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Tips for Hiring a Third-Party Management Company for Your Self-Storage Business

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By Paulina Pineda

“Think of yourself as the pilot of a facility and the management company as the mechanic,” says Mel Holsinger, owner of Professional Self Storage Management LLC, which oversees more than 50 facilities in seven states. “You may be able to fly the airplane yourself, but can you take care of all the details that allow you to do so safely and efficiently?”

Some self-storage owners like to have “skin in the game,” so to speak. In other words, they want to be on—or at least near—the front lines. They enjoy the challenges that come with operating a successful facility. They may even fill in behind the desk regularly, walking the property, performing maintenance tasks or handling other responsibilities.

Then there are other kinds of storage owners. Perhaps the facility is just one of many properties a person owns. Or it’s owned by a development or real estate company that doesn’t have the desire or manpower to focus on the daily operation. Maybe an owner is new to the industry and lacks the expertise to properly manage the business. Some might just be stuck in a rut, unable to achieve new growth.

Fortunately, there’s an option that allows these owners to reap the rewards of their investment: a third-party management company. A management firm can provide solutions on several levels and may be an excellent alternative for the hands-off owner or one who simply wants operational support. Of course, you must weigh the pros and cons and ensure the company you choose is the right fit for your business. Here are some of the benefits and drawbacks to outsourcing a facility’s day-to-day operation and insight to choosing a provider.

Advantages

Third-party management companies offer a range of services, from overseeing day-to-day operation to all-inclusive management plans. They can bring a wealth of experience, branding, resources and economies of scale to the partnership. Some of the perks include formal hiring and training programs to ensure the highest-quality staff, comprehensive marketing programs, established branding, and proven programs to increase occupancy and profit.

“The owner can take advantage of a sophisticated revenue-management system that can forecast rates to maximize revenue systematically and quickly,” says Dale Payne, sales manager for Uncle Bob’s Management, the third-party management arm for Sovran Self Storage Inc., which owns and operates more than 500 storage facilities nationwide. “A team of analysts with access to a plethora of self-storage data interacts with the system, providing a series of checks and balances.”

Another advantage to hiring a management company, particularly for investors, is “more time to run your other businesses and less stress,” says Genevieve Elefante-Sigmund, president of Platinum Storage Group, which owns and manages 51 facilities six states. “It takes a lot of time, energy and expertise to properly manage a self-storage facility. Why not leave it up to the experts?”

Peggy Heimann, vice president of storage operations for Texas-based Blue Llama Storage, says management companies also know how to handle the “nuts and bolts of the business.” It makes sure staff is up-to-date on lien laws and knows how to assess risk management as well as tackle other daily challenges. “Established management companies also have collective buying agreements with call centers and vendors and can bring those resources to a [new] owner,” she adds.

Another pro of hiring a third-party company is an improvement in results, says Michael Haugh, president of Absolute Storage Management Inc., which manages 65 properties in 11 states. The company can assure owners their company’s financial performance is being maximized by lowering expenses and strengthening Internet marketing, he says.

Having someone on your side and working toward a common goal can also be a huge boon. “When you hand over management of your facility, it’s a team effort. The management company can be a great source of information for the owner, and the owner can also be a resource for the management,” Elefante-Sigmund says.

Drawbacks

There are also some potential disadvantages to allowing a third-party firm to run your company. Some owners, particularly those who’ve been hands-on, might feel like they’ve lost all the decision-making power. But this concern is often unwarranted.

“The owner remains the final decision-maker in capital expenditures that are suggested and prioritized by the management company; the management company controls the daily operations. We need that autonomy to effectively run the business for the owner,” Payne says. “We do provide a liaison between the owner and management when concerns or questions arise, so the owner has a voice and a platform to address any issues.”

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