The importance of a self storage feasibility study
A solid feasibility study is invaluable for your self storage business. 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 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 is 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
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Frequently asked questions
What is a self storage feasibility study?
A self storage feasibility study is a comprehensive analysis of a self storage business idea to determine if it is worth pursuing. The feasibility study includes in-depth research to analyse various aspects of the self storage business idea. It helps investors decide if they should proceed with the idea or find better opportunities.
What is the importance of conducting a feasibility study for a self storage business?
For a self storage business, conducting a feasibility study is important because it provides valuable insights for better decision-making. Here is why it is crucial:
- It helps investors determine market potential and trends before proceeding with a project.
- It identifies technical, financial, and market opportunities and risks involved in the self storage industry to determine whether the profits will outweigh the costs.
- It helps businesses identify market competition and improve their strategic decisions.
What is the important part of a feasibility study?
A feasibility study has four important parts that examine different factors to determine if something is possible and practical.
- Technical feasibility: Technical feasibility checks if the idea can be implemented using existing technology.
- Financial feasibility: Financial feasibility determines whether the idea is financially viable and can make money.
- Market feasibility (or market fit): Market feasibility examines if there is a demand for the idea in the market.
- Operational feasibility: Lastly, operational feasibility assesses whether the idea can be effectively managed.
Why is self storage important?
Self storage is important for the following reasons:
- It provides a convenient solution for keeping extra stuff when you don’t have enough space at home.
- It allows you to rent a small room to store things like furniture, seasonal items, or belongings you don’t need right now.
- Businesses can use storage facilities to keep equipment and inventory that is not immediately needed.
- It’s a smart and cost-effective way to manage your belongings during times of transition.
How to carry out a feasibility study for your self storage business?
To carry out a feasibility study for your self storage business, follow these steps:
- Hire a qualified expert.
- Determine the scope of your study.
- Keep track of your self storage business KPIs.
- Analyse and use the findings for your future decisions.