You’ll also need a few simple but necessary financial reports. All the information in the world is meaningless unless you truly know the financial status of your operation. In other words, if you don’t know if you’re profitable, then all the other information is irrelevant. It does you no good unless you’re making enough money to stay in business.
The most important financial report is a profit and loss statement (P&L). The work that goes into producing this report has to be accurate and timely, and the person using the report must understand its makeup. You should have a monthly P&L and an annual one so you can measure your year-to-year profit and expenses. In its simplest form, the P&L should account for all income received and money spent to run the self-storage business.
Income. As your understanding of the business deepens, you should be able to break down your income by products and services so you can see what’s producing a profit vs. what’s just costing you money. For example, let’s say you offer retail product and spend a great deal on inventory, but your sales are not profitable. At some point, you have to decide if you want to continue to offer ancillary items or reduce the number of products you offer.
Perhaps you have an abundance of 5-by-10 units available, but only a few 10-by-10s, and they’re almost always occupied. So you make the decision to combine or convert some of the smaller units into larger ones, thus increasing your sales of these units while gaining income from the smaller spaces that were once empty.
By organizing your income items in a detailed format, you can see which units are producing income and which are lagging. This offers you an opportunity to make changes, better meet your market’s demands and generate more sales.
Expenses. A P&L report will also contain the most frequently used categories for expenses. For example, you should be able to track your advertising, payroll or wages, repairs and maintenance, services, utilities, insurance costs, and taxes. If you know these items, you’ll be able to deduce your profitability by comparing income received to business expenses.
No business owner can survive for a long period of time if the money he receives is less than the money he spends. It’s a pretty simple conclusion but one that some business owners don’t know until it’s too late. Unless you have some way to track your spending accurately, you’ll never really know if your business is thriving or failing.
In most self-storage management software, the financial reports that can be generated are numerous and can be very technical. Your level of business education, knowledge of finance and accounting, and ability to interpret the data will determine the level of sophistication you’ll need or want from your reports. If you don’t understand the financial aspect of your business, seek professional guidance, as this can be the difference between staying in business for the long haul or ending up in potential bankruptcy or worse.
Management reports can be very simple or comprised of intensely complicated data. Keep in mind the reports you understand and require are simply one more piece to this puzzle we call “business” and should be embraced as such.
Mel Holsinger is president of Professional Self Storage Management LLC, which manages more than 40 facilities in Arizona, Colorado and Texas. Holsinger has been in the self-storage industry for more than 25 years. He is a frequent speaker at the Inside Self-Storage World Expo and other industry expos and a contributing writer to Inside Self-Storage magazine. To reach him, call 520.319.2164; e-mail firstname.lastname@example.org .