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How to Start a Parking Lot Business

Written by:

Natalie is a business writer with experience in operations, HR, and training & development within the software, healthcare, and financial services sectors.

Edited by:

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

How to Start a Parking Lot Business

Fast Facts

Investment range

$9,550 - $18,550

Revenue potential

$164,000 - $328,000 p.a.

Time to build

1 - 3 months

Profit potential

$98,000 - $148,000 p.a.

Industry trend

Growing

Commitment

Flexible

Finding parking is one of the great hassles of driving. In cities across the US, frustrated drivers spend countless hours each year searching for a decent spot. More cars are on the road today than ever before, which means demand for parking has never been higher. In addition, as the pandemic recedes, more and more people are heading back out to enjoy the town. The global parking lot and garage industry is expecting strong growth through 2023.

There has never been a better time to start your own parking lot business  — you’d be providing an invaluable service while making good money. But before you start, it’s important to understand the fundamentals of running your business. This step-by-step guide will help you build the foundation to succeed as a parking lot entrepreneur. 

Step 1: Decide if the Business Is Right for You

Pros and cons

Before starting a parking lot business, it’s important to weigh the pros and cons.

Pros

  • Low Maintenance – It’s easy to keep a parking lot well-maintained
  • In-demand Product – More cars on the road means higher demand
  • Good Money – Charge up to $60 per space per day in a urban location

Cons

  • Expensive Leases – Renting a lot in a desirable location can be expensive
  • High Competition – Compete with established parking lots in popular areas

Parking lot industry trends

Industry size and growth

parking lot industry size and growth

Trends and challenges

parking lot industry Trends and Challenges

Trends in the parking lot industry include:

  • New technology allows for gateless entry and exit into parking lots. This cuts down on the need for parking lot attendants and makes parking more convenient for customers.
  • Parking apps like SpotHero are on the rise. These apps make finding and reserving a parking space quick and easy for customers. 

Challenges in the parking lot industry include:

  • Securing a viable parking lot for your business can be challenging in high-demand areas. In urban locations, real estate is expensive and you’ll be competing with existing lots and garages.

Local zoning and real estate regulations may prevent the establishment of parking lots in desirable locations. 

How much does it cost to start a parking lot business?

Startup costs for a parking lot business range from $9,000 to $18,000. The average cost is around $13,000. This figure includes the parking lot lease, wages for attendants, website setup, and lot maintenance costs.

You’ll need a handful of items to successfully launch your parking lot business, including:

  • Parking lot
  • Attendants
  • Website
  • Parking lot management software
Start-up CostsBallpark RangeAverage
Licenses and permits$300-$1,000$650
Insurance$100-$300$200
Marketing and advertising$750-$1,500$1,125
Website$1,000-$2,000$1,500
Software$100-$250$175
Lot Rental$5,000-10,000$7,500
Attendee Wages$2,000-$3,000$2,500
Maintenance Costs$300-$500$400
Total$9,550 - $18,550$14,050

How much can you earn from a parking lot business?

parking lot business earnings forecast

Daily parking rates cost an average of $30. After parking lot lease costs, wages for employees, insurance, and maintenance, your profit margin should be around 60%.

In your first year or two, you could lease a small lot with 15 spaces at a rate of $30 per day, resulting in $164,000 in annual revenue. This would mean $98,000 in profit, assuming that 60% margin. As your business grows, you could lease an additional lot, doubling your capacity to 60 spaces. At this stage, you’ll also be hiring more employees, reducing your profit margin to around 45%. With an annual revenue of $328,000, you’d still make a handsome profit of $147,000.

What barriers to entry are there?

There are a few barriers to entry for a parking lot business. Your biggest challenges will be:

  • Finding available lot space for rent in a viable location
  • Competition from other parking facilities

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Step 2: Fine-Tune Your Parking Lot Vision

develop a business idea

Now that you know what’s involved in starting a parking lot business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research parking lots in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a parking lot with valet services or an on-site car wash. 

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as parking specifically for mobile homes or local concerts and sporting events.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your services

You’ll be providing parking solutions for customers. You could also offer additional services, such as on-site car wash or valet parking. Here’s a list of potential services:

  1. Basic Parking Solutions: Provide secure, well-maintained spaces with efficient layout for easy vehicle access and parking.
  2. Valet Parking: Offer premium valet services for convenience and enhanced customer experience, especially in upscale areas.
  3. On-site Car Wash and Detailing Services: Introduce car wash and detailing while customers park, adding value and convenience.
  4. Electric Vehicle Charging Stations: Attract eco-conscious drivers by installing EV charging stations.
  5. Parking Reservations: Implement an online reservation system for guaranteed parking spots, streamlining the process.
  6. Security Services: Enhance safety with 24/7 surveillance and patrolled monitoring.
  7. Shuttle Services: Provide shuttle transport to nearby destinations for large or remotely located lots.
  8. Loyalty Programs: Develop loyalty programs for regular customers to encourage repeat visits.
  9. Mobile App Integration: Create a mobile app for real-time parking availability, mobile payments, and car location services.
  10. Bicycle Parking and Rentals: Cater to cyclists with secure bicycle parking and rental options.
  11. Temporary Storage Lockers: Offer storage lockers for convenient luggage or shopping bag storage.

How much should you charge for parking?

The cost of a parking space varies greatly depending on location. Many parking lot businesses charge per hour or per day, with some places offering monthly rates. Average daily rates typically range from $20 to $60. 

Once you know your costs, you can use our profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Where? Choose your parking lot location

To generate the most business, you’ll want to choose a parking lot in a desirable location close to businesses, schools, or local attractions. Here’s what to consider:

  1. High Traffic Areas: Choose a location near areas with high foot or vehicle traffic. This could be near shopping centers, business districts, hospitals, airports, or tourist attractions.
  2. Accessibility and Visibility: Ensure the location is easily accessible from main roads and is visible to passersby. Good signage can also help increase visibility.
  3. Demand for Parking: Research the demand for parking in the area. Locations with limited street parking or expensive parking facilities are ideal.
  4. Competitor Analysis: Analyze the competition. If there are many existing parking lots, ensure your business can offer something unique or more convenient.
  5. Zoning and Legal Regulations: Check the local zoning laws and obtain necessary permits. Some areas may have restrictions on the type of commercial activity allowed.
  6. Future Development Plans: Be aware of future development plans in the area. Changes in infrastructure or new construction can affect the demand for parking.
  7. Safety and Security: Choose a location where you can provide safe and secure parking. This might include good lighting, surveillance cameras, and regular patrols.
  8. Size and Layout Potential: The location should allow for efficient layout of parking spaces and smooth traffic flow.
  9. Cost Analysis: Consider the cost of the land and the return on investment. Prime locations can be more expensive but may offer higher revenue potential.
  10. Community Impact: Understand the impact on the local community and environment. Engaging with community leaders and residents can provide valuable insights and support.
parking lot business idea rating

Step 3: Brainstorm a Parking Lot Business Name

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better 
  • Name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “parking” or “parking lot”, boosts SEO
  • Name should allow for expansion, for ex: “ParkSmart” over “ConcertPark”
  • A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Parking Lot Business Plan

Here are the key components of a business plan:

what to include in a business plan
  • Executive Summary: A brief summary of the parking lot business plan, highlighting its key points and objectives.
  • Business Overview: An introduction to the parking lot business, including its purpose and location.
  • Product and Services: Explanation of the parking services offered, such as hourly parking, valet, and monthly parking passes.
  • Market Analysis: An assessment of the parking industry, including demand, customer demographics, and trends.
  • Competitive Analysis: Examination of competitors in the parking industry, identifying strengths and weaknesses.
  • Sales and Marketing: Strategies for promoting the parking lot business and acquiring customers.
  • Management Team: Information about the individuals responsible for running and managing the parking lot business.
  • Operations Plan: Details on how the parking lot will be operated, including hours of operation and staffing requirements.
  • Financial Plan: Projections of the parking lot’s financial performance, including revenue, expenses, and profitability.
  • Appendix: Additional supporting documents and data, such as market research, legal documents, and resumes of key team members.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to parking lot businesses. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your parking lot business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

types of business structures
  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
  • C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

flea market funding
  • Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
  • SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
  • Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a parking lot business. You might also try crowdfunding if you have an innovative concept.  

Step 8: Apply for Parking Lot Business Licenses and Permits

Business Licenses and Permits

Starting a parking lot business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your parking lot business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

types of business insurance
  • General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business Property: Provides coverage for your equipment and supplies.
  • Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto: Protection for your company-owned vehicle.
  • Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

Launching a Business

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as Parkable, Wayleadr, or Premium Parking to manage lot capacity, collect payments, and run financial reports.

Accounting

  • Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Marketing

Here are some powerful marketing strategies for your future business:

  • Strategic Partnerships: Cultivate partnerships with local businesses, event venues, and offices to secure exclusive parking agreements, creating a steady revenue stream and increasing your visibility in the community.
  • Local SEO — Regularly update your Google My Business and Yelp profiles to strengthen your local search presence.
  • Customer Loyalty Programs: Implement a loyalty program offering discounts, free parking hours, or priority spaces to frequent customers, encouraging repeat business and fostering customer loyalty.
  • Digital Advertising: Leverage targeted digital advertising on social media platforms to reach local audiences, using geo-targeting features to promote your parking services to users in your vicinity.
  • Mobile App Integration: Develop a user-friendly mobile app that allows customers to easily locate and pay for parking spaces, offering convenience and a seamless experience.
  • Seasonal Promotions: Create seasonal promotions or discounts during peak periods, events, or holidays to attract more customers and maximize revenue during high-demand times.
  • Customer Reviews and Testimonials: Encourage satisfied customers to leave positive reviews on popular review platforms, enhancing your online reputation and influencing potential customers to choose your parking services.
  • Community Involvement: Sponsor local events, sports teams, or community activities to increase brand visibility and build a positive reputation as a supportive and engaged business in the community.
  • Green Initiatives: Implement eco-friendly practices, such as offering electric vehicle charging stations or reserving spaces for carpooling, to appeal to environmentally conscious customers and differentiate your business.
  • 24/7 Security Assurance: Emphasize and promote your parking lot’s security measures, such as surveillance cameras and well-lit facilities, to assure customers of their vehicle’s safety, building trust and confidence.
  • Referral Programs: Introduce a referral program that rewards existing customers who refer new clients, creating a cost-effective way to acquire new business while rewarding your loyal customer base.

Focus on USPs

unique selling proposition

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your parking lot meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your parking lot business could be:

  • Convenient parking in the heart of the city
  • Fast, easy parking for busy professionals
  • Going to the concert or big game? We’ll keep your car safe 

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a parking lot business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in parking for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in parking lots. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

Building a Team for a New Business

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a parking lot business include:

  • Parking Attendants – Assist customers with parking, collect payments
  • Office Manager – Bookkeeping, payroll, customer service
  • Facilities Manager – Maintain parking lot cleanliness, fix broken equipment

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Parking Lot Business – Start Making Money!

Running a Business

Driving around and looking for parking before a big meeting or event is one of life’s major headaches. Becoming a parking lot business owner allows you to help frustrated drivers and make great money doing so. Over time, as you scale your business and enhance your reputation, you could start building yourself a local parking empire! 

Now that you’ve reviewed this guide and studied the parking lot business basics, it’s time to begin your entrepreneurial journey.

Parking Lot Business FAQs

Is a parking lot business profitable?

Parking lot businesses can be extremely profitable. Securing a lot in a viable, high-demand location is the key to a lucrative venture.

How to design a parking lot?

Determine the number of parking spaces needed based on the expected capacity, plan the layout for efficient vehicle circulation, designate entry and exit points, and incorporate features like lighting, signage, and markings to enhance safety and organization.

What is the minimum size of a parking space?

The minimum size of a parking space can vary depending on local regulations and specific requirements. In the United States, a typical standard size for a parking space is 9 feet wide by 18 feet long. However, accessible or ADA-compliant parking spaces are generally wider to accommodate wheelchair accessibility.

How can I differentiate my parking lot business from competitors in the market?

To differentiate your parking lot business from competitors, focus on providing exceptional customer service, maintaining a clean and well-maintained facility, and implementing technology solutions like parking apps or automated payment systems.

What material is used for parking lot striping?

The material commonly used for parking lot striping is paint or thermoplastic. Paint striping is typically done with durable and reflective traffic paint, while thermoplastic striping involves using heated thermoplastic material that adheres to the pavement and offers enhanced longevity and visibility.

Comments

  1. Racheal says:

    This is a very well-written and informative article on setting up a parking lot business business. I have gleaned valuable info on how to proceed with setting up this venture. Thank you.

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How to Start a Parking Lot Business