The topics of this month’s issue are storage law and insurance. What these subjects have in common is protection: How do you protect your business and yourself? While it is necessary to understand the law and have comprehensive insurance, nothing protects you more than a business plan.
For years, self-storage operators faced little, if any, competition. Today, more money and sophisticated operators are entering the industry. Competition has become an issue in virtually every market. The reality of new business requires more careful, strategic planning.
A plan protects you in many ways. It forces you to do the research essential to be a successful company. It gives you time to think things out before you find yourself in the throes of business. And once your plan is in place, you can go back to it as a “litmus test” for any decision you make. The problem is, most people never write a comprehensive plan. It’s not easy. It takes time, and you have other obligations. But it is an important step that will separate you from the pack and enable your business to thrive over the long term.
Recently, I was speaking to someone with years of experience in this industry. He made a comment that struck me: “Most people enter this business with an idea, a bag of money or a plan,” he said. The goal of this article is to pull all three together.
Begin at the End
So where do we start? Most people are taught to write a plan from beginning to end—to start with a mission statement, then focus on the product, market, competition, sales plan, marketing plan and financials. But many people either don’t make it to the financial section, or have sold themselves so much on their own idea they believe the financials are irrelevant. The ironic thing is sophisticated investors will flip right to the last page of the plan to look at the numbers. The rest is just filler.
Here’s a tip: Begin at the end. Create your vision and move straight to the financials. Work diligently on your financial plan. Figure out how your business pencils out, and the numbers will dictate how the rest of the plan lays out for you.
Build a Team
One of the most important aspects of your plan is the assembly of your team. Focus on your own core competency, then surround yourself with people who are great at doing everything else. Initially, you may want to hire consultants to reduce your costs by staffing on a project-by-project basis.
Here’s the key: Whatever the situation calls for, create an environment in which everyone wins. Be honest, upfront and fair. Be truly committed to helping everyone on your team benefit. This will attract people who work harder and are more committed and loyal than anywhere else.
A few of the people you may need to add to your team include a corporate attorney, real estate attorney, accountant, broker, title officer, escrow officer, banker, private or institutional investors, market and feasibility expert, tax planner, auditor, entitlement expert, architect, construction team, etc. Do your homework.
Get references, and call them! Make sure your team is complete. When opportunity strikes, you will be ready to attack.
If your goal is to grow your business, create systems that enable you to add scale rapidly and operate more efficiently as you grow. Use technology to streamline processes as much as possible, and fine-tune with each deal. This could mean standardizing your sales pitch or putting together market-analysis, acquisition- analysis or development analysis tools.
Know Your Market
Some things never change. In self-storage, nothing holds truer than this: A good location is the most important factor in determining the success or failure of a facility.
Unfortunately, people still jump into markets without any true understanding of market conditions. This usually results in one of many problems—difficulty getting land entitled, poor unit mixes, slow lease-up periods, market saturation or a softening in overall rental rates. Therefore, it is absolutely critical to get a market study and feasibility report completed prior to entering any market. Your market analyst should be a key part of your team.
Take It to the Bank
Once you have put together your plan and built your team, it is time to begin developing relationships with banks. A good banker could become one of your greatest sources of information, and may be able to provide quality referrals to consultants and other service professionals. Don’t be afraid to ask bankers to help you look at a deal and analyze it. They are part of your team, and their job is to help get your deal done.
Put the Word Out
There is tremendous competition in virtually every facet of the self-storage industry. How are you going to market yourself and stand out from the competition? No matter your business goal, it is crucial to be creative and produce a marketing plan that helps you to stand out. Once you have found your angle, tell anyone and everyone about it.
Finally, be patient. Don’t let your passion to build your business blind you to the fundamentals. Stick to your plan and be persistent, and the right path will unfold.
Scott Duffy is the founder and principal of Self Storage Capital Group Inc., an emerging owner and operator of public self-storage facilities based in Santa Monica, Calif. Mr. Duffy is an entrepreneur and investor whose background includes more than 15 years of management experience with media and technology firms, including FOX Sports, CBS Sportsline and NBC Internet. He has also worked with best-selling authors and speakers Anthony Robbins and Jim Rohn, conducting workshops throughout the United States and Canada in sales training, customer service and personal development. For more information, e-mail [email protected].