A solid feasibility study for your self-storage business is invaluable. Find out why your business needs one, and the necessary steps to carry one out.
A solid feasibility study for your self-storage business is invaluable. By definition, it's an expert opinion on the financial viability of a property based on specific factors.
Why is this necessary?
Simply to avoid a case of being pennywise but found pound-foolish. The cost of a self-storage feasibility study can vary a lot depending on factors such as the extent of study and qualification of the analyst. This should be considered an investment that can save you from making decisions about your business which could result in significant losses.
The importance of a feasibility study for your self-storage business:
1. It complements your findings
It's not unusual for people to claim that they’ve analyzed the site and are certain it’s a great investment. However, it is important to receive an unbiased expert opinion on the feasibility of your site, in order to make an informed decision on investment potential. This could help back up your own findings, or prevent you from making an uninformed business decision.
2. It gives you actual estimates
In order to get accurate estimates of construction costs and other expenses, it is important to conduct a standard feasibility plan. This will allow you to ensure you can cover start-up costs, and that your business is financially feasible.
3. Scope out the competition
The self-storage business has blown up over the past couple of years. In the United States alone, there are upward of 50,000 self-storage facilities in operation. Having a clear picture of what your competition looks like will help you fine-tune your facility to maximize its potential.
4. For official purposes
Assuming you ever have to deal with the bank for something concerning your self-storage business, such as a loan, a feasibility study is often required to prove that your property has the potential to yield fruit or satisfy the claims you've made.
5. Better decision making
Unless you make business decisions based on the results of flipping a coin, you're going to need some real facts. Beyond the value of a potential sale, a feasibility study offers insight useful for other aspects of the business such as information on potential clients, demographics, and more.
6. Market trends
The market has changed drastically over the years, with a feasibility plan, you can get information that you can use to your advantage to navigate the shifting tides of the self-storage business. This should also give you a good idea of competitors in your area so you can get a good understanding of the level of supply & demand.
Contents of a standard feasibility plan for a self-storage business:
- A detailed description of the project.
- Financial estimates or a budget including development costs.
- A comprehensive analysis of competition.
- A supply and demand analysis.
- An in-person study of the potential sites with all important details such as accessibility and road network.
- Clear analysis of the standard policies or regulations currently in place.
- A detailed marketing and operational recommendation provided based on the latest trends in the sector and site-specific facts.
- Market barriers and cost of entry.
Are there cases when a feasibility plan won't be needed?
The short answer is no. Unless you're not in the business to make a profit. Some people do not pay a professional to do this and still carry out a feasibility study themselves. However, this only works when you have the resources and expertise to do so. To be able to do this, you must be licensed - otherwise, your results/data will not be regarded as accurate.
Steps to carry out your feasibility study:
1. Find a qualified feasibility expert.
Ensure you check them out beforehand and ask for references and success stories to benchmark against.
2. Determine the extent you want the study to reach.
While some might opt for a limited study with just a few basic parameters, consider carefully which aspects will play a major role in your investment to make sure you are covering all the necessary areas..
3. Provide your analyst with key information
Let them know what are your goals and expectations regarding the site so they can get to work and you don’t get any unexpected surprises when they deliver their findings.
Keeping track of your self-storage business KPIs is the cornerstone of growth. Don't skimp out on a feasibility study. If you do, your business might end up just surviving rather than thriving.
Related Article: 7 Tips Before Setting Up Your Self-Storage Facility