6. Understand Laws Governing Your Business
In a prior article for Inside Self-Storage, I discussed the importance of gaining a general knowledge of bankruptcy laws prior to receiving of your first tenant bankruptcy notice. Learn what your rights are. Understand your obligations. Plot your options. By doing this in advance, you’ll eliminate surprise and stress and maybe legal fees, too.
This concept is true of all laws relating to self-storage. Knowing the ground rules that go along with your business entity is essential. Ditto with your local, state and federal tax laws and regulations. Understanding zoning and building codes, public-safety rules and work-related regulations are equally important. As noted above, pay attention to your state’s lien law. Be intimately familiar with it and follow it to the letter.
7. Correctly Apply the Laws You’ve Mastered
Once you’ve mastered the laws pertaining to your business, particularly your lien law, it’s important that you apply them correctly. Confused? Consult your local attorney. In applying these laws, it’s essential to pay attention to the details. No shortcuts. Meet deadlines. Follow procedure.
As noted above, your state’s lien law is essentially a gift from your legislature, avoiding the need to go to court to evict a tenants for non-payment and auction their property. Saves time and money. At the same time, you need to follow the lien procedure to the letter, even if it appears fruitless. Why? Because many of those details have been put in place to protect the consumer. Failure to master the details and make sure they’re applied completely each time can result in expensive and stressful lawsuit, which you might lose.
If you take away only one thing from this article, remember this: If you feel any detail leading up to an auction has been overlooked, cancel it for any unit involved and start over. To make sure the details are followed, create a comprehensive auction checklist and follow it.
8. Have a Simple and Understandable Storage Agreement
Just like the stock market, self-storage operators thrive on certainty. “Covering all the bases” in the relationship with your tenants is an important consideration. Through this process, you know if you get into a dispute with a tenant, you’ll more than likely prevail.
How do you do this? One way is by having a strong and understandable storage agreement. By strong, I mean being sure the agreement contains all of the appropriate language to protect yourself in the event of default. By understandable, your agreement should be written in such a way that you, your staff and tenants understand it.
Contracts that are plainly written are less liable to result in disputes because all parties know where they stand and can act accordingly. On the other hand, contracts that are ambiguous and not understandable often result in disputes—and stressful litigation.
Consider hiring someone to draft a “plain language” agreement for you. Avoid “legalese” that neither you nor your tenants understand. Legal rights and obligations can been expressed in simple language, too. Also, have your agreement reviewed periodically to be sure it is up to date. A simple, understandable and current storage agreement will result in less stress for you.
9. Reach Out to Your Fellow Storage Operators
As John Dunne famously said, “No man is an island unto himself.” This is especially true in our interconnected world today—as well as self-storage, too. For a number of years, I was involved in an informal, local group of self-storage operators in the Washington, D.C., area. We met monthly for lunch and typically had a speaker on a topic of mutual interest. I’m sorry this group is no longer active. Why? Because of what occurred during the luncheon prior to the speaker.
We had an open discussion between members regarding current storage issues in our area: Occupancy. New products. Managers. Marketing. What is working. What isn’t. Any issue but rental rates (think antitrust here). These discussions were always valuable. Am I suggesting you form a local group? Maybe. You would benefit from it.
More important, however, is my hope that you’ll begin to reach out to others, including competitors for information, advice and, sometimes, comfort. Maybe you’re experiencing an unexplained drop in occupancy. It may be helpful to know if it is just you or an industry trend. You can reach out in other ways, too. Join your local chamber of commerce. Start a dialogue. Different businesses, similar problems.
10. Carry Adequate Insurance
Less stress is what insurance is all about. You shift the cost of a risk from you to them. Of course, you have to pay for it, but you save the worry. In some instances, insurance is required by your lender. These coverages you already have, but what about optional coverages? Do you have directors and officers coverage to protect your board? How about coverage for wrongful auction? Coverage for your tenants’ property in case of fire? All of these are important to your business and will help reduce your stress.
Reach out to the number of insurance companies that offer special coverages for self-storage operators. See what they offer and compare.
I’ve discussed 10 simple ways you can reduce the pressure of managing your self-storage business. If implemented, each one can lead to smoother operation, better business protection and, of course, less stress. In the fast-paced world we live in, we can all use a little less hassle.
Bernard Fensterwald is a consulting attorney with more than 25 years of experience. He’s licensed in Maryland, Virginia and the District of Columbia. He's also a principal in U-Store Management Corp., a Washington, D.C.-based self-storage company, and a past president of the Washington Area Self-Storage Association. To reach him, e-mail firstname.lastname@example.org; visit www.global-self-storage.com. To read his blog, see www.fensterwald.wordpress.com.