By Kirk Nash
If you talk to any entrepreneur in self-storage and ask him where he wants to see his business in the future, his answer will depend on his level of current success. If he is just starting out, he might say, "I want my business to grow and become the best and biggest it can be. I want to take it to the top." But if he's more established and doing well, he might say, "Business is good. I'm making money. I'd like to see more of the same." These are average answers from average people.
The insightful, creative, far-thinking 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 a worthy rival. And he knows that if he is to be considered "the competition," he must be doing a lot of things right. He must raise the standard with a quality product, his prices must be fair and, most important, his customer service must be complete, ongoing, fresh and acute. His business acumen tells him 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.
I don't know about you, but I want to become the competition.
The Other Pieces
Occupancy is the No. 1 concern of self-storage entrepreneurs, 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. On the other hand, 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: 1) they have just completed construction of a facility; 2) they have just purchased an existing facility; 3) they are expanding a facility; 4) they own one of several new facilities sprouting up all over the market. Regardless of the category you fall into, increasing occupancy is your main concern. And it is a constant battle due to the transient nature of the business.
Your task is to replace those tenants that leave 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? Because it is the consensus that when shopping, customers are only concerned about price. Look at any facility in the storage industry, and it's almost a guarantee the facility with the cheapest rates will not be the facility with the highest occupancy.
If you are the entrepreneur who believes cheap rates are the key to higher occupancy, you are wrong. The only thing you are truly accomplishing is the undersale of your product and the depreciation of your business. You are compromising your storage facility for higher occupancy, and bringing the net worth of your business down. This will 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. Storage is not an impulse purchase. People either need it or they don't. How do they choose where to store their goods? Convenience, location, familiarity, availability, service and price. They cannot, however, choose you if they don't know you exist. Your task is 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. Other facilities have large, color ads in the Yellow Pages to make potential customers aware of their presence. If you're already doing all of those things, is there still more 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 may be the only opportunity to sell that individual. How does your staff answer the phone? What information do they accumulate and assimilate from that prospect? Most managers are well-versed and do an excellent job acquiring enough information to accurately determine 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.
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 most important ancillary products 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 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 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.
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? You guessed it--ABC Storage. Bill 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, it will generate additional income. The No. 1 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. Become the competition.
Newly Armed Staff
When Bill 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 Bill how he planned to move into the facility. He 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 Bill ever needs storage in the future, he will surely go to ABC Storage. And if anyone he knows asks him about storage, he will surely refer that person 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 your 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.
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 Nash is vice president and CEO of Boerne, Texas-based On the Move Inc. On the Move offers a rental-truck program to self-storage and other industries that includes trucks, insurance, rental forms, handtrucks and furniture pads. For more information, call 800.645.9949 or visit www.onthemovetrucks.com.