Cooking the Books: Who’s Watching the Money Trail at Your Self-Storage Operation?
A few weeks ago, ISS posted a news item about a self-storage employee who had embezzled about $65,000 from her employer. Wow, did it touch a chord. Not only did we have hundreds of views on the news article, but several operators chimed in on a thread on Self-Storage Talk, the industry’s largest forum.
Unfortunately, self-storage is an industry where embezzlement does happen. Managers can rent a unit “off the books” and pocket the cash. Or they can charge more for a cash-paying tenant and keep the extra dollars. I’m sure there are a dozen other ways to cheat an employer out of money.
The majority of self-storage managers are not crooks. They faithfully track every rental and payment, so when news like this hits the media, it brings to mind the image some still have of a self-storage manager: disheveled, uncaring and untrustworthy. It’s seriously a step backward for an industry that’s working hard on cultivating an image of trained professionals.
It may also taint the perception owners have of their managers—today and tomorrow—noted one SST poster. “Now all owners (that read this article) will be more paranoid than normal and good honest managers will be treated as though they are criminals,” wrote Budget Mini Storage #2.
I hope that’s not the case. For the most part, the majority of managers are honest, hard-working individuals. Few would think to steal from their employer, but there are always bad apples in the barrel, just as in any industry. Even if you hire, what seems to be, the perfect manager (check out the SST thread for an example), the possibility of embezzlement remains.
Fortunately, there are many steps self-storage owners—especially absentee ones—can put in place to prevent embezzlement. First, make sure your facility’s management software tracks everything! Most of the software available today is also customizable so only those with admittance can access certain areas, such as rental increases, for example. For more on this topic, review the software articles in the ISS archives.
Most important, pay attention to your business! Even if you live in a different state than your self-storage business you should still be actively involved in its operation. I’m not talking about every nuance of day-to-day operations. But you should know your occupancy on a weekly, if not daily, basis, your rental rates and other key indicators. David Lou shares his company’s auditing policy in the SST thread. For more on audits, read this article by industry veteran Linnea Appleby.
Embezzlement happens across all industries. While it’s not 100 percent preventable, there are steps every self-storage owner should take to lessen the chance of it happening to them. Post a comment below about your strategies, or join the discussion on Self-Storage Talk.