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Startup Considerations

September 1, 1998

9 Min Read
Startup Considerations

Bringing self-storage door to door

By Wendi Hope King

Customers may come and go, but one thing remains the same: the need to keep your self-storage units full. As the storage industry becomes flooded with ideas, storage owners are discovering innovative ways to keep the customers coming back. Although not entirely new, what's the latest trend? Mobile self-storage.

No longer must the consumer rent a truck, pack it, drive across town to a mini-storage facility, unload and return the truck. Now, the storage facility can go straight to the consumer. It's a simple concept: For approximately $50 to $80 a month, the storage company delivers a storage box to the customer's doorstep. The customer has a designated amount of days to fill the box himself, and then drives it back to the warehouse, where it can be easily accessed with a phone call or visit to the facility.

Making mobile storage either a part of your business or its entirety is a big step. Much research and planning is necessary before you begin.

Startup Considerations

Target Market. First, you must decide what market you will be serving. It is important to know your market, since so many things depend on this. Self-storage customers want convenience, accessibility, reasonable rates, etc. Mobile storage can provide it all. "It is so easy for the consumer," says Ed Byrd, chief executive officer of Hickory, N.C.-based Kontane Inc., the manufacturers of the HomePak mobile-storage box. "All he has to do is make a phone call. With mobile storage, the consumer can load the box at his own pace and then forget about it. When he wants it back he just makes another call." Or, many companies offer the customer the option of going to the facility himself when he needs items.

Another company, Box Trotters International, a mobile storage and mobile-storage moving company based in Atlanta, serves more than just the market for mobile storage; they are serving the moving consumer as well. Instead of just storing the boxes, they transport boxes to other locations­and not just nationwide, but internationally. Using containers strictly for storage is limited, says Henry Cox, president of Box Trotters. "We maintain a broad focus that emphasizes storage, local moving, long-distance moving and international moving." After they transport a box, the customer can unload it or have it sent directly to a Box Trotters storage facility until they are ready for it.

The Boxes. Although boxes range in size, standard boxes are approximately 71/2-feet high, 5-feet wide and 8-feet long. The HomePak has a storage capacity of 2,000 pounds and is designed to hold the contents of an average-size room. Who the target audience is will determine if other size boxes are necessary, says Byrd.

You must determine the type of box you want to offer your consumers. Most mobile-storage boxes are made of wood, although some companies may carry boxes made of other materials. For example, Box Trotters offers both wood and steel boxes. The metal boxes are weatherproof and built to stand against the rigors of salt water, says Cox. If the wood boxes are not stored properly, either in a warehouse and/or with tarps, and they get wet, they come apart and are no longer useable. Also, wood ignites easier, so metal reduces some risk of burning.

Other box features vary between companies. For example, the HomePak includes a roll-up door made of galvanized steel. Boxes are weather-proof so rain, snow and other elements won't bother the items inside during a transfer. The steel provides further protection of the items and some security.

Store to Door, a mobile storage company based in Woburn, Mass., covers their wood "vaults," as they call them, with a mylar jacket when they are taken to a consumer's home or business. Explains James B. Wayman Jr., founder and chief executive officer of Store to Door, the jackets offer additional weather protection as well as provide a marketing outlet by displaying the firm's logo without having to stencil it on each box.

Purchasing the correct amount of boxes for the initial startup can be tricky. Sales professionals can give you an estimate about how many you might need while you are testing the market. Byrd suggests using approximately 25 to 50 boxes, although it depends on the size of the market. Eventually, he says, an owner will want as many boxes as he can rent.

The Warehouse. It is important to store the wood boxes in a warehouse to protect them and their contents from the weather. And, you want to make sure you maximize your space. Store to Door has 30,000 square feet of floor space, which holds 1,500 of its 280-cubic-foot, wood vaults. "The warehouse should have a ceiling height of at least 26 feet so the containers can be stacked three high," says Cox. "And, I recommend zone sprinklers." Check with national and local fire standards to make sure your plans are to code.

No matter where the boxes are being stored, you have to have a system of finding them. Organizing the boxes alphabetically is not practical. A computerized listing of customers and their numbered boxes is the most convenient. "We use the standard seven-letter code that is used to track shipping containers all over the world," says Cox. This standard uses both letters and numbers.

Location. "I went strictly for convenience to the highways," says Wayman. Being close to the highways makes transporting the vaults faster and easier on the drivers.

Of course, your location will also depend on your service area. Since Box Trotters provides more than just local storage, its locations will differ from other companies. "I believe mobile storage is less of a location play and more of a convenience-visibility play," states Cox. "We have much more flexibility in choosing a location because we can choose from abandoned mills, railway right of ways, open lots or as an extension of a self-storage facility. Because our containers are weatherproof, we can stack our containers outside, which eliminates the need for an expensive building."

Vehicles. Flatbed trucks provide a means of transporting the boxes from a residence or office to the storage facility. Then, forklifts move the boxes on and off the trucks. Boxes can be specially made for forklift moving. For example, HomePak offers a four-way forklift entry on the box, allowing access from any side.

Much of Box Trotters' business is moving people's storage units from location to location. "We keep equipment moving in the field," says Cox. "If a dealer chooses to focus on this aspect, he has little need to bring other equipment (many forklifts, etc.) in to clutter up his facility." And because of the consumer demands, Box Trotters has created its own moving system involving a truck with its own clip-on frame that holds the containers securely in place.

Establishing prices. Finances need special attention. A specific budget should be written, designed and followed throughout the construction and operating processes. Ask yourself: How much will we charge? Will there be additional fees outside of a particular area? Is there a fee each time we deliver the consumer's box? Will the charges cover all of my expenses, including gas and vehicle upkeep?

Before buying any boxes for your facility, shop around. Box prices will vary with each company. Each HomePak wood box costs around $389. A Box Trotters' wood box costs $350 to $450, and the metal ones cost from $1,500 to $2,000.

Rental rates should be determined with all of your costs in mind, including vehicle maintenance, grounds-keeping, building upkeep, gas and all of the other "small" costs that sometimes are forgotten. "We establish local storage, delivery and pickup prices based on season, time of month, distance of delivery in mileage bands and time in storage," explains Cox. On the moving end, they establish local rates based on mileage bands, season and time of month. "Since we provide a service that is substituted for a truck rental," continues Cox, "we price around truck rental."

Rental rates vary as much as the services companies provide. "We've heard box-rental rates going from $50 to $85," says Byrd. "That means a potential return on investment in less than a year." As with any business, determining costs takes great care and accuracy. When in doubt, hire a professional.

Marketing. Even if you have the friendliest staff, the best prices and the fastest service, no one will use your services unless they know about you. The best avenues? "Internet and direct mail," says Cox. Other avenues include television commercials, newspapers, Yellow Pages, magazines, newsletters, a company Web site, fliers, etc. Really, the list is endless.

"The best plan is to know your market," says Byrd. "Educate your current customers about the concept and evaluate their responses. Use this as an advantage over your competitors and offer the best service you can."

Business Benefits

Where there are benefits, there are also drawbacks. The success of mobile self-storage is still being examined. A storage facility benefits by offering consumers more than one option. "Offering this type of storage, which is more convenient than the traditional self-storage, can extend the boom in self-storage that happened during the last decade," says Byrd.

Owners can reach a much wider market, Byrd explains. People who may not have transportation or who are not located near a self-storage facility can take advantage of this door-to-door service. For consumers, no truck rental is involved. For an owner that offers containers for moving location to location, there is less worry about transferring items than if they provide full-service movers. "Because the consumer loads their things themselves," says Cox, "they are responsible for any consequential damage." The company does, however, provide total catastrophic damage coverage. They also have the consumer sign an equipment-rental form and agreement.

Although mobile storage provides many benefits, the other side must be considered. "It's a very expensive business," says Wayman. Up front, the mobile business is much more expensive than self-storage. In addition to the worries and responsibilities that self-storage owners have--such as finances, security, liability, etc.--mobile-storage owners must consider expenses for gas, and servicing of the trucks and forklifts.

Whether or not you should make mobile storage a part of your business or your only business depends on many variables: financing, location availability, building availability, necessary equipment, etc. Financing or leasing equipment may be an alternative to purchasing. "And, building a container inventory can't be easily done with a mortgage," explains Cox. "With the metal containers that can be stored outside, there is much more financial flexibility. I believe that mixing the conventional self-storage facility with mobile storage makes sense." It opens up more revenue possibilities and gives the consumer a lot more options.

Prosperous business ideas develop over time. Perhaps a few more years and the success of mobile storage will be seen more easily. Concludes Cox: "I believe that like any creative innovative leap, many standards will be established and great performance will not necessarily hinge on who has the most gold, but who has the best, well-thought-out business plan, management and sales teams, delivery capabilities and superior equipment advantages."

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