Self-Storage Business Plan

A commercial loan needs to be negotiated to finance approximately 70% of the total project costs. A 15-year mortgage will be applied for with an 8.5% interest rate. First drawdown upon agreement of the seller and buyer concerning the terms of sale of the building. Last drawdown around the end of the year when all conversion to self-storage units should be completed. First repayment of principle is planned in April of 1999 with monthly installments of interest and principle to continue until the loan is fully repaid in 2013.

Important Assumptions

Interest rates for commercial loans as of this writing are 8.5% fixed for three years or 8.75% fixed for a five year period. Beyond this time frame, rates are quoted at 1% over the Fleet Bank floating rate.

Key Financial Indicators

The following chart shows the benchmarks for Westbury.

Break-even Analysis

The following table and chart show our Break-even Analysis.

Projected Profit and Loss

Advertising and promotion will rely heavily ads in the Yellow Pages, as well as initial local newspaper ads at the time of opening. We are assuming three directories for Yellow Pages ads with 1/8th page ads costing $165/month each. The ads in the local papers (Springfield News and community newspapers) are estimated to cost $300 monthly for the first year only. They will be reduced in the second year to half this amount and eliminated in the third year.

Property taxes ($11,946) are projected at the actual rate of the tax year 7/1/96-6/30/97. Significant increases are not expected.

Building maintenance is normally a very substantial item on a building of this size built in 1910. However, the roof has been completely redone fairly recently and the basic structure of the building is very robust. The start-up costs reflect adequate amounts to ready the building for opening in good order. Also, it should be noted that expenditures for building maintenance would need to be larger if the building were being used for offices rather than storage. We assume an annual amount for maintenance equal to 5% of the purchase price which works out to $27,500.

Utilities:

• Water and sewer assumed at historical levels of $262 per year.
• Westbury Municipal Light’s bills totalled $13,714 last year when the present tenant was operating production with full staffing. As a self-storage facility electricity is needed only to power the rows of low-draw tube lighting. We estimate electricity to run about $250/month.
• Fuel oil for heating ran $13,881 last year. Since as a self-storage facility the level of heating does not need to be nearly as high, we estimate an annual bill of half this amount, or $7,000.
• Trash removal is projected at historical levels of $536 per year.
• The total for utilities is estimated to be $900 monthly.

Insurance:
Property and Liability Insurance amounted to $15,000 annually for the present tenant. We’ll assume the same annual cost.

Telephone:
Most of the telephone bill will be the charges for the Yellow Pages ads. These costs are already included in advertising and promotion. We assume the telephone bill to amount to $150/month.

Bookkeeping/auditors/legal:
Bookkeeping and billing will be handled by the same system used at Plainview Storage and charged at a rate of $300 per month. Auditor charges will run about $4,000 annually.

Projected Cash Flow

The following chart and table represent the cash flow for Westbury Storage.

Projected Balance Sheet

The following table presents the balance sheet for Westbury Storage.

Business Ratios

Business ratios for Westbury for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 4225, General Warehousing and Storage, are shown for comparison.