In todays ever-changing self-storage environment, many of us independent facility operators are forced to compete with the larger, better capitalized companies we all know as real estate investment trusts (REITs). These companies have the advantage of being able to spend more on marketing and advertising, afford larger management staffs, build more locations, and keep in the public eye. What is a REIT and why is it a formidable competitor?
REITs are owned by a number of shareholders who purchase company stock in anticipation of steady returns and, in many cases, cash flow for their personal investments. Think of Public Storage as the Mobile/Exxon of the self-storage business, Extra Space Storage as the Shell Co. in our industry, and then think of all the rest of us as the small independent gas stations competing for the same customers and selling the same products.
So the question is, how can we take on the giant corporations and not only survive but make a profit when they seem to have all the advantages? Quite simply, we need to change our attitudes. Here are five ways to alter your mindset and take on the REITs in your market.
1. Your Marketing Program
First, if you try to take on the REITs in everything they do, chances are youll lose. How can you possibly spend money on marketing like they do? You cant. What you can do is market where they dont, specifically in your neighborhood.
Instead of promoting your business to your complete market, go after your immediate local area. For example, most of you have the opportunity to join a local chamber of commerce and get involved in chamber activities. That networking group alone can bring you a number of small businesses and their employees, families, friends, etc.
Other marketing avenues include church newsletters or local schools and sports teams. Make your facility the one the neighborhood identifies and supports because you support the neighborhood. Chances are the REITs cannot do these things as effectively as you can because the decision-makers are not in your backyard and arent privy to the same information as you.
2. Act Now
One of the best parts about being a decision-maker is you can do things on a whim instead of waiting for the long drawn-out process of approval. Want to have an open house at your location to draw in crowds? No problem. Find a cause and promote it to your neighborhood. For example, maybe the local high school band needs a place for a carwash. Why not donate your parking area or driveways, then get them to promote the event? You get the traffic and they get to raise some money.
3. Change Your Curb Appeal
Want to change your window look and get a fresh start? Again, no problem, just come up with a workable design and make the change. For example, say your curbs are painted white along the street, and your office is cream with blue trim around the windows. Change it. Paint the office shell blue, paint your curbs red and paint your trim white.
Youll be surprised how many people will take notice of something as simple as a new paint color. The advantage you have is you can make changes today if you desire. For the most part, the REITs are locked in when it comes to curb appeal as they want all of their stores to have a uniform look.
4. Look for Ways to Save
How about your operational costs? Can you reduce them so your profit margin is greater, even without an increase in occupancy or rates? You better believe it. Shop around for the goods and services you need with your local vendors. You may be able to negotiate a better rate for your waste removal if you find you dont need as large a dumpster as you have, or perhaps you can reduce the frequency of pickups.
Many times, independent operators bemoan the fact that the larger companies seem to get the best deals, but you would be surprised. If you agree to pay your bills in a timely manner (not 30-days plus), youll be impressed by how much you can save. Many companies offer a 2 percent to 4 percent discount if you pay a bill within 10 to 15 days. Add that up over the course of a year, and it can be significant. The point is operators can save money if they simply take the time to look at each and every detail of their business, not just the revenue but the expenses.
5. Be a Friendly Competitor
Instead of having the attitude that youre fighting the REITs, join them. Be their ally rather than a foe. Simply put, several of the REITs recognize they might not be able to fill every potential customers need. Reach out to them and see if theyll put you on a list of preferred competitors and send you business they cannot accommodate. For example, say you have RV parking and they dont. Make sure the local REIT competitor knows that, and ask him to refer you.
This may come as a shock, but all of the REITs are comprised of people. Many, if not most REIT employees are just like you and methey care about their country, family and, yes, communities. Reach out and befriend them. You may be surprised at how much they can help you in your business.
I know its popular to bash the REITs, but I would rather look at them as an older brother who, while he may be bigger, smarter and richer than me (at least for a while), still puts his pants on one leg at a time. In business, this means theyre trying to get the same customers as us. We just have to outwork and outsmart them and well do fine.
Mel Holsinger is president of Professional Self Storage Management LLC, which oversees the operation of 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 Inside Self-Storage World Expos and other industry events, a contributing writer to Inside Self-Storage magazine, and a founding member of the Qualified Storage Manager training program. To reach him, call 520.319.2164; e-mail [email protected]; visit www.proselfstorage.com.