If a would-be entrepreneur sits down to think about the potential businesses they would like to start, there are a few standard choices they will consider. They will think about opening a retail store or ecommerce site; their mind will inevitably consider the range of options for office-based businesses; or they will perhaps consider creating their own product to sell onto distributors. All of these businesses can be viable choices, but if you’re looking for the business idea that can launch your entrepreneurial career, it might help to expand and consider more unconventional options.
In this post, we’re going to delve into the details behind a business idea that few people ever consider – but an idea that can be surprisingly profitable: owning a parking lot.
How is owning a parking lot a business?
Admittedly, parking lots do not initially seem like a business in their own right. For most prospective entrepreneurs, any kind of parking lot would be supplementary to their actual business, and certainly not a method of generating revenue in and of itself.
However, parking lots can indeed be a business in their own right as, realistically, owning a parking lot is akin to any other service-based business. If you create a well-designed parking lot in a well-chosen location, then people will want to park their vehicles in that lot, and they will pay well for the privilege of doing so. The costs of establishing and maintaining the parking lot are then subtracted from the prices people pay to park, and profits are then calculated accordingly. As a result, owning a parking lot may be an unusual business idea, but it’s far from an outlandish one.
Why do parking lots make a good business choice?
- Hands-off – most parking lots can operate relatively independently, with little day-to-day supervision required
- Low staff requirements – technological advances, and the very nature of parking lots, means that you will need to hire relatively few staff
- High customer demand – parking is often extremely limited, especially in busy towns and cities, which helps to ensure constant demand
- Scalable – with one parking lot established and profitable, you can repeat the process and scale the business with numerous sites
Can parking lots really be profitable?
Absolutely. Parking lots offer one particular advantage to a prospective entrepreneur; when they are established, they require relatively little in terms of fixed costs. As a result, the vast majority of what you earn from customers can be pure profit.
If parking lots are such a good idea, why don’t more people open them?
There are a number of reasons people hold back from opening parking lots, the most significant of which is the substantial startup cost. As we mentioned above, most modern parking lots will rely on technological advances in order to manage their lot; ticket machines, CCTV, and so on and so forth. Unfortunately, these systems can be relatively expensive to install – they require very little in terms of management long-term, but the startup costs can be problematic for some entrepreneurs.
As well as the funds required to establish technology, anyone looking to start a parking lot would need to buy – or lease – the land and construct the lot itself. Many prospective business owners worry that the building process is too complicated or difficult, which causes them to shy away from the idea.
Thankfully, both of these issues do have workable solutions…
How can the building process be simplified?
It depends entirely on the type of project you are considering.
You could, for example, opt for a very simple parking lot; all you need is a piece of land, and most of the work is already done. You’ll need to work with a construction company in order to ensure that the surface of the lot is flat and comfortable to drive on, but this aside, there’s relatively little you have to do in terms of building.
Alternatively, you could think bigger and look to construct a larger, multi-story parking garage in order to maximize the square footage you have available. Given that this route is undeniably the most profitable, it is well worth considering – though, of course, it does also require a longer construction process. However, this is relatively easily managed, especially with the likes of this engineering firm on hand to help effectively plan the entire project from start to finish.
There are advantages and disadvantages to both types of projects. Single-story parking lots are simpler, but multi-story garages offer more bang for your buck. Whichever you choose, the construction process is manageable, and can be made even simpler by seeking expert help on planning and project management.
How can the startup costs of a parking lot be managed?
Initially, the high startup costs can seem prohibitive, but it’s worth noting that a huge number of entrepreneurs seek outside investment in their company – regardless of the type of business they are creating. This reality means that parking lots are really no different to other businesses in terms of startup costs; yes, the amounts may be higher, but investors can cover the costs – you don’t need to finance the entire operation yourself.
In addition, basic startup cost management tips apply: start small, look to lease the land rather than buy it, and work within your budget at all times.
What should I do if I want to start a parking lot or garage?
If you have read through the above and decided a parking lot might be the right business choice for you, here are a few tips to get you started:
- Work on creating a great business plan that will encourage outside investment, if required. You will then need to pitch your idea to potential investors, ideally starting with banking institutions first and foremost.
- Start thinking about how you are going to collect payment. Are you going to hire someone to be on-site at all times to manually process payments, or use technological solutions such as smart parking? Both can work well, so you’ll need to decide which is most suitable for you.
- Begin searching for potential sites, even before you have secured your investment, to get an idea of the possibilities in your area. Parking lots should ideally be constructed in urban environments, close to other local businesses, and ideally poorly-served by existing parking options.
When you have achieved the above, you can move onto the next steps: buying or leasing the land, planning construction with an engineering company, and – eventually – opening for business.
In conclusion
Owning a parking lot or garage may initially seem like a rather unusual business choice, but as we’ve seen above, such a venture can also be profitable and relatively easy to manage. As a result, if you’re considering business ideas, this definitely is definitely a choice you’re going to want to consider.
