Storage Franchise Companies, Costs & Profitability

Storage Franchise Companies, Opportunity, Start Up Costs & Profit Potential

As comedian George Carlin put it: everybody needs a place to put their stuff. When you think about it, a house is nothing but a pile of stuff with a cover on it. Well, if you’ve heard of the recent recession and the crash of the housing market, quite a few people might decide that their house isn’t such a good place to keep their stuff anymore. They’ll want to switch to a condo or an apartment, and keep their extra stuff that won’t fit in a storage facility.

Self- Storage facilities are notable as franchise businesses for their widely-diverging ups and downs. On the downside:

* High start-up costs. You need real estate, about three to seven acres, usually in an area zoned for industrial space. You also need firm, quality buildings that don’t leak and aren’t infested with pests. Some storage facilities even have climate-controlled environments, with keeping the humidity low a primary goal. We’re talking a high six figures here at least. Sometimes other facilities are converted to storage purposes, but even doing this can be expensive.

* Security. You will always need to prevent loss and theft.

* Competition. Simply put, how do you advertise your facility as being superior to your competitor’s? Beyond beating them on prices or boasting about your quality facility, there’s not much room to exploit advantages.

But, on the up side:

* Easy work. It’s almost impossible to imagine someone who couldn’t run a storage facility. It can even easily be a one-person operation.

* Low maintenance. Put it in the contract’s rules that customers aren’t allowed to store “problem” items. You don’t want flammables, perishables, hazardous materials, and so on. After that, what’s your maintenance? You hardly even need to think about it beyond the basics.

* Steady income. Long-term storage means long-term billing. At a mere $50 per unit monthly, even a hundred units quickly amounts to serious income.

* Auctions. Your contract almost certainly will include a clause that states that property stored on the facility for more than 30-90 days without the owner paying the bill will be auctioned off. That’s kind of a wild-card; sometimes it’s junk and sometimes it’s treasure. This isn’t just company policy by the way; your right to auction off delinquent property is actually covered by law.

The market for storage facilities varies. In the United States, there are a reported 40,000 storage facilities, while there are only 1000 in Australia and 600 in the United Kingdom. This shows that storage is a far larger industry in the United States.

Your typical customers will be people transitioning from one dwelling to another. This doesn’t always mean somebody going from a home to apartment; there’s also cases where one home has to be vacated and another home isn’t ready yet. Less typical, but still present customers will include people storing a second car when they have limited parking, small business owners who just need a space to temporarily keep stock, collectors of various kinds of valuables, people in the military or collage who need storage while they’re on a tour of duty or studying abroad, and various other breeds of adventurers.

Starting a new storage location is daunting for all but the well-heeled entrepreneur, but taking over an existing facility is child’s play. About the worst that can happen is if somebody uses your facility to store a… well… did you see the movie “Silence of the Lambs”?