SunState Self Storage

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Executive Summary

SunState Self Storage is a self-storage business in Arizona. We lease a large existing building and convert it into about 300 secure storage units, half climate-controlled and half standard, with gated access, cameras and online rentals. Our customers are people who are moving, downsizing or short on space, and small businesses that need to store stock or equipment.

The problem is simple. Homes and apartments are small, moves are frequent and many people need a safe place for their belongings for a few months or years. We offer clean, secure, well-lit units with simple month-to-month terms.

Here is what our numbers show. We expect sales of $138,300 in Year 1, growing to $397,720 by Year 5 as the units fill during the first two years. We expect a loss of about $148,600 in Year 1 while the units fill, which takes about two years, a loss of about $39,800 in Year 2, then a profit from Year 3 (about $15,700), growing to about $37,800 by Year 5.

We need $407,500 in total. That covers $250,500 in startup costs (unit partitions and doors, climate control, a gate and access system, cameras, a kiosk, the lease deposit, permits and insurance) and a cash cushion for the first months. I am putting in $50,000 of my own money, and I am asking for a $337,500 SBA loan plus $20,000 from an investor or partner.

I am Paul Hendricks, the owner. These numbers are estimates based on the assumptions listed at the end of this plan, not promises.

Company Description

SunState Self Storage will be a limited liability company (LLC) in Arizona, owned by Paul Hendricks. An LLC is a business type that generally keeps your home and savings separate from the business's debts and lawsuits, although a lender may still ask for a personal guarantee. A business attorney or the Small Business Development Center (SBDC) can explain how it works in our state.

What we believe. A storage unit holds things that matter. We keep the facility clean, secure and honest about prices, and we follow the law when a customer falls behind.

What we offer:
- Climate-controlled unit rentals. Units with temperature and humidity control for furniture, records, electronics and keepsakes.
- Standard unit rentals. Lower-cost units in a secure, dry building.
- Tenant protection plans, locks and boxes. Optional plans that cover stored goods, plus locks, boxes and packing supplies.
- Later, as we grow: outdoor parking for vehicles and boats. The numbers in this plan do not include this.

The decision behind this plan. This plan assumes we lease a building instead of buying land and building a new facility, which would cost millions of dollars. Leasing lowers the money needed to start, but it adds a large monthly rent, so this business loses money while units are filling and needs patient funding. We will not sign the lease until a conversion cost estimate and a lease review confirm the numbers.

The space. In Year 1 we will lease a building of about 30,000 square feet with room for about 300 units, an office and a loading area. We budget $120,000 a year ($10,000 a month) for rent and utilities, and the plan assumes this grows about 3% a year.

Licenses and insurance. We will register the LLC with the state, get a business license, an EIN (the business tax number from the IRS, free at irs.gov) and a sales tax registration where it applies, and ask the city about zoning, a change-of-use permit, fire code, sprinklers and accessibility before I sign a lease. We will carry general liability and property insurance and workers' compensation once we hire. Our rental agreement will describe late fees, lien rights and how an unpaid unit is handled under state law, reviewed by an attorney. These rules change, so we confirm every requirement before we act.

Where things stand today. This plan is my starting point. Before I sign a lease or buy equipment, I will survey at least 50 nearby households and 10 small businesses about storage needs, count units and prices at every competing facility within 5 miles and get the conversion estimate. If the numbers do not match this plan, I will change the plan before I spend money.

Problem & Opportunity

Many people run out of space.

1. Small homes and apartments. Items do not fit.
2. Moves and life changes. People need a place for belongings for a few months.
3. Security and cleanliness. Customers worry about theft, pests and damage.
4. Climate. Heat can damage furniture, electronics and records.
5. Business storage. Small businesses need space for stock and equipment.

How we will find out if people want this before we spend money. I will survey at least 50 households and 10 small businesses and check the occupancy and rates of nearby facilities. Our Year 1 plan needs about 50 climate units and 52 standard units rented on average.

Products & Services

What we sell. We have three offerings, each priced simply.

1. Climate-controlled unit rentals. The plan assumes an average of about $125 per unit per month in Year 1, rising to about $137 by Year 5. Utilities and unit upkeep cost about $4 per unit-month. We expect about 600 unit-months in Year 1 (about 50 units rented on average), growing to about 1,560 a year by Year 5, close to full for 150 units.
2. Standard unit rentals. The plan assumes about $75 per unit per month in Year 1, rising to about $83, with about $3 per unit-month in upkeep. We expect about 620 unit-months in Year 1, growing to about 1,600.
3. Tenant protection plans, locks and boxes. The plan assumes about $14 per sale in Year 1, rising to about $16, with about $5 per sale in cost. We expect about 1,200 sales in Year 1, growing to about 3,200.

Our prices. A posted monthly price by unit size, a clear first-month offer and no hidden fees.

How it works for a customer:
1. The customer picks a unit online or at the kiosk and signs a rental agreement.
2. The customer gets a gate code and can access the unit during posted hours.
3. Rent is charged monthly by card, and the customer can leave with notice.
4. If rent is unpaid, we follow the notice steps in the rental agreement and state law, and we never remove items without them.

Gross margin, explained. "Gross margin" is the share of each sale left after paying for the direct costs of each unit. Our plan shows about 93% in Year 1. That money pays the team, the building rent, insurance and other bills. Team pay is counted separately, under payroll.

Market Analysis

Who will use us:
- People moving, renovating or downsizing.
- Military families and students.
- Small businesses and online sellers.
- Contractors who store equipment.

Where we will work. Customers within about 10 miles of the facility.

How we sized the plan. The facility has about 300 units. Our Year 1 plan fills about 50 climate and 52 standard units on average, which means most units are empty in Year 1. By Year 5 the plan reaches about 90% occupancy. I will check the real numbers by surveying households and visiting competitors before spending money.

Season. Summer moves and the end of the school year are busy. The numbers show a yearly average.

Competitive Landscape

Other choices customers have:
1. Other storage facilities, including large national brands.
2. Portable storage containers delivered to the home.
3. Garages and sheds at home.
4. Family and friends.

How we will win customers: a clean and bright facility, simple month-to-month terms, a posted price, secure access and responsive service. These are promises we have to keep, and any competitor could make them too, so we will measure ourselves on them every week.

Marketing & Sales Strategy

How customers will find us.
- A website with unit sizes, prices and online rental.
- A free Google business listing with reviews, and listings on storage search sites.
- Movers, real estate agents, apartment communities and military bases.
- Signs and a first-month discount.
- A referral thank-you: a customer who refers a friend gets a month at a discount.

Marketing budget. About $12,000 a year in Year 1 (about $1,000 a month), growing about 8% a year. The sign, website and online listings are paid for from startup costs ($9,000).

Operations Plan

How the business runs day to day.

The facility. A gated entrance, an office and kiosk, hallways of climate-controlled units, standard units, bright lighting, security cameras and fire protection.

A normal day:
1. Open, walk the facility, check lights, doors and cameras.
2. Help customers rent units, answer calls and process payments.
3. Clean hallways and the loading area and handle repairs.
4. Close, review the gate log and follow up on late accounts.

Safety and security. The building has fire protection and clear exits, no hazardous or illegal items may be stored, and customers agree to this in the rental agreement. Cameras and a gate log help security. We follow the law and the rental agreement for late accounts and never open a unit without the legal steps.

Equipment. About $50,000 to start: a gate and access system, cameras, lighting and an alarm, a kiosk and computers, and carts and cleaning equipment. We set aside about $4,000 a year after that.

Running costs in Year 1: building rent and utilities about $120,000, gate system, software and card fees about $7,200, marketing and online listings about $12,000, business and property insurance about $12,000, repairs, lighting and pest control about $9,600, and accounting, licenses and legal about $4,800. That is $165,600 in all.

Payment. Customers pay monthly by card, so what is owed to us is small.

Management & Organization

Who runs the business. Paul Hendricks, owner and facility manager. As owner I will run the office, manage rentals, handle repairs and the money. I plan to pay myself $40,000 a year in salary.

The team. Pay figures include payroll taxes and workers' compensation insurance.
- Attendant (part-time): one in Years 1 and 2 and two from Year 3, at about $18,000 a year each.

We hire people who are friendly and trustworthy, train everyone on security and customer service and run background checks (with the person's permission and following the law) on anyone with access to the facility.

People who will help us: a bookkeeper or tax preparer, an insurance agent who understands self-storage facilities, a business attorney for a one-time review of the lease, the conversion contract and the rental agreement, and a free mentor from SCORE or the Small Business Development Center (SBDC).

Milestones Narrative

Our goals and when we plan to reach them.
- Before opening (6 to 9 months ahead): survey households and businesses, check competitors' units and rates, get a conversion cost estimate, confirm zoning and fire code, register the LLC and get an EIN, open a business bank account, get insurance quotes, have an attorney review the lease and rental agreement, and build the units. Sign the lease only after the conversion estimate and the zoning answers are in hand.
- Year 1: open with the owner and one part-time attendant, with about 50 climate units rented on average, $138,300 in sales and a loss of about $148,600.
- Year 2: fill units and grow online rentals, with about 1,100 climate unit-months, $262,700 in sales and a loss of about $39,800.
- Year 3: add a second attendant, with about 1,450 climate unit-months, $353,450 in sales and a profit of about $15,700.
- Year 4: reach steady occupancy, with about 1,510 climate unit-months, $375,940 in sales and a profit of about $27,100.
- Year 5: grow to about 1,560 climate unit-months a year with a team of three, $397,720 in sales and a profit of about $37,800.
Growth depends on filling the units quickly, keeping rates competitive and collecting rent on time, so treat the later years as goals, not promises.

What we check every week: units rented, occupancy, rent per unit, late accounts, move-ins and move-outs, reviews and cash in the bank.

Funding Request

How much we need and how we will use it. Total we are raising: $407,500.

How we got that number. The Funding Need Calculator in this plan adds up three things:
- Startup costs of $250,500, listed item by item in the Startup Costs section: $25,000 for electronic gate and access control system, $15,000 for security cameras, lighting and alarm, $6,000 for computers, kiosk and card readers, $4,000 for carts, hand trucks, ladders and cleaning equipment, $120,000 for unit partitions, roll-up doors and wiring for about 300 units, $30,000 for climate control and ventilation upgrades, $20,000 for lease deposit and first month of rent, $3,500 for business license, building and fire permits, $9,000 for legal, lease review, rental agreement and accounting setup, $9,000 for sign, website and online listings, $6,000 for first insurance payment, and $3,000 for locks and moving boxes for opening retail stock.
- A cash cushion of about $155,100: the deepest hole our cash falls into while we fill the units and cover the building rent (about $99,200) plus about 3 months of running costs (about $55,900). Lenders call this "working capital."
- Together that comes to about $405,600, rounded up to the nearest $500: $406,000.
We are raising $1,500 more than that, $407,500 in all, to leave extra room for loan payments in the first years and for the long time it takes to fill the units.

Where the money comes from:
- My own money: $50,000.
- Amount requested as a loan: $337,500.
- From an investor or partner: $20,000.

Kind of funding we are looking for. An SBA 7(a) small loan through a local bank or community lender, plus investor or partner money. Investor or partner money is not paid back with interest, but the person gets a share of the business. A family member, a friend, a local investor or a business partner could fill this part. Put any agreement in writing.

How we will pay it back. We expect a loss of about $148,600 in Year 1 while the units fill, which takes about two years, a loss of about $39,800 in Year 2, then a profit from Year 3 (about $15,700), growing to about $37,800 by Year 5. With this funding, the business has money in the bank at the end of every year of the plan, and the lowest year-end balance is about $136,900, at the end of Year 3. The loan is planned at 12.75% interest over 10 years, so payments of about $4,990 a month (about $59,875 a year) are already included in our cash flow. We chose 12.75% as a cautious planning rate. Ask the lender for the real rate, which may be lower or higher.

What we are offering the lender: our equipment as collateral (something the lender can claim if the loan is not repaid) and my personal guarantee (my promise to repay from my own money if the business cannot).

A smaller first step, if needed. If we cannot raise the full amount right away, we can start smaller and grow into this plan:
- Phase 1: start by converting a smaller part of the building, about 100 units, and lease only that portion if the landlord allows. Startup can be roughly $60,000 to $90,000 for partitions, a gate and insurance. Get your own quotes.
- Phase 2: once the first units are mostly rented, convert the rest of the building and follow this plan.
To plan the smaller start, make a copy of this plan (use Duplicate) and lower the numbers to match.

All numbers in this plan are estimates. We will update them as real results come in.

Appendix Notes

Documents to attach before you send this plan:

- Your resume (one page is fine) and any licenses or training certificates.
- A personal financial statement (a list of what you own and what you owe; lenders usually provide a form).
- Business registration papers and your EIN (your business tax number from the IRS, free at irs.gov).
- Proof of insurance, or a quote.
- Your rental agreement, rules and a sample late notice.
- The conversion estimate and the city's written answers on zoning and permits.
- A letter or quote for the building, and the lease once you have it.
- Quotes for the gate system and cameras.
If you don't have any of this yet, no worries - let's continue.

The assumptions behind our numbers (change them in the Financials section to match your own):
- Climate-Controlled Unit Rentals: about $125 per unit-month in Year 1, rising to $137; about $4 per unit-month in direct costs, rising to $4.40; about 600 unit-months in Year 1, growing to 1,560.
- Standard Unit Rentals: about $75 per unit-month in Year 1, rising to $83; about $3 per unit-month in direct costs, rising to $3.40; about 620 unit-months in Year 1, growing to 1,600.
- Tenant Protection Plans, Locks and Boxes: about $14 per sale in Year 1, rising to $16; about $5 per sale in direct costs, rising to $5.80; about 1,200 sales in Year 1, growing to 3,200.
- Pay: Owner / Facility Manager $40,000 (1/1/1/1/1); Attendant (part-time) $18,000 (1/1/2/2/2). The numbers in parentheses are how many people we plan to have in Years 1 through 5. Pay figures are yearly and include payroll taxes and workers' compensation.
- Other yearly costs in Year 1: building rent & utilities $120,000, gate system, software and card fees $7,200, marketing and online listings $12,000, business and property insurance $12,000, repairs, lighting and pest control $9,600, and accounting, licenses & legal $4,800. These grow between 3% and 10% a year as the business grows.
- Customers pay monthly by card. At the end of Year 1 about $4,149 (3% of Year 1 sales) is rent that is late or still on its way from card processors.
- Tax rate: 21%.
- Every dollar amount is an estimate. Replace them with your own quotes and research.

Startup Costs