An Outside Assessment: The Self-Storage Management Audit
|Copyright 2014 by Virgo Publishing.|
|By: Jim Chiswell|
|Posted on: 04/05/2009|
The topics of third-party and remote management are vital for existing self-storage owners, as well as for builders and investors who are entering the industry through acquisition or development. We know that facility managers provide the character and customer-service image of our businesses. Now, the quality of site management is emerging as one of the key indices of facility success.
Because we've been building to meet the pent-up demand for storage space for several years, in many cases, facilities filled up despite the quality of the management and not as a result of it. Those times have changed forever. While I always recommend that owners consider engaging a third-party management company when buying or building a facility, I now find myself discussing the topic with those who have already operated their own stores for years.
If you are a self-storage owner, consider bringing in an industry expert to provide you with an objective arm's-length assessment of your site. A consulting engagement that involves sharing the statistics of your current operation and complete marketing strategy with someone outside your company will force you to ask yourself important questions.
For example, when I ask an owner for a copy of his tenant ZIP-code marketing report and customer-longevity analysis, he often candidly explains that he didn’t realize his software could produce those types of reports. Knowing exactly where your customers come from can provide significant insight into the the effectiveness of your marketing dollars. Knowing that your 10-by-20 or 10-by-30 customers stay an average of 10 to 20 months longer could impact the deals you're willing to make to capture that type of tenant.
In countless cases, an outside review can quickly identify problematic items that owners have ignored or managers thought were proper. The robotic reply from some employees, “We do it that way because that is the way we have always done it,” could point to an underlying lack of critical knowledge or misunderstanding about vital day-to-day operational details.
A Second Opinion
There's nothing like having a detailed, professional management audit conducted by an objective third party to shine new light on problems and shortcomings within your operation. For example, knowing your managers have a consistent pattern of waiving the first late fee for every delinquent customer could cause some owners' blood pressure to climb. Or coming to the painful realization that 45 percent of your current customers are paying well below street rates just because the manager convinced you that you shouldn't raise rents. Seeing the details a skilled management audit can produce is one of today’s best investments.
Some owners may realize they have internal problems but are too close to the situation to put their finger on it. Realizing after a review that 50 percent of staff need to be replaced with employees who realize we're in business to make a profit can be sobering. The flip side is a detailed report can also point to all the areas where your established systems are working and strong.
Advertising and Marketing
Another area in which an expert review can help you is marketing. You need to know if your marketing dollars are being used effectively and if your strategies are being properly measured. Spending dollars in a vacuum of information can never achieve the intended results. The reason is because you don’t know what expenditure achieved what outcome.
I'm always amazed when I hear an owner say he spent $1,500 per year on Valpak mailings, but he can't answer how many of those mailings resulted in rentals. If you aren't measuring results, you can never know the effectiveness of a market compaign.
An objective analysis can help you determine if you're turning over every digital rock in search of low-cost or no-cost promotional opportunities. Even the largest operators sometimes miss free Internet options. If you've never “claimed” your business listing on Google, Yahoo, MSN, MapQuest, etc., you do not have a full appreciation for the portals that could bring in your next customer.
The bottom line is you don’t have to clap your hands and walk away from the table to engage a third-party management company or other industry expert to help you see where you are and where you want to go in 2009 and beyond. As a real estate asset class, self-storage continues to enjoy one of the highest relative occupancy levels, despite recent setbacks. There has never been a better or more crucial time to make sure your facility's performance report card shows straight As.
Jim Chiswell is the owner of Chiswell & Associates LLC, which has provided feasibility studies, acquisition due diligence and customized manager training for the self-storage industry since 1990. Jim has served for a number of years on the Inside Self-Storage Editorial Advisory Board, is a moderator on the SelfStorageTalk.com interactive online community and is an instructor of the Self-Storage Training Institute. He can be reached at 434.589.4446; e-mail firstname.lastname@example.org; visit www.selfstorageconsulting.com.