March 1, 2023
The IRS publishes tax return data each year on the roughly 28,000,000 sole proprietorships in the U.S. We analyzed the 59,953 tax returns that were filed in the self storage industry to pull out some key statistics and insights to help our customers ensure that they are creating realistic financial projections for their self storage business.
We hope that this data will be helpful for you as a “reality check” for your financial projections and business planning process. We hope you create a forecast for your unique situation and plan, and then use this data to make sure your projections seem reasonable based on industry averages.
Here is what we will cover in this article:
Learn How to Use this Financial Data
If you are creating projections for your startup business, or you just want to see how your existing business stacks up to industry averages, you can take your income statement and compare key ratios and percentages for your business compared to this industry average data.
How many storage unit businesses in the US are sole proprietorships
There are approximately 59,000 self storage businesses in the US organized as sole proprietorships. We specifically analyzed 59,953 companies based on the 2019 IRS tax return data.
Average annual revenue for storage unit businesses
The average annual revenue for all sole proprietorship storage companies in the U.S. was $50,998.
Average annual expenses for a storage business
The average annual expenses for all sole proprietorship self storage companies in the U.S. was $50,219.
The raw dollar amount is less important here, the important thing to note is that all expenses for a self storage business amounted to 98% of total revenue.
Average net profit margin for a self storage business
The average net profit margin for a self storage business was just 2%.
How much can I make by owning a storage unit facility?
If you are wondering how much you might be able to make by owning your own self storage business, you can get a good idea by creating a revenue projection based on the number of storage units you plan to have in your facility. Then you can estimate your expected vacancy rate. Finally, you can forecast your average monthly rent per unit. Take # of units x occupancy rates x average rent per unit. That will give you total revenue, then simply multiply that by 2% (the net profit margin) to come up with a forecasted profit as the owner of the business.
Top 10 expenses for a self storage business
Based on the tax returns of 59,000+ sole proprietors operating in the storage industry, the following were the 10 largest business expenses as a percentage of revenue.
Average labor cost for a storage business
The average self storage business spent just 3% of revenue on salaries and wages. Many self storage unit facilities can be operated remotely without any staff on the premises.
Average material cost for a storage business
The average storage business spent 14% of annual revenue on material costs.
This number did seem a bit high to me for a self storage facility, but it was what the data said. Perhaps if you are selling boxes or packaging materials that could represent some material costs, but my gut feeling is that 14% is too high for a typical self storage facility.
Average depreciation expense for a self storage business
The average self storage facility reported depreciation expense of roughly 14% of annual revenue.
This is likely to be your single largest expense for most self storage businesses.
Average interest expense for a self storage business
The average sole proprietor self storage facility spent roughly 8% of annual revenue on repairs.
Average EBITDA for a self storage business
The average EBITDA for a self storage business is roughly 32%.
So even though the net profit margin is just 2% for self storage, once you add back in:
- Depreciation - 14%
- Interest Expense - 9%
- Taxes - 7%
You end up with a strong EBITDA of 32%.
Average repair costs for a self storage business
The average self storage facility spent roughly 9% of annual revenue on interest expense.
Learn more: How to Start a Self Storage Business
Important Details about the Data
I want to point out a few key items about the data:
- You can download this data for free from the IRS website.
- The data includes 59,953 self storage sole proprietorships in the U.S. in 2019.
- This data will include businesses that operate full time, and businesses that only operate on a part time basis.
- Because of this, you should take the raw numbers for revenue, expenses and profit with a grain of salt, but the percentages can still be quite valuable when trying to forecast expenses for your business.
- This data includes businesses from all across the country, keep in mind that revenue and expenses can vary greatly based on your specific geographic location.
- We used 2019 data because we felt it was most likely to be representative of a “normal” environment for the industry. COVID-19 caused disruption to almost every business in 2020 and 2021, so we wanted to utilize “normalized” data.
If you have any questions about the data or how to utilize the data in your financial forecasting process please don’t hesitate to reach out to us!