Getting involved in the warehousing industry can be a lucrative business if you know what you’re doing and you plan accordingly. Depending on the size of your client list and the types of products you’ll be storing, warehouses can be very large, which means the price of the building and its upkeep will get costly. If you’re new to the warehousing business, there are some important steps you need to consider before committing to your new business venture. Learn more about how to plan for your new business and how to implement best practices like using eco-friendly packaging materials and reducing warehouse carbon emissions.
What Is the Warehousing Business All About?
The warehousing industry is fairly straightforward. Warehouse owners attract clients who need additional space to store their stock. These clients will pay a recurring fee to the warehouse owner in exchange for storing their goods. The warehouse owner and employees are responsible for storing, organizing and preserving the products until they are ordered and ready to be shipped out to the consumer. Warehouses must use a well-planned organization system to keep track of items, and they usually have some type of automated inventory management system to help track when products are coming in and leaving the warehouse.
Warehouses vs. Distribution Centers
Although the words “warehouse” and “distribution center” are often used interchangeably, there is a major difference between the two that you should be aware of before entering the business. Warehouses are responsible solely for storing and managing products of their clients. Distribution centers, on the other hand, do these same jobs in addition to being in charge of fulfillment. When an order is placed by a customer, the business will alert the distribution center, and the employees must prepare and ship the order to the customer. Running a distribution center instead of a warehouse can add a lot of extra pressure and responsibilities, so be sure you know what you’re getting into if you opt for a distribution center over a traditional warehouse.
Tips for Starting a Warehouse Business
Research Your Direct Competition
It’s important to be aware of your competition before starting a new business as it will give you some insight into industry trends and potential setbacks before you’ve even opened shop. This type of analysis is called “competitive research,” and it covers everything from your competition’s clients and types of products to warehouse storage size. You want to know what your competition is already doing to help you figure out a way to give your warehousing company an extra edge. Identify your competitors’ strengths and weaknesses, note their online presence, including their website and customer reviews, and determine what attracts their customers to them. From this information, you’ll be able to recognize any weak areas that your own business can improve on and, hopefully, become more successful.
Determine a Reasonable Building Size
When it comes to owning a warehouse business, size is one of the most important aspects to consider. You’ll obviously need a large space to accommodate all of your clients’ products, but you also don’t want to end up paying a lot for a space that you don’t use. The best way to pre-determine a reasonable size for your warehouse is by first deciding what types of products you’re going to store. If you decide to manage inventory for businesses that tend to carry smaller or less bulky items like books or clothing, you can start off with a smaller warehouse space and build or rent more space as your business grows.
Create a Budget
Your budget will encompass everything you need, including startup costs, to run your business. In the beginning, you’re going to need to dish out a lot of money to get your warehousing business off the ground. You’ll need to buy or rent warehouse space (or spend money to build a warehouse), purchase essential equipment like forklifts and shelving units and hire employees. All of these different necessities will add up quickly, which is why it’s smart to create a set budget from the beginning. Unless you have a lot of personal capital (and we mean a lot), you will definitely need to find some investors or apply for a bank loan in order to afford all of the startup costs for a warehousing business. Try to make your budget realistic, but also give yourself a little bit of wiggle room in case unexpected expenses pop up along the way.
Seek Out Clients
This step is, of course, one of the most important aspects to starting a business. Many people believe that they don’t need to start seeking out clients until their business is up and running, but this is a mistake. You should begin fielding potential clients as soon as you’ve decided that you’re going to go through with your business idea. Of course, it does take time to get all of the proper licensing and equipment to start your business, but it also takes time to establish a client list. You can start reaching out to potential businesses that might want to store their products in your warehouse, and give them a realistic timeline for when you could begin moving their stock to your facility. You can use your competitive research to tell your potential clients why your new business will have an edge over their current warehousing company.
Consider Ways to Be Eco-Friendly
Warehouses can greatly contribute to carbon emissions and climate change, so it’s important to consider how you can reduce this problem with your own business. Using eco-friendly packaging is one great way to reduce waste. You should also consider using energy-efficient lighting to lower your cost and your level of energy waste. Warehouses often have to leave doors open as products are being moved around, which leads to a high level of energy loss. Invest in high-speed doors that reduce the amount of time the door stands open or try using air curtains to retain heat or cool air in smaller areas of your warehouse.