November 27, 2019
Everyone wants a substantial return on investment (ROI) in a business venture, but what does that look like?
ROI is the profitability ratio determined by dividing net profit from an investment by the amount of the investment. The most common method of calculating ROI in the storage facilities industry is the capitalization rate.
For purposes of this brief discussion, we won’t grab a pencil and hunker down to do the math of specific businesses; rather, we will look at the general idea that a mini storage franchise realistically turns a healthy ROI and the reasons this is so.
Initial and Ongoing Investment
Though we promised there would be no math, we will use some hard numbers as a baseline. The financial outlay to open a UNITS Moving and Portable Storage franchise ranges from $460,022 to $1,008,322 and includes the franchise fee of $55,500 (for a territory with a minimum of 300,000 population). This gets the franchise partner 90 containers, use of the UNITS ROBO Delivery System, and the ability to lease a secured warehouse. UNITS collects 8% royalty and 2% for national advertising and marketing, on a monthly basis.
Lean, Mean Profit Machine
So, what ROI can be expected from that investment?
Though mini storage companies, for legal reasons, are wary of making earnings claims public and do not guarantee a specific rate of return, it is safe to say that the storage industry has tremendous margins, heightening ROI investment because of businesses in the industry having a low-labor model and very low variable costs. Also, there are minimal or no additional cost burdens when scaling the business up.
A key factor attracting investors to self-storage investments is the “low maintenance, high return” nature of the business model. A very small team handles daily operations, and self-storage is economically resilient and relatively low-risk as a business.
Take, for example, UNITS Moving and Portable Storage, which uses portable containers dynamically for moving items on trucks, storing onsite, and more. A UNITS franchise runs on the power of half a handful of people: a driver, customer service rep, and salesperson. The owner can be involved daily or operate as a semi-absentee. Long story short, this is the “low-maintenance” piece of the puzzle.
Economic Resiliency and Continued Industry Growth
Recessions do not sink business for a mini storage franchise, which remains profitable during downturns. All those belongings people bought when the economy was booming need to be stored when times are bad and people downsize. Though it’s no fun to capitalize on others’ hardships, the fact remains, all that “stuff” needs somewhere to go.
The Self Storage Association found that one out of 10 people, in their lifetimes, will use self-storage. The U.S. storage industry was projected to reach $32.7 billion in revenues in 2019 and will see a compound annual growth rate (CAGR) of 8 percent in the 2019 through 2024 period.
Whether consumers need a fixed-location storage facility to store things while they move or a portable storage company to help them move it to a new location, mini storage is a sure bet.
Scaling Container by Container
A mobile storage units business has an advantage over a typical mini storage franchise. Whereas the latter, to expand, must build additional buildings—or even additional locations altogether — a franchisee in the mobile storage world can simply add more and more containers incrementally as demand grows.
And in the case of mobile storage, once the containers are paid for, they continue for a long time in use, producing revenue as ROI only increases.
The risk is essentially non-existent when scaled container by container, in pace with demand. The owner can know exactly what uptick in ROI to expect from each added container — instead of putting all eggs in one basket with new construction in hopes demand will match the square footage of a fixed-location facility.
Another disadvantage of a fixed storage facility is the timeline for scaling up. Instead of incrementally adding containers, a business adding more buildings must endure permitting and construction time; it might take a year or two to add on. However, a franchise purchasing mobile containers can put them into active use within 90 to 120 days.
Though the specific overall rate of ROI in a mini storage franchise may be up for debate, it is certain that the margin of profit in a mobile storage franchise is significant, relatively safe, and easy to scale to greater heights.
Founded by Michael McAlhany in 2004, the mission of UNITS Moving and Portable Storage is to provide personal customer service while supplying the most innovative equipment in order to eliminate frustrations associated with moving and storage space issues.
UNITS Moving and Portable Storage currently has 24 franchised and three corporate territories across the United States. With a presence in more than 40 markets, and growing, the brand is looking to expand with the right people in the right markets.
For more information on how to take advantage of this opportunity, or simply to learn more about the moving and portable storage industry, visit https://www.unitsfranchisegroup.com/ and fill out the inquiry form. We will reach out to you to talk more about your interest in our brand, and how UNITS Moving and Portable Storage can help you reach your personal and financial goals.