buy land or a warehouse at prices that work

Finding all of the above is almost impossible, so simply try your best to get a good combination of each, but don’t rule a site out if it’s missing one or more because it could still work.

This is the fun part of the process, but it’s also the bit where a lot of people give up … because finding suitable sites isn’t easy. It takes time, hard work, and luck!

5. Select an operational model

The final step of how to start a self storage business is deciding how you’ll operate. In other words, what way are you going to run this business?

Staffed, semi-manned, or unmanned?

On premise or remotely managed?

Success is possible with any model, if you’re willing to invest the necessary time, money, and manpower in the business. And of course there are perks, drawbacks, and special considerations for each approach—from flexibility, customer experience and company culture to job satisfaction, sales processes, technology costs, and site security.

6. Research the red tape

If you’ve run businesses in the past, you will already be familiar with the local laws and regulations that will impact your build and operations. If not, make sure to carefully familiarise yourself with the following in your location, as failure to comply can result in unwanted fines and penalties:

Planning permission

Legally permitted opening hours for your location

Building control requirements

Fire safety requirements

Self storage insurance

Can Stora help you?

If you're looking to take the plunge into the wonderful world of self storage, discover if Stora would be a good fit for your business.

Get started →

Useful links

Check out some of our other helpful resources for those new to self storage.

The Self Storage Academy Explore our wide-ranging guides and resources.

The Self Storage Growth Guide The ultimate guide to growing your self storage business.

Self Storage Brand Marketplace Still need a logo? Check out our ready-to-go brands.

Self Storage Investment Calculator Quickly see what you can earn from investing in self storage.

Stora is self storage sales and management software for modern operators who want to run their businesses with as little admin and as much profit as possible. Our platform offers automated web sales, facility management + marketing all in one.

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Self Storage Business Plan Template

Written by Dave Lavinsky

Self Storage Business Plan

Over the past 20+ years, we have helped over 9,000 entrepreneurs and business owners create business plans to start and grow their self-storage facilties. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a self storage business plan template step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is a Self Storage Business Plan?

A business plan provides a snapshot of your self-storage business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Self-Storage Facility

If you’re looking to start a self-storage or storage unit business, or grow your existing self-storage business, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your self-storage business in order to improve your chances of success. Your self storage business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Self Storage Facilities

With regards to funding, the main sources of funding for a self-storage business are personal savings, credit cards, bank loans, and angel investors. With regards to bank loans, banks will want to review your self storage business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.

The second most common form of funding for a self storage facility is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding or, like a bank, they will give you a loan. Venture capitalists will not fund a self-storage business. They might consider funding a self-storage business with a national presence, but never an individual location. This is because most venture capitalists are looking for millions of dollars in return when they make an investment, and an individual location could never achieve such results.

Finish Your Business Plan Today!

How to write a business plan for a self storage business.

If you want to start a self storage facility or expand your current one, you need a business plan. Below we detail what should be included in each section of your business plan for a storage facility.

Executive Summary

Your executive summary provides an introduction to your self storage business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of self-storage business you are operating and the status. For example, are you a startup, do you have a self-storage business that you would like to grow, or are you operating a chain of self-storage facilities.

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the self-storage industry. Discuss the type of self-storage business you are operating. Detail your direct competitors. Give an overview of your target market. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.  

Company Analysis

In your company analysis, you will detail the type of storage business you are operating.

For example, you might operate one of the following types of storage businesses:

• Portable container : this type of storage business allows customers to easily transport self storage units.
• Climate controlled storage : this type of storage business protects and preserves property against harmful temperature and humidity levels.
• Vehicle storage : this type of storage business allows customers to safely store various types of vehicles.

In addition to explaining the type of storage business you will operate, the Company Analysis section of your storage unit business plan needs to provide background on the business.

Include answers to question such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of occupied self storage units, contract renewals, number of referrals, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

While this may seem unnecessary, it serves multiple purposes.

First, researching the self storage industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy, particularly if your research identifies market trends.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your storage business plan:

• How big is the storage industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your self storage facility? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your storage unit business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: students, business owners, families, and people who are relocating.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of self-storage business you operate. Clearly, students would want different service options and would respond to different marketing promotions than families who are relocating, for example.

Try to break out your target market in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the customers you seek to serve. Because most self-storage facilities primarily serve customers living in the same city or town, such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

Finish Your Self Storage Business Plan in 1 Day!

Don’t you wish there was a faster, easier way to finish your business plan?

With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other self storage facilities.

Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes businesses with their own storage space and people who store extra items in their attics or basements. You need to mention such competition to show you understand that not everyone who needs storage will utilize a self-storage company.

With regards to direct competition, you want to describe the other self-storage facilities with which you compete. Most likely, your direct competitors will be self-storage facilities located very close to your location.

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• What types of customers do they serve?
• What types of storage services do they offer?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of the competitive analysis section of your business plan is to document your areas of competitive advantage. For example:

• Will you provide superior services?
• Will you provide services that your competitors don’t offer?
• Will you make it easier or faster for customers to use your services?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your business plan.  

Marketing Plan

Product : In the product section, you should reiterate the type of storage business that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to self storage, will you provide 24-hour security, electronic gate access, or on-site staff?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the services you offer and their prices.

Place : Place refers to the location of your self storage business. Document your location and mention how the location will impact your success. For example, is your self storage business located near a main highway, near public transportation, etc. Discuss how your location might provide a steady stream of customers.

Promotions : The final part of your self storage marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

• Advertising in local papers and magazines
• Reaching out to local websites
• Social media marketing
• Local radio advertising

Operations Plan

While the earlier sections of your self storage business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your storage business, including security management, facility maintenance, and customer service.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to lease 100 self storage units, or when you hope to reach $X in revenue. It could also be when you expect to expand your facility or launch in a new location.  

Management Team

To demonstrate your self storage business’ ability to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience in managing self storage facilities. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing self storage companies or successfully running small businesses.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $100,000 on building out your self storage business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a local office building approached you with a $50,000 contract to provide self storage services for their building occupants. Let’s further assume the contract would cost you $50,000 to fulfill in terms of increased staffing costs. Well, in most cases, you would have to pay that $50,000 now for employee salaries, utilities, etc. But let’s say the company didn’t pay you for 180 days. During that 180-day period, you could run out of money.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting a self storage business and growing it:

• Location build-out including design fees, construction, etc.
• Cost of equipment like surveillance technology, dollies, and climate control systems
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your location lease or a blueprint of your facility.  

Putting together a business plan for your own self storage business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the self storage industry, your competition, and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful self storage business.

Self Storage Business Plan FAQs

What is the easiest way to complete my self storage business plan.

Growthink's Ultimate Business Plan Template  allows you to quickly and easily complete your Self Storage Business Plan.

What is the Goal of a Business Plan's Executive Summary?

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of self storage business you are operating and the status; for example, are you a startup, do you have a self storage business that you would like to grow, or are you operating multiple self storage businesses.

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Self Storage Business Plan

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.

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 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.

What to Include in Your Self Storage Business Plan?

• Executive Summary 
• Company Overview
• Industry Analysis
• Customer Analysis
• Competitive Analysis
• Marketing Plan
• Operations Plan
• Management Team
• Financial Plan

1. Executive Summary 

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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2. Company Overview

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:

• Vision and mission statements
• Business legal structure(Sole proprietorship, partnership, LLC, or corporation)
• History and background of storage business (if any)
• Owners’ names with qualifications
• Future business goals(Short-term or long-term)
• Milestones you have accomplished(number of self-storage units occupied, number of referrals, contract renewals, etc.)

3. Industry Analysis

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 .

4. Customer Analysis

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:

• Working Class Adults / Corporate Executives
• Sports Clubs (soccer team, athletics team, and choreographers et al)
• College Students / Schools
• Community and Corporate organization
• Business People / Entrepreneurs
• Government Officials
• Religious centers (Crusade Teams)
• Merchants, Importers, and manufacturers
• Sports Men and Women
• Construction companies

5. Competitive Analysis

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:

• Who(type of customers) do they serve?
• What type of self-storage services do they provide?
• What are USPs, including their quality service?
• What is their pricing strategy(medium or low)?
• What do they need to improve as per their customers?

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.

6. Marketing Plan

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:

Unique Selling Propositions(USPs)

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.

Social Media Marketing

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.

Partnerships

Establish collaborations with local businesses to promote your storage facilities and generate referrals. This can benefit your self-storage company and local partners.

Website and online reservations

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.

Loyalty programs and special offers

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.

7. Operations Plan

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:

Staffing & Training

Describe your staffing plan, prioritize training programs, and foster a collaborative work environment for smooth administrative processes and excellent customer service.

Facility Management

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.

Technology and Software

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.

8. Management Team

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.

9. Financial Plan

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:

Income Statement

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:

Balance Sheet

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.

Cash Flow Statement

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.

Funding Sources for Your Self-Storage Business

You can access different funding sources to support your self-storage startup or expansion efforts. Here are some common sources to get funding from:

Bootstrapping

Many entrepreneurs use personal savings as initial capital for starting a self-storage business without attracting investments or borrowing money from banks.

Family and friends

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.

Investors and partnerships

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:

• Crowdfunding
• Small Business Administration(SBA) loans
• Private equity & venture capital
• Grants and subsidies
• Real Estate Investment Trusts(REITs)

Download a sample self-storage business plan

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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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.

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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:

• Executive summary
• Company overview
• Self-storage industry analysis
• Customer analysis
• Competitive analysis
• Marketing plan
• Operational plan
• Management team
• Financial plan

What is the average profit margin for self-storage?

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%.

What are the legal and regulatory considerations for a self-storage business?

A self-storage unit business should consider various legal and regulatory aspects:

• Business legal structure
• Licenses and permits
• Lien rights & late fee policies
• Tax regulations
• Zoning laws
• Vehicle towing

How much capital is needed to start a self-storage facility?

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.

What types of self-storage units should I offer?

There are various types of self-storage units, including:

• Standard units
• Climate-controlled storage
• Drive-up units
• Interior storage units
• Exterior units
• Vehicle storage

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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How to Start a Storage Unit Business: Everything You Need to Know

How to start a storage unit business tends to be one that requires a lot of capital to get started. 3 min read updated on January 01, 2024

The Rental Storage Unit Business: Industry Overview

How to start a storage unit business tends to be one that requires a lot of capital to get started. It can also consume a lot of your time. But, there is one area of real estate that is not capital intensive nor is it time-consuming. That area is the rental storage unit industry. 

People use storage units to keep their belongings secure when they can't fit it into their living quarters. A unit can be a box or a locker, containers or rooms, or even an empty lot. The amount of construction of new storage unit facilities is on the low side which means there is room for new players to enter the market. 

The storage unit industry started in 1958 and has been an industry that makes money for investors. The potential for profit is  there if you do your research and make sure you have a strategic location.  Storage units are susceptible to supply and demand forces, but people will always look for extra room to store their stuff. Rents may not always stay high, but there's almost a guarantee of income for the long run.

Market Research and Feasibility Studies

Just as with any other business you might want to get into, you need to do your research. Gaining an understanding of this industry before you commit your time and money into getting a business off the ground is important. You need to understand the demand for storage in the area you have chosen, along with the potential costs and profits. Ask yourself what type of facility you want to operate. Do you want a facility with:

• Units locked by the renter
• Self-storage rental warehouse
• Coin-operated lockers

Understanding the competition is also important to your market research . Location trumps all when it comes to running a storage unit facility. You may find you are able to charge more than your competition due to the location. Or you may find your competition is willing to do what it takes to get as much business as possible and undercut you. That means you pay the premium for a high-profile location but still wind up losing money. The more you can learn about the lengths your competition will go to rent units, the better you can counter their efforts.

Outline Your Goals 

Once you know as much as you can possibly learn about the local market conditions for storage units, you should focus on a clear-cut business plan . Do you want a small business that you can run part-time from home and supplement income? Or, do you consider this a stepping stone that you can grow into a larger business? Remember, you can always start small and grow your business over time, especially if you're not ready to fully commit to operating a fully-fledged storage unit facility. 

Determine Your Start-Up Costs

Now that you have an idea of what it is you want to do, and where you want to place your facility, you need to estimate your start-up costs. These are known as sunk costs or the costs you have to pay to get the business started. These costs are separate from your ongoing maintenance and business costs. It's important to make sure you can raise the money first.

Some of these costs may include:

• Land acquisition
• Franchise fees if working with a franchisor
• Website design and hosting
• Promotional materials
• Construction

Leave aside some money to deal with any unexpected costs during this time. 

Ensure You Comply With Tax and Legal Regulations

You need to make sure that you are registered and in compliance with all the relevant tax and regulations that apply to the storage unit industry. If you do not think that you are able to do this research on your own, you should hire an attorney who is capable of informing you of the laws, licenses, and regulations that you need to follow. Your attorney may also have information about grants and financial aid that exist for small businesses. You might be eligible for financial support from the government as you start your first storage unit facility.

If you need help with starting a storage unit business, you can  post your legal need  on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

Content Approved by UpCounsel

• Self Storage Contracts
• Breach of Contract Section
• How to Start a Business: A Comprehensive Guide for Entrepreneurs
• Cash Requirements From Startup
• Starting a Company
• Shared Service Agreement Template
• How Does a Business Operate: Everything You Need To Know
• Cost to Start a Sole Proprietorship
• How Much Money to Start a Corporation
• Partial Release Clause

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How to Start a Rental Storage Unit Business

June 12, 2023

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Where to Start in Creating Your Self-Storage Business

If you’ve managed to stay in-the-know about the latest trends in real estate for 2023, you know that self-storage investing is on the rise. Between record high returns, low management costs, and sustained renter demand, investing in self storage facilities is proving one of the most lucrative moves for investors this year. 

But what does it really take to start your own business in self-storage? 

In this article, we break down eight simple steps to start your own self-storage rental business and start capitalizing on this lucrative market. 

Step 1: Conduct Market Research  

As with any type of investing, step one is doing your homework. You must decide whether starting a self-storage business will be sustainable in the location and local market you’re interested in. 

Here are a few factors to consider: 

• Local Demand – If you start a self-storage business in a particular location, will there be enough demand to reliably fill units? Think about where a self-storage facility might be particularly well utilized (e.g., next to a university, off the highway exit, etc.). Investing in any property involves some level of risk, so you want to be sure you’ll be able to generate enough revenue from your customers to cover construction expenses, mortgage debt, and your monthly operating expenses.  
• Local competition – Have the owners of nearby storage facilities been able to fill their units consistently? If not, a second facility in close vicinity is unlikely to fare any better. 
• Expected Revenue – What do storage units typically rent for in the area? You should use this information to calculate your expected revenue based on the number of storage units you plan to rent out, as well as an estimate of what your self storage investment returns could look like. 
• Seasonality – The range of seasonable variability in demand is something to consider as well when starting your self-storage business. According to Neighbor.com , the state with the most seasonable volatility is North Dakota and the state with the least is Arizona. Consider how seasonal variability will affect your ability to generate revenue. 
• Target Demographic – Keep in mind that self-storage renters tend to fall in the middle- and upper-middle-income brackets and generally range from people in their early 20s (think college-aged) to those in their mid-50s (retirement age). The customer base of a self-storage facility is also typically within a three- to five-mile radius, so a facility located in a secluded area with few people is unlikely to generate sustained interest. 
• Vehicle Traffic – Research shows that drive-by marketing attracts most self-storage customers. High vehicle traffic = more exposure = more filled units. 
• Population and Job Growth – The projected population and job trends in the area are also a strong predictor of how small businesses will fare in future years. 

Include these factors and other relevant ones in your formal cash flow analysis, or feasibility study. You’ll need this estimate of your predicted cash flow for your next step: the business plan.  

Step 2: Create a Business Plan 

After you’ve done the preliminary research, your next step is writing a self storage business plan. Any small business owner needs a sound and well-reasoned plan for implementing their ambitious goals. 

A business plan should include the highlights from the market research you conducted, organized in a readable way for future partners, lenders, or other parties involved. It should describe the structure and type of your business, detail important financial metrics, and explain your overall market strategy and approach for keeping your business profitable based on the supply and demand in your chosen market. 

Ultimately, your business plan should lay out a convincing proposal and the steps you intend to take to start a successful self-storage business. 

For more tips about what to include in your business plan, see our article on the basics of self-storage investing . 

Step 3: Secure Financing 

Now that you have a plan, you need the means to accomplish it. Whether you decide to build or buy a self-storage facility, you’ll probably need some level of financing to fund your small business.  

There are a variety of loans available for self-storage investors. Some of the most common financing options for self-storage include SBA (Small Business Administration) 504 loans, SBA 7(A) loans, or conventional loans. If you’re building a new facility, you need a construction loan, which usually requires at least 25% down.  

SBA 504 loans are ideal for those who don’t qualify for conventional loans, and they offer 10-, 20-, or 25-year fixed-rate mortgaging for up to $5 million. To qualify, however, you’ll need to meet some criteria set by the U.S. Small Business Administration , including: 

• Operating as a for-profit company with a net worth less than $15 million 
• Having an average net income less than $5 million 
• Demonstrating some management expertise 
• Showing that you’ll be able to pay back the loan (This is where your business plan and feasibility study come into play) 

SBA 7(A) loans also assist small business owners. The maximum amount is again $5 million for standard loans. For this type of loan, you’ll work closely with your lender to negotiate an interest rate, typically between 5.5% and 8%. To qualify, you’ll need to demonstrate a need for the loan, be paying off any existing debt obligations to the government you may have, have invested equity into the business yourself, and meet various other criteria.  

New construction loans are short-term loans, usually around one year in duration, that finance a new build (such as a new self-storage facility) during the construction phase of the project. Construction financing typically has higher interest payments and rates than a traditional mortgage due to the riskier nature of these loans. Closing costs may vary for construction loans, depending on the lender and scope of the project. Some developers may be able to save on closing costs by using a construction to permanent loan. Construction to permanent loans are construction loans that convert into more traditional mortgages after the building part is completed. These loans require only one down payment and set of closing costs, and during the construction process, the borrower will often only be required to make interest-only payments. Once the loan converts into a permanent mortgage, they’ll begin paying off the principal balance while continuing paying interest.

Remember, having a sound business plan to present to lenders is your biggest asset when securing a loan and negotiating a low interest rate. 

Step 4: Build or Buy Your Storage Unit Facility 

Next, it’s time to put your plan into action. Your next steps will obviously depend on whether you’ve decided to build a new self-storage facility or purchase an existing one. If you’re building, you’ll first need to check with local city planners about zoning requirements to verify that you can operate your facility on the plot you were intending to. You may need to get your plot re-zoned and wait for approval before you can move forward with construction. And don’t forget to get your new facility insured with a comprehensive policy to protect your business against potential disasters or liabilities. In total, you can expect to pay around $25 to $70 per square foot on construction costs. 

If you plan to buy an existing facility, you’ll focus instead on getting your new acquisition appraised, inspecting it, and negotiating with the seller on its price and the conditions of the agreement. Just like any other property, you’ll want to analyze the property’s prior cash flow, tax returns, and other financial and risk information you have. The price of a self-storage facility will depend on its square footage, number of units, and location. 

Learn more about the pros and cons of each option here .  

Step 5: Install Security 

As a storage business, security should be one of your main priorities and selling points for your units. If your storage units aren’t secure, customers will have no reason to entrust you with their belongings.  

Installing smart technology can enable you to monitor and manage your self-storage facility remotely, which can benefit you personally while also serving as a great feature to advertise and use to draw in clients. Some security features to consider include electronic/keyless entry, mobile entry, smart padlocks, or door controllers. Many security companies (like this one ) also offer custom locks solutions, so you can create a security system unique to your facility’s particular needs and design. 

Step 6: Market Your Storage Units 

You won’t make much progress filling your storage units without targeted marketing. You should cater your listings, advertisements, and website content toward those renters you’ve identified as your primary customers. There are many options for self-storage marketing that you can explore in our article on the topic , but a few include pay-per-click ad campaigns, billboard ads, and referral programs. 

Step 7: Write a Detailed Self-Storage Rental Agreement 

Before you can rent to any tenants, you’ll need to write a thorough self-storage rental agreement template. At minimum, a self-storage lease should include: 

• Contact information for both parties 
• The monthly rental rate and payment schedule 
• The start and end dates of the lease 
• Amount of the security deposit 
• Grace period and late fee policies 
• Responsibilities of the lease 
• Responsibilities of the lessor 
• Any rules about which items can and cannot be stored 

If your units are climate-controlled or offer additional amenities or features, you’ll also want to clearly explain the terms and details of the arrangement for these features and any corresponding fees or costs. And if you have any legal questions about your self-storage agreements or the laws surrounding them, don’t hesitate to get in touch with an experienced real estate attorney in your area. 

Step 8: Use Software to Manage Your Units 

Implementing smart strategies for managing your storage units is perhaps the most important thing you can do to ensure long-term success for your business. Using storage unit software to manage your rental offers several benefits, including: 

• The ability to sign and store leases digitally 
• Lease tracking 
• Online rent collection capabilities 
• Tenant screening tools 
• Financial reporting, accounting, and tax documentation resources 
• Tenant communication tools 

What’s more, you can use property management software like Innago to manage storage units just as you would traditional commercial or residential properties. You’ll have access to all the same features on the platform you’re familiar with, or if you’re a new user, you can easily set up yourself and your tenants on a platform with a simple and intuitive interface and exceptional customer support. 

Conclusion 

While the process of setting up your self-storage business may seem overwhelming at first, a significant payoff is waiting for you at the end of the start-up period. With a carefully thought-out business plan, skillful team members, and an eye toward technology that can ease management duties, you can take advantage of this niche but rapidly growing industry.  

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The manager and employees were very knowledge and helpful. They installed a hitch for me on my Subaru in about an hour and a half and gave me a GREAT deal on a 4x8 trailer. They totally took care of me and I left on my cross country move feeling satisfied with my experience at this U-Haul location. I would definitely recommend to anyone, especially in the Omaha area! Call around and compare to U-haul places in Omaha.. you'd be surprised, I bet you end up going with these guys instead! : ]

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Business Continuity vs. Disaster Recovery: What’s the Difference?

Disaster recovery and business continuity are two processes that help organizations ensure their resilience when unexpected adverse events occur. Learn more about them and how they differ.

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May 07, 2024

When disaster strikes, whether it’s natural or human-made, businesses need to be prepared. Business continuity planning helps organizations continue operating during or after an event, while disaster recovery planning helps them restore IT infrastructure and data after a disruption.

When the unexpected happens, poorly prepared businesses run the risk that everything could come to a screeching halt. Customers could stop placing orders, outgoing shipments could cease, and productivity can grind to a standstill. All of that leads to lost revenue, unhappy customers, and bad publicity. In some cases, it can even result in compliance failures and financial penalties.

It’s important to understand the distinctions between business continuity planning (BCP) and disaster recovery planning (DRP) because they each entail a different set of problems, priorities, and solutions. 

Historically, business continuity and disaster recovery have called for complex and expensive solutions with multiple potential points of failure. Recent innovations, including Pure Storage® ActiveCluster ™, combine simplicity and ease of use with robustness and dependability. Before we delve further into solutions, though, let’s talk about the main differences between BCP and DRP.

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What Is Disaster Recovery Planning?

Disaster recovery , often referred to simply as “DR,” ensures that organizations can rebound quickly in the face of major adverse events. When a hurricane leads to widespread power outages, flooding, and workforce disruption, for example, an effective disaster recovery plan ensures that IT systems remain up and running and that operations can come back online as soon as possible.  

The primary focus of DR is to restore IT infrastructure and data after a significantly disruptive event. This includes minimizing downtime, minimizing data loss, and ensuring business continuity. Readiness starts with an effective disaster recovery plan that incorporates backup systems, data replication, and testing procedures to ensure that the plan will work in practice.

What Is Business Continuity Planning?

Business continuity is somewhat broader in its scope, encompassing an entire organization’s ability to continue operations during and after a crisis. Not only does it address a wider range of functions, but it also encompasses a larger array of potential disruptions, including localized events that might simply halt operations for a brief period of time.

Business continuity plans address the need to maintain essential operational functions, manage risks proactively, and adapt to changing circumstances. When a regional storm makes travel difficult and causes short-term power outages, for example, an effective business continuity plan will have already laid out the potential impact, measures to mitigate associated problems, and a strategy for communicating with employees, vendors, customers, and other stakeholders.

Disaster Recovery vs. Business Continuity: Key Differences 

So, what is the difference between BCP and DR? 

Business continuity planning addresses the big picture, including a broad range of operational functions, whereas disaster recovery planning deals primarily with IT infrastructure and data recovery.

BCP extends beyond the IT department into key business processes such as supply chain management , customer service, and human resources. DR is a vital subset of business continuity because it attends to the recovery and continued operation of the company’s IT backbone.

BCP and DR have slightly different objectives as well. The former prioritizes keeping things going, even if it’s not “business as usual.” The latter seeks to restore normalcy as quickly as possible.

Business continuity planning often entails temporary measures or workarounds that are not part of the company’s normal routines. In the face of regional disruptions, for example, a company might reallocate workloads to a secondary location or contract with an outside organization to fill a gap temporarily. 

In this respect, business continuity often includes plans that enable the organization to continue operations under adverse conditions. This requires planners to identify essential business functions, create manual workarounds for automated processes, and ensure that sufficient resources will be available to continue operations. In BCP, the goal is to keep things going, even if extraordinary measures are required to do so.

The objective of DR, in contrast, is to minimize downtime, restore data to the greatest extent possible, and return critical IT systems to their normal state as rapidly as possible. This typically involves detailed technical strategies for system failover, data recovery, and backups. The primary objective is a rapid return to normalcy while minimizing losses.

Because BCP encompasses a broader range of functions, it also requires a more detailed approach to scenario planning, risk assessment, and contingency measures. Testing business continuity requires that organizations simulate various scenarios to ensure that all aspects of the plan function correctly and that personnel are able to perform their roles adequately.

DRP also calls for routine testing, but such tests tend to be more focused in their scope, zeroing in on the immediate aftermath of a disaster and aiming to get systems back online within a specified target time frame.

Importance for Organizations

To ensure their resilience in the face of adverse events, organizations should have both a disaster recovery plan and a business continuity plan in place. The unexpected can happen when you least expect it, and things can change quickly.

When a cargo ship destroyed the Francis Scott Key Bridge in Baltimore earlier this year, it severed access to the port, halting operations for the businesses that operated there and disrupting supply chains for countless companies.

When Colonial Pipeline suffered a ransomware attack in 2021, there were fuel shortages in 17 states. Numerous airlines were compelled to alter their flight schedules, and drivers were faced with long lines at the gas station. 

These events illustrate why it’s so important to have both a business continuity plan and a disaster recovery plan in place and to test them routinely. Even for companies with very little exposure to weather disasters or supply chain disruptions, it’s important to plan ahead. Ransomware, for example, is a growing problem for businesses of all sizes. According to SANS Institute, the number of ransomware cases increased by nearly 73% in 2023 . 

To protect yourself, engage stakeholders in your organization to develop comprehensive plans for both business continuity and disaster recovery. Consider investing in technology solutions that are designed with resiliency in mind.

At Pure Storage, for example, we’ve designed our products around what we call a cyber-resiliency architecture . Pure Protect™ //DRaaS , for example, is an on-demand disaster-recovery-as-a-service solution that simplifies DR by enabling you to recover critical systems to the AWS Cloud in just minutes while maintaining full custody of your own data at all times. Purity//FA , the software heart of our FlashArray ™ solution, offers always-on data protection and lightning-fast replication. Our Evergreen//One ™ storage-as-a-service offering comes with a first-of-its-kind ransomware recovery SLA .

Pure Storage can help you fast-track your BCP and DRP readiness with solutions designed with native cyber-resiliency capabilities. Learn more about our data protection , ransomware , and business continuity and disaster recovery solutions today, or contact us to discuss your unique requirements.

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A Plan to Remake the Middle East

While talks for a cease-fire between israel and hamas continue, another set of negotiations is happening behind the scenes..

This transcript was created using speech recognition software. While it has been reviewed by human transcribers, it may contain errors. Please review the episode audio before quoting from this transcript and email [email protected] with any questions.

From New York Times, I’m Michael Barbaro. This is The Daily.

[MUSIC CONTINUES]

Today, if and when Israel and Hamas reach a deal for a ceasefire fire, the United States will immediately turn to a different set of negotiations over a grand diplomatic bargain that it believes could rebuild Gaza and remake the Middle East. My colleague Michael Crowley has been reporting on that plan and explains why those involved in it believe they have so little time left to get it done.

It’s Wednesday, May 8.

Michael, I want to start with what feels like a pretty dizzying set of developments in this conflict over the past few days. Just walk us through them?

Well, over the weekend, there was an intense round of negotiations in an effort, backed by the United States, to reach a ceasefire in the Gaza war.

The latest ceasefire proposal would reportedly see as many as 33 Israeli hostages released in exchange for potentially hundreds of Palestinian prisoners.

US officials were very eager to get this deal.

Pressure for a ceasefire has been building ahead of a threatened Israeli assault on Rafah.

Because Israel has been threatening a military offensive in the Southern Palestinian city of Rafah, where a huge number of people are crowded.

Fleeing the violence to the North. And now they’re packed into Rafah. Exposed and vulnerable, they need to be protected.

And the US says it would be a humanitarian catastrophe on top of the emergency that’s already underway.

Breaking news this hour — very important breaking news. An official Hamas source has told The BBC that it does accept a proposal for a ceasefire deal in Gaza.

And for a few hours on Monday, it looked like there might have been a major breakthrough when Hamas put out a statement saying that it had accepted a negotiating proposal.

Israeli Prime Minister Benjamin Netanyahu says the ceasefire proposal does not meet his country’s requirements. But Netanyahu says he will send a delegation of mediators to continue those talks. Now, the terms —

But those hopes were dashed pretty quickly when the Israelis took a look at what Hamas was saying and said that it was not a proposal that they had agreed to. It had been modified.

And overnight —

Israeli troops stormed into Rafah. Video showing tanks crashing over a sign at the entrance of the city.

— the Israelis launched a partial invasion of Rafah.

It says Hamas used the area to launch a deadly attack on Israeli troops over the weekend.

And they have now secured a border crossing at the Southern end of Gaza and are conducting targeted strikes. This is not yet the full scale invasion that President Biden has adamantly warned Israel against undertaking, but it is an escalation by Israel.

So while all that drama might suggest that these talks are in big trouble, these talks are very much still alive and ongoing and there is still a possibility of a ceasefire deal.

And the reason that’s so important is not just to stop the fighting in Gaza and relieve the suffering there, but a ceasefire also opens the door to a grand diplomatic bargain, one that involves Israel and its Arab neighbors and the Palestinians, and would have very far-reaching implications.

And what is that grand bargain. Describe what you’re talking about?

Well, it’s incredibly ambitious. It would reshape Israel’s relationship with its Arab neighbors, principally Saudi Arabia. But it’s important to understand that this is a vision that has actually been around since well before October 7. This was a diplomatic project that President Biden had been investing in and negotiating actually in a very real and tangible way long before the Hamas attacks and the Gaza war.

And President Biden was looking to build on something that President Trump had done, which was a series of agreements that the Trump administration struck in which Israel and some of its Arab neighbors agreed to have normal diplomatic relations for the first time.

Right, they’re called the Abraham Accords.

That’s right. And, you know, Biden doesn’t like a lot of things, most things that Trump did. But he actually likes this, because the idea is that they contribute to stability and economic integration in the Middle East, the US likes Israel having friends and likes having a tight-knit alliance against Iran.

President Biden agrees with the Saudis and with the Israelis, that Iran is really the top threat to everybody here. So, how can you build on this? How can you expand it? Well, the next and biggest step would be normalizing relations between Israel and Saudi Arabia.

And the Saudis have made clear that they want to do this and that they’re ready to do this. They weren’t ready to do it in the Trump years. But Mohammed bin Salman, the Crown Prince of Saudi Arabia, has made clear he wants to do it now.

So this kind of triangular deal began to take shape before October 7, in which the US, Israel, and Saudi Arabia would enter this three way agreement in which everyone would get something that they wanted.

And just walk through what each side gets in this pre-October 7th version of these negotiations?

So for Israel, you get normalized ties with its most important Arab neighbor and really the country that sets the tone for the whole Muslim world, which is Saudi Arabia of course. It makes Israel feel safer and more secure. Again, it helps to build this alliance against Iran, which Israel considers its greatest threat, and it comes with benefits like economic ties and travel and tourism. And Prime Minister Benjamin Netanyahu has been very open, at least before October 7th, that this was his highest diplomatic and foreign policy priority.

For the Saudis, the rationale is similar when it comes to Israel. They think that it will bring stability. They like having a more explicitly close ally against Iran. There are economic and cultural benefits. Saudi Arabia is opening itself up in general, encouraging more tourism.

But I think that what’s most important to the Crown Prince, Mohammed bin Salman, is what he can get from the United States. And what he has been asking for are a couple of essential things. One is a security agreement whose details have always been a little bit vague, but I think essentially come down to reliable arms supplies from the United States that are not going to be cut off or paused on a whim, as he felt happened when President Biden stopped arms deliveries in 2021 because of how Saudi was conducting its war in Yemen. The Saudis were furious about that.

Saudi Arabia also wants to start a domestic nuclear power program. They are planning for a very long-term future, possibly a post-oil future. And they need help getting a nuclear program off the ground.

And they want that from the US?

And they want that from the US.

Now, those are big asks from the us. But from the perspective of President Biden, there are some really enticing things about this possible agreement. One is that it will hopefully produce more stability in the region. Again, the US likes having a tight-knit alliance against Iran.

The US also wants to have a strong relationship with Saudi Arabia. You know, despite the anger at Mohammed bin Salman over the murder of the Saudi dissident Jamal Khashoggi, the Biden administration recognizes that given the Saudis control over global oil production and their strategic importance in the Middle East, they need to have a good relationship with them. And the administration has been worried about the influence of China in the region and with the Saudis in particular.

So this is an opportunity for the US to draw the Saudis closer. Whatever our moral qualms might be about bin Salman and the Saudi government, this is an opportunity to bring the Saudis closer, which is something the Biden administration sees as a strategic benefit.

All three of these countries — big, disparate countries that normally don’t see eye-to-eye, this was a win-win-win on a military, economic, and strategic front.

That’s right. But there was one important actor in the region that did not see itself as winning, and that was the Palestinians.

[MUSIC PLAYING]

First, it’s important to understand that the Palestinians have always expected that the Arab countries in the Middle East would insist that Israel recognize a Palestinian state before those countries were willing to essentially make total peace and have normal relations with Israel.

So when the Abraham Accords happened in the Trump administration, the Palestinians felt like they’d been thrown under the bus because the Abraham Accords gave them virtually nothing. But the Palestinians did still hold out hope that Saudi Arabia would be their savior. And for years, Saudi Arabia has said that Israel must give the Palestinians a state if there’s going to be a normal relationship between Israel and Saudi Arabia.

Now the Palestinians see the Saudis in discussions with the US and Israel about a normalization agreement, and there appears to be very little on offer for the Palestinians. And they are feeling like they’re going to be left out in the cold here.

Right. And in the minds of the Palestinians, having already been essentially sold out by all their other Arab neighbors, the prospect that Saudi Arabia, of all countries, the most important Muslim Arab country in the region, would sell them out, had to be extremely painful.

It was a nightmare scenario for them. And in the minds of many analysts and US officials, this was a factor, one of many, in Hamas’s decision to stage the October 7th attacks.

Hamas, like other Palestinian leaders, was seeing the prospect that the Middle East was moving on and essentially, in their view, giving up on the Palestinian cause, and that Israel would be able to have friendly, normal relations with Arab countries around the region, and that it could continue with hardline policies toward the Palestinians and a refusal, as Prime Minister Benjamin Netanyahu has said publicly, to accept a Palestinian state.

Right. So Michael, once Hamas carries out the October 7th attacks in an effort to destroy a status quo that it thinks is leaving them less and less relevant, more and more hopeless, including potentially this prospect that Saudi Arabia is going to normalize relations with Israel, what happens to these pre-October 7th negotiations between the US, Saudi Arabia, and Israel?

Well, I think there was a snap assumption that these talks were dead and buried. That they couldn’t possibly survive a cataclysm like this.

But then something surprising happened. It became clear that all the parties were still determined to pull-off the normalization.

And most surprisingly of all, perhaps, was the continued eagerness of Saudi Arabia, which publicly was professing outrage over the Israeli response to the Hamas attacks, but privately was still very much engaged in these conversations and trying to move them forward.

And in fact, what has happened is that the scope of this effort has grown substantially. October 7th didn’t kill these talks. It actually made them bigger, more complicated, and some people would argue, more important than ever.

We’ll be right back.

Michael, walk us through what exactly happens to these three-way negotiations after October 7th that ends up making them, as you just said, more complicated and more important than ever?

Well, it’s more important than ever because of the incredible need in Gaza. And it’s going to take a deal like this and the approval of Saudi Arabia to unlock the kind of massive reconstruction project required to essentially rebuild Gaza from the rubble. Saudi Arabia and its Arab friends are also going to be instrumental in figuring out how Gaza is governed, and they might even provide troops to help secure it. None of those things are going to happen without a deal like this.

Fascinating.

But this is all much more complicated now because the price for a deal like this has gone up.

And by price, you mean?

What Israel would have to give up. [MUSIC PLAYING]

From Saudi Arabia’s perspective, you have an Arab population that is furious at Israel. It now feels like a really hard time to do a normalization deal with the Israelis. It was never going to be easy, but this is about as bad a time to do it as there has been in a generation at least. And I think that President Biden and the people around him understand that the status quo between Israel and the Palestinians is intolerable and it is going to lead to chaos and violence indefinitely.

So now you have two of the three parties to this agreement, the Saudis and the Americans, basically asking a new price after October 7th, and saying to the Israelis, if we’re going to do this deal, it has to not only do something for the Palestinians, it has to do something really big. You have to commit to the creation of a Palestinian state. Now, I’ll be specific and say that what you hear the Secretary of State, Antony Blinken, say is that the agreement has to include an irreversible time-bound path to a Palestinian state.

We don’t know exactly what that looks like, but it’s some kind of a firm commitment, the likes of which the world and certainly the Israelis have not made before.

Something that was very much not present in the pre-October 7th vision of this negotiation. So much so that, as we just talked about, the Palestinians were left feeling completely out in the cold and furious at it.

That’s right. There was no sign that people were thinking that ambitiously about the Palestinians in this deal before October 7th. And the Palestinians certainly felt like they weren’t going to get much out of it. And that has completely changed now.

So, Michael, once this big new dimension after October 7th, which is the insistence by Saudi Arabia and the US that there be a Palestinian state or a path to a Palestinian state, what is the reaction specifically from Israel, which is, of course, the third major party to this entire conversation?

Well, Israel, or at least its political leadership, hates it. You know, this is just an extremely tough sell in Israel. It would have been a tough sell before October 7th. It’s even harder now.

Prime Minister Benjamin Netanyahu is completely unrepentantly open in saying that there’s not going to be a Palestinian state on his watch. He won’t accept it. He says that it’s a strategic risk to his country. He says that it would, in effect, reward Hamas.

His argument is that terrorism has forced a conversation about statehood onto the table that wasn’t there before October 7th. Sure, it’s always in the background. It’s a perennial issue in global affairs, but it was not something certainly that the US and Israel’s Arab neighbors were actively pushing. Netanyahu also has — you know, he governs with the support of very right-wing members of a political coalition that he has cobbled together. And that coalition is quite likely to fall apart if he does embrace a Palestinian state or a path to a Palestinian state.

Now, he might be able to cobble together some sort of alternative, but it creates a political crisis for him.

And finally, you know, I think in any conversation about Israel, it’s worth bearing in mind something you hear from senior US officials these days, which is that although there is often finger pointing at Netanyahu and a desire to blame Netanyahu as this obstructionist who won’t agree to deals, what they say is Netanyahu is largely reflecting his population and the political establishment of his country, not just the right-wingers in his coalition who are clearly extremist.

But actually the prevailing views of the Israeli public. And the Israeli public and their political leaders across the spectrum right now with few exceptions, are not interested in talking about a Palestinian state when there are still dozens and dozens of Israeli hostages in tunnels beneath Gaza.

So it very much looks like this giant agreement that once seemed doable before October 7th might be more important to everyone involved than ever, given that it’s a plan for rebuilding Gaza and potentially preventing future October 7th’s from happening, but because of this higher price that Israel would have to pay, which is the acceptance of a Palestinian state, it seems from everything you’re saying, that this is more and more out of reach than ever before and hard to imagine happening in the immediate future. So if the people negotiating it are being honest, Michael, are they ready to acknowledge that it doesn’t look like this is going to happen?

Well, not quite yet. As time goes by, they certainly say it’s getting harder and harder, but they’re still trying, and they still think there’s a chance. But both the Saudis and the Biden administration understand that there’s very little time left to do this.

Well, what do you mean there’s very little time left? It would seem like time might benefit this negotiation in that it might give Israel distance from October 7th to think potentially differently about a Palestinian state?

Potentially. But Saudi Arabia wants to get this deal done in the Biden administration because Mohammed bin Salman has concluded this has to be done under a Democratic president.

Because Democrats in Congress are going to be very reluctant to approve a security agreement between the United States and Saudi Arabia.

It’s important to understand that if there is a security agreement, that’s something Congress is going to have to approve. And you’re just not going to get enough Democrats in Congress to support a deal with Saudi Arabia, who a lot of Democrats don’t like to begin with, because they see them as human rights abusers.

But if a Democratic president is asking them to do it, they’re much more likely to go along.

Right. So Saudi Arabia fears that if Biden loses and Trump is president, that those same Democrats would balk at this deal in a way that they wouldn’t if it were being negotiated under President Biden?

Exactly. Now, from President Biden’s perspective, politically, think about a president who’s running for re-election, who is presiding right now over chaos in the Middle East, who doesn’t seem to have good answers for the Israeli-Palestinian question, this is an opportunity for President Biden to deliver what could be at least what he would present as a diplomatic masterstroke that does multiple things at once, including creating a new pathway for Israel and the Palestinians to coexist, to break through the logjam, even as he is also improving Israel’s relations with Saudi Arabia.

So Biden and the Crown Prince hope that they can somehow persuade Bibi Netanyahu that in spite of all the reasons that he thinks this is a terrible idea, that this is a bet worth taking on Israel’s and the region’s long-term security and future?

That’s right. Now, no one has explained very clearly exactly how this is going to work, and it’s probably going to require artful diplomacy, possibly even a scenario where the Israelis would agree to something that maybe means one thing to them and means something else to other people. But Biden officials refuse to say that it’s hopeless and they refuse to essentially take Netanyahu’s preliminary no’s for an answer. And they still see some way that they can thread this incredibly narrow needle.

Michael, I’m curious about a constituency that we haven’t been talking about because they’re not at the table in these discussions that we are talking about here. And that would be Hamas. How does Hamas feel about the prospect of such a deal like this ever taking shape. Do they see it as any kind of a victory and vindication for what they did on October 7th?

So it’s hard to know exactly what Hamas’s leadership is thinking. I think they can feel two things. I think they can feel on the one hand, that they have established themselves as the champions of the Palestinian people who struck a blow against Israel and against a diplomatic process that was potentially going to leave the Palestinians out in the cold.

At the same time, Hamas has no interest in the kind of two-state solution that the US is trying to promote. They think Israel should be destroyed. They think the Palestinian state should cover the entire geography of what is now Israel, and they want to lead a state like that. And that’s not something that the US, Saudi Arabia, or anyone else is going to tolerate.

So what Hamas wants is to fight, to be the leader of the Palestinian people, and to destroy Israel. And they’re not interested in any sort of a peace process or statehood process.

It seems very clear from everything you’ve said here that neither Israel nor Hamas is ready to have the conversation about a grand bargain diplomatic program. And I wonder if that inevitably has any bearing on the ceasefire negotiations that are going on right now between the two of them that are supposed to bring this conflict to some sort of an end, even if it’s just temporary?

Because if, as you said, Michael, a ceasefire opens the door to this larger diplomatic solution, and these two players don’t necessarily want that larger diplomatic solution, doesn’t that inevitably impact their enthusiasm for even reaching a ceasefire?

Well, it certainly doesn’t help. You know, this is such a hellish problem. And of course, you first have the question of whether Israel and Hamas can make a deal on these immediate issues, including the hostages, Palestinian prisoners, and what the Israeli military is going to do, how long a ceasefire might last.

But on top of that, you have these much bigger diplomatic questions that are looming over them. And it’s not clear that either side is ready to turn and face those bigger questions.

So while for the Biden administration and for Saudi Arabia, this is a way out of this crisis, these larger diplomatic solutions, it’s not clear that it’s a conversation that the two parties that are actually at war here are prepared to start having.

Well, Michael, thank you very much. We appreciate it.

On Tuesday afternoon, under intense pressure from the US, delegations from Israel and Hamas arrived in Cairo to resume negotiations over a potential ceasefire. But in a statement, Israel’s Prime Minister Benjamin Netanyahu made clear that even with the talks underway, his government would, quote, “continue to wage war against Hamas.”

Here’s what else you need to know today. In a dramatic day of testimony, Stormy Daniels offered explicit details about an alleged sexual encounter with Donald Trump that ultimately led to the hush money payment at the center of his trial. Daniels testified that Trump answered the door in pajamas, that he told her not to worry that he was married, and that he did not use a condom when they had sex.

That prompted lawyers for Trump to seek a mistrial based on what they called prejudicial testimony. But the judge in the case rejected that request. And,

We’ve seen a ferocious surge of anti-Semitism in America and around the world.

In a speech on Tuesday honoring victims of the Holocaust, President Biden condemned what he said was the alarming rise of anti-Semitism in the United States after the October 7th attacks on Israel. And he expressed worry that too many Americans were already forgetting the horrors of that attack.

The Jewish community, I want you to know I see your fear, your hurt, and your pain. Let me reassure you, as your president, you’re not alone. You belong. You always have and you always will.

Today’s episode was produced by Nina Feldman, Clare Toeniskoetter, and Rikki Novetsky. It was edited by Liz O. Baylen, contains original music by Marion Lozano, Elisheba Ittoop, and Dan Powell, and was engineered by Alyssa Moxley. Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.

That’s it for The Daily. I’m Michael Barbaro. See you tomorrow.

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Hosted by Michael Barbaro

Featuring Michael Crowley

Produced by Nina Feldman ,  Clare Toeniskoetter and Rikki Novetsky

Edited by Liz O. Baylen

Original music by Marion Lozano ,  Elisheba Ittoop and Dan Powell

Engineered by Alyssa Moxley

Listen and follow The Daily Apple Podcasts | Spotify | Amazon Music | YouTube

If and when Israel and Hamas reach a deal for a cease-fire, the United States will immediately turn to a different set of negotiations over a grand diplomatic bargain that it believes could rebuild Gaza and remake the Middle East.

Michael Crowley, who covers the State Department and U.S. foreign policy for The Times, explains why those involved in this plan believe they have so little time left to get it done.

On today’s episode

Michael Crowley , a reporter covering the State Department and U.S. foreign policy for The New York Times.

Background reading :

Talks on a cease-fire in the Gaza war are once again at an uncertain stage .

Here’s how the push for a deal between Israel and Saudi Arabia looked before Oct. 7 .

From early in the war, President Biden has said that a lasting resolution requires a “real” Palestinian state .

Here’s what Israeli officials are discussing about postwar Gaza.

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The Daily is made by Rachel Quester, Lynsea Garrison, Clare Toeniskoetter, Paige Cowett, Michael Simon Johnson, Brad Fisher, Chris Wood, Jessica Cheung, Stella Tan, Alexandra Leigh Young, Lisa Chow, Eric Krupke, Marc Georges, Luke Vander Ploeg, M.J. Davis Lin, Dan Powell, Sydney Harper, Mike Benoist, Liz O. Baylen, Asthaa Chaturvedi, Rachelle Bonja, Diana Nguyen, Marion Lozano, Corey Schreppel, Rob Szypko, Elisheba Ittoop, Mooj Zadie, Patricia Willens, Rowan Niemisto, Jody Becker, Rikki Novetsky, John Ketchum, Nina Feldman, Will Reid, Carlos Prieto, Ben Calhoun, Susan Lee, Lexie Diao, Mary Wilson, Alex Stern, Dan Farrell, Sophia Lanman, Shannon Lin, Diane Wong, Devon Taylor, Alyssa Moxley, Summer Thomad, Olivia Natt, Daniel Ramirez and Brendan Klinkenberg.

Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly. Special thanks to Sam Dolnick, Paula Szuchman, Lisa Tobin, Larissa Anderson, Julia Simon, Sofia Milan, Mahima Chablani, Elizabeth Davis-Moorer, Jeffrey Miranda, Renan Borelli, Maddy Masiello, Isabella Anderson and Nina Lassam.

Michael Crowley covers the State Department and U.S. foreign policy for The Times. He has reported from nearly three dozen countries and often travels with the secretary of state. More about Michael Crowley

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