Your Self-Storage Startup with Shipping Containers: The Must-Knows

“Michael, how can I start up a self-storage business using your shipping containers?”

Increasingly, we at SteelStored get that question. In this article we will brief you on the absolute must-knows and how we help you in every phase of your startup.

Self-storage Industry

It makes good business sense that you are considering entering the self-storage industrial niche. It is high-growth, both for individual and commercial market segments. There are the empty-nesters moving to a city apartment who need to store. Simultaneously there are retailers and temporary construction crews who are potential customers.

According to Mordor Intelligence the self-storage industry is projected to reach almost $116 billion by 2025, up from about $88 billion in 2019. The compound annual growth rate from 2020 through 2025 is expected to be almost 135 percent. Essentially the business is recession-resistant. During downturns, for example, there were fewer delinquencies in loan repayments than for other industries.

Using Shipping Containers

By doing your startup with shipping containers instead of brick and mortar brings you four key advantages. You bypass construction costs so both the initial and maintenance expenses are less. Shipping containers are structured to be water- and wind-proof, have thick-steel-material security, and the wide two-door opening facilitates the entrance and exit of very large items. As your business grows, more shipping containers can be added. They are also totally portable if the location is not profitable or if they are needed at another of your sites.

Your First Step

When you ask SteelStored about a startup, we shift into a consultative mode. We ask you: What is your business objective? Is this to be a small side business or the beginning of a large venture which you might franchise? That will determine everything from choosing your business structure to decisions about financing.

Adopt the Discipline of Creating a Business Plan

A formal business plan is usually mandatory if you are seeking investors or a partner, financing from some lenders, or a small business grant. However, the format is also useful for you to address what is entailed in creating a self-storage business with shipping containers. Going through that process allows you to “walk through” what being an entrepreneur demands in this particular niche.

Possibility Meets Realities

In SteelStored’s experience, here are the major issues you have to sort out via your version of a business plan.

The Big Picture.

In business plans this is the Executive Summary. You will map out where you intend to go and how you plan to get there. Of course, this is not cast in stone. As you shift into the actual doing, the hands-on experience will probably change much of what you had envisioned. Meanwhile, you will hammer out:

• The Mission Statement. What is it that you intend to accomplish through this enterprise?
• Short description of the services you will offer and through what kind of business structure and model.
• List of major players, with a discussion about what skills and experience they bring to the business. This could uncover gaps in expertise.
• The logistics of where the headquarters is, location or locations of the facilities, and the kinds and number of employees.
• Financial data, ranging from financing to projected revenue and profit and within what timeframe.
• Vision of the future. Yes, dream.

The Make-or-Break Factors.

At the top of the list is location. As with real estate and purchasing a franchise, the location is almost everything. That mandates comprehensive research. The layout has to be flat. Otherwise you lose the benefits of the containers as dry and durable in any weather. In addition, you have to assess any potential location for the proximity to your target markets both individual and commercial, crime rate, accessibility to main transportation arteries, and competition. Then you drill down to the nuts and bolts. How successful are comparable storage businesses? According to Inside Self Storage, if the enterprise has been around several years and has only 70 percent occupancy, the market there could be soft.

Next are your startup expenses. Will you purchase the property or lease? You have to do an analysis of the risks in both options. For example, if you buy the property and the location does not attract business, you could be stuck. On the other hand, the lease might not be renewed or at an excessive rate of increase.

Other costs include the shipping containers, delivery of the containers, onsite security measures, marketing, employees, and legal/accounting services.

Of course, you have to understand your options for financing those expenses. Fortunately there is plenty of free guidance. That ranges from the Small Business Administration to the volunteer group SCORE. You can pull from a variety of funding sources. Those could include tapping into angel investors such as your family and friends, formally approaching professional investors, finding a partner, applying for a Small Business Administration loan, going to a bank or credit union, doing business quickly but at a higher rate with an online lender, taking a cash flow loan, setting up a line of credit, and using business credit cards.

Then there are the logistics of zoning, federal and state licensing, and how to structure the business to maximize tax advantages.

Management entails how you operate the business day-to-day and navigate crises. Those are necessary skills. For example, you need to have marketing, especially digital, down cold to pump up demand in slow times. Mastering word-of-mouth usually is also critical.

SteelStored Has Your Back

Here at SteelStored, our business is primarily providing shipping containers for storage. That means we have the expertise to be with you from concept through expansion or exit strategy. We listen. We provide the direction for issues such as:

What kinds of shipping containers should you purchase for what market segments?

How to keep delivery expenses at a minimum?

New or used?

What size or sizes (10, 20, or 40)?

How to refurbish?

What special paint (acrylic-based) to use?

How to transport cost-efficiently all the containers to another location if the initial one is not generating adequate revenue?

Sales of the containers when shutting down the business.?

Starting Out on Your Startup

You owe it to yourself to contact SteelStored for a complimentary consultation. Yes, ask for Michael.