Self-Storage Automation, A Case Study: Two Facilities Embrace Technology and Transform Their Operations
Copyright 2014 by Virgo Publishing.
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Posted on: 03/13/2011



 

By Mandy Welborn

Turning a weak self-storage operation into a business that outperforms the competition is what it’s all about. The Yandow Realty Group did just that with its new automated tools and processes.

Owner Mark Yandow conducted case studies on two self-storage properties in different states that yielded astounding results, including increases in occupancy and net operating income. The studies span about 18 months, from January 2007 to July 2008, and demonstrate how automation and business-process improvements are instrumental to optimized facility performance, bottom-line cash flow and increased market value.

Facility Statistics and Management Structure

The first self-storage facility, South Congress Storage in Austin, Texas, was developed during the 1980s. It has approximately 40,000 square feet of enclosed storage and 2 acres of uncovered parking. With approximately 380 units, this facility needed an operation overhaul. Its profile in the beginning included:

  • Two full-time resident managers who spent three to four hours daily collecting and distributing operational data
  • An office that was open six days a week from 8 a.m. to 5 p.m.
  • 170 paid parking spaces
  • A gate controller with a single monthly access code for all customers, requiring tenants to acquire the new code each month
  • Outdated office technology—a dot-matrix printer, standalone software, no Internet connectivity and no website

The South Congress facility was similar to many others in the area. All customer interactions required the presence of a manager. If an employee wasn’t available, business wasn’t conducted. In addition, managers worked overtime and wasted time chasing information that could be readily available with sound property-management software.

The second facility in this case study is You Stuff It Personal Storage in Tehachapi, Calif. It has 274 storage units and 30,000 square feet. The facility’s profile includes:

  • One full-time manager
  • One part-time assistant manager
  • An owner who oversaw the property from 200 miles away
  • No website

This facility received numerous customer complaints about service levels and the onsite manager’s performance. The grievances included missed office hours, account-status disagreements, no or handwritten payment receipts for cash, and incorrect payment posting. After investigating the complaints, theft and lack of employee performance were identified as major issues.

The Transformation

Upon purchasing both properties, Yandow evaluated the state of the businesses. Substantial investments in infrastructure, technology and business processes were needed for both. Yandow believed the Internet and the flow of information were critical success factors. His background in real estate, consulting, information technology and supply-chain management made him a solid source for process-management knowledge. Here’s how the changes affected each property.

South Congress. Data integrity and timely data entry are fundamental to the use of automated tools and, based on this philosophy, Yandow decided to start from scratch and manually enter data into the new property-management software. Items purchased and services engaged included:

  • A kiosk to allow rentals and payments 24/7
  • Installation of an Internet connection (with static IP address)
  • Two new computers and printers (one for the office and one for customers)
  • A Web developer to launch a website with payment capability
  • An electrician to prepare the area for a kiosk (trench, power, phone, etc.)

Once escrow closed, a draft copy of the new business-process guide was distributed and discussed with employees. The owners and managers paired into teams and began the transformation. One team focused on the office and computer system, and the other on the kiosk and competitive landscape. To do this, the teams spent one day in the office and one day off site.

New printers, computers and property-management software were installed along with an Internet connection. Managers were trained on the basic operation of the new software.

A location for the kiosk was selected and the staff purchased a small building to house it. An electrician was hired to power it. A subcontractor was employed to upgrade the building’s finish to stucco and to construct a rain enclosure.

You Stuff It Personal Storage. Similar to what he did at South Congress, Yandow developed an improvement plan that addressed business processes, automation tools and the manager’s role and compensation. At this location, investments were made over a period of six months, including:

  • A kiosk
  • Internet-based property-management software
  • A website with ability to take customer payments
  • Security cameras with the capability to broadcast to a Web page

Once the automation tools were installed, the new business processes were introduced to the manager, which created direct accountability. Other processes included:

  • Accepting cash at the kiosk only and not in the office
  • Spot inspections and audits
  • Shifting the manager’s bonus structure to include rewards for customers use of the kiosk and other technology

Key Results

Yandow has experienced great success with both facilities. He feels strongly that owners need to streamline their business processes to take advantage of the integrated toolset. “If they don’t have hands-on experience, they should consider engaging someone who has successfully executed the targeted improvements, as opposed to the people that just talk about it,” he says. “To do this right, you should take a look at the overall operation, measure all aspects, and streamline the business to take advantage of the tools.”

At South Congress, Yandow now has real-time visibility to monitor facility performance over the Internet, a kiosk that provides customers access to rent units and make payments at any time, a website that returned to the first page on Google searches, and repeatable business processes. With increased occupancy at more than 95 percent and monthly net operating income increased by more than $6,000 per month, the facility appraised at 35 percent more than the purchase price eight months after acquisition.

A new manager was hired at You Stuff It who is very comfortable with the new business processes, software, automation tools and general operations. In July 2008, 170 payments were made through the kiosk. A typical payment takes three to five minutes and a new lease takes 20 to 25 minutes. In one month, it’s estimated the manager saves more than 18 hours on these two tasks. This time was redirected into truck rentals, managing delinquencies and business development, helping to increase the bottom line. Overall, the facility provides better customer service and more access to rent units and make payments.

It’s really an eye-opener to see how well customers and staff have adapted to the changes implemented at both facilities. These automation tools have given Yandow the ability to service customers day or night.

“Ten years ago the demand for storage space was more than the supply—it was an easy business to run,” Yandow says. “Customers needed the space, so even a poorly managed business was successful. Then developers overbuilt the supply of storage and the market shifted to a surplus. We are now engaged in markets where supply is greater than demand, and we must out-service our competition. Facilities need to operate as well-tuned streamlined organizations with a focus on customer satisfaction. Technology is an integral part of that strategy.”

Mandy Welborn is the marketing manager for OpenTech Alliance Inc., maker of the INSOMNIAC line of self-storage kiosks. For more information, call 602.749.9370; e-mail mwelborn@opentechalliance.com; visit www.opentechalliance.com .