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A Sample Cold Storage Business Plan Template

In recent times, new technologies have made it possible to move fresh, perishable foods from one side of the world to the other without altering their freshness. There are also cold storage and refrigerated warehousing that make cold chain logistics a premium service in this age.

When looking to start a cold storage business , first find out the industries in your area that require your services and the best approach to cater to these needs. Once you find a viable demand in your area that has not been filled, you can put together a concise business plan to ensure you understand the tasks ahead. Ensure to seek advice from people who are in the same business and get ideas on how to implement your strategies.

Steps on How to Write a Cold Storage Business Plan

Executive summary.

Prime Care Storage (PCS) is a cold storage facility catering to the storage needs of healthcare and pharmaceutical companies in Philadelphia, Pennsylvania. At PCS, we will help our clients store things at various temperatures. According to research, most healthcare and pharmaceutical facilities in Philadelphia have limited space, or only have one temperature level in the storage area.

Meanwhile, a good number of vaccines and medicine need to be kept at different temperatures. At Prime Care Storage, we can meet those varied requirements, while also helping our clients reduce product waste, especially since medicines or vaccines become spoiled at certain temperatures.

Company Profile

A. our products and services.

It is not always advisable to store medical and healthcare products under room temperature conditions. At PCS, our cold storage leverages high-tech flame-retardant insulation materials that follow modern design norms and is energy-saving and environmentally friendly. The medicine cold storage types we intend to offer include;

• Vaccine Storage: At 0℃~8℃, effective to store vaccines, medicines, etc.
• Medicine Storage: At 2℃~8℃, used to store medicine, biological products, etc.
• Blood Storage: At 5℃~1℃, used to store blood, pharmaceutical and biological products, etc.
• Low-temperature-maintaining Storage: At -20℃~-30℃ can be used to store blood plasma, biological materials, vaccines, reagents, etc.
• Ultra-low-temperature-maintaining Storage: At -30℃~-80℃, used to store placenta, semen, stem cells, blood plasma, bone marrow, biological samples, etc.

b. Nature of the Business

Indeed, there are many uses of cold storage in the pharmaceutical and medicine industry, and we believe a good number of healthcare facilities in Philadelphia will trust PCS with their medicines and vaccines. At PCS, we will provide cold storage and other services, including 3PL and the ability to distribute to wholesalers from our facility.

c. The Industry

Prime Care Storage will be part of the pharmaceutical segment of the United States Cold Storage Industry.

d. Mission Statement

Our mission at PCS is to provide healthcare and pharmaceutical facilities with the right technology to preserve the function of their products. We are committed to providing exceptional cold storage services. With an experienced workforce, we understand the precise art of moving and storing temperature-controlled medical products.

e. Vision Statement

Our vision is to become the prime choice for healthcare facilities when it comes to product storage and delivery. Storing vital products at the right temperature will allow our clients to focus on other essential things, such as innovation and quality control. Taking this responsibility from their hands will free them to do the work they should.

f. Tagline or Slogan

Prime Care Storage – Your Ever Reliable Storage Partner!

g. Legal Structure of the Business

Note that Prime Care Storage will be registered as an LLC with the State of Pennsylvania. We believe this business structure is suitable for our medicine cold storage business since it offers the following advantages;

• Protect the personal assets of our owners, stakeholder, and employees
• Offer tax choices that benefit our bottom line
• Gives us the platform to grow our business
• Ensure we gain credibility with customers

h. Organizational Structure

• Chief Executive Officer
• Facility Manager
• Admin and HR Manager
• Marketing and Sales Executive
• Front Desk Officer
• Refrigerated Truck Drivers
• Security Guards

i. Ownership/Shareholder Structure and Board Members

• Michael Smith (Chief Executive Officer/Owner) 49 Percent Shares
• Diamond Minton (Facility Manager) 21 Percent Shares
• Josephine Smith (Marketing and Sales Executive) 17 Percent Shares
• Greg Lawson (Accountant) 13 Percent Shares

SWOT Analysis

A. strength.

• Philadelphia boasts of a mature healthcare industry with an adequate manufacturing base and capacity to produce and supply quality drugs.
• The sheet material of our medicine cold storage uses modern high-tech flame-retardant insulation materials which have excellent airtightness.
• Our medicine cold storage is energy-saving and environmentally friendly.
• Outside waterproofing.
• Inside vapor proofing.
• Air distribution.
• Adequate humidification.
• Properly designed controls for precisely maintaining the storage atmosphere.

b. Weakness

• The city has a very small internal market.
• There seems to be a lack of innovation within the city’s healthcare industry

c. Opportunities

• Philadelphia has established itself as a hub for biomedical and pharmaceutical firms
• The city’s robust medical network includes the University of Pennsylvania’s largest teaching hospital, the Children’s Hospital of Philadelphia, and the Thomas Jefferson University Hospital.
• The city’s regulatory framework is good and embraces the mutual recognition agreement.
• The city has an encouraging legal, political, social climate and attractive low corporation tax, which embraces the tax imputation system.
• Sound financial services are available

i. How Big is the Industry?

According to reports, the US Cold Storage Market size was valued at $15.26 billion in 2023; however, it is expected to attain a valuation of $19.69 billion by the end of 2026, growing at an annual compound rate of 3.7% between 2022 and 2026.

ii. Is the Industry Growing or Declining?

The pharmaceutical segment of the US Cold Storage Market is expected to witness exponential growth from 2019 to 2025. According to experts, pharmaceutical and biotechnology supply chains are liable to certain risks associated with product adulteration during transport. Aside from that, strict federal regulations, standards, and guidelines will also boost growth in this segment.

iii. What are the Future Trends in the Industry

The general cold storage industry is without doubt a very demanding logistics segment. Coupled with recent additional challenges like increases in the sensitivity, quality standards, volume of goods, and additional regulations, more and more is being expected from this industry.

According to experts, the industry is expected to put up with serving the global market, driving out costs, becoming more strategic, and addressing capacity and resource constraints, all still catering to the precise needs of the sector’s most vital cargo—primarily food and pharmaceutical products.

To succeed in this segment, businesses must steadily upgrade technology to guarantee efficiency, integrity, and safety. They will have to invest in both back-end IT infrastructure and front-end devices to always have and report key shipment data in real-time

 1v. Are There Existing Niches in the Industry?

• International pharmaceutical distributors
• Temperature-controlled shipping and freight services
• Biobanking services
• Passive thermal protection services
• Pharma supply chain companies
• Pharmaceutical freezers
• Insulated packaging concepts

v. Can You Sell a Franchise of your Business in the Future?

No. At Prime Care Storage, our business plan is to start up our first pharmaceutical cold storage facility in Philadelphia, Pennsylvania, before opening more company-owned facilities in strategic locations across the country.

• Competition from developing cold storage businesses
• R&D infrastructure and investment are under-developed.
• Fluctuation or unexpected increase in electricity tariff

i. Who are the Major Competitors?

• Interstate Warehousing, Inc.
• United States Cold Storage
• Americold Logistics
• Bennett International Transport, Inc.
• Diversified Transfer & Storage
• Aphena Pharma Solutions
• Daybreak Express, Inc.
• Yusen Logistics, Co. Ltd
• AIT Worldwide Logistics

ii. Is There a Franchise for Cold Storage Business?

No. There are currently no franchises offering pharmaceutical cold storage opportunities in the United States, mainly because this is still a new and growing segment of the cold storage industry.

iii. Are There Policies, Regulations, or Zoning Laws Affecting Cold Storage Business?

Yes, regulations and zoning laws in the United States are known to vary from state to state. Therefore, it is necessary to consult your state’s public health department or medical board to find out if you are expected to be licensed to offer the sort of storage services you’re interested in.

Marketing Plan

A. who is your target audience.

i. Age range

At PCS our medical cold storage services provide rental options for healthcare businesses to ensure the safety of their products.

ii. Level of Educational

The services we offer at PCS are essential for doctor’s offices, hospitals, and medical centers across the city of Philadelphia.

iii. Income Level

The income level of healthcare facilities is barely released; when done, the presentation is haphazard and hard to navigate, much like health care itself.

iv. Ethnicity

At PCS, there will be no restriction on the ethnicity of our clients. We will be catering to the storage needs of healthcare and pharmaceutical companies in Philadelphia.

v. Language

Our services and products will be accessible to everyone, irrespective of language and accent. By leveraging Google Translator software, our website will also be accessible to foreigners and non-English speaking clients.

vi. Geographical Location

In recent years, Philadelphia has become a hub for biomedical and pharmaceutical firms and has also grown into a premier destination for healthcare professionals. Note that the city’s robust medical network includes the University of Pennsylvania’s largest teaching hospital, the Children’s Hospital of Philadelphia, and the Thomas Jefferson University Hospital.

vii. Lifestyle

The cold storage services we offer are essential for the following clients:

• General Practitioners
• Veterinarians
• Medical Clinics

b. Advertising and Promotion Strategies

• Optimized web design for cold storage facilities
• Collaborate with hospitals and other medical-related businesses
• Leverage couponing to entice first-time customers to make initial contact with the brand
• Buy a mailing list and perform a direct mail campaign.
• Hire a marketing firm

i. Traditional Marketing Strategies

At PCS, we understand that the success of our business will depend on our marketing and advertising campaigns. In the initial as well as later stages of our business, we intend to hire a marketing firm to help market Prime Care Storage.

ii. Digital Marketing Strategies

• Pay-per-click (PPC) ads
• Social media marketing
• Email marketing
• Search engine optimization (SEO)

iii. Social Media Marketing Plan

• Provide Incentives For Instagram Word-Of-Mouth
• Provide Group Deals
• Use Twitter hashtags
• Post Content That Will Entice Our Target Customer
• Use Facebook as a Key Communication Tool
• Use Twitter As An Information Source About Our Services

c. Pricing Strategy

At PCS, we will ensure our clients enjoy the dividends of fewer charges and more benefits, therefore we intend to adopt the Market Penetration Pricing Strategy, and as we grow, switch to the Geographic pricing strategy. Have it in mind that our price range will be affordable for all the segments. At PCS, we will offer the following;

• Attractive prices for all segments
• Prices will be set according to the competitor’s price strategy
• Prices will be affordable.

Sales and Distribution Plan

A. sales channels.

At PCS, we plan to grow our cold storage facility’s position in the customer’s mind as well as in the market. Leveraging differentiation, Prime Care Storage will be positioned as the most convenient and value-added pharmaceutical cold storage facility for healthcare facilities in the area. We will always strive to make available more products and services to our customers and ensure we become a reliable storage partner.

b. Inventory Strategy

Our plan at PCS is to adopt a properly designed inventory strategy that will address all products based on class and group. Also, note that this strategy will take into account the layout and design of our cold storage to ensure the efficiency of operation and the maintenance of good Health & Safety of every product in our care.

c. Payment Options for Customers

At Prime Care Storage, we intend to make available the following payment options to our clients;

• Payment via bank transfer
• Payment via credit cards
• Payment via online bank transfer
• Payment via mobile money transfer

d. Return Policy, Incentives, and Guarantees

No. There are no return policies at Prime Care Storage. However, we guarantee that the temperature in our cold room will be fully adjustable, and it is controlled to prevent products from dehumidifying. Have it in mind that temperature controllers and monitoring systems are all mounted in our cold storage units.

e. Customer Support Strategy

Note that our cold storage units at PCS will be equipped with two units to ensure that when the electrical unit stops working owing to a breakdown, the operation of the standby unit will not affect products inside the warehouse. Have it in mind that the control system leverages a fully intelligent microcomputer with automatic detection.

To serve our clients effectively, there is a high-precision sensor recorder (with alarm device) that has an SMS alarm function that monitors and records the temperature and humidity in the storage area, and also can meet long-term monitoring requirements. If it detects that the temperature has attained the set upper or lower limit, the device will light and sound the alarm.

Operational Plan

• Easy to access location
• In-house, experienced experts
• Innovation and creativity
• Moderate price point
• Comfortable, customer-focused environment

a. What Happens During a Typical Day at a Cold Storage Business?

Most often, cold storage businesses are owned and managed by a team. In this line of business, advertising available spaces is a daily task. Potential clients are given a comprehensive tour of the facility. All applications will have to be collected and processed with background and credit checks.

Also note that security deposits, key deposits, collection of rental payments, and monthly accounting records will have to be handled on time and accurately. It also falls on the owner or group to ensure that the facility is kept clean and constantly supervised to prevent vandalism and theft.

Also note that rent for any storage space that is past due will have to be collected, and if there is any issue with the rental payments, the necessary legal processes will have to be initiated to remedy the issue. Note that this may involve turning the account over to collectors, filing court papers, or giving eviction notices, but you will have to consult the local laws and rental contract agreement.

b. Production Process

At present, there are no production plans and processes in place at Prime Care Storage.

c. Service Procedure

• We offer high-quality cold storage units that provide reliable refrigeration for medical products
• Our staff is knowledgeable about how our services
• We offer affordable pricing
• A seamless and headache-free communication system
• Our convenient hours of operation mean that someone is available when you need them

d. The Supply Chain

At Prime Care Storage, we intend to partner with Kendall Cold Chain System to sustain a very viable supply chain and ensure we always provide top-class services to our clients. Kendall Cold Chain System Co., Ltd. Is headquartered in Shanghai, China and specializes in the design, installation, and maintenance of cold storage rooms, refrigeration systems, and commercial refrigeration equipment.

Note that the medicine cold storage designed and installed by Kendall has numerous advantages such as quick-freezing, fast fresh-keeping refrigeration, energy-saving, etc. and also leverages the most advanced low-noise evaporative fans to guarantee that the lowest energy consumption of the main unit achieves the highest efficiency.

e. Sources of Income

• Rent or lease of medicine cold storage units
• Leasing or rental of mini refrigerated storage truck units
• Other related cold storage services

Financial Plan

A. amount needed to start your cold storage business.

After extensive research, we need around $550,000 to successfully start Prime Care Storage in Philadelphia.

 b. What are the Costs Involved?

• Setting up a business name: $150 – $200
• Licenses and permits: $200 – $300
• Insurance: $1000 – $30,000
• Business cards and brochures: $200 – $300
• Website setup: $1,000 – $3,000
• Location security deposit: $0 – $5,000
• Facility remodeling and equipment: $25,000 – $470,000
• Equipment: $15,000 – $200,000
• Labor and Utilities: $500 – $150,000

c. Do You Need to Build a Facility?

Our plan at Prime Care Storage is to start operations from a rented facility in an easy-to-access location in Philadelphia. We also understand that the components of our medicine cold storage facility will be strictly regulated by U.S. Agencies such as the FDA and USDA.

We also concur that these agencies’ regulations will have an influence on rules we put up in our facilities to guarantee safe operation and maintenance. We expect to invest around $273,000 in renting and remodeling our facility, and also in acquiring standard packing industry equipment.

d. What are the Ongoing Expenses for Running a Cold Storage Business?

At PCS, our basic expenses will include;

• Maintenance of our facility and machines
• Cost of mortgage or lease buildings
• Training and certifying employees

e. What is the Average Salary of your Staff?

• Chief Executive Officer: $72,800
• Facility Manager: $59,000
• Admin and HR Manager: $48,970
• Marketing and Sales Executive: $52,340
• Accountant: $50,720
• Front Desk Officer: $43,210
• Refrigerated Truck Drivers: $40,220
• Security Guards: $34,180

f. How Do You Get Funding to Start a Cold Storage Business

• Funds from personal savings and sale of personal stocks and properties
• Funds from investors and business partners
• Sell shares to investors
• Seeking business loans from banks
• Business grants and seed funding from the government, donor organizations, and angel investors
• Obtain soft loans from family members and friends.

Financial Projection

A. how much should you charge for your service.

In this line of business, what you charge will most often depend on the size of the storage unit, the type of product stored in the storage unit, and the cost of storing the item per day. However, always ensure that what you charge replicates the time and resources you put into storing the product.

b. Sales Forecast

• First Fiscal Year (FY1): $400,000
• Second Fiscal Year (FY2): $920,000
• Third Fiscal Year (FY3): $1.4 million

c. Estimated Profit You Will Make a Year?

At PCS, we expect to make;

• First Fiscal Year (FY1): $180,000 (45% of revenue generated)
• Second Fiscal Year (FY2): $368,000 (40% of revenue generated)
• Third Fiscal Year (FY3): $770,000 (55% of revenue generated)

d. Profit Margin of a Cold Storage Business 

According to reports, a storage facility generates a typical profit margin of 41%.

Growth Plan

A. how do you intend to grow and expand .

Just as it was noted above, our business plan at Prime Care Storage is to startup our first pharmaceutical cold storage facility in Philadelphia, Pennsylvania, before going on to open more company-owned facilities in other strategic locations across the country.

b. Where do you intend to expand to and why?

Being a business that targets healthcare facilities, we will always expand to cities we believe have the most hospitals, medical centers, clinics, physicians, and surgeons per capita. Truth be told, all cities are not created equal, so we intend to expand to these US cities;

• Honolulu, Hawaii
• Baltimore, MD
• Pittsburgh, Pennsylvania
• Louis, Missouri
• Plano, Texas
• Lexington, Kentucky
• Orlando, Florida
• San Jose, California

At PCS, our exit plan will involve handing the business down to the children of our founding members. We strongly believe that this business exit plan is suitable for us as it wouldn’t need extensive interference or involvement of external parties and it is also one of the easiest and most direct options when done right.

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How To Start a Cold Storage Business – Complete Guide

Do you want to start a cold storage business? Find here a detailed cold storage business plan sample checklist for your ready reference including cost, investment, machinery, profitability, and subsidy information.

If you are looking for a one-time investment business, then starting cold storage is just perfect for you. Generally, in this business, the initial investment is higher compared to other small businesses. However, this type of business ensures a constant return on a long-term basis.

Cold storage is a profitable business both in developing and developed countries. You will find two different types of cold storage according to the storage facility. One is specific for one product (for example potato) and another is multipurpose. However, multi-purpose cold storage ensures better returns and profitability overall.

Table of Contents

What is a Cold Storage Business?

A cold storage business is a specialized enterprise dedicated to providing temperature-controlled storage facilities for a variety of perishable goods. The primary objective is to create an environment that preserves the freshness and quality of items that are sensitive to temperature, such as fruits, vegetables, dairy products, pharmaceuticals, and more.

Key Components of a Cold Storage Business

A) temperature-controlled warehousing.

The cornerstone of a cold storage business is the provision of warehouses equipped with advanced temperature control systems. These facilities are meticulously designed to maintain specific temperature ranges suited to the requirements of different products.

b) Logistics and Distribution

Cold storage businesses often integrate logistics and distribution services. This involves the efficient transportation of temperature-sensitive goods from producers to the storage facility and, subsequently, to various points in the supply chain.

c) Monitoring and Security Systems

State-of-the-art monitoring systems are essential to ensure that the designated temperatures are consistently maintained. Security measures, including surveillance and access controls, are implemented to safeguard the stored goods.

d) Customized Storage Solutions

The flexibility to cater to diverse products is a hallmark of a successful cold storage business. This includes offering customizable storage solutions to accommodate the unique requirements of different industries.

e) Technology Integration

Embracing technological advancements is crucial. Cold storage businesses leverage cutting-edge technologies such as IoT (Internet of Things) for real-time monitoring, automated systems for inventory management, and energy-efficient solutions to reduce operational costs.

f) Compliance with Regulations

Adherence to local and international regulations governing the storage and transportation of temperature-sensitive goods is paramount. This involves maintaining stringent quality control measures to meet industry standards.

g) Collaboration with Stakeholders

Collaborative partnerships with producers, distributors, and retailers form the backbone of a cold storage business. Establishing a robust network ensures a seamless flow of goods through the supply chain.

h) Energy Efficiency Measures

Given the energy-intensive nature of maintaining low temperatures, cold storage businesses implement energy-efficient practices. This includes utilizing eco-friendly refrigeration systems and exploring sustainable energy sources.

i) Risk Management Strategies

Due to the nature of the goods being stored, effective risk management strategies are imperative. This involves having contingency plans for power outages, equipment failures, and other potential disruptions.

Is Cold Storage a Profitable Business in India?

As per this report , in 2022, the size of the cold chain industry in India was around 16 million U.S. dollars, and it is forecast to reach 36 million dollars in 2027. In 2021, pharmaceutical products took up more than two-thirds of the cold chain storage in India.

The Indian government provides various incentives and subsidies to promote cold storage infrastructure. Profitability Impact: Entrepreneurs can leverage these benefits to enhance their financial viability, making it an attractive proposition.

The frozen food market in India is witnessing a surge, expected to reach USD 1.3 billion by 2024. Besides, cold storages have an important role in reducing the wastage of perishable commodities. In addition, it helps in providing remunerative prices to the growers and to make available farm products to the consumers at competitive and affordable prices. Additionally, changing lifestyles and demand for processed or packaged food are creating the need for cold storage solutions globally.

India is a significant exporter of agricultural produce, with a focus on improving cold chain logistics. Cold storage facilitates the export of quality agricultural products, tapping into global markets and driving revenue.

Benefits of a Cold Storage

Cold storage facilities have become the backbone of various industries, offering a myriad of benefits that span from preserving freshness to enhancing global trade. Let’s delve into the key advantages that make cold storage an invaluable asset:

⇒ Preservation of Freshness

Cold storage maintains low temperatures, slowing down the natural decay of perishable items. This ensures that fruits, vegetables, dairy products, and other sensitive goods retain their freshness for an extended period.

⇒ Prevention of Spoilage

By controlling temperature and humidity, cold storage inhibits the growth of microorganisms that lead to spoilage. This prevention is instrumental in reducing food wastage and ensuring that products reach consumers in optimal condition.

⇒ Extended Shelf Life

The controlled environment provided by cold storage significantly extends the shelf life of products. This is particularly critical for items with a short natural lifespan, allowing businesses to manage inventory effectively.

⇒ Market Accessibility

Cold storage facilities enable producers to store surplus goods during peak seasons and release them strategically to meet market demands throughout the year. This flexibility is essential for sustaining a consistent supply chain.

⇒ Supply Chain Efficiency

Cold storage is a linchpin in the supply chain, especially in agriculture and food processing. It facilitates the storage of bulk produce, ensuring a steady and reliable flow of goods from producers to distributors and, ultimately, to consumers.

⇒ Global Trade Facilitation

In the realm of international trade, cold storage is indispensable. It allows for the transportation and storage of goods that require specific temperature conditions, fostering the seamless movement of products across borders.

⇒ Quality Retention

Sensitive products like pharmaceuticals, chemicals, and vaccines require precise temperature control to maintain their efficacy. Cold storage ensures that these items retain their quality, contributing to public health and safety.

⇒ Diversification of Products

Cold storage empowers businesses to diversify their product offerings. Whether it’s a variety of dairy products or an array of flowers, the ability to store different goods in optimal conditions enhances market competitiveness.

⇒ Reduced Post-Harvest Losses

Agricultural economies benefit significantly from cold storage as it mitigates post-harvest losses. Surplus produce can be stored temporarily, preventing it from perishing before it reaches the market.

⇒ Adaptation to Climate Variability

Cold storage acts as a buffer against unpredictable weather conditions, allowing farmers and distributors to adapt to climate variations. This adaptability is crucial for maintaining a stable supply chain.

12 Steps to Start a Cold Storage Business

1. market research.

Before diving in, conduct thorough market research . Identify the demand for cold storage services in your target location and assess the competition.

2. Create A Business Plan

Starting a cold storage business demands strategic planning and careful implementation. Therefore, crafting a business plan or project report is the most important aspect of starting this business. According to your investment capacity, you will need to decide the business size.

Additionally, you must have financial planning with a projected ROI and payback period. A business plan helps you in numerous ways. It helps in commencing the business properly, getting finance, and ensuring smooth operations.

3. Obtain The Permissions & Licenses

Understand and comply with the legal and regulatory requirements for establishing and operating a cold storage facility. It depends on the specific location where you are starting the business. You need to obtain the necessary licenses and permits from local authorities.

4. Secure A Location

Location plays an important role in this business. Choose a strategic location that is easily accessible and has good connectivity. Proximity to agricultural regions and major transportation routes is advantageous. Additionally, you will need to procure approximately one acre of land for a multi-purpose/multi-commodity cold storage plant of 5000 MT capacity.

5. Cost of Starting a Cold Storage Business

The initial investment is very high in this business. Generally, the investment includes acquiring the land, building construction, obtaining permissions and licensing, and arranging utilities like water, electricity, etc. Additionally, you will need to invest a major startup capital in procuring the cooling machinery. Generally, modern and updated machinery ensures better performance and long-term sustainability.

Apart from the above-mentioned fixed costs, you will need to consider the working capital expenses also. The major considerations are staffing, utility bill payment, and promotional expenses.

The cost and investment will largely depend on the scale of the cold storage unit. However, according to experts, the estimated project cost for setting up 5000 MT Cold Storage may be in the range of Rs. 3 Crore – 4 Crores in Indian Rupees. The cost of land is an additional investment you need to make.

6. Arrange Finance

Cold storage is a capital-intensive business. You must have an investment capacity of 3 to 4 Corers for commencing this business. Generally, you can set up this business with financial help from banks . In addition, check if there are any subsidies or Govt. grants available for this business.

7. Cold Storage Business Subsidy

In India, the National Horticulture Board provides subsidies for cold storage businesses for entrepreneurs. You will need to apply online. There you will need to fill up an online IPA (In-Principle Approval) application Form. Before applying, carefully read and understand the Operational Guidelines of the relevant scheme.

8. Setting Up Your Cold Storage Facility

• Infrastructure: Invest in quality infrastructure with modern refrigeration systems. Ensure that your facility is equipped to handle a variety of products with different temperature requirements.
• Storage Capacity: Determine the scale of your cold storage facility based on market demand. Adequate storage capacity allows you to cater to a larger client base.
• Safety Measures: Implement stringent safety measures to protect stored goods and maintain optimal storage conditions. This includes fire safety systems, security measures, and backup power sources.

Also Read: Best Agriculture Business Ideas with Low Investment

9. Procuring Equipment and Technology

• Refrigeration Units: Invest in energy-efficient refrigeration units that can maintain varied temperature ranges for different products. Regular maintenance is crucial to prevent breakdowns.
• Warehouse Management System (WMS): Implement a robust WMS to track inventory, manage stock rotation, and monitor temperature controls. A well-integrated system enhances operational efficiency.
• Cold Storage Software: Utilize specialized software for cold storage management. This software helps in monitoring temperatures, managing orders, and ensuring compliance with industry standards.
• Inventory Management: Implement a systematic inventory management system to track product movement, expiry dates, and stock levels. This helps in preventing wastage and ensures timely deliveries.
• Quality Control: Establish stringent quality control measures to maintain the integrity of stored products. Regular inspections and adherence to hygiene standards are essential.

10. Fix Pricing

Establish competitive yet profitable pricing for your cold storage services. Consider factors like storage duration, volume, and additional services offered.

11. Staffing

Hire skilled personnel with experience in cold storage operations. Provide training on safety protocols, equipment handling, and hygiene practices.

12. Promote Your Cold Storage Business

Build strong relationships with local farmers, food manufacturers, and distributors. Networking is crucial for securing contracts and establishing your presence in the market. Create a professional website highlighting your services, facilities, and contact information. Utilize digital marketing strategies to reach potential clients.

Explore partnerships with businesses in the supply chain, such as logistics providers and wholesalers. Collaborative efforts can lead to mutually beneficial relationships.

Frequently Asked Questions

What is the primary purpose of a cold storage business in india.

Cold storage businesses play a crucial role in preserving perishable goods, particularly agricultural produce, by maintaining low temperatures. This helps extend the shelf life of products and minimizes post-harvest losses.

How can one secure funding for initiating a cold storage venture?

Entrepreneurs can explore various avenues for funding, including bank loans, government subsidies, and private investments. Government schemes specifically designed for cold storage infrastructure can provide valuable financial assistance.

Are there specific regulatory requirements for establishing a cold storage unit?

Yes, there are regulatory standards and guidelines set by authorities such as the Food Safety and Standards Authority of India ( FSSAI ) and the Ministry of Food Processing Industries. Compliance with these standards is essential for obtaining necessary licenses.

What are the critical considerations for choosing a suitable location for a cold storage facility?

Proximity to agricultural hubs, transportation networks, and markets is crucial. Additionally, accessibility to a stable power supply, water availability, and compliance with environmental regulations are important factors to assess.

How can technology be integrated for operational efficiency in a cold storage business?

Implementing technologies such as temperature monitoring systems, RFID tracking, and automated inventory management can enhance operational efficiency. These technologies not only ensure precise control over storage conditions but also streamline logistical processes.

Are there specific types of products that can be stored in a cold storage unit?

Cold storage facilities cater to a diverse range of products, including fruits, vegetables, dairy products, pharmaceuticals, and more. The versatility of cold storage allows for the preservation of various perishable items.

What are the key challenges faced by entrepreneurs in the cold storage business?

Challenges may include high initial investment costs, operational energy expenses, and the need for stringent quality control. Entrepreneurs should carefully address these challenges to ensure the long-term sustainability of their cold storage venture.

How can one stay updated on advancements in cold storage technologies?

Keeping abreast of industry publications, participating in relevant conferences, and engaging with industry associations can help entrepreneurs stay informed about the latest technologies and best practices in cold storage.

Is there government support available for cold storage businesses in India?

Yes, the Indian government offers various incentives, subsidies, and schemes to encourage the development of cold storage infrastructure. Entrepreneurs can explore these opportunities to reduce financial burdens.

What is the expected return on investment (ROI) for a cold storage business?

The ROI for a cold storage business can vary based on factors such as scale, location, and operational efficiency. Conducting a detailed feasibility study and financial analysis is essential for projecting realistic ROI expectations.

Next What Business Research Team

The Editorial Staff at NextWhatBusiness is a team of Business Consultants having years of experience in small and medium-scale businesses.

Cold Storage Business Plan: Requirements, Profits & Subsidy

• July 23, 2023
• Articles , Business Loan , Working Capital Loan

Effective cold storage is crucial in meeting the significant demand for preserving vegetables and other food products in the country. Poor storage practices have resulted in significant wastage of fresh produce. Investing in cold storage solutions not only helps to reduce waste but also presents a lucrative opportunity to maintain the freshness and quality of vegetables, thereby enhancing profitability.

The cold storage business is a profitable venture where the initial investment is on the higher side. The return is also higher and long-lasting than in other businesses. 

Cold storage facilities can be specified into two categories. Food products that need freezing storage like fruits and vegetables, poultry and seafood products, meat products, and other packaged food, including cigarettes and beer.

Why is a cold storage unit required?

Food waste is a global issue, with fruits and vegetables being a major contributor. In countries with high production rates, food wastage is even more prevalent. In such countries, cold storage is essential to extend the shelf life of processed or packaged foods, maintain quality during post-harvest processing, and provide fresh fruits year-round. By minimizing perishable waste and preserving produce, cold storage plays a crucial role in enhancing profitability while simultaneously addressing food waste.

Scope for the Cold Storage Business industry in India

As the demand for processed foods increases and dietary habits evolve, the need for cold storage facilities is also growing rapidly. This demand has been further intensified by the significant investments and growth in the e-commerce sector, which requires efficient storage and delivery of perishable goods. Fortunately, advancements in modern technology, such as automatic temperature control systems and energy-efficient equipment, have resulted in improved efficiency and reduced operational expenses.

With its potential to prevent food waste and ensure food security, the cold storage sector has become a critical component in boosting India’s economy. By embracing this sector, India can unlock new opportunities for economic growth and development.

Suggested Read : Best 25+ Loan Apps for Low Credit Score

Investment cost of cold storage

The initial cold storage business investment is comparatively higher than the other businesses whether we are talking about vegetable cold storage project cost or in general. The investment is generally in acquiring the land, construction of cold storage facilities and permits for the required utilities, including electricity, water etc. You must spend significant sums on buying a cooling machine. Modernised cooling machinery ensures longer-term stability and higher quality. Apart from fixed costs, investment costs include some expenses like operating costs.

Guidelines on Cold Storage Business in India

In India, a cold storage company requires a detailed plan of operation before it starts. This business plan should contain every detail concerning cold storage, products and services that will be used, along with employee information such as your name and address. The locations of cold storage units are very important in operation. Storage facilities are recommended close to retail outlets and producers’ farms.

How to Start Your Own Cold Storage Business in India?

If you are working on a cold storage business plan, you must develop a comprehensive business strategy. The business plan should detail all relevant information on the products and services used for cold storage plants and the staff, such as your full name and address.

Basic criteria for an ideal cold storage plant:

Important guidelines/points for cold storage business plan:.

• Property that needs to be used as a cold storage facility must be turned into non-agricultural land.
• You can not construct the facility unless you have a letter of consent from the local government.
• Labour is only permitted for 12 hours per day in cold storage facilities.
• A road must link the region, and there has to be enough drainage.
• There should be a site elevation.
• Testing is necessary to determine the soil’s ability and its load-bearing strength.
• As a precaution, the pressure and vacuum of the refrigeration system must be tested.
• Cold storage facilities must be equipped with alarms and fire extinguishers, among other things.
• A water-softening plant must be built if soft water is not available.
• You must also have insurance for the cold storage facility.

Eligibility Criteria for Cold Storage Business Loan

The following conditions must be met to qualify for this loan:

• Banks investigate the track record of the promoters of such firms, which might include: an individual, a group of individuals, a cooperative, a business, a private concern, and a partnership.
• If the building is already in use, it needs to be operational and the cold storage business profit should be there for the previous three years. The rules have to be adhered to when keeping the accounting.
• The bank must get the feasibility report for evaluation for all new projects making sure you can manage the total investment.

Steps to Apply for a Commercial Loan for Cold Storage Business

How to crack a loan deal from renowned lenders in India to meet urgent financial requirements? Follow three easy steps:

Step 1: First you need to submit a project report, and then the bank representative will discuss that report with you, to better understand your business plan.

Step 2: Now provide all the details such as names, mobile numbers, residential and email addresses, annual revenue and profits, and any other pertinent data related to your business. After the necessary document submission and scrutiny, your loan application will be processed. 

Step 3: Once approved, the bank may confidently accept this loan. The bank will deposit the amount into your specified bank account after approval of your repayment capability.

Top Banks Offering Loans for Cold Storage Business

Business loans are offered by these top financial institutions to help you meet your urgent credit requirements.

Loans and subsidies for cold storage business in India

Establishing a cold storage business requires a significant capital investment. Typically, an initial investment of approximately 3 to 4 crores is necessary. While the investment required is substantial, it is possible to secure financing from a bank to fund the development of a cold storage business. 

The National Horticulture Board of India finances cold storage chains for entrepreneurs. Building specialised cold storage with a capacity of 2,000 tons will require around 2 crores and have an amortisation period of six to seven years.

Types of Cold storages machinery

Cold storage equipment can be purchased in industrial coolrooms, combi refrigerators, and modular room refrigerators.

How to build a cold storage facility?

Following is the procedure for Starting a Cold Store Business

1. Finalizing Location 

The location of the cold storage facility should be near agricultural or consumer centres covering various market segments. For instance, A cold storage facility with a 5000 metric tonnes capacity requires an acre of land for a multi-commodity or multi-storage unit. 

2. Selection of the Right Equipment

In the summer, when it is hot, equipment must be carefully picked to manage heavy loads and power disruptions. Numerous factors must be considered when choosing the equipment used for cold storage. These factors include the age of the equipment, fan, light, and product load, in addition to the ceiling, wall, and floor.

3. Maintenance

Cold storage facility cleaning and maintenance are equally important. It is important to often check the cooling machine, including the temperature, humidity, and preserved items. Trays, containers, and storage bins must be serviced and cleaned promptly.

4. Promotion of product and target Audience

A cold storage company’s performance depends on its ability to execute advertising and promotional campaigns and use effective marketing strategies. In the early and later stages, an entrepreneur should concentrate on all market segments, including traders, promoters, wholesalers, marketers, warehouse companies, retail markets, and supermarkets in urban and rural areas. 

5. Arranging Funds

Raising finance is one of the most onerous challenges since the cold storage sector requires a pretty sizable investment and avoids cash crunch situations. Because one may face urgent financial requirements or to pay for other expenditures, savings are not a practical source of finance for the entire investment in the cold storage firm.

How much capital do you need to invest in the cold storage business?

The cost to set up cold storage space requires a minimum investment of 30-40 lakh. The better the technology, the higher you make the best cold storage available! Always set your financial budget and know all the facts before investing in cold storage businesses.

The investment costs include acquisitions for land, construction permits and licensing of utilities like water and electricity. Additionally, you’d need a large investment to buy cooling machines and erect proper infrastructure. 

Generally, modern machines guarantee better performance and long-term durability. With these fixed charges, you will also have to consider working capital expenses. Overall consideration for staff, utility billing fees, and promotional expenses exists.

OneNDF is committed to providing you with the best debt financing options in terms of a Term Loan or any working capital facility and all sorts of business-related information.

Cold Storage Business Plan FAQs

Is cold storage a profitable business.

Yes, Cold storage is a profitable industry. The Indian government annually introduces additional subsidies and policies for its promotion.

Is cold storage a good investment?

Cold storage means storing vegetables and fruits for longer durations without spoiling. While this company’s initial investment is significantly higher than other businesses, the return on investments is also higher for longer tenures.

How much money is required to establish a cold storage unit?

Cold storage businesses are capital-intensive operations. The minimum initial investment required is around 30 to 40 lakh.

What will be the investment for 1000 mt of cold storage?

For your company to get 1,000 tonnes, the cold storage cost is a little under 2,75,00,000 INR.

How much land is required for 5000 mt cold storage?

5000 MT godowns = 3 Compartments. Space between compartments: 135′-9″x70′ = 9502.20 sq. ft. The total area is 879.85 sq2 (41.23 m x 21.34 m).

How much land is required for 3000 mt cold storage?

A 3000 mt cold storage will require 2 acres of land.

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Start Your Cold Storage Business in Minutes

How Much Does it Cost to Start a Cold Storage Business

In this article, we will delve into the world of cold storage and explore the various business and startup costs associated with this industry.

Get worry-free services and support to launch your business starting at $0 plus state fees.

Table of Contents: (Page Navigation)

Detailed startup costs for a cold storage business:.

Initiating a cold storage business can involve substantial financial commitment, the scale of which is significantly influenced by factors such as geographical location, market dynamics, and operational expenses, among others. Nonetheless, our extensive research and hands-on experience have revealed an estimated starting cost of approximately $885000 for launching such an business. Please note, not all of these costs may be necessary to start up your cold storage business.

Please note that the startup costs provided in this article are estimates and may vary depending on various factors such as location, size of the business, and equipment choices. It is important to conduct thorough research and consult with professionals before making any financial decisions. The author and publisher of this article are not responsible for any financial losses or damages incurred as a result of following the information provided.

Factors Contributing to Cold Storage Startup Costs:

Starting a cold storage business can be a lucrative venture, but it requires a significant amount of capital. Several factors contribute to the startup costs of a cold storage business:

• Facility costs: The largest expense for a cold storage business is the facility. The cost of purchasing or leasing a building, renovating it to meet industry standards, and installing the necessary equipment can be significant.
• Equipment costs: Cold storage facilities require specialized equipment such as refrigeration units, shelving, and pallet jacks. The cost of purchasing or leasing this equipment can add up quickly.
• Inventory costs: To start a cold storage business, you need to have inventory to store. Purchasing inventory can be costly, especially if you are starting with a large quantity of goods.
• Utilities: Cold storage facilities require a significant amount of energy to maintain the appropriate temperature. The cost of utilities can be high, especially in areas with high electricity rates.
• Permits and licenses: Cold storage businesses require permits and licenses to operate. These costs can vary depending on the location and type of business.
• Insurance: Insurance is necessary to protect your business from liability and property damage. The cost of insurance can vary depending on the size and scope of your business.

Seven Methods to Reduce Your Cold Storage Startup Costs:

Cold storage startups are becoming increasingly popular due to the growing demand for temperature-controlled storage solutions. However, starting a cold storage business can be expensive, especially when it comes to purchasing equipment and building facilities. Fortunately, there are several ways to reduce your cold storage startup costs without compromising on quality. Here are seven methods to consider:

• Lease or rent equipment instead of buying
• Utilize existing facilities instead of building new ones
• Partner with other businesses to share costs
• Optimize your storage space to maximize efficiency
• Invest in energy-efficient equipment to reduce utility costs
• Consider alternative financing options such as grants or loans
• Outsource non-core functions such as marketing or accounting

How to Improve Your Cold Storage Profit Margins?

As a cold storage business owner, it's important to constantly look for ways to improve your profit margins. With increasing competition and rising costs, it's crucial to implement strategies that can help you increase revenue and reduce expenses. Here are some tips to help you improve your cold storage profit margins:

• Optimize your inventory management: Efficient inventory management can help you reduce waste and improve your bottom line. Make sure you have a system in place that allows you to track your inventory levels and monitor your stock rotation.
• Invest in energy-efficient equipment: Energy costs can be a significant expense for cold storage businesses. Investing in energy-efficient equipment can help you reduce your energy bills and improve your profit margins.
• Offer value-added services: Consider offering value-added services such as packaging, labeling, and transportation to your customers. These services can help you increase your revenue and differentiate yourself from your competitors.
• Implement cost-saving measures: Look for ways to reduce your operating costs without compromising on quality. For example, you can negotiate better deals with your suppliers, streamline your processes, and reduce your labor costs.
• Focus on customer retention: It's more cost-effective to retain existing customers than to acquire new ones. Make sure you're providing excellent customer service and building strong relationships with your customers.

By implementing these strategies, you can improve your cold storage profit margins and ensure the long-term success of your business.

More Cold Storage Business Resources:

• How to Start a Profitable Cold Storage Business [11 Steps]

I'm Nick, co-founder of newfoundr.com, dedicated to helping aspiring entrepreneurs succeed. As a small business owner with over five years of experience, I have garnered valuable knowledge and insights across a diverse range of industries. My passion for entrepreneurship drives me to share my expertise with aspiring entrepreneurs, empowering them to turn their business dreams into reality.

Through meticulous research and firsthand experience, I uncover the essential steps, software, tools, and costs associated with launching and maintaining a successful business. By demystifying the complexities of entrepreneurship, I provide the guidance and support needed for others to embark on their journey with confidence.

From assessing market viability and formulating business plans to selecting the right technology and navigating the financial landscape, I am dedicated to helping fellow entrepreneurs overcome challenges and unlock their full potential. As a steadfast advocate for small business success, my mission is to pave the way for a new generation of innovative and driven entrepreneurs who are ready to make their mark on the world.

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Get this complete sample business plan as a free text document.

Self-Storage Business Plan

Start your own self-storage business plan

Westbury Storage, Inc.

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

This storage business plan describes a proposed self-storage facility to be established in Westbury, New York involving the conversion of an existing building. Total project costs are estimated at $1,054,487 including purchase price, conversion costs, and pre-opening expenses (see section on Start-up Summary). Based on current and projected strong demand for self-storage units, rental revenue is projected to grow rapidly as units fill up from the first year’s target of $320,000 to $684,000 by year three.

After achieving experience and success in their present self-storage facility in Plainview, New York the principals of this proposed project plan to take advantage of the strong demand in the self-storage industry to achieve a major presence in Westbury. The ownership connection with Stote Moving will assist in gaining full occupancy quickly. Goals have been set to rent 50% of the proposed 300 unit spaces within the first six months of Year 1. An additional 25% will be rented in the second half of Year 1, with the remainder to be filled in Year 2.

The mission of the principals is to serve the Long Island community’s local residential and commercial storage and moving needs.

Keys to Success

The keys to success in the self-storage business are:

• To be able to adapt as storage and market needs change.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

Westbury Storage is a start-up project to be located in Westbury. The owners are experienced in the moving and storage field, owning a well-established moving company (Stote Movers) and a successful self-storage facility in nearby Plainview (Plainview Storage). The building to be purchased for this project is a large brick building originally constructed as a bleachers around 1910. This building as well as surrounding buildings, were connected with the now dying leather industry which flourished a few decades ago. A large building of similar size located next door and connected by a walk bridge has already been converted successfully and is operating well. The Westbury Storage building contains three floors of heavy-duty wood and steel beam construction ideally suited to the planned purpose of self-storage units. The building is heated by oil. One of the two elevator shafts will be the home for a new over-sized passenger elevator suitable for transporting storage contents from the ground level to the units on the second and third floors. A large separate parking lot area comes with the building but will not be needed for this project. This lot could be sold or could be the site of additional future storage units to be set up using one of several one-story steel storage systems.

It is estimated that, with purchase of the building taking place in June of this year, the conversion into storage units could be completed and ready for occupancy by the end of the year. Demand for the units is strong, as evidenced by the market survey of existing self-storage facilities. Bank financing for 70% of the project costs is expected with the remainder supplied by shareholder equity.

Company Ownership

The company will be incorporated as an S Corporation, and will be owned by three individuals: Roger Black, Sebastian Stote and Daley Thompson. Each will own 1/3 of the stock. Roger Black and Sebastian Stote are 50-50 owners of Plainview Storage which is a 110 unit self-storage facility converted in 1993 from a former piano factory. All units are fully rented. Sebastian Stote is owner of Stote Movers, which is a family business providing residential and commercial moving since 1917. In addition to being the source of many of the rentals at Plainview Storage, Stote Movers has 52 filled 45-foot trailers located in Roslyn-by-the-Sea. These trailers contain customers’ stored goods pending delivery at a new location.

Company Locations and Facilities

Westbury Storage will be located in Westbury, in a central location about 1/2 mile from the monument in the center of Westbury. The owners’ present self-storage facilities are located at in Plainview with further storage capacity in 52 trailers in Roslyn.

Start-up Summary

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 last tax year. 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.

• 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.

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Competitive Comparison

All self-storage facilities that could be found in Westbury or the area bordering Westbury were surveyed with the following results:

Prices average at $1.20 per sq. ft. per month. Mean price is closer to $1.40.

Market Analysis Summary how to do a market analysis for your business plan.">

In a similar split experienced by management’s existing storage facilities, Westbury Storage is expecting to rent 70% of its available units to non-commercial renters and the remaining 30% to the commercial sector of the market. A total of 300 self-storage units of various sizes will be created and offered for rent by Westbury Storage in a central location in downtown Westbury. The present supply of these units is insufficient to meet the demand as evidenced by a survey of all self-storage facilities within easy reach of Westbury residents. The price realized by these existing units is more than double the national average.

Market Segmentation

Self-storage units are needed by residential customers for storage of personal items as well as by commercial customers for storage of stock. It is envisaged that 70% of the planned self-storage units will be taken up by the residential segment of the market and the remaining 30% will be directed toward the commercial segment. This split is expected based on the existing customers of management’s present self-storage facilities in Plainview. The commercial segment are small businesses, many of which are run out of people’s homes such as an interior designer who needs space to store hundreds of expensive sample fabric books, or a retail shop with inadequate on premises storage.

The market research shows that the annual market potential for the commercial self-storage service in the Westbury area is about 10,000 customers. As stated above, these are mostly small businesses. The residential segment potential is substantially higher at 150,000 customers per year and is based on the Self Storage Association’s assumption that 40% to 55% of population has used self-storage facilities.  This estimate includes individuals who need storage facilities due to moving arrangements or to store excess household property. Both of the market segments are expected to grow at a 5% annual rate. The table and chart below outline the market potential for the both customer segments.

Target Market Segment Strategy

Since the demand for local self-storage services substantially exceeds the local supply, Westbury Storage will simultaneously market its services to the two major customer segments–residential customers and small business customers. The company will not pursue large business segment due to the limited service scope it can provide to such customers at the existing facilities.

The market analysis shows that local self-storage rates are substantially higher than the national averages. Westbury Storage will position itself to the both customer segments as a conveniently located and affordable quality self-storage facility. Both customer segments will be effectively reached via the local Yellow Pages ads and through the referrals of Stote Movers owned by one of the Westbury Storage’s co-owners.

Market Needs

Customer needs in the self-storage industry have certain similarity across different market segments. The underlying need is for a reliable, safe, dry and accessible self-storage facility. Due to the overwhelming demand, customers are less price sensitive and consider convenient location as the major buying decision criterion.

Residential customers use self-storage facilities to temporarily store their property while moving to a new location. This need originates in the mobility of the American population and the affordability of rental accommodations. Such customers usually rent 25 to 100 square feet depending on the size of their household and they rent on a weekly or monthly basis. The other cluster of residential customers rents self-storage facilities for longer periods to keep their oversize property like boats or other equipment that either does not fit in their garages or is not used on a constant basis.

Small business customer segment requires self-storage facilities to temporarily store their stock or merchandise. These customers may use the storage facilities more often than residential customers and they benefit from convenient loading areas, extended operating hours and better equiped storage units of bigger size.

Service Business Analysis

According to an article in the November 15th issue of Inside Self-storage the national industry average rental income generated by self-storage units is $6.00 per square foot per year, or $.50/sq. ft. per month. In the market to be served by Westbury Storage the average storage rate (see section on Competitive Comparison) is more than double this amount. Washington Storage in Westbury is a typical example. They charge $50/month for an 8X6 ft unit which works out to $12.50 per sq. ft. per year. A 9X9 unit on the second floor also rents for this same amount only because there is no elevator. All of their units are fully rented! All units within the area were surveyed. The average rate is $1.20/sq. ft. per month ($14.40 per year) and the mean was closer to $1.40/sq. ft. per month ($16.80 per year). The story concerning availability was uniform. Either the facility was full or only had one or two available units to chose from. E-Z Mini Storage in S. Centreport said, “There’s some turn-over at the end of every month. Leave your name and we will call you when one becomes vacant.” Extra Space Storage in Springfield said, “We need one week advanced notice.” North Shore Self-Storage said, “We have nothing available on the ground floor.” U-Haul reported, “We have one small unit available, otherwise we are all full.”

The self-storage industry really only started in the late 1960’s when a few far-sighted people recognized the growing need for residential and commercial storage. The industry has doubled in size each decade. Returns on investment have been very impressive–often twice that of other forms of real estate investment. The reasons for this have been the mobile society, the tendency to live in rental apartments, and the general increase in the accumulation of property, especially leisure articles such as skis, wind-surfers, exercise equipment, etc.

It could be argued that the higher than national average rates enjoyed by local self-storage facilities may not continue indefinitely, but there is no indication of any downward pressure at this time. It should also be pointed out that during an economic down-turn the self-storage industry does not suffer to the extent that other industries suffer.

Should the supply of self-storage units begin to outstrip demand, Westbury Storage should be well positioned to deal with the competition due to its ability to offer heated units (nearly all competing units are unheated) and its ability to supply electric outlets to individual units (for hobby/workshop purposes).

Business Participants

Although there are a few nation-wide players in the self-storage market, the industry is still fairly dispersed in which many small companies take part. (See the section on Competitive Analysis for a complete listing.)

Competition and Buying Patterns

Convenience is probably the single most import factor in the decision of where to rent a self-storage unit. For example, Hicksville and Huntington have no self-storage facilities. Residents choose to rent one in a nearby town probably based on proximity to the route taken by the renter to and from work. If no units are available nearby, then renters will travel further afield. Units on the ground floor are favored, especially if no elevator is available.

Main Competitors

See the section on Competitive Comparison for names of competitors. In the present market situation, competition plays a very weak role.

Strategy and Implementation Summary

The sales and marketing strategy is fairly simple by virtue of the fact that self-storage facilities are in short supply. Westbury Storage will simply have to inform the public of its existence by advertising in local newspapers, and by placing Yellow Pages ads.

Competitive Edge

Although the current local demand exceeds the supply and Westbury Storage will have no problems fully utilizing its capacity, the market situation may change in the future. The company will fully utilize its management’s seasoned experience in the storage business in order to establish a strong foothold in the local community. This will be reached by providing excellent service and offering extra service features like the heated and well-lit rental units, which will supplement the great location of the storage facility.

Sales Strategy

Most inquiries will come through the Yellow Pages ads. Proper telephone manners and professional handling of on-site inquiries are essential. Even though there is an excess of demand over supply, an unfriendly manager or clumsiness over the telephone will cause needless lost sales.

As is the case with the owners’ present self-storage facility in Plainview, many sales are directed through Stote Movers, who are in constant contact with people on the move and, therefore are most likely to require temporary storage.

Sales Forecast

Due to the fact that demand has been outstripping supply in this market, Westbury Storage may well be able to rent out all of its new units within the first year of operation. Prices paid for self-storage units reflect this strong market demand. The ground floor units will rent at $1.40 per sq. ft. per month and the upper floors, served by an over-sized elevator will rent for $1.20/sq. ft. per month. It is assumed that half of the units will rent in the first six months of operation. The second half of 1999 will see a further 25% of the total space rented, leaving the final 25% to be reached in the year 2000. Within these time spans, the growth, for projection purposes, will be assumed to be straight line, i.e. the first 50% of the total space will be reached in equal monthly increments during the first six months, and so forth.

The building measures 240 ft. X 80 ft. A section at one end (40′ X 80′ =3,200 sq. ft. per floor) will be reserved for future offices. This leaves total space dedicated to self-storage units of 48,000 sq. ft. (16,000 per floor). Some space is lost when the partitioning is done. Floor plan “D” suggests a way to partition an area 200 ft. X 40 ft. Doubled, this is exactly the space available in the Westbury building after deducting the office area. This 16,000 sq. ft. (200′ X 40′ X 2′) would be reduced somewhat to allow walkway/passages on the sides. So instead of 16,000 sq. ft. of rental space per floor, we would end up with about 15,000 sq. ft. Total self-storage net rentable space would be 45,000 sq. ft. The 15,000 sq. ft. on the ground floor would rent for $21,000 monthly and each of the other floors would rent for $18,000 each on a monthly basis.

Sales for the first month would be $4,750 (50% of total $57,000 divided by 6). The second month would have $9,500 in sales, etc.

Many self-storage companies charge administration fees to first-time customers. Deposits are also not uncommon. In addition to these sources of income, the sale of certain related items such as cardboard boxes, tape, packing materials, storage containers, plastic mattress covers, etc. can be substantial. However, for projection purposes, it is assumed that income from these sources will wash out any credit losses.

Strategic Alliances

An important strategic alliance is the common ownership connection to Stote Movers. By virtue of its contact with people changing addresses, Stote Movers is in a position to direct a lot of storage business to Westbury Storage.

The following table shows the milestones that Westbury Storage has established.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

The management of Westbury Storage will rest with Roger Black and Sebastian Stote, both of whom are successful in the moving and self-storage industries.

Personnel Plan

Operating hours are planned to be 7 a.m. to 7 p.m. Monday through Friday and 9 a.m. to 5 p.m. on Saturdays. Westbury Storage will be closed on Sundays.

The manager will work a normal 40 hour week at an annual salary of $35,000. A maintenance man will be employed at a salary of $24,000. A night watchman will be employed at a salary of $24,000.

Financial Plan investor-ready personnel 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

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

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.

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.

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How to Create a Self-Storage Business Plan [Plus a Free Template!]

By the end of 2020, roughly 4.35 million hopeful individuals had filed new business applications . 

Perhaps the motivation was the loss of jobs or that people were fed up with the traditional 9-5 gig. Whatever the case, entrepreneurship has been a popular theme lately. 

Many new business owners opted to pursue a real estate investment, specifically a self-storage business. For those of you on this path, let’s discuss creating a self-storage business plan and how a few purposeful decisions can catapult your business to the forefront. 

It starts with a solid self-storage business plan.

Developing a business plan

Before you can start creating your business plan, you need to do some market research first. Start by relying on others’ history and experience. Do lots of market research. Network and learn from other marketing strategies. Attend an industry trade show. Diligently learn the ins and outs of running a small business. 

Start to hone in on the details as you begin to formulate your plan. For example, , are you building or renovating your own potential storage space? You’ll need to consider the zoning in your chosen area, and contemplate the land cost and interest rate from a lender or two. In terms of marketing strategies, will construction costs or developmental costs be worth the initial investment? Thinking through these aspects with some “back of the napkin” math early on will help you as you start to formalize your business plan

Self-storage business plan template

Putting the vision for your self-storage business to paper is important. Not only will it help you develop a roadmap for all the things you need to do to make your business dreams a reality, but it will allow you to easily share your vision with others. This is necessary if you want to bring in funding partners or borrow money for a lender.

Download a business plan template and start drafting your own self-storage business plan. Dive deep into a recent market analysis to determine any possible cash flow outcomes. Understand that your first year as a startup might be your most challenging. Read various feasibility studies, and talk to your peers in the industry. 

Your business plan should look at least two years out into the future. Plan for different scenarios in regards to your return on investment projections. Consider your returns under a best case scenario and a worst case scenario, as well as a conservative median projection.

Components of a self-storage business plan

Aside from the initial planning phase, remember to consider the operational logistics it will take to run this business. Fortunately, self-storage business investments are desirable because of the traditionally low operating expenses. 

Make sure your business plan includes these components:

Executive summary

Business description, market research and strategy, management and personnel, financial reporting documents.

An executive summary is a brief overview of your business. Think of it as the first thing you would tell someone about your business in a conversation. For example, an executive summary for a self-storage business might start something like this:

“The purpose of this business is to develop and operate a 100-unit facility on a parcel of land outside of Colorado Springs, Colorado.”

Or, like this:

“This venture seeks to find and acquire value-add self-storage facilities in secondary markets in the Southeast. The business will modernize and update the facilities with the latest technologies to increase their profitability over the next two years.”

An executive summary should go on to summarize and highlight key elements from your business plan, such as total costs and projected revenue.

Everything You Need to Know About How to Start a Self-Storage Business

What kind of business will you be: sole proprietor, LLC, C- or S-corporation?

Here, you can describe the details of how your self-storage business will operate. Beyond your legal status, cover the operational details of your business such as branding, services offered and projected expenses.

Businesses are more tech-enabled than ever before, with easy-to-navigate websites , advanced phone systems, user-friendly apps and online payment services . Of course, these things aren’t always necessary to achieve success; however, having a few tech-powered options will put you ahead of the game. Consider how you will use these technologies sooner, rather than later.

Also consider things like your hiring plans, insurance needs , and maintenance procedures. Include additional revenue sources besides self-storage rents, such as sales of tenant insurance or moving supplies. 

Remember all that market research you did on the self-storage industry? Lay out your most relevant findings and how they support your self-storage business idea in this part of your business plan. Examine the demographics and supply and demand story of your target market. For example, if individuals need RV storage, consider offering that option. Decide how you will make money and attract new renters (i.e., social media , content marketing, etc.).

Like any industry, the self-storage industry has a unique ebb and flow to it. Knowing these trends will help you execute a more successful self-storage project.

This is the who’s who of your self-storage business. Discuss the experience, qualifications and duties of the executive team, as well as additional employees that you have or need to hire to execute your plan.

Is your self-storage business plan financially feasible? Here is where you demonstrate that it is, by laying out details of your financial situation. What are your assets and liabilities? Will you have debt service?

This section should include the projected profit and loss, balance sheet and cash flow for your business for the next two to three years.

Expect the unexpected

Once your business is up and running, you will no doubt encounter challenges and situations that your plan did not anticipate. However, a strong business plan will greatly increase your chances that your business will succeed. If you are looking to do more with your business, Storable offers a host of technology solutions to help your self-storage operation thrive in a competitive environment.

Financing Options for Self-Storage Businesses

Resolve your questions about how to get financing for your self storage business. Keep Reading

Is a Self-Storage Business Profitable?

Is owning a self-storage business profitable? Find out how an investment in a self storage facility can turn into a lucrative business for you. Keep Reading

How to Buy a Self-Storage Facility

Thinking about buying a self-storage facility? Here is what you need to know before starting your search. Keep Reading

Intelligent Investment

Cold Storage Demand Grows Amid Tailwinds

Investors still hungry for temperature-controlled industrial assets.

June 27, 2022 10 Minute Read

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Key takeaways.

• An expected rise in e-commerce's share of total U.S. grocery sales to 21.5% by 2025 from 13% in 2021 will drive demand for cold storage, particularly within the grocery distribution segment.
• As of Q2 2022, there was 3.3 million sq. ft. of speculative cold storage development underway in the U.S., up from only 300,000 sq. ft. in 2019.
• Despite the uptick in speculative development, new entrants must navigate a challenging market, with high construction costs, complex user requirements and other barriers to entry.
• Investor interest in cold storage increased during the pandemic. Nearly 40% of respondents to CBRE's 2022 U.S. Investors Intention Survey are pursuing cold storage assets this year, up from 22% in 2021 and 7% in 2019.

Outsourcing Common for Cold Storage Industry

More outsourcing is occurring throughout the broader industrial market with third-party logistics (3PL) providers accounting for 34% of total leasing activity this year through May, up from 30% in the same period of last year. This trend is particularly common in the cold storage industry due to costs and more complex technology systems.

Consolidation within the public refrigerated warehouse (PRW) industry has accelerated since 2019, when Lineage Logistics and Americold accounted for 61% of North America's total cold storage space. Today, these two companies account for 71%, according to Global Cold Chain Alliance. United States Cold Storage controls 10%. Indeed, there are few key players in this highly specialized and competitive industry. As technological systems become more sophisticated, the benefits of economies of scale far outweigh the operational challenges brought on by increased size.

Share of total industrial leasing activity by 3PL providers due to higher costs and greater supply chain complexity

Combined share of North America's total cold storage space by the top two public refrigerated warehouse companies

Figure 1: Largest Refrigerated Warehouse Companies in North America

Source: IARW North American Top 25 List, March 2022.

Although outsourcing to 3PLs is growing for the overall industrial market, it appears to be declining for cold storage, meaning more private and semiprivate operators are gaining market share. According to the U.S. Department of Agriculture (USDA), 72% of the refrigerated storage capacity in the U.S. is outsourced to PRW companies, down from 75% five years ago. The remaining 28% includes in-house cold chain operators, up from 25% five years ago.

Sizing the Market

The U.S. currently has 3.7 billion cubic feet of gross refrigerated storage capacity, up by 2.2% from 2020, according to the USDA. Although it’s difficult to precisely calculate the total U.S. cold storage real estate footprint, CBRE estimates that it is approximately 225 million sq. ft.

The U.S. currently has 3.7 billion cubic feet of gross refrigerated storage capacity, up by 2.2% from 2020, according to the USDA.

Figure 2: Top 10 States for Cold Storage Capacity

*Sq. ft. estimated from USDA cubic ft. using a height of 24 ft. and 85% footprint efficiency. Source: USDA – Capacity of Refrigerated Warehouses, Census, CBRE Research, January 2022.

Drivers of Cold Storage Demand

Cold storage demand has traditionally followed population growth and demographic changes. For example, recent migration patterns have generated more food & beverage demand in states like Florida, Arizona and Texas, resulting in the need for more cold storage capacity to store and distribute perishable items.

Other drivers of cold storage demand include online sales of food items that require temperature-controlled space, like frozen snacks, meat and poultry. Edible perishables make up a small but growing percentage of total online grocery spending. As of October 2021, refrigerated and frozen foods captured 9% and 13%, respectively, of total e-commerce grocery sales, up from 4% for each category in early 2020, according to data provider IRI. Online purchasing of refrigerated and frozen foods rose by 58% year-over-year as of October 2021.

Year-over-year increase in online purchasing of refrigerated and frozen foods as of October 2021

Figure 3: Breakout of Online Category Penetration

Cold Chain Challenged but Resilient

With increased demand for perishables, cold storage capacity has been strained by transportation backlogs, inflation and labor shortages exacerbated by the pandemic. This has led to declining stock levels of primary food commodities. Cold storage warehouses typically have steady utilization rates for commodities held in facilities near major population centers, but there was a 6.8% year-over-year drop in Q4 2021, according to the USDA. Meanwhile, U.S. imports of perishable foods increased last year, rising by 27% for meat and 15% for dairy, for example. What this means is that growth in cold storage utilization is creating new sources of demand as warehouses struggle to maintain normal stock levels.

Increase in U.S. imports of meat last year

Figure 4: Total Stock Levels of Primary Food Commodities, Rolling 4-Quarter Average

Source: USDA National Agricultural Statistics Service, CBRE Research, March 2022.

Cold storage is a resilient sector whose stock levels have recovered from past disruptions like Swine Flu in 2009 and severe droughts that limited availability of certain fresh foods in 2014. If supply chain volatility eases this year, utilization rates are expected to bounce back as operators work to replenish grocery stores and serve direct-to-consumer demand.

Grocery and Restaurant Sales Above Pre-COVID Levels

Grocery and restaurant sales have recently exceeded pre-pandemic levels. Restaurants have particularly benefited from widespread COVID vaccinations, the easing of capacity restrictions and healthy consumer balance sheets. Although economic conditions tend to dictate how frequently people eat out, they don’t dramatically impact the demand for cold storage space either way. Food products still need to go through warehouses, whether their destination is to a restaurant, grocery store or directly to the consumer. As a result, cold storage benefits from steady demand and is insulated from societal or economic disruptions. Although inflation and economic uncertainty pose a risk to retail sales, there is no evidence of softening in the grocery or restaurant segments and Americans are consuming more than they have in the past.

Figure 5: U.S. Grocery Sales vs. Restaurant Sales

Note: Seasonally adjusted. Source : U.S. Census Bureau, CBRE Research, April 2022.

Grocery Sector Poised for Change

The pandemic has caused more U.S. consumers to shop for groceries online. E-commerce grocery sales surged to nearly $98 billion via pickup, delivery and ship-to-home channels last year, according to the latest Brick-Meets-Click/Mercatus Grocery Shopping Survey. Online penetration of total grocery sales reached almost 13% in 2021, up roughly 2 percentage points from 2020 and 10 percentage points from the pre-COVID share in 2019. By 2025, e-commerce is projected to capture 21.5% of total grocery sales, up from the 13.5% pre-pandemic projection, according to Mercatus/Incisiv. Some estimates are even higher. According to a recent McKinsey & Company survey, grocery executives expect their companies' e-commerce penetration to more than double in the next three to five years to an average of 23% but may reach as high as 35%. 1

Online grocery shopping has evolved from a matter of safety and basic convenience during the pandemic to becoming part of consumers’ shopping routine as food retailers get more sophisticated. For example, another recent McKinsey & Company survey found that 63% of consumers who shop for groceries online prefer home delivery over click-and-collect service, up from 48% in 2021.

As the online grocery market continues to grow, figuring out how to fulfill orders is critically important. It’s not a one-size-fits all solution, and grocers will need to find the right mix of automated “micro-fulfillment centers” (MFCs), manual dark stores and in-store fulfillment. Many grocers are locating MFCs close to their customers to improve speed at a lower cost while also implementing centralized fulfillment centers to handle larger order volumes and support next-day delivery in highly populated regions. Some grocers such as Ahold Delhaize, Wakefern and H-E-B have partnered with technology companies such as Dematic, Takeoff Technologies and Swisslog to expand fulfillment capabilities through MFCs. Google and Microsoft have also developed artificial intelligence to assist grocers with inventory replenishment, such as monitoring online grocery lists by consumers.

In partnership with British online grocer Ocado, Kroger plans 16 fulfillment centers across the U.S. to accommodate next day, same day and immediate delivery services. The first was opened last year in Cincinnati, followed by others in Groveland, FL—a new market for Kroger—and Atlanta and South Dallas. More are scheduled to open soon in Austin, San Antonio, Birmingham and Cleveland. These large facilities form a dynamic network with stores and offer reliability, scale and efficiency.

Projected e-commerce share of total grocery sales by 2025

Online grocery shopping has evolved from a matter of safety and basic convenience during the pandemic to becoming part of consumers’ shopping routine as food retailers get more sophisticated.

Real Estate Just One Piece of the Pie

Although real estate is one component, it has the potential to make or break a company’s fulfillment network. Demand for cold storage space is expected to continue outstripping supply over the next three to five years. The overall industrial real estate vacancy rate is just 3.1% and the cold storage vacancy rate is estimated to be even less than that given robust tenant demand. Cold storage real estate leasing and sales activity rose by an average 43% from 2017 to 2021, according to CBRE. Development has ticked up in recent years, especially with more institutional capital flocking to the sector. There is 3.3 million sq. ft. of speculative development currently underway in the U.S. (Figure 8), up from only 300,000 sq. ft. in 2019.

Investors are attracted to the cold storage sector given its growth prospects and higher yields compared with the traditional warehouse sector. However, robust demand has driven the cap rate spread between cold storage and dry warehouses to as low as 50 basis points (bps) in core markets. And investor interest has surged from pre-pandemic levels given the positive tailwinds to the sector. According to CBRE’s 2022 U.S. Investor Intentions Survey , 39% of respondents said they were pursuing cold storage assets, up from 22% in 2021 and just 7% in 2019 This momentum is expected to continue as the online grocery segment grows, particularly in demographically strong markets.

Figure 6: Share of Investors Pursuing Alternative Investment Sectors

Source: U.S. Investor Intentions Survey, CBRE Research, Q1 2022.

Figure 7: Cold Storage Investment Volume Strong but Limited by Amount of Tradeable Assets

Note: Excludes portfolio and entity-level transactions. Volume includes fully dedicated refrigerated warehouses as well as warehouse/ distribution facilities with a significant freezer/cooler component. Source: Real Capital Analytics, CBRE Research, Q1 2022.

Cold Storage Development & Design

In 2019, CBRE Research predicted the following three emerging trends in cold storage development that were later accelerated by the COVID pandemic:

1. An increase in speculative development.

2. An uptick in activity in smaller markets with population growth.

3. Greater automation in the design and operation of cold storage facilities.

Speculative development has increased since CBRE Research started tracking activity in early 2019. The first facility built by a non-operator was completed in mid-2019 by Hunt Southwest in Fort Worth and leased to cold storage operator Emergent Cold. About a year later, Lineage Logistics acquired Emergent Cold and purchased the building from Hunt Southwest.

New speculative development of cold storage facilities is challenging for five primary reasons: high construction and operating costs, the risk of not securing a tenant before completion, the unique expertise required of developers and operators, the complexity of user requirements and the inflexibility in converting from cold to dry warehousing should the need arise. Despite these challenges, there currently are 12 speculative cold storage projects totaling 3.3 million sq. ft. in eight markets. Another 60 development projects are planned or proposed.

Figure 8: Map of Development Projects Underway

Source: CBRE Research, Q1 2022.

Texas has largely led recent speculative cold storage development, driven by solid demographic fundamentals. The state has nearly 2.7 million sq. ft. of speculative cold storage projects that were delivered or remain underway since 2019. Dallas/Ft. Worth is a top Texas market for cold storage facilities, handling distribution of Midwest agricultural products throughout the South. Dallas/Ft. Worth’s population is projected to surpass that of Chicago in 2035 to become the third most populous urban region in the U.S. with 9.4 million residents. It is also part of the 20-million-resident Texas Triangle megaregion, which includes the state’s other major cities of Austin, Houston and San Antonio. Together, they generated an economic output of $1.5 trillion in 2021.

Kroger and Ocado recently opened a fully automated e-commerce fulfillment center in South Dallas to provide grocery delivery across the greater metropolitan area. Grocery business growth is being driven by automated e-commerce fulfillment centers like this. According to technology research firm Interact Analysis, warehouse automation investment is expected to reach $69 billion in 2025, up from $30 billion in 2020.

Houston also is seeing rapid growth of its cold storage market, since its port handles distribution of seafood from the Gulf of Mexico and fruits and vegetables from Central and South America.

Energy Efficiency is Key

Given land constraints and high construction costs, development of taller cold storage facilities with 50-foot-plus clear heights is becoming the norm. According to Ware Malcomb, an architectural firm specializing in cold storage design, taller facilities increase both storage capacity and energy efficiency, with rooftop refrigeration units distributing cold air downward to cool the entire building. Some new facilities also are incorporating alternative energy sources, which are particularly attractive to investors focused on environmental sustainability to lower operational costs.

Development of 50-foot-plus cold storage facilities is becoming the norm.

What’s Next?

The cold storage industry will continue to benefit from tailwinds, providing opportunities for both industrial real estate occupiers and investors. Nevertheless, despite an increase in speculative development over the past three years, the product type will remain dominated by build-to-suit projects given unique user requirements and high construction and operating costs. Going forward, these higher costs will make it increasingly difficult to achieve the yields necessary to justify new speculative development.

Whatever the method of new development, demand for cold-storage space will remain high. Population shifts, changed eating habits and increased adoption of online grocery ordering will ensure this for the foreseeable future.

1 “The next horizon for grocery e-commerce: Beyond the pandemic bump,” McKinsey & Company, April 29, 2022.

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Cold Storage Business Plan in India | Procedure, Importance and Cost in 2023

Are you looking for a business opportunity that will grow over time? If so, then a cold storage business plan is a good idea.

The Indian cold chain market was worth more than INR 1,285 billion in 2020, and it is expected to reach a value of INR 2,865 billion by 2027, growing at a CAGR of 14.3%. Cold storage may be the perfect business opportunity if you want something with high profit margins and long-term growth potential. It requires a one-time investment, and once your business starts making money, it will continue to grow indefinitely.

Wondering how to get started with your cold storage business plan? Here�s a complete guide to cold storage businesses, the investment required, and a step-by-step guide to starting your business. 

Step 6: Marketing

5. maintenance, what is the importance of cold storage business in india.

The cold storage industry is one of the most essential industries in the world. It prevents vegetables and fruits from spoiling over an extended period of time. 

Here are the two types of cold storage facilities: 

• Fruits and vegetables 
• Poultry, seafood, meat, and other packaged foods, such as cigarettes and beer.

But how does the cold storage industry add value to the world, you might wonder? Well, it majorly reduces food waste. Food waste is a severe global problem, and fruits and vegetables are a significant cause.

Food loss is more common in nations with high production rates. Cold storage is essential for maintaining quality during post-harvest processing, extending the shelf life of processed or packaged commodities and ensuring year-round access to fresh fruit. Cold storage is vital to increasing profitability and reducing food loss since it preserves produce and reduces perishable waste.

What Is the Cost of Starting a Cold Storage Business?

When investing in a cold storage business, the initial investment is much higher than in other companies.�You’ll need to purchase land, build the facility, and obtain utility permissions for electricity and water. Also, cooling equipment is a mandatory investment for cold storage businesses.

Longer-term stability and superior quality are guaranteed by modernized cooling equipment. Investment costs could include various charges, like operating costs and fixed costs.

The size of your cold storage unit will have the most significant impact on the price and investment. It will cost between Rs. 3 and 4 crore to put up a 5000 MT cold storage facility.

Typically, banks will lend you money to start a cold storage business. Additionally, determine if this business is eligible for government grants or subsidies in your state or district.

Procedure to Start a Cold Storage Business

Starting a cold storage business is a great way to start a new business and make money. But it can also take time to know where to start or what to do to get your new business up and running.

Here’s the procedure for starting a cold storage business:

Step 1: Business Plan�

Write an elaborate business plan that includes all relevant company information, specifics on the goods and services to be used, and information on the personnel (full names and addresses).

Step 2: Choosing a Location

Choosing an ideal location for your business is crucial. You want it to be close to consumer hubs or production farms so that you can keep cold storage facilities close to where the food is shipped in or produced. It takes about one acre of land to construct a cold storage facility with roughly 5,000 metric tonnes of capacity.

Step 3: Funding Arrangements

Funding arrangements are complex because the cold storage industry demands substantial capital expenditure. Savings are typically intended to cover emergency expenses or in times of cash stress; thus, managing the overall investment for the cold storage firm from savings is neither a practical alternative nor a recommendation.

Step 4: Equipment Choice

When choosing equipment, it is essential to consider the age of the equipment, its light source, fan speed, product load, and heat generated by stored goods. These factors should be considered when determining which equipment best suits your situation.

Step 5: Regular Upkeep and Cleaning

Regular maintenance is essential for the upkeep of cold storage facilities. That includes frequent servicing and cleaning of containers, storage bins, and trays. Temperature, humidity, and preserved goods should all be examined regularly.

Marketing and advertising are the keys to the success of a cold storage business. Dealers, wholesalers, and retailers in urban and rural locations are just a few of the marketplaces that entrepreneurs should focus on. Business owners can also advise farmers, distributors, exporters, producers, and consumers to boost sales and profits.

Things To Keep In Mind While Starting a Cold Storage Business Plan in India

You must remember certain things when planning to start a cold storage company. They are as follows:

1. Area of the Storage

The space should be big enough to accommodate the installation needs, loading goods or raw materials, and easy access for delivery trucks.

2. Temperature

If you store your materials in an orderly manner, finding what you’re looking for will be easier. The number of products stored also affects a cold storage room’s temperature, so be sure to size the room appropriately if you store many products.

3. Ventilation

Long-term storage of raw materials and frequent product removal can lead to the presence of unidentified compounds. To ensure the best product quality, a cold storage facility must have a reliable ventilation system.

4. Power Supply

Cold storage facilities use 380-volt electricity. Ensure power is continuously supplied and there are no short circuits to prevent damage to other electronic items nearby and extend their lifespans.

It is vital for only certified engineers to do maintenance on the cold storage every month, checking its capacity and looking for breakage or damage.

FAQs�on Cold Storage Business Plan in India

Below are some questions commonly asked about the Cold Storage Business Plan:

Why is cold storage so important?

A cold storage facility aims to keep produce, typically food, at the optimal temperature and prevent it from rotting. In contrast, a freezer warehouse must maintain a steady temperature for the product to be preserved and not harmed.

What is the minimum size of a cold storage facility?

Cold storage requires 1800 to 2000 square metres of land.

How profitable is cold storage?

Although the initial investment is high, cold storage is a lucrative endeavour. The return is also higher and more substantial than at other firms.

What is the cost of starting a cold storage business?

To start a cold storage business in India, you need an initial investment of between Rs 3 and Rs 4 crores. For that, you can take out bank loans.

Does cold storage fall under MSME?

In India, cold storage can be considered an MSME service provider. Therefore, offering services for cold storage qualifies MSMEs for registration.

If you’re an investor looking to enter the cold storage industry, now’s your chance! While the market is still in its infancy in India, it’s a good time for potential investors to enter the market. You can turn a one-time investment into a long-term income stream with the right business strategy.

If you’re building a new cold storage business, you can easily make it profitable with the information provided here.

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