A lot of self-storage operators out there believe they provide site security simply because they have keypads, cameras and other similar equipment. What they don't realize is the technology doesn't run itself. It’s the person behind the counter who is managing the business! It's the manager who does regular lock checks, reviews the surveillance tapes and keeps the software up-to-date. Everything else is just a tool.
I'll admit the tools have become more valuable, providing more information and enhancing our ability to protect customers' belongings. But if you eliminate the human element, the tools themselves will not properly “run” the store.
Once you acknowledge it's the management team that truly operates the facility, your focus changes. You have to ask yourself, “Am I giving my people all the tools and training they need?” The answer, unfortunately, is usually “no.” The budget often lacks the funds to adequately maintain systems, upgrade to new versions of the operating software, even to establish a complete policy and procedures manual.
I've lost count of the number of storage facilities I’ve visited over the years that had fire extinguishers hanging in interior hallways or the office that had not been serviced in years. I've looked at keypads on which most of the numbers were rubbed off from frequent use. I've discovered storm-water retention ponds—originally installed on a property to prevent flooding—that were overgrown and malfunctioning.
So, as you step back to give yourself a wide-angle perspective of the security at your facility, don’t ignore the people who really make it work. Ensure your team has the proper systems and everything is in good working order. Remember, without people to operate, watch and maintain them, security tools have no value to a customer.
Is the Economy Impacting Your Store?
If you've been in the self-storage industry for any length of time, you've probably heard someone say, “Don’t worry, our industry is recession-proof!” I've always believed we might be a bit more recession-resistant than many other real estate asset types, but we're certainly not bullet-proof. Evidence of an economic downturn, especially in the housing market, is beginning to rear its ugly head. I'm hearing from self-storage owners who, for years, have operated in the 90 percent-plus occupancy range, but are now in the mid to upper 70 percent range.
Just as important is the dramatic drop off in inbound telephone inquiries from potential new customers. More than 60 percent of the people who have participated in the online poll at Self-Storage Talk (www.selfstoragetalk.com) indicated their phone volumes are lower than last year. Our business is a numbers business, after all. If call volume declines and you don’t improve your historic closing ratios, the net result will undoubtedly be fewer rentals.
Not everyone lives in communities where frantic residential growth and wild property values shot up. The sub-prime mortgage crisis is having an impact in every area, even if it's not on the front page of your local newspaper. Escalating default rates in home-equity and auto loans are yet another bad sign. All these indicators should be getting our attention, prompting us to evaluate the trends and how they will affect daily operation.
If you haven’t been monitoring inbound calls, start counting. If you haven’t been paying attention to the comments of your managers that more people are paying later (with cash instead of checks or credit cards), wake up and smell the coffee. As your delinquencies increase (and I feel they might), the answer will not be more frequent auctions to remove the deadbeats.
Instead, you’ll need to communicate with your customers much earlier. Early intervention and dialogue can go a long way in heading off collections problems. It will be more important than ever to find a way to work with tenants. Some creative payment options and a willingness to help people through their own economic crises can pay big dividends in good will in the future.
Some of you reading this will think this is counterintuitive to the traditional laissez faire, hands-off approach we have taken with customers in the past. Once they rent the unit, we only need to deal with them directly when we have a major problem collecting rent when it’s 45 to 60 days overdue. I'm urging you to adopt a different approach and be more proactive by watching the trends of customer payments under a microscope.
Housing will rebound, gasoline will drop below $4 a gallon, but it won’t happen overnight and we'd better be prepared to weather this storm. Don’t wait until the waves are crashing over your head to start asking what a tsunami is and the direction to higher ground. Take action now to be prepared to ride out this cycle.
It starts with paying more attention to the trends and customers’ comments. Be visible and talk with tenants when they are on the property. Taking that extra time to make renters feel like you are looking out for them may entice them to stay a bit longer.
See You in Nashville and at Selfstoragetalk.com
I'm pleased to be a speaker at the upcoming Inside Self-Storage Expo in Nashville, Tenn. Judging from the diversified lineup of industry experts who will present seminars and the long list of exhibitors, this next event will be another outstanding conference. I look forward to seeing you there, Oct. 7-10.
I'm equally excited about the industry’s response to the online community and forum at www.selfstoragetalk.com. Hundreds of owners and managers are actively sharing their questions, comments and recommendations with each other. The online membership includes people from coast to coast and around the world. The cost is free, and the time invested can directly help your career and your facility. Drop me a note when you sign up. I’m “MisterJim444.”
Jim Chiswell is the owner of Chiswell & Associates LLC, which has provided feasibility studies, acquisition due diligence and customized manager training for the self-storage industry since 1990. He is a member of the Inside Self-Storage Editorial Advisory Board, a moderator for the Self-Storage Talk online community, and a faculty member of theSelf-Storage Training Institute. He can be reached at 434.589.4446; visit www.selfstorageconsulting.com.