Launching a Portable-Storage Business: Business Models, Costs and Potential Revenue
|Copyright 2014 by Virgo Publishing.|
|Posted on: 08/15/2013|
By Michael P. Smith
Self-storage facilities generally serve customers within a three- to five-mile radius. A portable-storage operation, on the other hand, can service up to a 100-mile radius and beyond due to long-distance moves (LDMs), making it an attractive investment.
When starting a portable-storage business, entrepreneurs have two options, each with its own benefits and challenges. The traditional franchise model provides a candidate with a larger serviceable population, ownership of the equipment, and more potential for revenue due to market size, but it’s also a larger investment. The other option, which is fairly new to the industry, focuses on bolting portable storage onto an existing self-storage or moving business. It’s referred to as the fractional concept. The initial investment is less than that of a traditional franchise, and the equipment is typically rented rather than purchased.
Each concept provides flexibility and value, but to ultimately make the right decision, you’ll need a few more details. Let’s take a closer look at your options.
The Franchise Model
The traditional franchise concept usually involves a first-time entrepreneur in the moving or storage industry. Typically, you’ll need to obtain a warehouse, delivery system, personnel and inventory. Your territory fee, which averages $49,000, involves a population of up to 800,000. Depending on the density of the population, the local coverage zone could extend more than 200 miles.
Once your warehouse is in place, you’ll need various equipment. This could include:
You'll also need minor tools for preventive maintenance on all your equipment. In terms of personnel, each location must have a customer-service representative and a warehouse manager/delivery driver.
The Fractional Concept
The fractional concept was designed for candidates who already have a moving or storage business and would like to serve a whole new customer base. All that’s needed is space to store portable-storage units and a pickup truck to pull the specially designed delivery system. The need for a customer-service representative and delivery driver is required, but in most cases, existing personnel can fill those roles. The costs associated with this option are much less and work on a lease-to-own program in regard to the containers to reduce startup costs and initial investment.
The customer base of your new moving and portable-storage facility includes three primary markets: residential, commercial and LDMs.
The residential market makes up about 60 percent of the portable-storage industry’s clientele. The demographics to which portable storage caters are far broader than you would imagine. They might include:
The case-by-case possibilities are endless, but every single one has the potential to increase your revenue through a monthly rental rate, transportation fees, protection plans, and an endless amount of packing merchandise.
About 30 percent of a portable-storage operation's clientele is comprised of commercial customers, including clients in the construction, remodeling and disaster-relief industries. These clients rent for the purpose of storing their customers’ belongings or materials needed onsite at a job. That being said, some of these containers are stored for a higher rental rate for long-term projects. When opening a new portable-storage location, it’s very important to target market and foster relationships with your local contractors.
A portable-storage business averages about 10 percent of its revenue from LDMs. These are customers who are relocating from one state to another and are handled by multiple locations within a nationwide company. These moves are more costly for end users, but the revenue-share profit is much larger for locations participating in this system. Whether yours is in a more inbound or outbound location, the profit share for the move is very lucrative for you and cost-effective for your customers.
The moving and portable-storage industry works off many trends and seasonal business that an owner can time with his efforts and costs throughout the year. It’s important to learn and understand these tendencies to better prepare for what lies ahead.
Whether you go with a franchise or fractional model, planning your portable-storage operation's grand opening along with pricing and marketing are all extremely vital. It may be wise to partner with a national company that has experience in the industry to ensure your continued success.
Good luck in your new venture.
Michael P. Smith is vice president of operations for UNITS Franchise Group, which offers portable-storage containers nationwide. He participates in all operational aspects at UNITS and helps grow the company’s national footprint. He’s also in charge of staff hiring and training, price setting, company audits, and overall relationship and business development. For more information, call 843. 881.0113; visit www.unitsstorage.com .