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Travelers often find themselves without an easy way to tote around the luggage that they need on a trip. While luggage can be left in a hotel room, this frequently isn’t an option before check-in or after check-out -- especially as more and more people opt for non-traditional accommodations that don’t always provide the amenities hotels do. Additionally, luggage can be safely left in a locked car, but many travelers in major cities don’t rent cars.
Luggage storage businesses give travelers who don’t have alternative options a way to safely stow their luggage so that they don’t have to carry it with them.
Who is this business right for?
Anyone who is reasonably fit and enjoys interacting with people may enjoy running a luggage storage business. Business owners occasionally need to lift heavy pieces of luggage, so it helps to be in good physical shape. Some of the customers business owners meet will have questions about the area (e.g. where to get lunch or where the nearest public transit stop is). Thus, a natural ability to converse with different people is helpful.
What happens during a typical day at a luggage storage business?
A typical day at a luggage storage business involves:
- Accepting luggage from customers
- Storing customers’ luggage
- Handing luggage back to customers
A tag or identification system is normally used to track which luggage belongs to which customer. Identifying information is taken when luggage is dropped off and confirmed when customers pick up their luggage.
What is the target market?
The target market for a luggage storage business are travelers who don’t have a place to stow their luggage. These travelers may be:
- People who are touring a city for one day
- Job applicants who fly into a city for an interview
- Travelers who are staying at an Airbnb or similar setup
- Researchers who are in a city for a short amount of time
- Consultants who are in a city to meet a client for a few hours
How does a luggage storage business make money?
A luggage storage business makes money by charging customers for storing their luggage. Fees are usually based on how many pieces of luggage are being stored and how long they’re stored.
What is the growth potential for a luggage storage business?
Most luggage storage businesses have a few locations throughout a city. For example, Vertoe has 10 locations in New York City. It’s possible, however, for a successful business to expand into other cities. City Copilot, another business that’s based in New York City, is planning on expanding to other cities throughout the world.
What are some skills and experiences that will help you build a successful luggage storage business?
Successfully running a luggage storage business requires a good understanding of basic business principles. Business owners who don’t have prior experience owning a business may want to take one or more business courses from a local community college. Alternatively, there are many online business courses offered on platforms like Coursera and Open Culture.
What are the costs involved in opening a luggage storage business?
The startup costs involved with opening a luggage storage business are minimal. The biggest upfront expenses include:
- Leasing a commercial space
- Purchasing racks for storing luggage
- Procuring insurance for stored luggage
Business owners who want to keep their startup expenses llow may be tempted to skimp on these expenses, but doing so can be detrimental:
- Leasing an out-of-the way space to save on rent makes it harder for customers to bring their luggage to the location -- and toting luggage around is precisely what business owners are trying to avoid.
- Forgoing racks limits how much luggage a business can accept without stacking luggage on top of itself, which can lead to damage
- Not having insurance may deter customers from leaving their luggage with a business
Instead, business owners who have limited capital should start by leasing a small space in a high-traffic area. This will help them attract customers while keeping their lease payments as low as possible. With a little creativity, a lot of luggage can be housed in even a small space.
What are the steps to start a luggage storage business?
Once you're ready to start your luggage storage business, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
- Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your luggage storage business is sued.
- Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
- Open a business bank account. A dedicated checking account for your luggage storage business keeps your finances organized and makes your business appear more professional to your customers.
- Set up business accounting. Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
- Obtain necessary permits and licenses. Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
- Get business insurance. Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
- Define your brand. Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
- Establish a web presence. A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers. Save 15% when you create a business website with Weebly.
Select your state below for an in-depth guide on completing each of these steps in your home state.
Where can I find a business mentor?
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
What are some insider tips for jump starting a luggage storage business?
Offering to pick-up and drop-off customers’ luggage at their location can greatly increase a business’ potential customer base. Customers who have lots of luggage or are on tight schedules may specifically look for a business that will come to their location. As an added bonus, businesses are usually able to charge an additional fee for these services.
How to promote & market a luggage storage business
Since a luggage storage business’ target market is travelers, all advertising efforts should be directed at travelers. Online ad campaigns can be targeted toward people who are researching ticket prices to or hotel accommodations in a city. Signs posted in airports, on shuttles and in buses can also be effective.
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How to keep customers coming back
A luggage storage business can keep customers returning each time they’re in town by providing a convenient and professional service. Customers often have many other stresses while they’re traveling, and they’ll be happy if a business takes care of their luggage without any complications or hassles.
How and when to build a team
Many luggage storage businesses hire a small team of employees as soon as they open. Customers may need to drop off or pick up their luggage at any time of the day or night. Having a team of employees makes it possible to extend the hours when a business is open.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a luggage storage business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Maintain Personal Asset Protection
Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
Two of the simplest steps that will protect your business, and yourself, are to:
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
Certificate of Occupancy
Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a luggage storage location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a luggage storage business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a luggage storage location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your luggage storage business will be in compliance and able to obtain a CO.
How much can you charge customers?
Luggage storage businesses generally charge around $10.00 per day for each piece of luggage stowed. City Copilot charges $10.00 per day, Free Your Arms charges $11.99 per day, and Vertoe charges $6.95 per day. Some businesses offer discounts for long-term storage or storing several items with them.
Fees for picking up and dropping off luggage may run anywhere from $34.99 to $79, with some prices even higher.
What are the ongoing expenses for a luggage storage business?
The ongoing expenses for a luggage storage business are manageable. They include rent, utility payments, insurance premiums and employees’ salaries.
How much profit can a luggage storage business make?
A busy luggage storage business can earn a significant profit. At $10 per item per day, a business that stores about 27 items per day can bring in six figures per year. This doesn’t include additional payments for pick-up or drop-off services.
How can you make your business more profitable?
A luggage storage business can increase its revenue by offering additional services that travelers may need. These services may include package acceptance, key exchanges, copy, print and fax options, and concierge services.