By Bryce Grefe
Whether you’re looking to enjoy semi-retirement, are involved in other business ventures, or need help to make your self-storage facility more profitable, a third-party management company could be your answer. Comprehensive management companies provide a full gamut of services, including financial reporting, hiring and more. But their real goal should be to increase your facility’s bottom line. How do they do this, and what should you expect?
First and foremost on the list should be staffing. We know the person behind the counter makes or breaks a self-storage operation. Finding proper staff is difficult. The reality is you have a 50/50 chance of selecting a person appropriate for the position.
Through a series of hiring processes, a good management company should be able to improve those odds substantially. Starting with a telephone interview and following up with an in-person interview is a good beginning. There are other tools to improve the process beyond the gut-level reaction to the interviewee. Personality profiles are an excellent method to help determine if the candidate has a personality conducive to the job. Drug tests and credit and background checks further ensure the potential hire isn't an accident waiting to happen.
Once the candidate has been hired, the training process begins. Does the management company have a formalized program? Does it include onsite training addressing facility operation, phone skills and customer service? A comprehensive two-week training program should result in a manager capable of handling most day-to-day activities, but this is just the beginning. It takes approximately one year to get a new manager running on “all eight cylinders.” Constant training on various skills is an ongoing process; and in reality, it never ends.
Does the management company have an incentive structure for the sales manager? These incentives should be income-oriented, for the manager and the facility. Every dollar paid in a well-designed incentive will yield multiple returns in actual income to the operation.
Once you’ve hired and trained a good manager, what does the management company need to do to improve the bottom line? The income side of the equation should be the first area of attention, including the implementation of supply-and-demand pricing. If a prospect shows up at the door at closing time and wants a unit, you don’t need to give him the same discounted price as someone who called and is shopping around. On the other hand, the Internet has made the market very price competitive, so you want meet or beat any price for unit sizes with excess inventory. Your management company should have a clear strategy for maximizing rental income.
Other income-producers a management company may suggest include late fees (5 percent of gross revenue) tenant-insurance administrative fees, the sale ancillary merchandise and administrative fees in lieu of deposits, just to name a few. These items in themselves won't pay your mortgage, but they all add bottom-line dollars and increase facility value.