By Mel Holsinger
All the options for computer and manually generated management reports in self-storage can become an overload of information, but can also provide a perfect understanding of how a business is operating. We need industry-specific reporting if we want to fully understand how were doing in terms of operational efficiency and financial standing. Your management reports help you know if youre making the right decisions to maximize your facilitys profitability.
Lets take a look at the various reports available and evaluate how the information can help you improve your self-storage business.
Most self-storage management software programs can create a number of basic reports that are easily accessible by facility owners. Lets first look at operational reports.
At a minimum, these reports should show the facilitys number of occupied and vacant units. You should also be able to quickly see your occupancy rate (rented units divided into available units) so you have a feel for what space you have left to sell. Getting a bit more sophisticated, categorize each of your unit sizes by occupancy rate, and then determine which customers are current and delinquent on rent. These three thingsoccupied, vacant and occupied but delinquentare the primary pieces of information that can help you make future business decisions.
You should also generate a report by unit size that shows the actual rate customers are paying vs. your board or asking rate. This becomes more important the longer youre in business because if you have customers who are paying substantially below the asking rate, you may want to consider raising their rent to increase your cash flow and, ultimately, profitability.
The report that shows your occupied but delinquent status is important because it lets you know how and when you may need to deal with these customers. Some tenants may simply require a generated billing statement to let them know theyre past due. As they become longer delinquent, you may need to remove them from your property via the lien-sale process. Knowing your tenants payment status can also help you determine other things such as expected cash flow or losses of income, and can help you determine the direction you need to take.
Other important operational reports include a ZIP-code analysis, which can show where your customers come from, and a report showing your percentage of residential vs. business customers. You may even want to break down this analysis to determine if your residential customers come from single-family or multi-family dwellings. Business customers can be divided into groups such as service, retail, industrial, etc. All this information can be helpful when it comes to marketing your facility and determining which advertising methods work best in your particular market.
Another important report is one that gives you information about your competitors. If you know their rates, facility features and the distance between your sites, you can make numerous decisions including marketing strategies, pricing, adding or omitting features, etc. The more you know about your competitors, the better prepared youll be to effectively compete with them for new customers.
The operational reports discussed above can give you a wealth of information to better understand what drives your business, and can be valuable in determining how youll operate. Keep in mind there are many more pieces of data you may want or need, but the basic reports described above will give you a good feel for your overall operation.
Youll also need a few simple but necessary financial reports. All the information in the world is meaningless unless you truly know the financial status of your operation. In other words, if you dont know if youre profitable, then all the other information is irrelevant. It does you no good unless youre making enough money to stay in business.
The most important financial report is a profit and loss statement (P&L). The work that goes into producing this report has to be accurate and timely, and the person using the report must understand its makeup. You should have a monthly P&L and an annual one so you can measure your year-to-year profit and expenses. In its simplest form, the P&L should account for all income received and money spent to run the self-storage business.
Income. As your understanding of the business deepens, you should be able to break down your income by products and services so you can see whats producing a profit vs. whats just costing you money. For example, lets say you offer retail product and spend a great deal on inventory, but your sales are not profitable. At some point, you have to decide if you want to continue to offer ancillary items or reduce the number of products you offer.
Perhaps you have an abundance of 5-by-10 units available, but only a few 10-by-10s, and theyre almost always occupied. So you make the decision to combine or convert some of the smaller units into larger ones, thus increasing your sales of these units while gaining income from the smaller spaces that were once empty.
By organizing your income items in a detailed format, you can see which units are producing income and which are lagging. This offers you an opportunity to make changes, better meet your markets demands and generate more sales.
Expenses. A P&L report will also contain the most frequently used categories for expenses. For example, you should be able to track your advertising, payroll or wages, repairs and maintenance, services, utilities, insurance costs, and taxes. If you know these items, youll be able to deduce your profitability by comparing income received to business expenses.
No business owner can survive for a long period of time if the money he receives is less than the money he spends. Its a pretty simple conclusion but one that some business owners dont know until its too late. Unless you have some way to track your spending accurately, youll never really know if your business is thriving or failing.
In most self-storage management software, the financial reports that can be generated are numerous and can be very technical. Your level of business education, knowledge of finance and accounting, and ability to interpret the data will determine the level of sophistication youll need or want from your reports. If you dont understand the financial aspect of your business, seek professional guidance, as this can be the difference between staying in business for the long haul or ending up in potential bankruptcy or worse.
Management reports can be very simple or comprised of intensely complicated data. Keep in mind the reports you understand and require are simply one more piece to this puzzle we call business and should be embraced as such.
Mel Holsinger is president of Professional Self Storage Management LLC, which manages more than 40 facilities in Arizona, Colorado and Texas. Holsinger has been in the self-storage industry for more than 25 years. He is a frequent speaker at the Inside Self-Storage World Expo and other industry expos and a contributing writer to Inside Self-Storage magazine. To reach him, call 520.319.2164; e-mail [email protected] .