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10 Reasons to Build a Monthly and Annual Budget for Your Self-Storage Business

By Alyssa Quill Comments
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It's a new year, and well past time to start thinking about your 2018 budget. If you’re not in the habit of creating a monthly budget for your self-storage business, now’s the time to start. Consider these 10 reasons why you need to set solid financial goals for your operation.

Keep Your Eye on the Prize

We’re all motivated by different things. Recognition, money and paid time off are some that come to mind. Sometimes something as simple as crossing a task off a to-do list creates a sense of accomplishment. Setting goals that can be measured, achieved and even surpassed can create extra excitement and drive to get a job done.

A budget creates a measuring stick. If you compare your self-storage occupancy, revenue and expenses to a budget each month, it’ll be much easier to understand your results and opportunities for improvement. A budget is also a good tool to use in incentivizing your team.

Care for an Aging Facility

Door springs break, HVAC units need preventive maintenance, landscaping needs to be refreshed and elevators need to be inspected. An annual review of your physical asset will help you keep it in good condition. Being able to plan projects throughout the year via your budget will allow you to better control your cash flow.

Set Your Priorities

A clearly written and communicated budget helps the whole team understand your priorities. What do you want to focus on this year? Occupancy growth? Rate growth? Fixing up the buildings? Or maybe you really need to save money and reduce expenses. Use your budget to clarify goals and keep everyone on the same page.

Predict Cash Flow

I don’t know anyone who has a bottomless bit of money. That means we all need to understand our cash flow. For storage sites in lease-up, this is critical. Even owners of mature sites will benefit from cash-flow planning. For example, if I’m using every dollar I make at the end of each month, how am I going to pay my property-tax bill next fall? If the roof needs to be replaced, will I have money set aside for that project? When considering your cash flow, you need to think about future expenses.

Understand Your Profit Margin

After you know what your cash flow is going to look like, you can decide what to do with the profit margin. This is the fun part! Maybe you’ve been dreaming of a vacation on a tropical island. A budget can help you plan it with the comfort of knowing that you’ll have the money to enjoy it. On the other hand, you may want to save your profit and use it as a deposit on your next storage acquisition. The budget will help you know how long it’s going to take to reach your goal.

Be Fail-Proof

In the words of motivational speaker, Zig Zigler, “If you aim at nothing, you will hit it every time.” Making financial decisions on the fly, without a plan, is never a good idea. It’s possible to achieve success based on luck, but that strategies brings with it added stress and anxiety. It can also damage your relationships with lenders, employees, vendors and many others.

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