By Kirk Nash
Talk to any entrepreneur in the business. Ask them where they want their business to be in the future. Chances are their answer will depend on where they are currently. If it's a new business, they might say, "I want my business to grow, expand and become the best and biggest it can be. I want to take it to the top." If their business is established and doing well, they might say, "Business is good. I'm making money. I'm happy and content." These are average answers from average people.
The insightful, creative, far-thinking, concerned entrepreneur would answer this question in a much different way. His answer would be, "I want to become the competition." This person wants to be considered by all in his field as the competition. He knows that if he is considered to be the competition, he must be doing a lot of things right. His product must be quality, his prices must be fair and, most importantly, his customer service must be complete, ongoing, fresh and acute. His business acumen tells him that he must continue to do all the things that have helped get his business to the pinnacle and constantly offer innovative marketing and customer-service ideas and implementations.
Ralph Waldo Emerson said, "A man comes to measure his greatness by the regrets, envies and hatreds of his competitors." I don't know about you, but I want to become the competition.
The Other Pieces
I've met hundreds of storage-facility owners. Their number-one concern is occupancy, and rightly so. The more space you have rented, the more profitable you are. If you are 70 percent occupied, you have a problem. You need to fill your space. If you're 100 percent occupied, you have a different problem. You either need to build more space, raise your prices or both.
Price: Doing Things the Easy Way
Storage-facility owners seem to fall into one of four categories:
- I've just completed construction of my facility.
- I've just purchased an existing facility.
- I'm expanding my facility.
- It seems new facilities are sprouting up all over my market.
Regardless of which category you might place yourself in, your key concern is increasing occupancy. This is a constant battle because people move out each and every month. Your task is to replace those leaving each month and add more. Now, many operators/managers choose to take the easy way out by discounting storage rates or offering a free month's rent. Why? Mainly because managers often think your customers are shopping and making their decisions based on price. Take any market in the storage industry and I assure you the facility with the cheapest rates will not be the facility with the highest occupancy.
If you are one of the owners who believe cheap rates are the key to higher occupancy, you are wrong. All you are accomplishing is the cheapening of your business. You are bringing the net worth of your business down. You are literally compromising your storage facility for higher occupancy. This can catch up with you. You must become more creative in your marketing and customer service. Remember: You want to become the competition.
Derby Brown once said, "The business that considers itself immune to the necessity of advertising sooner or later finds itself immune to the business." Is there a storage facility in the world that isn't in the Yellow Pages? Probably not. Advertising is a necessity for storage facilities. Let's face it, storage is not an impulse purchase. People either need storage or they don't. How do they choose where to store their goods? Convenience, location, familiarity, availability, service and price. However, they cannot choose you if they don't know you exist. It is your task to make them knowledgeable of your existence.
Many facilities are built on major thoroughfares; they have a great location. Some facilities have a large, can't-miss sign and have established familiarity. Some facilities have large, color ads in the Yellow Pages to make potential customers aware of their presence. But, is there more that you can do? There is if you strive to become the competition.
Most storage-facility owners are keenly aware of the importance of a knowledgeable, courteous and well-trained staff. The first inquiry from a potential customer is possibly your only opportunity to sell that individual. How does your staff answer the phone? What information do they accumulate and assimilate from that prospect? I have found that most managers are well-versed and do an excellent job acquiring enough information to accurately ascertain the size unit the prospect needs. They also do an adequate job quoting the price of the unit, availability and any specials they may be running. But are they doing enough? Not if you want to become the competition.
Let's assume your occupancy is 85 percent, your location is excellent, you have a great sign and an attractive Yellow Pages ad, your prices are higher than average, you don't give away a free month's rent and you have an impeccable staff. Have you become the competition? Probably not. Why? Your occupancy rate is too low. You're missing something. What is it that keeps you from becoming the competition? Perhaps, rental trucks.
Yes, rental trucks. Are rental trucks the number-one ancillary product in the storage industry? No, locks are. Rental trucks are the difference between you and the competition. Let's look at some of the major players in the self-storage industry. If you examine the top 10 to 20 self-storage operators in the country, you will find that nearly half of them offer rental trucks. The others will soon offer them. Why? Because that's how they attract their prospects. Most started in the storage business and added rental trucks. One started in the rental-truck business and added storage.
Pay attention to the people moving into your facility over the next month. What means of transportation are they using to move in? Trucks. Pay attention to people moving out of your facility over the next month. What means of transportation are they using? Trucks. Very few move in or out in anything other than a truck. U-Haul, Ryder, Budget, Penske, On the Move, cousin Bill's pick-up--they're all trucks. If you don't currently offer rental trucks, you will.
Bill Smith needed a 10-by-20 storage unit for six months. He called ABC Storage and XYZ Storage. Both facilities had the size he needed at the exact same price. Both facilities are exactly three miles from him. Both facilities offered locks and packing supplies for sale as ancillary products. ABC Storage offered rental trucks and XYZ did not, but Bill needed a truck to move his goods into the facility. If he leased space from ABC Storage, he could also rent his truck from the same place. If he leased space from XYZ Storage, he would have to go elsewhere to rent a truck. Where did Bill sign his lease for the 10-by-20 unit? You guessed it--ABC Storage. Mr. Smith liked the idea of one-stop shopping, and ABC Storage had become the competition.
Storage facilities with rental trucks have a higher occupancy rate than equal facilities without trucks. Higher occupancy rates translate into more profit. But let's take it a step further: You will make additional income from rental trucks. Whether you use a large rental-truck company that pays you a commission for truck rentals or you add your own truck, they will generate additional income. Am I suggesting that you allow truck rentals to usurp your storage business? No. I am, however, telling you that the number-one ancillary product to storage should be rental trucks.
And, for those of you who have taken the easy way out by comping one month's rent, why not comp the rental truck? It is far less expensive to comp the truck than the space. When you appraise your business, it will show lost revenue from comped space, thus deteriorating your bottom line and, consequently, lowering your net worth. A comped rental truck will not show as a negative, but rather as credit on your balance sheet, because you have the rental of trucks to those moving out of your facility to make up for those giveaways to those moving in. So, if you insist on a giveaway, give the truck, not the space.
Newly Armed Staff
When Mr. Smith called ABC Storage, the staff answered the phone with "ABC Storage and truck rental, how may I help you?" The manager of ABC Storage then asked Mr. Smith how he planned to move into the facility. Mr. Smith informed the manager he would be renting a truck, and the manager proceeded to reserve one for him. All of his needs were met. ABC Storage had a completely satisfied customer. If Mr. Smith ever needs storage in the future, he will surely go to ABC Storage. And if anyone Mr. Smith knows asks him about storage, he will surely refer them to ABC Storage, because remember: ABC Storage has become the competition.
Imagine a truck--your truck--driving throughout your market area advertising your business, a moving billboard advertising facility. Everywhere the truck goes, your logo, advertising your facility, will be seen by thousands of prospective customers. Every time you comp the truck to someone moving in or rent the truck to someone moving out, you are advertising your facility wherever that truck goes.
If the truck isn't being used on a given day, park it in a high-traffic area. Let local charities know the truck is available for their use free of charge. Let the high school use it to pull a float in the homecoming parade. Advertising your business on your truck will enhance the familiarity of your storage facility immensely. And for those of you who are truly sophisticated, you can market advertising to others on the sides of your truck--local realtors, title companies, restaurants and auto dealers are always looking for innovative ways to advertise their businesses. For a small monthly fee, you can advertise their business--in addition to your facility--on the side of your truck. You are now on your way to becoming the competition.
Rental trucks are the wave of the future in the self-storage industry. In another five to 10 years, you will be hard-pressed to find a storage facility without them. Zoning and architectural standards are becoming more and more stringent for self-storage facilities. The consumer is getting more sophisticated and demanding. Record storage, wine storage, cold storage, climate-controlled storage were, at one time, a rarity. Now they are commonplace. Your choice is to lead or follow. Self-storage customers are seeking one-stop shopping for their storage, packing and moving needs. Rental trucks can fulfill that need.
George H. Henshaw, owner of Lincoln Service Corp. in Salem, Ohio, wrote me a letter that exemplifies what I've been discussing. "We purchased our own rental truck, and over the last three months, the truck has returned $2,325 over all costs, including personnel, interest, maintenance, insurance and depreciation," he says. "Coupled with this, we have an immense traveling billboard advertising our business all over town. What's even better: We were able to secure several storage rentals by discounting our truck $10 one time, rather than discounting our storage fee forever."
Doug Hunt, owner of Access Self Storage in Dallas, was talking to one of his competitors in the storage business not long ago. His competitor asked him how his rental trucks were working for him. Hunt responded, "I started with one truck more than three years ago and now have 20 trucks. It's working very well." Hunt comps his trucks to those moving in for a couple of hours, then charges an hourly rate thereafter. He is both serving his customers and making money.
Henshaw and Hunt have become the competition in their markets. They are on the leading edge of customer service. They know that a business either increases or decreases, and that businesses rarely stand still at zero growth.
If you have recently built or purchased a storage facility, expanded your existing facility or think your market is shrinking due to expansion by others in your area, it is time for you to consider adding rental trucks to your marketing and customer-service plan. Do this, and perhaps you, too, will become the competition.
Kirk W. Nash, together with Maury Westerdale, is co-founder of On The Move Inc., which was founded in 1991 to help supply rental trucks and insurance to the self-storage industry. The company has since branched out to cover the rental, apartment and realty industry. Mr. Nash serves as vice president and chief operating officer of On The Move. For more information call (800) 645-9949.
How to Acquire Rental Trucks
Now that you've decided to become the competition, you may have questions as to how you start. Your options are many, and there are numerous people in the rental-truck business you can contact. If you are looking for a national one-way and local truck-rental company, you can contact companies such as:
If you are looking for your own truck, companies such as On The Move, Ryder, Hertz and Budget, among others, all have truck-leasing programs you may want to investigate. There are also numerous self-storage owners who currently rent and comp rental trucks who would be happy to share their experiences with you.