Parking businesses are profitable investments for interested entrepreneurs.
Develop a strong plan for operations to automatically run your business with minimal day-to-day involvement.
If you’re considering opening a parking business, follow these necessary steps for successfully running your first parking lot business.
Understand Parking Businesses
Parking businesses refer to established structures, such as garages or lots, used for parking cars, generally located in areas containing limited street parking and ample automobile traffic. Parking businesses impact numerous industries, including residential, commercial, healthcare, hospitality, university, event, and airport.
Understand parking businesses to recognize important considerations involved with owning and operating a parking lot.
Costs Involved
Starting a parking business requires a certain amount of startup and ongoing capital depending on the type, size, and location of your business.
Building costs for a parking business include materials, equipment, and labor. On average, a small surface parking lot costs about $10,000 to build. However, a basic multi-level parking garage costs about $9,750,000 to build, ranging anywhere between $7,500,000 and $12,000,000. Recognizing the initial building costs assists in choosing the proper investment for your financial abilities.
Ongoing costs for parking businesses include rent or mortgage payments, employee wages, utilities, insurances, and supplies, costing approximately $5,000 every month. A major ongoing cost for parking businesses is maintenance. Maintenance involves repainting lines, repairing concrete, and replacing signage, costing almost $500 per space each year.
Develop a Business Plan
Develop a business plan to successfully open your parking business. Business plans are essential documents for organizing your business’s structure, finances, staffing, and much more. A comprehensive business plan saves you valuable time, money, and effort for the future.
Analyze Your Target Market
Identify your parking business’s target market. Essentially, a parking business’s target market are customers who use your parking lot to conveniently park near something else. Determine your target market by discovering where your customers are parking near, whether you’re located near business, healthcare, or hospitality buildings.
After you establish your target market, learn about your target market’s needs, wants, expectations, and objectives. Understanding your target market’s preferences assists you in choosing a location, determining prices, and developing marketing efforts.
Choose a Location
Location is everything, especially for parking businesses. Choose a location for your parking business by searching for prospective lots near your target market containing ample traffic. Review local zoning laws and real estate prices to guarantee you select an ideal location.
Determine Prices
Determine prices for your parking business by examining your location. For example, a parking business in a rural area may charge an hourly rate of $1, but a parking lot in a metropolitan location can charge an hourly rate of almost $60.
Calculate your potential profits by calculating the amount you’ll earn for every space and subtracting your expenses.
Complete Legal Requirements
Guarantee your parking business is covered by completing necessary legal requirements.
Establish a Legal Entity
Establish a legal entity for your parking business to protect yourself from personal liability regarding lawsuits. Types of business structures include sole proprietorship, partnership, limited liability company, and corporation. Research each option to discover the perfect business structure for you. Create a legal entity by forming a business structure yourself or consulting a professional.
Fulfill Tax Obligations
Fulfill your tax obligations by first registering your parking business for state and federal taxes. Meticulously track your business's profits and expenses to simplify your annual tax filing. Consider contacting an accountant for additional assistance to ensure your business is covered.
Obtain Permits and Licenses
Obtain essential permits and licenses to earn authorization for opening a parking business. Required permits and licenses vary based on state and local laws. Research online and ask local officials to learn mandatory licenses and permits applicable to you.
Typically, a certificate of occupancy (CO) is necessary for parking businesses. A CO services as a confirmation that a business complies with building codes, zoning laws, and government regulations. Acquire a CO for your parking structure by requesting one from your local government authorities.
Purchase Insurance
Purchase business insurance to defend your parking business from liability claims. Research different types of insurance to discover the right insurance policies and rates for you. On average, a parking business needs general liability insurance and workers’ compensation coverage to protect your business from property damage and personal injury expenses.
Manage Your Parking Business
Effectively operate your parking business by discovering methods for successful management.
Begin by recruiting staff to handle daily operations. In general, you’ll need cashiers, maintenance, and security teams. Depending on the types of services your parking lot offers, you may also need valet or shuttle drivers. Choose highly-trained, professional staff members to serve as a positive first impression for your business.
In addition to personnel, contemplate the parking technology you’ll incorporate. Automated technology is available to control access and promote efficiency while saving you money on employee wages. Consider the costs and benefits of advanced technology for your parking business.
Outsource Parking Management
Parking businesses commonly outsource parking management. A parking management service is equipped with professional staff, efficient technology, and numerous services to elevate your business and ease your overall stress. For example, Pro Park is a parking management service providing over 35 years of experience in guest services and parking management.
Discover a parking management service near you to improve your parking business successfully.
Market Your Business
Market your parking business by developing an effective strategy to earn customers and increase profits.
Develop a brand for your business to start your marketing efforts. A strong brand signifies to potential customers your business’s mission and standards. Assess your company’s goals and purpose to choose colors, select fonts, and create a logo. Once you’ve established your brand, broadcast it across the entirety of your business.
Other methods for marketing your parking business include:
- Building a business website
- Participating actively on social media
- Offering discounts for new customers
- Creating a rewards program for returning clients
- Posting traditional advertisements, such as banners or posters
- Consulting a professional marketer for assistance
Create a marketing strategy for your business to attract and retain customers.
If you’re interested in running your first parking lot business, follow these essential steps to guarantee success.