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Checks and Balances Protect a Self-Storage Business From Embezzlement

Embezzlement can and does happen in any industry, including self-storage. Fortunately, there are steps owners can take to prevent employee theft. There are also strategies storage managers can use to ensure they're never falsely accused.

By Amy Campbell  

Last week, ISS reported on an embezzlement case involving a self-storage manager in Troy, N.Y. Investigators say Anne Narzynski allegedly stole $86,334 over nearly three years from Brunswick Self Storage. The owner became suspicious after noticing money wasn’t being deposited into the company’s bank account. It appears Narzynski kept customer payments between Jan. 1, 2011 and Oct. 14, 2013. To date, she’s been charged with criminal possession of stolen property and falsifying business records for failure to record rent payments.

I’m sure you have as many questions as I do regarding this case. How did the owner not figure out his employee was stealing sooner? How did the manager cover her tracks? While we can only guess at what may have happened, this incident serves as a cautionary tale to owners and managers.

Embezzlement can—and does—happen in any industry. In self-storage, however, managers often work alone, especially at smaller properties. Absentee owners may only check in a few times a week. It’s often a cash business, and clever thieves have found ways to alter transactions and pocket the money. Quality software programs have helped, but there are still many ways to skim a few bucks here and there.

So what’s an owner to do? First, hire quality staff and pay them well. Second, watch for red flags. Have you noticed any missing petty cash or retail items? Do you have units that are locked but show vacant in your management software? Are a lot of late fees being “waived”? It’s critical you examine any and all chances for employee theft and take steps to prevent them. One way to do this to audit your property. You can do it yourself or hire a third-party to come in and do a deep dive on everything from your finances to your lien sales. It can be well worth the money, even if you’re not looking for theft. You just might find other areas that can be streamlined.

I asked Self-Storage Talk members their thoughts on this case. I questioned owners about the strategies they use to keep staff honest. I then asked managers what steps they take to ensure they’re never falsely accused. Let’s face it, if money is missing the manager is the No. 1 suspect. In reality, more than a handful of business owners have been known to embezzle from their own companies!

Fortunately, managers can also take steps to protect themselves from being accused of stealing. The best way to keep things honest is to document everything. A paper trail is a manager’s best friend. That means every rental payment and retail sale includes a receipt. This goes for petty cash as well, which is often the place where funds go missing. If you pull money to buy a new broom, for example, make sure that receipt lands where it needs to.

The majority of self-storage managers are hard-working, honest people. Stealing isn’t even in their DNA. However, it’s important owners and managers take steps to keep their interests safe. One way to keep everyone honest is to have a solid policies and procedures manual in place. A manual serves as a guide for how the self-storage business will be operated. It’s more than just a bunch of rules, however. Policies and procedures protect managers, owners and the storage business in many ways. It takes the guess work out of operations and puts everyone on the same page.

Sadly, the embezzlement case at Brunswick Self Storage perpetuates many of the stereotypes about the self-storage industry and diminishes its legitimacy as a business. Despite its current status as a real estate darling, there are still so many people who view self-storage in a negative light. I see these preconceived notions often as developers face opposition because storage is “unsafe” and will attract “criminals.” Don’t let that criminal be a person on the inside.

Share your thoughts on protecting against embezzlement by posting a comment below or in this Self-Storage Talk thread.

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