By Alyssa Quill
School’s back in session, summer’s over, Halloween’s around the corner … It’s time to start thinking about your self-storage facility's operational budget for 2013! “Already!?!?” you ask. To budget well, we need to prepare, research and take our time. Budgets are usually completed for the following year by Dec. 1. The process can take about a month, so you should begin by mid-October.
Why is budgeting important? For starters, many investors and bankers require it. Even if it’s not required, a budget helps predict cash flow, sets goals for revenue growth, and creates a framework from which operators can manage their expenses. Without a budget, it can be easy to spend more money than you’re bringing in. Here are seven critical steps to creating a realistic 2013 budget for your self-storage operation.
Step 1: Gather Tools and Data
Before you begin assembling your budget, spend some time gathering important data. If you have a bookkeeper or property accountant, ask him for copies of the property’s profit-and-loss statements for the last two years, and year to date for the current year. Also, find out when paychecks will be cut next year. If payday is every two weeks for your manager, which two months will have three payroll periods instead of two during 2013? Review any existing contracts that will continue into 2013. This may include Yellow Pages ad commitments, preventive maintenance or Internet-marketing contracts.
You should also generate a couple of critical reports from your self-storage management software, including the most recent monthly summary report. It will give you starting points for gross potential, occupancy and total actual rent. It would also be really helpful to have a historical report that shows move-ins, move-outs, occupied units, total rent collected and discounts given for the last 36 months.
Step 2: Review the Competition
Budgeting season is also a great time to visit your local competitors. How does your facility compare in terms of quality, service and value? Are there any changes you could make in 2013 that would significantly improve your occupancy or revenue? This might include adding climate-controlled units, sealcoating your parking lot, purchasing new banners to improve signage, instituting a new move-in special, or hiring a more sales-oriented staff.
Step 3: Audit for Maintenance and Capital Project Needs
After you’ve visited your competitors, do a thorough walk-through of your property, trying to see it from a customer’s perspective. Make sure all the lights are working, and review the condition of the signage, gutters and roof. Are all keypads, gates and cameras working? Are there any signs of asphalt damage or wear and tear? Are there any doors that need spring adjustments or replacement? Create a list of capital improvements and maintenance projects you’d like to complete next year, and then gather estimates.