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How to Bootstrap a Self Storage Business

If you want to start a self-storage business but do not have enough operating cash or access to small-business loans, you must engage in what's commonly called "bootstrapping." This process allows you to start a business with a smaller version of what the company will eventually be, and to grow it into its end form by investing the revenues it earns along the way.

Lease a storage unit or shed to sublet to others. You should work with the owner of that facility to ensure that subletting is within your lease rights. Then concentrate on finding customers who need to store a few items, but do not need a full storage unit themselves. Take care to keep each person's belongings separate from one another. You may even consider building or setting up partitions to allocate a separate space for each customer. Though you may not cover the full cost of your storage unit in the first few months with your subletting income, you should make careful projections and price your services competitively but such that you will make a profit once you have several customers.

Assemble your first several customers through your network of contacts and positive reviews. If you can dedicate a room in your house or apartment or your garage or backyard storage shed to your business, you can begin to get experience and save a few dollars toward expansion. At this stage, you should begin learning the best way to keep track of inventory, ensuring that each person's possessions are separate from your other customers' and that you are organized and can get to each item swiftly.

Lease multiple units or a very small stand-alone property. You may continue with the previous strategy of dividing units into smaller pieces, or start subletting entire units to individual customers. Price your services to encourage customers to leave their items with you for longer periods, so there is less risk of being unable to meet your lease expense in any given month.

Determine the minimum requirements for your first customer. For instance, your sister's best friend may need to store a few boxes of possessions for the summer while she goes home from college. Consider charging her a few dollars a month to store those boxes in your shed or garage. At this stage, trustworthiness and customer service are more important than revenue. Consider this a chance to build your reputation.

Reinvestigate financing options. If you have customers on a lease contract or who owe you rental payments, you can use these Accounts Receivable as collateral for a small business loan. Banks are also much more willing to lend to businesses that have a proven income stream than to unknown businesses. You may have established a reputation well enough to seek small investors. This should allow you to grow into your own self-storage facility or purchase a franchise.

Difficulty: Moderate

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