As we wind down another calendar year, self-storage owners are working on next year’s budgets. After we get past the optimistic income projections, we need to analyze our operating expenses and see if we can manage our facilities more efficiently and lower our costs. With price increases occurring in most every facet of life (gas, food, insurance, taxes, etc.), planning for business expenses is complex in many ways.
The goal is to effectively manage costs and minimize increases. Approach each line item with an open mind and look outside the box. Here are some tips to keep your facility’s expenses in check.
Consider Your Vendors
An important consideration when looking at your overall expenses is your vendor relationships. First, look at your business and tenant-insurance policies. Have signed on with the same property-insurance company year after year simply out of habit? You could be saving money simply by switching providers. Get at least three different companies to look at your policy and offer you a bid.
There may also be some new discounts available to you. For example, if you’ve added “mandatory” tenant insurance in the past year, look to see if there’s a discount based on your facility's average penetration. Have you upgraded your security system, improved safety conditions or made other major capital improvements that have increased the value of your property? If so, go over these improvements with your insurance agent to see if any of them can help you save.
Have you really looked at your invoices and statements from your other vendors, such as your landscaper, maintenance company, etc.? Again, get some other companies to give you bids for the same services.
When gas prices sky rocketed a few years ago, many vendors added a “fuel surcharge.” Are you still paying for this and, if so, why? Ask your vendor if you can reduce or eliminate it all together. Fuel is costly, but after this many years of relatively stable prices, perhaps this is something you should not have to pay.
Are you spending money on services that could be purchased for less or even eliminated? For example, compare the cost of an outside service, such as pest control, to doing it yourself or having your manager do it as part of his duties. In many cases, you’re paying hundreds of dollars for something that may not be as necessary as it was in the past, or that could be done in-house by simply buying the materials.
I’m not saying you should make your manager do more than is necessary but, in many cases, you could offer your manager a raise of half of what you save by not outsourcing the service. This way, you both win. Your manager gets a few more dollars in his pocket, and you shell out a few less. Look at each item you outsource and evaluate it from every conceivable angle.
Are you still writing checks to pay your bills? These days, most companies offer auto-billing or online bill pay. Think about the cost savings if you eliminate the cost of postage, checks, printer cartridges, etc. You may be losing money by not paying your bills online.
Are your managers still sending invoices and late notices via snail mail? Again, if you can get this to a paperless process, you’ll save hundreds if not thousands of dollars each year. These minor items can add up fast.
Examine Your Retail Inventory
We all recognize the value of selling retail and ancillary supplies, but how many of us honestly know what we sell? Do you really need to have the amount of inventory on hand that you do?