Start a Warehouse
Opening a warehouse requires extensive planning and research. It’s important to know what it takes to start a warehouse, whether you’re new to the industry or have years of experience. Below are seven steps to open a warehouse:
Write a business plan
A business plan should be the first step in starting a company. Doing so helps you plan each step of opening your business and gives you an accurate idea of what it will take. A business plan is essential for securing loans, investors, or other funding to achieve your goals. Your business plan should cover your warehouse concept, competition, business structure, and finances.
To learn more, read our restaurant business plan article. It’s useful across industries.
2. Figure cost
Rows of boxes in a warehouse at an industrial storage factory
Costs to set up a warehouse vary based on preferences and other factors. The cost to build a warehouse is $10-$20 per square foot, so the final cost depends on how much space you need. A warehouse renovation can cost between $10,000 and $50,000.
In addition to the cost of buying or renovating a warehouse, consider equipment, permits, and wages. You may also need to pay for software, inventory, and marketing.
3. Finance warehouse
While it’s possible to start a warehouse on your own, it’s more likely that you’ll need financing. Each external financing option has costs and benefits for prospective warehouse owners. Two common financing options:
A warehouse loan is a type of financing created for the warehousing industry. Loans can be used to buy, remodel, or expand a warehouse. Length and interest rate of your loan depend on the bank you use and your finances.
Investors: You can also pitch investors your business idea. A strong business plan and clear path to success may convince someone to invest in your company. If you choose this option, remember that most investors get a stake in your company.
4. Get permit
Before opening a warehouse, get the required licenses and permits. Location, products sold, and warehouse size can affect the permits you need. Several permits and licenses require a fee. Check with local authorities to ensure you have all required permits. Two certifications most warehouses need are:
Warehouse licenses allow your warehouse to store and distribute goods. The license you need and its cost depend on the goods you sell.
Warehouse racking permits reduce product damage and keep the workplace safe. To get this permit, you must prove your racks meet local standards.
Find a warehouse
As with any business, you have many options for a warehouse. Depending on your experience and business size, each option has benefits. The top three choices are:
If you can afford it, buy an existing warehouse. Owning the property allows you to make changes and profit if you sell it. Note the risks of buying a warehouse property. High upfront costs and mortgage payments can be burdensome, especially for new warehouse businesses.
A warehouse lease: In general, leasing a warehouse is cheaper than buying one. Usually, you can negotiate your lease’s length and monthly rate. You’re not financially tied to a property when you lease. If you don’t own the property, upgrading or moving is easier. Without a property, you can’t build equity.
If you want to expand your warehouse business or start one from scratch, building your own warehouse gives you design flexibility.
6. Get Gear
Without proper equipment, warehousing will be hard. Due to the business and physical demands of moving and storing products, each section of your warehouse will need specific tools, machines, and vehicles. Not only do they make your employees’ jobs easier, but they also keep the workplace safe. Needed equipment includes:
Dockboards, dockplates, truck restraints, bumpers, yard ramps, wheel chocks, levelers, and lifts
Gravity roller, belt, flexible, vertical, spiral, chain, and automotive conveyors.
Storage bins, shelves, racks, and carousels
Lifting equipment: forklifts, pallet jacks, pallet trucks, hand trucks, service carts, cranes, hoists, dollies, and castors
Industrial scales, strapping machines, stretch wrap, packing tables
7. Hire Staff No warehouse can operate without qualified employees. A successful warehouse owner should know the industry’s jobs and their importance. While many warehouses have similar types of employees, others may need specialized positions. Following are some warehouse jobs:
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