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A Self-Storage Owner's Guide to Tightening the Tap on Facility Expenses

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By Rick Beal

My professional motto is, “Storage is a business of inches not miles.” As with any mantra, the deeper you think about it, the more it makes sense. Self-storage is an industry with more opportunities to make small changes than large ones. Take, for example, facility expenses. Many are predictable, but it’s important to ensure sure they don’t spiral out of control. Costs can add up. Small increases and decreases can have significant impact.

To better understand expenses, we first need to separate them into two categories:

  • Non-controlled expenses are those that are set and beyond your reach. These include bank loans, business insurance, property taxes, etc. These items can change but, for the most part, they stay the same.
  • Controlled expenses are those of the “inch.” These include advertising, credit card processing, Internet and phone services, payroll, utilities and rental discounts. (Yes, I count complimentary units and discounts as an expense). All of these can be easily numbered and tracked. If you aren’t doing so, you’re setting yourself up to lose money.

Following are some ways to track your expenses and save money. Add up enough “inches” on the savings side, and you can go miles toward greater overall profitability.

Track It

I’m by no means an accountant. Numbers aren’t my first language. However, I understand their importance to the operation and how being unable to decipher the language will adversely affect the business.

Before the beginning of each year, create a budget that includes all of your controlled and non-controlled expenses. When it comes to money, the more detailed the budget, the better. If you have investors, it’s only fair to present them with the most accurate description of a yearly fiscal report as possible. If you’re having difficulty identifying all your expenses, e-mail me, and I’ll provide you with a list I use.

The budget should be broken into the 12 months of your company’s fiscal year (often January to December, but not always). If you want to get creative, add in your rental and other income budgets. That’s where it gets really fun! The only tool you need is Microsoft Excel, which will provide you with more than enough to create a budget that’s professional and useful.

Once you have a master list of money in and out, you can follow it year after year. You’ll be surprised at what stays the same and what you can change.

Find It

Now that you can track your expenses through a budget, you know what they are and can do something about them. Compare your budget to your actual expenses and see if items are on track or coming in too high. Are there some areas where you can improve?

For example, look at your phone service. The phone costs at my operation are $250 per month per location. This includes facilities with multiple elevators and security as well as switching to a multiple VOIP (voice over Internet protocol) system. Two years ago, that cost was $350, but then I did some investigating to see what other options were available.

I can almost guarantee that if I were to perform a quick audit on your facility, I could find several places to save you money. It’s not because I’m a storage whisperer, it’s because I took the time to track the expenses and discover opportunities to reduce them. You can do the same. Let me help start your journey. Here are some common controlled expenses from which you should be able to shave a few dollars:

1. Discounts. Again, I count discounting as an expense. I’ve mystery-shopped enough facilities to know some managers will tell prospects from the get-go that the first month or two is free before they even offer a property tour. You might as well be passing out $100 bills! Examine your need for discounting. Coinciding with that are “buddy units.” How many units have you given free or discounted for friends? Once again, you’re passing out cash.

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