How to Start a Self Storage Business

A self-storage business makes it easy for people to store their personal belongings without the hassle and clutter of keeping things at home. These businesses also cater to other businesses who need storage space for equipment like office supplies, furniture, and more.

The lack of space in homes and offices, and the desire to be able to store and forget about items, are the driving forces behind self-storage businesses.

Learn how to start your own Self Storage Business and whether it is the right fit for you.

Ready to form your LLC? Check out the Top LLC Formation Services.

Start a self storage business by following these 10 steps:

  1. Plan your Self Storage Business
  2. Form your Self Storage Business into a Legal Entity
  3. Register your Self Storage Business for Taxes
  4. Open a Business Bank Account & Credit Card
  5. Set up Accounting for your Self Storage Business
  6. Get the Necessary Permits & Licenses for your Self Storage Business
  7. Get Self Storage Business Insurance
  8. Define your Self Storage Business Brand
  9. Create your Self Storage Business Website
  10. Set up your Business Phone System

We have put together this simple guide to starting your self storage business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Self Storage Business Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

  • Your state's business records
  • Federal and state trademark records
  • Social media platforms
  • Web domain availability.

It's very important to secure your domain name before someone else does.

Want some help naming your self storage business?

Business Name Generator

What are the costs involved in opening a self storage business?

MakoSteel says to allocate 25% to 30% of the total development project budget to buy the land. If land costs $1.25 per square foot and there is the ability to build out the coverage to 40% of the job site, then the land cost for the building would be about $3.13 for each rentable square foot.

A single story facility costs $25 to $45 per square foot to build. A multi-story building is $42 to $70 per square foot for construction. For a businessperson wanting to start up a new self-storage facility, they would have to have the financial clout (or investor support) to be able to finance the land purchase and the construction costs. Typical projects require financing of $2 to $3 million with 10 to 20% down payment.

Inside Self Storage gives an example of a development budget:

Statement of Development Cost Annual

Financial Image

What are the ongoing expenses for a self storage business?

The monthly expenses include loan debt service, staff expenses, maintenance, marketing expenses, utilities, security expenses, and insurance.

Inside Self Storage gives an example of the financials for a business able to rent 50,000 square feet for $9 per square foot per year. This is about half the current national average because the example is based on the year 2000. Even so, a modest operation such as this one is still nicely profitable.

Financial Model

Financial Image

Who is the target market?

The best customers are the ones that have a longer-term need for storage, such as a military member who is on active duty outside of the United States, and who are able to pay for the monthly rental by using some method of automatic payment, such as a monthly credit card payment or an electronic fund transfer (EFT) from a bank account.

The most popular storage size is a 10’ by 10’ by 10’ space with the best customers renting one for up to two years or more.

How does a self storage business make money?

The income streams include monthly rental collections, auction proceeds from past due accounts, fees, and sales of related products such as moving supplies and locks.

These businesses make extra money from administrative fees, lost key fees, lock removal services, late fees, and other fees, in addition to the normal rental fee structure. Some charge a premium rate for the rental of storage spaces in a climate-controlled building. Others offer insurance, for an additional monthly premium, to insure the contents of the items placed in a storage space.

How much can you charge customers?

Easy Storage reports the average monthly rate per square foot (PSF) of non-climate controlled storage units in America is $1.26 PSF and for climate-controlled space the average monthly rate is $1.60 PSF. The overall average is $1.42 PSF. The most popular size is a 10’ by 10’ unit. This means the average rental income for each of these units would be $126.00 to $160.00 per month, depending on whether the building was climate-controlled.

During 2015, there was a national average of 90%+ occupancy for all storage units. Some that are located in more popular areas have waiting lists and therefore may charge rates that are higher than these national averages.

An average moving truck rental customer, pays around $200 to $500 for the rental truck and equipment needed to make the move, if the move is a local one. They may pay up to three or four times this amount if the move is long distance, depending on the distance driven.

How much profit can a self storage business make?

The Parham Group says that an average storage facility will be 60,000 to 80,000 of rentable square feet and break-even once occupancy reaches about 40 to 60%. A successful facility will operate with 83% to 93% occupancy and produce net income of about 26% of rental income after paying for expenses and loan debt service.

At the average rent of $1.42 PSF per month ($17.04 per year), this example would produce $1,022,400 to $1,363,200 in annual rental income and $265,824 to $354,432 in before tax cash flow per year.

How can you make your business more profitable?

Adding moving truck rental services, moving equipment, and supplies to the business will increase income by about 5% according to the Parham Group.

Many self-storage facilities extend their business operations to include managing a fleet of rental trucks, vans, and moving trailers, such as those offered by national franchises like U-Haul or Budget. These businesses can operate side-by-side or as one combined enterprise. Besides offering moving vehicles, the moving equipment offered for rent includes furniture dollies, furniture pads, and hand trucks. The rental office may also sell moving materials such as packing tape, packing supplies, and moving boxes.

Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your self storage business is sued.

Form Your LLC

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

You can acquire your EIN through the IRS website. If you would like to learn more about EINs, read our article, What is an EIN?

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

  • Separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • Makes accounting and tax filing easier.

Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.

Get a business credit card

Getting a business credit card helps you:

  • Separate personal and business expenses by putting your business' expenses all in one place.
  • Build your company's credit history, which can be useful to raise money later on.

Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.

STEP 5: 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.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: 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.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a self-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.

Services Contract (e.g. MSA)

Self-storage businesses should require clients to sign a services agreement before leasing a space to a new customer. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and length of the rental. Here is an example of one such services agreement.

Liability Waiver

Labor safety requirements

It is important to comply with all Occupational Safety and Health Administration requirements.

Certificate of Occupancy

A self-storage business is generally run out of a warehouse. 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 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 self-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 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 self-storage business will be in compliance and able to obtain a CO.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

FInd out what types of insurance your Self Storage Business needs and how much it will cost you by reading our guide Business Insurance for Self Storage Business.

STEP 8: 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.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.

Recommended: Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker.

If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

How to promote & market a self storage business

The location of a self-storage facility is a critical factor. It is best if it is located near a highly populated area that has many renters. Large billboards are effective advertising on the nearby freeways. Bus stop ads are also effective. Having the facility painted with signage to be a prominent advertisement can be very helpful. Easy access to major freeways is very desirable.

National companies that offer franchise opportunities have cooperative media advertising campaigns that coordinate efforts on the Internet with websites using standardized branding and style. They make use of radio promotion, physical ads, and television ads to create more brand awareness and advertise the locations in the local area.

How to keep customers coming back

In order to compete with larger national companies, smaller self-storage companies may consider offering more competitive rates and cater to a previously underserved area. Hand delivery of discount flyers to apartment buildings and neighborhoods that contain potential renters helps attract customers. Active digital marketing is important using the best search engine optimization techniques available.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business.

While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

  • All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
  • Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
  • Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.

Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.

Recommended Business Phone Service: is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.

Is this Business Right For You?

People who succeed in this business enjoy working with people and are excellent when it comes to tenant relations. It helps to have simple maintenance skills to fix some of the things that may need repairs. You should be able to use a ladder to change light bulbs and be able to keep the place painted nicely.

Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

Entrepreneurship Quiz

What happens during a typical day at a self storage business?

Many of the storage spaces are owned and operated by a team. Marketing of available spaces is ongoing. Interested new tenants are shown the facilities. Applications need to be taken and processed with background and credit checks. Security deposits, key deposits, and the collection of rental payments, all need to be handled properly. Monthly accounting records need to be up-to-date and accurate.

The facility needs to be kept clean and constantly supervised to prevent vandalism and theft. Rent for any storage space that is past due needs to be collected, and if there is a serious problem with the rental payments, the proper legal processes need to be taken to manage the problem. This may include turning the account over to collections, filing court papers, giving eviction notices, and/or selling the items left abandoned in storage spaces after the correct amount of time has passed according to the local laws and the rental contract agreement.

Statistics Brain says that the contents of about 155,000 storage spaces are auctioned each year, for the average price of $425, because of past due rental payments.

What are some skills and experiences that will help you build a successful self storage business?

As this type of business bears many similarities to the real estate business, previous experience in the real estate field may be a helpful skill when starting this type of business. Renting and maintaining storage spaces is similar to renting apartments.

What is the growth potential for a self storage business?

This industry sector has everything from locally run single storage facilities, to huge major national operations with thousands of locations. There are over 54,000 storage locations in America with over $30 billion in annual revenues. The SpareFoot Storage Beat reported on the largest public storage companies, their market valuation, and revenues for 2015. They are:

  1. Public Storage: Market Valuation $2.38 billion
  2. Extra Space Storage: Market Valuation $782.27 million
  3. CubeSmart: Market Valuation $444.5 million
  4. Sovran Self Storage (Uncle Bob’s): Market Valuation $366.6 million
  5. U-Haul: Market Valuation $211.1 million (self-storage revenue only)

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Take the Next Step

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.

Learn from other business owners

Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.

Resources to Help Women in Business

There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:

  • Funding
  • Events
  • Guides
  • Support

If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.

What are some insider tips for jump starting a self storage business?

If you plan to open a new facility, be prepared to finance a negative cash flow for about 18 month to two years before the facility has an occupancy rate that is high enough to create long-term sustainable profitability. The key in the early years is to focus efforts on getting the facility rented and work hard to reach higher occupancy rates.

Once a self-storage business has stabilized with plenty of renters, it has a tendency to create a long-term profitable revenue stream and become much easier to manage after the first two years.

How and when to build a team

There needs to be enough staff to cover the hours of operations for the administrative office. This depends on the size of the facility. Smaller facilities, usually have just two people running the administrative office. If there is a larger volume of new customer flow, then additional staff may be necessary during certain times to respond to the customer needs. You want to make sure the customers do not have to stand in line for extended periods.

Most storage facilities are highly automated and require very few staff. Statistics Brain notes that during 2015, there were 58,000 storage facilities in the United States, with an average of 566 units each. They employed around 172,000 people in total. This means there was only an average of three people per location across America.

A storage facility may also offer extended hours of operation for tenants who wish to move things in and out of their storage space. Some facilities allow 24-hour access by issuing security codes for the drive-in gates. During the extended hours, the administrative office may be closed so that the only requirement for staff is to cover facility security, which can be done remotely by video surveillance.

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