How to best manage your self-storage business is one of the most important decisions you’ll make as an owner. As you develop your management plan, you must objectively gauge your individual talents, availability and knowledge regarding your market and business.
A good management plan can mean a difference of months on lease-up in a new facility. On an existing store, it can be the strength and stability of your bottom line. As you develop your business plan, you’ll be faced with an important decision: What is the best way to manage my facility?
Before making your decision, you must define your role in your business. While certainly a challenge, it’s important to be objective when analyzing your unique talents and shortcomings. You have to know and understand your strengths and weaknesses.
A good way to take this personal inventory is to apply an often-used business measurement called a SWOT analysis: Strengths, Weaknesses, Opportunities, Threats. A condensed example of a SWOT analysis is below. Our fictional character, Joe Stormore, is building his first self-storage project, after a successful career in other business ventures.
Now, like most of us, I’m sure it was easier for Joe Stormore to define his strengths. Usually, we can attribute our successes to our talents and abilities. The first two areas of the SWOT are internal pieces of the analysis. Strengths and Weaknesses are the characteristics that make you who you are. Opportunities and Threats are external variables, but must be addressed in your business plan, and ultimately in your management strategy.
Having this well-defined inventory is your first step in constructing your management plan. When you complete your SWOT, be as detailed as possible. Run it by a trusted advisor or close associate to make sure you have been objective and accurate. The SWOT analysis is a great tool to use in all types of strategic planning in your business.
Hiring or Becoming?
Once you have your personal inventory defined, review your personal goals and the goals for your business. Consider how active you wish to be in the day-to-day operations of your site. Perhaps you are transitioning from one career into self-storage, and the challenge of managing your store is important to you. Maybe this is a piece of a portfolio you’re building. Maybe your goal is to be passive in the ownership. Your goals and motivation should impact your management plan.
Your availability is important. If you’re out developing other properties, or running other businesses, you may not realistically have the time to review each detail of the management puzzle. If you’re a “big picture” person, and your storage business is just a piece of the overall picture, your time may be spent more productively in endeavors other than managing daily store activities.
If your store is your big picture, budget your time to meet the demands of handling each intricacy of operations. even if you hire your own manager, you’ll still need to provide the training and monitoring necessary to get the most out of your business. A complete business plan should include specific details of management, sales, customer relations, operations, finances, marketing, advertising and promotion, and an exit strategy.
‘I Want to Own It, Not Run It’
If you’re considering using a management company, the first step is conducting an interview. Do this prior to construction or acquisition, to fully benefit from any services the management company may offer in the predevelopment/due-diligence process. If you choose to use a third-party management firm, you’ll want its input on office design and site layout.
Key questions to ask when evaluating third-party management firms include:
1. How many sites do they currently have under management contract? Find a management firm that has the type of experience you need. Request to see examples of sites similar in size to yours. Be sure your management company understands what it takes to get your facility where you expect it to be.
2. What does their typical marketing and sales plan look like? Understand the part of their business model and how it works on your site.
3. What specific duties does the management company perform? A management company should run all day-to-day operations of your site for a fee, including hiring and firing, sales, collections, auctions, advertising, promotion, auditing, reporting, accounts management and customer relations.
4. How will your store benefit specifically from the firm’s economy of scale? If you need a replacement manager, know how your management company will respond. What cost savings will you reap? Advertising? Inventory?
5. What is the hierarchy of management, and who specifically works with you as the owner? You want to know the person you are dealing with, and understand how often you’ll be hearing from him.
6. What types of reporting should you expect? Make sure you understand the controls that the management company has in place and how you’ll see results. Get comfortable with the types of measurement the firm uses. Be clear on your expectations of your management team.
7. In what other areas can your management firm assist your business? Does the firm have construction and design experience? Can it help you market your facility when the time comes? What guidance is offered to you as an owner and developer?
“The biggest advantage we can offer to an owner is a business model based on over 30 years of benchmarks in the self-storage industry,” says Stuart Wade of Norfolk, Virginia-based AAAA Self Storage, a firm managing more than 50 stores from Virginia to Florida. “Many owners and developers have talents and experience they’ve developed in other businesses; our talent is in managing self-storage properties.”
‘I Can Do This!’
If you determine from your personal inventory and goals analysis that you have the time and the talents to self-direct the management of your site, here are some of the things you’ll need:
A Training Program. Before opening your doors, you want your manager to be able to handle the tough questions, sell the features and benefits of your site, and follow a good sales protocol. Your manager must feel comfortable with your software program, security system and daily operational expectations. If you don’t have experience, hire an experienced consultant to develop your training program. This program should include fine-tuning your own management skills and becoming intimately familiar with each facet of your business. Your training program should be ongoing.
An Employee Manual. Include a checklist of daily duties: site inspection, receivables tracking, credit card processing, opening and closing, and rules and regulations for employees. The manual also will have a list of key contacts and vendors.
A Business Plan. A detailed plan should be written to serve as your business strategy. It will include a mission statement, business-focused SWOT analysis (like the personal inventory), defined duties and key individuals, budget, projections and exit strategy.
A Marketing Plan. Use this to guide your strategy in reaching the customer. Define the ways you communicate to the community and serve customers at your site. The plan should also address pricing strategies, features and benefits analysis and advertising and promotion strategy.
Sales Protocol. Develop a guide your manager can use as he talks with customers. Anticipate customer questions and role-play with your manager.
Measurement Technology. Set up regular periodic monitoring of your store’s financial well-being. You’ll need to understand the management program, and your accounting software to self-audit financial records and recognize areas for improvement.
Advisory Team. A lawyer, an accountant and other trusted advisors should be accessible when you have questions about operations, taxes, finances, repairs, etc. Keep your team informed of your progress. Advisors need to be up to date to be effective.
Now, our fictional Joe Stormore probably has enough on his plate to benefit from using third-party management for his new store. Using a management firm won’t guarantee his success, but it enables him to focus on other businesses, new opportunities and goals.
I often advise clients new to this industry to hire a reputable third-party manager to run the day-to-day operations of their site. Management companies with a good track record can eliminate the learning curves a new owner will face. However, if your big picture is your site, then commit yourself to taking the necessary steps to being an effective leader. Whatever you choose, be sure your decision is based on your talents and availability.
Benjamin Burkhart is the principle in BKB Properties, a selfstorage consulting firm based in Richmond, Va. For more information, call 804.598.8742; e-mail email@example.com; visit www.bkbcompanies.com.