Fighting the 'Cancer' of Poor Management Philosophy in Self-Storage
|Copyright 2014 by Virgo Publishing.|
|By: Benjamin Burkhart|
|Posted on: 09/06/2012|
I hate cancer. My adopted and beloved grandfather, a grandmother and a close friend lost brutal heart-wrenching battles with the disease. I sat and played guitar as my grandfather took his last breaths, having said his last words days before. I think about it a lot. So don’t misread me when I use the word “cancer” to talk about management practices in self-storage. I do not take it lightly, and neither should you. Cancer is the worst.
Managers are the lifeblood of the self-storage businesses. But this industry has a cancer of poor management practices and philosophy. This sickness is our own fault. We don’t value our employees. We don’t train them. We build a pretty picture with lots of time and money, and then put a weak manager behind the desk to handle all the customers. We hope our location, market and pricing will mitigate our lousy management decisions.
We spend millions on land and development. We overspend on security. We buy the best signage. Then we hire a manager for $10 an hour and brag about our awesome business. It’s like building a nice new gym in your house with all the best equipment, and then chain-smoking cigarettes and eating bacon while watching the new ceiling-mounted TV. As developers and owners, are we so caught up on curb appeal that we forget how important employees really are to our bottom line? Is our business acumen really that shallow?
II recently visited the store of a major national self-storage player. When I walked in, the manager was texting on her phone and didn’t even look up at me until I said "hello" and introduced myself. I left thinking, “I could pull someone off the street and train him in five minutes to provide better service than that.”
Although I believe it’s a big mistake, some of the industry's biggest operators can rest on their interchangeable management protocol because they have a huge, productive marketing machine that churns out leads and leases from many states away. Smaller operators, though, cannot afford that complacency. Revenue happens at the point where the manager meets the customer—by phone, e-mail, and especially in person.
How do I know I’m right? Because in almost every established market I observe, the competitor with the best management profile leads in price and occupancy. That’s a fact worth noting if your business is trailing the market leader. So for you, Mr. Owner-Operator, here are a few practical elements you can plug into your management philosophy that might move you up the competitive ladder.
Know Your Target, Teach Your Manager
Have you profiled your average tenant? The management software I use at my store prompts the manager to collect some important data about our customers. It’s mostly demographic and marketing data, but it can be useful. Knowing who we serve and who we miss can help us develop effective, targeted marketing strategies. The data is important and valuable, but the more subjective profile can be just as significant.
Teach your managers to develop rapport while asking quality questions, such as "What will you be storing?", "How long will you need storage?" and "Have you used storage before?" If managers ask the right questions, they’ll have a good feel for what’s creating demand in your market.
They should also ask the tenant if he’s moved before, or moved or lost a business. For most people, moving is a tough, sometimes traumatic experience. Our tenants are often not having the best day of their lives when they get to our store. They're stressed out, exhausted, angry with someone or emotionally spent.
I teach managers that their phone will not always ring, and the door will not be in constant motion; but when a call comes in or the door opens, they must be on top of their game—pleasant, friendly, helpful and eager to provide the best solution to the customer’s demand. What our employees can enjoy about their duties is providing a much-needed relief to customers on bad days. Because that’s what moving day is: stress, sweat, anxiety, arguments and pain. With the right direction, storage managers can provide a pleasant experience during an otherwise bitter time.
It’s Sales, Not Property Management
The self-storage manager position is a sales job. We shouldn’t even call it “manager,” we should call it sales or customer service. We can hire out all the maintenance or site issues we have with contracts or on an as-needed basis. I cringe when owners say, “Yeah, we have a great manager. He can pretty much do anything we need him to do—fix doors, drill locks, paint, cut the grass. He can fix anything. He’s a real gem.” But is he a salesperson?
Often, managers are so overloaded with maintenance or reporting duties that they don’t even see themselves as salespeople. They see themselves as “property managers.” And because of that, the sales side—the part that makes you money—suffers.
Managers must be required to stand up when a customer comes in the door. They must smile. They need to look professional and speak intelligently. They need to be friendly, warm and personable. The storage salesperson must master the art of asking the right questions every time and providing thoughtful answers. If your manager can’t do that, you have a problem.
Don’t just call them salespeople, compensate them like salespeople. Treat them like salespeople. Certain activities will yield results, like making calls to local businesses and visiting medical, dental, legal and other professional offices. Joint venturing with local businesses with a coupon drive. Calling existing tenants and asking for referrals. Making an extra call for late rents. Give your manager a reason to think of himself as the salesperson and compensate him accordingly.
At my store, we pay bonuses every month based on move-ins, gross revenue and declining delinquency. Those things change the bottom line every month. When I write a bonus check for $500 or $1,000 at the end of the month, I’m happy and my salesperson is happy.
I’ll go ahead and step on some toes with my view on resident managers. I used to be on the fence about this when I had very little industry experience. It sounds OK, right? I mean, people like knowing someone is watching their stuff, right? Well, that’s a myth.
Resident management is an archaic practice, and non-resident managers are better. I don’t want someone whose highest aspiration in life is living at my concrete compound with an open/closed/private sign on his door. I want a salesperson. I want a personality who strives to make himself better, not someone who mixes laundry time with collection calls. Cash is usually the best motivator. An upstairs apartment with a comfy sofa motivates nobody worth paying.
What about site maintenance? Sweeping and cleaning bathrooms is why you hire a high-school kid. Pay him $8 an hour for 10 hours per week and you’ll have clean floors and toilets.
It Really Is Top Down
Installing the correct management protocol begins at the top of the food chain. Your management philosophy will guide your employees. If you value them at $10 an hour and nothing more, that’s what you’ll get. If you’re complacent, they’ll be complacent. If you try to find ways for them to make more money with you, the right employees will get it done.
If anything I’ve written rings in your ears, see it as an opportunity to make your business better. I can bet that sooner or later, the competing owner down the street will either tighten up or relax, creating an opportunity for you to strengthen your operation. Perhaps that time for you to grab additional market share is now. Better management practices will win.
I’ve learned with failures and successes that I don’t get lucky. I don’t improve without effort. It takes hard work, being able to learn from mistakes, intellectual rigor and overcoming challenges to install the best management practices. Better management yields higher rental rates and occupancy and stronger profit. But if I don’t work hard at it, if I don’t keep my management style healthy, the cancer I’m striving to overcome will win.
Benjamin Burkhart is owner of BKB Properties and StorageStudy.com. He provides professional consultation to real estate owners and developers throughout North America. To reach him, call 804.598.8742; e-mail email@example.com.