Small businesses are becoming an increasingly important gear in the engine that moves the global economy. If we would look at the example of the United States, we would see that over a third of the U.S. working population is employed in the companies with fewer than 100 employees, and businesses with less than five employees make up 62% of all U.S. businesses.
It is interesting to observe that most of these establishments (especially the retail businesses) share one common problem – they lack the proper space to store their goods. Starting a warehouse business that could potentially solve this problem seems like a very lucrative proposition.
Know Your Market
However, before you simply make a leap of faith and assume that your future warehouse will be successful from the get-go, you should first do a very through market research and see if the local business network is large enough to support your business, and, if it’s not, could you benefit more from moving outside the town.
Know Your Competition
Another factor that will play a huge part in determining your business location, scale and orientation is definitely your competition. Researching the competition will provide you with benefits other than taking a good look at what or who you are going up against. You will be able to see how warehouse business actually works, learn about common industry pitfalls, and even scout your potential employees.
Choose Your Niche
Now that you know the number of local retailers and have mapped out your competition territory, it is time to carve out some unexploited niche for yourself. For a start, it wouldn’t be a bad idea to focus on a group of retailers with specific requirements (e.g. food suppliers or art dealers) who can’t always store their goods in general-purpose warehouses.
Find a Co-Founder
The benefits of finding an experienced co-founder are multiple. You will be able to take a necessary break from the business and clear your head, focus only on the things you are good at, and make more impactful and well-thought-through decisions. Most importantly, you will have better chances with investors and be able to get some loans that would otherwise, as a newcomer to the game, be out of your reach. Speaking of which…
Get the Money
According to Entrepreneur, the upfront costs of starting a warehouse business can be between $10,000 and $50,000. Unless you have a very deep pocket, you will have to knock at a lot of doors before you finally cut the ribbon. If you want to raise your chances of getting these funds, don’t stand in front of the investors without a great pitch and a rock-solid, fail-proof business plan.
Find the Right Employees
Employees are the heart pumping the blood through your business’s veins. Fail to find the experienced and skilled employees and you may soon experience a major heart attack. The good news is that the most of the paperwork and the entire IT department can be outsourced to the third-party vendors until you get the opportunity to train new employees and develop these branches in-house.
Start with a Bang
Or in other words, make a big deal out of the launch. You can reach out to local media, invite local bigheads, and let the locals know why your business is important for the community. Let your guests familiarize with your future plans, and invite them to take part in making those plans come to life. Good media coverage will help you immediately put yourself on the map and become an important part of the local business landscape.
Reach Out to Customers
Last but not least, you should start reaching out to potential customers as soon as you make the business plan and ensure the funding. Establish a strong online presence, pull off a guerilla action, make a phone call to your potential customers, and reach out to the International Warehouse Logistics Association… At this point, there is no bad way to do marketing.
Make the Business Scalable
As we already mentioned, the best way to start any business is to make a safe bet on a small, but thriving niche. But, that shouldn’t be a long term-solution, and most certainly not your end-game. So start with the basics like forklifts, and shelving solutions, but plan ahead refrigerators, multiple sites, delivery service and other similar upgrades. Also, you should think about transforming your warehouse into a full-blown distribution business.
As we can see, starting a warehouse business requires a lot of work and careful planning, but it’s nowhere near impossible. The small business market is thriving. Starting a small-business oriented warehouse may be your best chance at taking the piece of this cake for yourself.