How to Start a Small Warehouse Business: The Only Guide You Need

How To Start A Small Business: The Only Guide You Need

A business warehousing solution is easy to start and is profitable, especially if your warehouse business is located in an area with many new and up-and-coming businesses. 

Think about it….

It doesn’t require resources to innovate a new product. You simply need to find a suitable location to rent or lease and begin helping businesses around you in storing products before it goes out to retailers or consumers. This is what makes warehousing easy to start and maintain.

If you’ve been thinking of starting a warehousing business from scratch, this post is for you! We’ll take you through the various steps involved in launching one from scratch.

Table of Contents

What is a Warehousing Business

A warehousing business provides companies, small businesses, manufacturers, transporters or wholesalers with a space to store their products before it reaches the retailers or consumers. 

Businesses use warehouses to store raw materials or manufactured goods. Warehousing businesses are used by ventures that are scaling up and might not have the resources to invest in their own warehouse.

For companies that might not have the space to store their inventory and do not want to invest the resources to rent their own space for storage prior to sale or distribution, a warehousing business can provide storage solutions.

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Getting your warehouse business up and running 

In order to start your own warehousing business, you need to know about the different components of a warehousing business. You can then decide on the business that best suits your interests. 

A warehousing business should have the following components:

  • Administrative offices: A warehousing business might administrative offices to administer the warehouse, manage clients, market the warehouse to attract more clients, etc.
  • Reception: A physical warehouse will require a reception to greet clients who come to store their products.
  • Loading area: A loading area is where heavy products are loaded onto trolleys before being taken into their respective storage areas.
  • Packaging: Some products might require special packaging prior to storage to avoid any damage during storage. This is why a warehousing business should have a packaging area.
  • Storage: The storage areas are the key component of a warehousing business. Storage areas are clearly demarcated areas where products will be stored before sale or distribution.
  • Dispatch area: This area is used before a product is shipped out to consumers or retailers.
  • Technical area: A technical area is required to store technical equipment like trolleys, pulleys, etc.

Three Key Considerations Before Starting Your Small Warehouse Business

What kind of business am I establishing?

Warehouses can be used for a variety of services, including storage, drop-shipping, packing, and third-party logistics. Choose which path you want to take based on your interests, budget, location, and warehouse size, amongst other things.

What will I be storing in the warehouse?

Once you decide what kind of warehouse business you want, you can then determine what size space you will need and what kind of costs you will need to consider (for example, heating or cooling systems, shelving, forklifts etc) .

Alternatively, you could already have a space and need a business that it can accommodate.

What type of customer will I be aiming to attract?

Since you are a small business, it would make sense to target other small businesses that require services such as yours. More specifically, you should ask yourself if there are any particular businesses or demographics you are trying to attract, such as clothing, furniture or food. Once you answer these questions, you can create your own market and build it up from there.

Identifying market gaps is also a great way to build a business that will not only attract customers but provide services where there are none, giving you more market share.

A great way to attract customers is by creating a website, establishing a social media presence and perhaps even requesting customers to review you on Google after they have used your services.

If your business deals with importing and exporting, you will need to determine which permits you need so that your goods will clear customs. It is worth noting that importers and exporters who don’t comply with tariffs and duties may be fined by the Australian Government, so this is something you definitely should not neglect.

Create a Business Plan 

Once you are familiar with the components required for your business, you can plan the next steps to start your warehouse:

  1. Create a business plan
  2. Choose a business structure
  3. Calculate cost and finance your warehouse
  4. Register your business
  5. Lease/buy space
  6. Buy Equipment
  7. Staffing
  8. Marketing your business

In order for your business to succeed, you need to devise a strong business plan with a review of the concept, competitors, funding/financing options, applicable laws and business structure.

How to choose the best business structure 

You can structure your warehousing business in the following ways based on your resources: 

  • Sole trader: A low-cost option for an individual running a business, this structure considers the individual and business to be the same entity. A sole trader business has low costs and is not a complex structure, this also means that the individual is liable for the company’s debts/losses.
  • Partnership: A partnership is when two or more people run a business, and the business is controlled by all partners. This also means that all partners are responsible for the debts and obligations of the company.
  • Company: A limited liability company has a more complex structure and can legally sue and be sued. However, it is considered a separate legal entity, and hence individuals cannot be held liable for the debts and obligations of the company. 

If you are planning to start a small warehousing business, a sole proprietorship or partnership is the easiest and cheapest option for you.

Calculating Cost and Financing Your Business

The cost of your warehousing business will largely depend on the space. If you already have space to turn into a warehouse, you just need to calculate any renovation charges, employee wages for those renovations, etc. 

If you need to lease or buy a new space to create a warehouse, you will need to consider rental or property charges, renovation, employee wages, as well as resources you will need to spend to find and tour potential properties (such as a real estate broker). 


Registering Your Warehousing Business 

Once you have your business, you will need to apply for an Australian Business Number (ABN) using your business name to be able to operate in Australia. If you are a sole trader, you will use your name as your business name. 

An ABN also enables you to apply for the goods and services tax (GST) concessions. You can apply for an ABN at the Australian Business Register website.


Finding a Space for Your Warehousing Business 

Your warehousing business will require a warehouse license to store goods. Licenses are provided to an individual, company or partnership. Licenses are not granted to a trust but instead to a trustee. You can find the relevant form for your business and apply for a license.


Buying Equipment for Your Warehousing Business

Once your business is registered and has all legal licenses to operate, you can buy the equipment required for the smooth functioning of your warehouse. This would include trolleys, pulleys, carts, storage containers or storage shelves, etc.


Staffing: Choosing The Right Employees 

Your company will also require employees to manage clients, load, store and ship goods. Employees might also be required for bookkeeping, cleaning, packaging, etc. You need to determine if you want to hire casual, part-time or full-time employees for your business.

Here is a webinar on how to hire the right employees for your business.

Embed [ https://www.youtube.com/watch?v=kYV6NYJETBI&ab_channel=Lawpath

Marketing Your Business 

Now that you have set up your business and hired a group of talented employees, you will also need to set up a marketing team to advertise and market your warehouse to potential clients. 

Warehousing and the Law 

One of the most important steps in starting your warehousing business is to ensure that your business is operating legally. This means obtaining all relevant licenses and permits that your business requires. Here are some legal requirements that you should be aware of while setting up your warehousing business:

  • Warehouse license
  • Rental agreement/certificate of title of the warehouse space
  • Other licenses such as a taxi license, towing license, boating license, limousine and luxury car license, heavy vehicle licensing and accreditation, public weighbridge licensing- external site, local and international trade regulations, customs licensing, qualifications to store/transport certain goods or services (e.g. food, waste) and approval of transport security plans
  • Taxes such as GST for motor vehicles and GST for taxi drivers
  • Workplace health and safety (WHS) regulations: Your business must comply with workplace health and safety standards.
  • Insurance such as insurance for transportation vehicles and vessels, equipment and machinery, cargo and goods, property and buildings and business interruption
  • Employment contracts, non-disclosure agreements and other employee documents for new hires.

You can find out about other requirements for your warehousing business here.


FAQs 

Do I need a warehouse license if I have a small warehouse?

If you have a warehouse business, you require a warehouse license. The size of the space does not matter. You can read more about the license requirements here.

What bookkeeping does a warehousing business require?

Beyond general accounting and finance bookkeeping, you will also need to maintain a clear repository of the products checked in and checked out of your warehouse.

Can I make my own contracts for my new employees?

Yes! Lawpath helps you create legal documents with ease.

Who uses a warehousing business?

Companies often need to store their products before these products are shipped out to consumers or retailers. They might also need to store goods in locations where they have a strong customer base but don’t have a brick-and-mortar store in order to ship items with ease. This is where they require an on-demand warehousing solution. 

How Lawpath can help 

Between 2021 and 2022, transport, postal and warehousing businesses increased by 16,530 businesses. And it’s not hard to see why, as this can be a very profitable business venture.

If you’re still unsure about how to start a small warehouse business and need further legal advice, you should hire a lawyer.

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