When launching a company, you need to choose a business structure. However, retailing and other traditional forms may not be that attractive. You want an alternative solution, and warehousing sounds like a great option. This article will help your company take off by showing you how to start your warehouse enterprise.
What Is a Warehouse?
A warehouse is a facility where you store your products or raw materials. You usually need this building if you’re a manufacturer, transportation company, or wholesaler.
Steps to Starting a Warehouse
Here’s what you should do to set up your warehouse business.
1. Develop a Business Plan
When launching your warehouse, the first thing you need to do is to come up with a comprehensive business plan. This will help you flesh out each stage of the business creation process, open your company, and manage it efficiently. On top of that, the plan is essential for securing investors, loans, and other financings to help you reach your goal.
Your plan should include the following elements:
- Executive summary – This is where you summarize your business plan. Although it’s the first section, we recommend writing it last.
- Business overview – You can use this part to provide an overview of your organization, its vision, mission, corporate goals, and ownership structure.
- Products– The third section should describe the products you offer.
- Market examination – Determine growth prospects, demand variations, and other key market trends. Additionally, carry out a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis.
- Competition breakdown – Evaluate the strongest and weakest points of your competitors before listing the benefits of your products.
- Marketing and sales – What unique selling propositions (USPs) does your company have? What sales and promotional strategies will you use for your warehouse business?
- Management – Name your managers, their responsibilities, and backgrounds. Clarify their positions in your corporate hierarchy.
- Operations – Some of the elements you can include in your operational plan are procurement, warehouse location, crucial equipment and assets, and logistics.
- Finances – Mention how you’ll obtain your financing in the next three to five years. This part should cover your startup expenses, income and outlay estimates, balance sheet, cash flow, and break-even analysis.
- Appendix – Provide any business-related or financial documents.
2. Calculate Costs and Budget
Not every warehouse business costs the same. The expenses depend on several factors, but the most important aspect you should consider is the size of your warehouse. In general, you’ll need between $10 and $20 for each square foot. If the place needs renovations, expect to pay an additional $10K-$50K.
Besides renovating and acquiring your warehouse, you should also take other factors into account:
- Licensing or permit fees
- Equipment costs
- Employee wages
Prudent saving can allow you to start a warehouse business independently, but it can take years to collect the necessary sum. Therefore, you’ll most likely need another source of financing.
There are many common solutions.
You need to be an excellent salesperson to secure your funds this way, as it requires you to pitch your warehouse business to investors. That’s where your business plan comes in. If it’s promising and indicates a smooth road to success, investors may take a liking to your company.
When taking this route, you can choose between individual investors and groups. Don’t forget that each investor will have a stake in your company.
Warehouse loans are a special form of financing specifically designed for your industry. You can acquire these loans for various needs, such as remodeling, purchasing, and developing your warehouse otherwise. The interest rate, length, and other terms depend on your credit rating and provider.
Your country may have a number of assistance programs for warehouse businesses. These can help you start your company without incurring heavy debt from day one.
Indiegogo, Kickstarter, and some other websites are other low-risk options. It’s similar to financing your warehouse business through investors – you present your business plan, and donors fund your vision if it’s compelling.
4. Find a Warehouse
The next step is to find your warehouse. You can choose from three main options.
Build Your Warehouse
Whether you’re starting from scratch or expanding your business, constructing a warehouse can be an excellent solution. It provides much-needed flexibility, as you can design virtually any space according to your needs and preferences. The only downside is the high cost, but the total control over the appearance and layout more than makes up for it.
Buy Your Warehouse
Purchasing a warehouse is another viable option with tremendous benefits. As you’re the owner, you can make any changes whenever necessary to expand your storage capacity and the functionality of the facility. You can even score a significant profit if you sell your building.
However, you also need to understand the risks associated with this decision. The upfront cost and mortgage payments can be a massive financial burden.
Lease Your Warehouse
The most affordable solution is to lease your warehouse. The upfront cost is much lower than that of constructing or purchasing a warehouse. You can even negotiate the conditions, including the lease duration and monthly rates.
Another major benefit is that you have no financial ties to the property. This allows you to easily change locations.
On the other hand, you can’t expand or upgrade your warehouse under this arrangement because you’re not the owner.
5. Apply for a Permit
Running a legal warehouse requires you to get a license. The type of license you need depends on the region where you operate. Consult a local attorney to determine the right permit.
Although this step may take a while, it’s essential. Failure to comply with requirements can lead to hefty penalties.
There are two primary certifications you might need to have as a warehouse business owner:
- Warehousing license – This license proves your warehouse can legally keep and distribute products. The permit you need to obtain, the cost, and the time it takes to get it depend on your area and your products.
- Racking permits – You need racking permits to lower the risk of damaging your products and workplace injuries. To be eligible for these permits, your racking solutions must be designed according to local guidelines.
6. Get Equipment
Robust equipment can help you scale your warehouse business and outperform your competition. You need to incorporate appropriate machines, vehicles, and tools in every part of the facility to succeed. It makes the environment safer for your staff and increases their productivity.
Here’s the equipment your warehouse should have:
- Packing gear – packing tables, stretch wrap, strapping machines, and industrial scales
- Lifting gear – pallet jacks, castors, dollies, hoists, cranes, service carts, hand trucks, pallet trucks, and forklifts
- Storage gear – carousels, racks, shelves, and bins
- Conveyors – automotive conveyors, chain conveyors, spiral conveyors, vertical conveyors, flexible conveyors, belt conveyors, gravity roller conveyors
- Docking gear – lifts, levelers, wheel chocks, bumpers, truck restraints, yard ramps, dock boards, and dock plates
- Maintenance gear – screwdrivers, hammers, power drills, ladders, and other tools for fixing different parts of your warehouse
7. Buy Devices and Technology
A great way to optimize your warehouse operations is to integrate cutting-edge devices. That said, you shouldn’t buy just any technology. You want rugged mobile computers, scanners, and tablets.
There are countless benefits of these gadgets for your warehouse business. They automate product and reception by providing seamless access to your inventory. They also offer instant shipping information, allowing you to stay on top of your supply chain.
Another impressive feature of these tech solutions is their versatility. You can use them as standard computers or smartphones, but you can also mount them on warehouse vehicles. This way, you elevate the visibility of your building to a whole new level.
You’ll enjoy their ease of use too. Most devices have a minimal learning curve, enabling you to verify shipments, pick correct products, and replenish your stock effortlessly. Furthermore, they offer real-time information to speed up your order validation and inventory scans.
Finally, their rugged design gives you peace of mind. You can comfortably use them in the harshest of environments, as they’re built to withstand drops, temperature fluctuations, and moisture.
If you’re not sure which device you need for your warehouse, reach out to Energy Electronics. We offer expert recommendations and quotes for top-rated mobile computers, scanners, and tablets.
8. Hire Staff
You need industrious and qualified workers to run your warehouse efficiently. The positions of your staff depend on the type of facility, but most warehouses employ the following professionals.
Forklift drivers are trained to operate forklifts safely throughout your warehouse. They move your products to appropriate places and relocate outgoing or misplaced goods.
You need warehouse clerks to meet with your customers, providing them with assistance and critical information. They’re key to the success of your facility because they ensure your client’s needs are fulfilled. Plus, they can help you manage an array of tasks in your building.
Another term for stockers is stocking associates. They keep your warehouse organized by staying on top of your inventory, handling scanners and computers, and ensuring products are in the right place.
Material handlers are another critical role. These professionals take records of your products before packing them. They also use specialized material handling equipment, hence the name of their position. Additionally, you can ask them to operate vehicles or machinery if they have the necessary skills.
Although material handlers can use your warehouse machinery, this role is best delegated to trained machine operators. They know the ins and outs of all your gear, allowing them to maintain it correctly and extend its lifespan.
Also known as shipping and receiving associates, these workers carry out a number of projects related to incoming and outgoing goods.
Managers are crucial in any business, especially the warehousing industry. They oversee vital sectors of your organization to help ensure the entire operation runs smoothly. The managers you need depend on your structure, type of warehouse, and your products, but you’ll generally need these three categories:
- Distribution center managers – Overseeing shipping, receiving, and other key processes, distribution center managers facilitate your supply chain processes. They also develop long-term goals and budgets.
- Inventory control managers – Regardless of how many inventory processes you have in your warehouse, you should delegate them to your inventory control managers. They have high organizational and tech skills to handle equipment and devices safely.
- Warehouse managers – Warehouse managers are near the top of your corporate structure. They oversee all warehouse operations and make final decisions.
Parts of the Warehouse
Warehouses are seemingly one large area. In reality, these facilities comprise many areas:
- Loading dock – This is where you receive and dispatch your goods. The area provides vehicles with direct access to your products.
- Reception dock – You place your products at the reception dock after unloading them. It’s also where you classify and distribute your goods from.
- Packaging area – You might need to repackage and label your goods upon receiving them. This takes place in the packaging zone.
- Storage area – As the name suggests, a storage area is a place where you store your products. It features shelves, bins, and other solutions.
- Order preparation area – You need a separate order preparation area if you ship your goods in a different package or label from the one originally received.
- Outflow and dispatch control area – Workers in this area arrange and organize goods for preparation. You place products here before loading them onto trucks.
- Technical area – Most warehouses have a technical area for keeping forklifts and other mechanical or technical equipment.
- Administrative premises – Your customer service staff, administrative workers, and warehouse managers spend much of their time in administrative offices.
Talk to Warehouse Experts
The process of starting a warehouse business might appear daunting at first. However, having all the steps right in front of you makes it much easier. The key lies in staying focused on your goal and asking for help whenever necessary.
Help can come from different sources, but warehouse experts at Energy Electronics are your best option. Get in touch with us, and we’ll help you set up your company with tailored advice and support.