A parking business can be a lucrative enterprise to invest in. From 2015 to 2020, revenues from parking lots and garages in the US have been steadily increasing, according to industry statistics.
But before going all-in on this business idea, what should interested entrepreneurs look out for? Here are a few things to consider.
1. Location, location
Location is the first thing one should consider. A poorly situated parking lot or garage will be less frequented by customers and will lead to a waste in investment.
Ideally, it should be strategically located in an area with the right amount of vehicle traffic. The obvious choice would be prime downtown locations, but land and rental prices could reach considerably high amounts. If you have sufficient capital, then this is an excellent option to go with.
In selecting a parking location, keep in mind the target market you intend to capture. If you want to address the parking needs of office workers, then setting up in a business district may be the best way forward.
Lastly, local jurisdictions will have specific rules and guidelines around parking lot construction. Don’t forget to make inquiries to the proper authorities.
2. Initial expenses and operational costs
Next, you should start thinking about acquiring the necessary equipment.
While this will mostly depend on the type of parking business you plan to set up — open-field parking lot, parking garage, multi-level parking — you need to cover the basics, such as ticket machines, lift gates, and aluminum fencing.
Parking garages and multi-level parking will entail more costs. You’d need to invest in elevators and sturdy vehicle barriers that will prevent cars from falling off the area. Also, industrial floodlights could factor into the equation if you plan to permit night parking.
Fortunately, a parking business is usually on the lower end of the spectrum when it comes to operational costs. What exactly are these costs?
Rent or mortgage will need to be paid, and wages and insurance need to be covered. Lines would need to be repainted now and then. Signs and lighting will need to be repaired occasionally.
Unless significant damage is incurred from a fire accident or natural calamity, a sizable outdoor parking lot usually won’t exceed $6,000 in monthly costs.
The type of parking area you plan to invest in will also influence your staffing decisions.
For smaller outfits, a parking attendant and cashier may be enough. And if you plan to keep your operations as lean as possible, you may not necessarily need a parking attendant at the entrance. You can invest in a parking ticket machine.
However, for bigger operations, you will most likely need to hire or outsource security services to check routinely on all parked vehicles for anything suspicious. Additionally, if you want to offer more value-adding services (e.g., valet services) to gain an edge on the competition, you’d need to look for more capable workers to fill in those positions.
Regardless of which option you go with, you will need cleaning staff to ensure that the space is free of trash and other unsightly waste.