With different ventures emerging from everywhere these days, the demand for warehouses has also increased. When starting out in business, many small businesses and independent contractors don’t have so many options for storing their products. While this may not be a problem for the big player companies and businesses, it is a big challenge for small entrepreneurs.
If you are thinking of starting a small warehouse business that will help cater to the needs of small business owners, then you are in for a lucrative venture. It is a business that is in high demand as everybody is looking for a safe and functional way of storing their products.
However, before you jump to start building your warehouse, there are many things you need to put into consideration. Starting a warehouse business is not a bread and butter thing. You need to do thorough background research and also carefully choose a niche and the type of products you will be storing. In this post, we have provided everything you need to start a warehouse business. So, let’s get into it.
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First, What Is a Warehousing Business?
A warehouse business practically involves storing products and goods bought from a manufacturer. You will be helping small businesses keep those goods in your facility till the time they will be ready to be delivered to a customer. By running a warehouse business, you are practically helping retailers store their products before they are sold to customers.
There are different types and sizes of warehouse business, and this usually depends on the type of commodities and physical goods you are storing for your clients.
How Much Do You Need to Start a Warehouse Business?
The amount you will need to start your warehouse business actually depends on what you want to be storing for your customers, and also on how big you want to start out. When starting this type of business, you must determine your product choice, whether it is paper products, electronics, or books. This will go a long way to determine the building size you need and consequently, the amount you will need for your warehouse business.
However, the average cost of starting a warehouse business is between $10,000 and $50,000.
How to Start a Warehouse Business; Everything You Need
#1: Gather enough background information about the business
Like it is for any other business, it is not advisable to start a warehouse business without first doing your research. You will want to first learn about the warehousing industry and how things work there before you open your business. Begin your research by searching through the yellow pages or other online business listings for warehousing companies in your area.
When you found some companies, try to visit their websites to see what type of services they offer, as well as the type of customers they are serving. See if you can get a couple of existing warehousing companies and see if they can provide you with useful information about the business. You can go for business outside your city as those types of businesses are more open to provide you with the right answers you seek.
#2: Determine what services to offer
This is the next important step after your initial background research. You will want to determine exactly what services you would like to offer. A warehousing business goes beyond just having equipment and knowing how to shelve. You will need to know what specific area of expertise you would like to cater for.
You can offer storage services or distribution and shipping. At the same time, you can combine both in your warehousing business. Just make sure you clearly understand what your targeted clientele will likely need.
#3: Choose a specific niche
The next thing is choosing a specific niche. This will allow you to know the type of warehouse to build. Look at some businesses that cannot use an all-purpose warehouse to get inspiration about what niche to go with. For instance, food companies and art dealers have specific requirements for their storage needs, so they are always looking out for a warehouse that is able to meet the needs.
Warehouses are different – even if they look the same from the outside. And for you to build the right type of warehouse that brings good business to you, you need to carefully find a niche you can stick with. Once you are able to find a niche for your business and have carefully studied competition in the niche, then you can go ahead to write a business plan for the business.
#4: Consider competition and demand
After finding a suitable niche for your business, the next thing will be to conduct thorough research of what competition looks like in the niche. Find out what demands are in your area and check if your company can fill any of these demands. If your local market cannot support your business, see if you would have to use a nearby community to cater to your business.
When studying your competition, find out what they are doing that seems to be working for them and what’s not working too. All these will fortify you with the right knowledge you need to stand out in the market and bring up something unique.
Brainstorm ideas and also reach out to similar businesses in other areas for their advice about the business. Since your business is in another area, it will less likely going to be a threat to theirs, so they will be willing to give any advice you need.
#5: Get the necessary equipment
Contrary to what many people think, a warehouse facility is not just a room with four walls for just storing goods. A good warehousing business needs the necessary equipment to keep items in good condition. So when starting a warehouse business, it is important you invest in warehouse equipment necessary for the type of goods you will be storing.
For example, if you are storing perishable items like food, you will need to get good freezers and chillers to store them so they don’t get spoilt before your customers request them. And that will definitely raise your energy costs too, so you should be prepared for that. You can also check out our post on how to ship temperature-controlled items to better understand that you need different conditions to store and ship different items.
Not sure what equipment you might need for your warehouse business, here is a list that might help:
- Lifting equipment such as forklifts, service carts, and pallet jacks
- Storage solutions like racks, shelves, and carousels
- Conveyors like gravity roller conveyors and belt conveyors
- Warehouse management software to make your operations smooth and efficient.
Related Article: How to Ship Temperature Controlled Items
#6: You will need the proper licensing for the business
To get your warehouse business on the good side of the law, you will need to obtain all necessary licenses for the business. Obtain all important documents required in your city or state. However, some documents you might be required to obtain typically include:
- Tax identification number (TIN)
- Tax permit according to your city or state
- Employee identification number (EIN)
- Doing business as (DBA) registration
#7: Find your customers
Warehousing business is a bit different from other businesses in that you are not marketing to everyone. Instead, you are selling your service to companies, and not individuals. Therefore, you should look for your potential clients among entrepreneurs who may need your assistance storing their products and goods.
A typical example of the type of clients you will be servicing is e-commerce businesses. They are the ones that need your help the most. These people don’t have physical establishments, so they need a safe place to keep their products before they reach their customer’s doorsteps.
So, find a way to reach out to your potential customers and build relationships with them. Start by attending trade shows and conferences about your industry. This will allow you to network and meet potential clients for your business.
Another effective way to connect with your clients is through social media. Having a website will also help. You can also consider joining the International Warehouse Logistics Association to meet even more people and benefit from the several resources it always provides for people in the warehouse industry.
#8: Hire logistics employees
Finally, you may not be able to do the business alone; you will need to hire experienced people who know about logistics, especially if you will be offering distribution services too. These professionals will be in charge of arranging shipping and tracking products until they get to their final destinations. They also oversee items that enter your facility, so they can always ship those items that first arrive at the facility first.
You will need employees to help check items you receive on arrival. The same person will also be in charge of setting up specific locations in the warehouse for each client’s items. You will also need to hire people to physically lift items and operate the forklifts in your warehouse facility.
Final Note: Is a Warehouse Business Worthwhile?
If you are thinking of starting a warehouse business, you have made a good choice. It is presently a lucrative business any entrepreneur can venture into. But you need the right tips and information to make headway in the business because of the competition. And that is exactly what we have provided you in this post. So go get it; start your warehouse business now!
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