Setting up your business is one of the most important aspects of your Self-Storage Business plan. You are likely asking yourself, how do I structure my business. You need to know who is going to be part of your business and what their role is from the beginning. This may change over time as you bring in new investors and partners, but you should account for those changes when you create this document
Initially you may be the only investor in your company. However, as you achieve success, other people are going to want to work with you. They will see what you are doing, and they will want to invest in you and your projects. You need to make sure that you know how you want to partner with these people. Your business plan will help you decide before hand how you want to handle these decisions.
Initially, you want to set up some form of entity for your asset protection. Consult with your attorney and accountant on what is best for you based on your current situation. You want to make sure that whatever you do is going to offer you the most protection from Uncle Sam and any greedy lawsuits that may come along. If you have done your research for your self-storage business plan, then you will speed up the process when you find the property because you will already know what entity you want to use.
Once you start bringing in other people to work with you, you will want to set up partnerships. Your self-storage business plan can help guide you when these situations arise. There are several ways to set up partnerships and you need to make sure that you do it the right way for you. For example, you can set up a partnership through an LLC. However, this may not be the right form of entity for what you are doing. When you structure partnerships, you should always seek counsel from your attorney on what the best structure is for your asset protection. You may discover that a partnership is not the way to go. You may decide that you don’t want to do a partnership at all. You may need to set up a c corporation instead. Talk to your advisors and find out what is best for you for each deal that you do and then put it in your business plan.
If you set up a partnership, what role are each of you going to play? Is the other partner going to be an active member in the partnership or are they just going to bring capital to the table? If they want to be an active member in the partnership, do they have the experience or expertise to be involved? These are important questions to address as you create your self-storage business plan. Sometimes partners want to make decisions without understanding all the ramifications of those decisions. Because of this, you might want to consider keeping a 51% ownership in all partnerships so that if there is a difference of opinion, you ultimately have the deciding vote. If there are multiple partners, this may not be possible. However, you want to make sure that there is no way that there can be a 50/50 vote because then nothing will happen.
Another decision that you want to address in your self-storage business plan is the percentage of profit each investor is going to get. Many investors feel that they need to give all the profit to the person with the money. Remember that you bring something to the table even when you are just finding the deals, managing the deals, or overseeing the business. You deserve to get paid for your time and energy. If you do not feel that you are bringing things to the table, then make a list of everything that you do and put it in your self-storage business plan. This will help you see your value and it will definitely help your future partners see your value.
You can set up the profit splits so that silent partners are getting a basic return on their investment plus a percentage of the profits. You can set up the partnership so that they are simply getting a percentage of the increase in the value of the property when you sell it if you are doing a fix and flip. In this case, you need to define how long it will take to fix up the property and increase the value. This may be a project that takes several years
. You want to make sure that your investors know that they are signing up for a 3 to 5 year opportunity. Either way, you need to decide how you want to set up your partnerships and you want to offer flexible opportunities for different partners. Think about these things and put the ideas in your self-storage business plan. Different partners will bring different amounts of money and experience to the table. Because of this, you need to have different programs that you can offer to them,
There will be many opportunities to bring in partners. One thing that you should keep in mind is that partners can refer you to more partners. How are you going to grow your business? Put a section in your self-storage business plan on increasing partners. An easy way to do this is to always be sure to always ask people who they know that might be interested in partnering with you. Once you are working with someone and they are making money with you, they are happy. They know that your systems work. They probably also know people who have money that they could introduce you too. Ask them who they could bring in to work on the next deal with you. This is a great way to grow your business.
Designing your self-storage business plan is a great way to look into your future and see your success. While this section of the business plan can be a little overwhelming, it is also exciting. If you know how you are going to invite people to partner with you, it will be so much easier to talk to people about partnering. If you are already educated on business entities and which one is the best for self-storage, then your partners will feel even more confident about working with you. Take the time to do the research and find out what is best for your situation. As always, happy investing. See you next time as we continue our series on self-storage business plans.