Claudia Stewart, Negosentro | The number of small and home-based retail businesses has exploded over the last couple of years. Most of them lack the necessary space to store their products and cannot afford to lease, own or staff their own warehouse. Public warehouses or third-party logistics company help these small businesses operate by storing their products and some of them even offer packing and shipping options. Although starting your own warehouse business requires a sizable investment, it is capable of generating a substantial revenue. Here are five things you should know before starting your own warehouse business.
Before you dive head-first into the warehousing business you should perform an in-depth market analysis and determine whether the local network is large enough in order to support your new business. Consider your competition and the number of warehouse facilities already in that area. This will help you figure out if a specific niche is already explored and help you find the right one for your business. Finding the right niche is very important, as it determines what type of products you will be storing and the size of the building needed to store them.
Write a business plan
A well-written business plan is crucial for starting any type of business. It serves as a reminder of what your business goals and work objectives are, how to achieve them over time and help spot potential issues and problems before they even occur. A business plan helps business owners and managing directors understand everything there is to know about a company and how it will operate and scale over time. But one of the most important things a business plan can help you achieve is to help you get the necessary funding for your company.
Getting the necessary funding
Getting into the warehousing business is notoriously expensive, with the average startup cost ranging anywhere between $10,000 and $50,000. This is a sizable investment no matter how you look at it and although you can pay for it out of your own pocket if you choose, there are other expenses you need to think about such as operational costs, employee insurance rates, salaries, etc. Bank and credit card loans are a good option, as long as your credit score is absolutely perfect and you will most likely have to provide some kind of collateral. Alternatively, you can look for outside investors and let them fund you for a small percentage of the company.
Get equipment and hire employees
A large part of your investments will go towards buying the necessary equipment, including forklifts, shelving units, crates, pallet trucks and refrigeration systems in case you’re working with food and other, perishable items. You will also need some basic office supplies, such as a desk, the computer and some software to keep track of the inventory. The size of your warehouse business will determine the number of employees you hire, but besides those working in the warehouse itself, you will also need someone to handle the paperwork and deal with the customers.
Find clients and scale up
Once your business is up and running, you should start considering all the things you need to scale up into a proper distribution business. This might require additional construction work and Wallandra is a company that truly understands industrial and warehouse construction. You can obtain customers in a number of ways, but make sure to sign up with the local Warehouse Association to help generate leads. Advertise in publications most likely to be read by potential clients and try to associate with other local businesses. Lastly, make a website and don’t be afraid to advertise on various social media platforms.
Starting your own business is not an easy task to accomplish. You need to research the market, obtain finances, write a business plan, consider the legalities and finalize the paperwork. Then you have to hire employees and deal with business partners, manufacturers, suppliers and customers on a daily basis. But at the end of the day, nothing beats being your own boss.