Every Self-Storage Operator Rents Units! What Else Can You Sell to Eclipse Competitors and Stimulate Income?

From retail to vehicle storage to ancillary offerings you haven’t even dreamed up yet, add-on profit centers can have a positive impact on your self-storage operation’s revenue, reputation and more. Every single one of your competitors offers unit rentals. If you want to differentiate yourself in a busy market and kick up your income, it’s smart to consider your ancillary options.

You may be thinking, “I don’t have the time or energy to do more. Besides, if it ain’t broke, why fix it?” Perhaps you already have a portfolio of reliable properties. You’re satisfied with your rental and occupancy rates. You have a great team in place. So, why change?

News flash: If you aren’t generating optimum revenue from your self-storage asset, it is broken.

This industry is incredibly competitive but not immune to disruption. Your market might not be crowded now, but that could change. You may currently have tenants who pay on time and employees who can be counted upon, but what if that changes? When profit stagnates—or worse, declines—add-on products and services can make a positive difference to your bottom line and peace of mind.

If you’re interested or even ready to take the first step, this article covers ancillary options that can work in a self-storage environment. You’ll get guidance on choosing the right offerings for your market and what you need to succeed.

Research the Possibilities

The add-on products and services that have been explored by self-storage operators over the years range from common options such as retail merchandise, truck rentals and boat/RV storage to much more original offerings such as fine-art storage, propane-tank rentals, pack-and-ship services and boutique sales. Their success hinges largely on your specific location and customer base as well as the way you present them to tenants and the public.

After conducting a market analysis, West Coast Self-Storage (WCSS) found that wine storage would be the perfect fit for some of its facilities. The decision involved weighing the cost of the required conditions against profit potential. While this product isn’t without its challenges, in the end, this gamble paid off for the Pacific Northwest company.

“The great thing about wine-storage customers is they often are also self-storage customers,” says Derek Hines, marketing specialist with WCSS. “They also typically stay much longer than the average self-storage customer.” Customer retention can be more cost-effective than acquisition, which is exactly what makes this a smart choice.

Third-party management firm Storage Asset Management (SAM) also relies on market analysis to make its ancillary decisions. “Down South, offering propane makes sense because we have a lot of local market areas where propane is incredibly popular in terms of heating your house,” says Lee Kunkel, director of operations. “In other markets where propane isn’t common, it wouldn’t make sense.”

SAM has also experimented with Amazon Hub lockers to draw traffic to its managed facilities. The company first tried it in 2015 and was pleased with the simplicity of implementation and outcome. “We had the space, the infrastructure, electricity, clearance and parking to meet Amazon’s specifications,” Kunkel says. “The Amazon locker didn’t pull the staff from the facility, but it did drive people to our facility and helped us sell additional merchandise.”

Location can also play a pivotal role in your choice. “Some of our locations have excellent visibility with opportunities for cell towers and billboard leases,” says Kurt Kleindienst, senior vice president of marketing for Safeguard Self Storage, which operates more than 80 locations nationwide. “These can provide additional revenue to the property but must be evaluated on an individual basis.”

Carol Mixon, owner of industry management and training company Skilcheck Services Inc., was able to leverage the location of a Hawaii facility she operated. “We had some people who wanted to store surfboards. I didn’t really have storage for small things, so I came up with a chain-link fencing area and gave them a lock,” she says. “They put their surfboards in there. It was about $15 a month. We put quite a few in the area and we rented them out in maybe a month and a half. We were right across the beach, so it was easy to do.”

Contents coverage for self-storage renters in the form of a tenant-insurance or property-protection program is a reliable revenue stream that can work for any facility, anywhere. “We require proof of customer storage insurance at the time of rental,” says Charlie Fritts, president of third-party management firm Storage Investment Management Inc. “Customers can satisfy this requirement by providing a copy of their homeowner’s or renter’s insurance policy or purchasing insurance [through us] and paying with their rent. This is a great add-on income source, as it serves many purposes.”

It's also a great customer-relations tool if a problem ever arises. “We provide them with the insurance-claims info rather than shrugging our shoulders and saying, ‘We are not responsible for your stored property,’” Fritts says. “We collect the insurance premium with the rent, the insurance company in return pays us a percentage of the premium as an admin fee for collecting their money.”

Assess the Requirements

Whether you’re adding something as simple as a soda machine or a service as complex as wine storage to your facility, you need to consider the resources required to turn your plan into reality.

Space. Do you have enough of it? For example, a retail store requires room for product displays but also for the storage of inventory. If you’d like to add truck rentals, you’ll need a place for parking and ample room to maneuver trucks around the property. Boat and RV storage will require significant room for open, canopy or covered rental spaces, not to mention the appropriate drive aisles and turning radii to accommodate large vehicles.

Staffing and training. Do you have enough staff to support the new profit center once it’s up and running, and how much training will your team need? The answer to both questions will depend on the specific product or service. For example, partnering with a truck-rental vendor will require employees to learn new software. If you sell retail products, learning to design the displays and track inventory is imperative.

“Always figure out the training development needed ahead of time,” Kunkel says. “If we’re going to hire a new person tomorrow, how would we train them to run this service? Do they need to be certified in any way? What do they need to know? How are you going to maintain that profit center? The last thing you want is to roll something out before the pieces are in place to make it work. Many times, we’ve taken over properties that offer these different products and services and the staff just isn’t trained on how to get the most out of them.”

Depending on the ancillaries your self-storage business intends to offer, employees might have to be knowledgeable regarding the needs of RV/boat owners, for example, or wine terminology. You may even have to do some hiring. This means weighing the cost of additional payroll against potential new revenue. “If we’re paying $1,000 in payroll extra per month and only bringing in $600 worth of commissions, that’s an easy evaluation that this isn’t worth the investment,” Kunkel says.

Regulations. Are there any you must follow? For example, when WCSS decided to offer pharmaceutical storage, it had to follow a strict protocol. “The FDA mandates the proper storage of drug samples to ensure their stability, integrity and effectiveness,” Hines says. “This necessitates storage units equipped with temperature regulation and good ventilation. Fortunately, several of our facilities meet these stringent criteria, and as a result, we've been able to attract pharmaceutical reps as valued customers.”

Marketing. Once you’ve trained your staff and launched your ancillary service, customers need to know about it. What marketing will be necessary? Will you need to explore new platforms or campaigns you wouldn’t normally use? To start, you’ll want to promote your new product or service on your website, across your social media channels and your Google Business Profile. You can also advertise in your offline marketing materials and through community or vendor partners.

Weigh the Pros and Cons

Some self-storage profit centers are so low-risk that you might not even think about the pros and cons—selling boxes and packing tape, for example. But low risk can also mean low reward. If you’re considering a product or service that requires construction, investment in inventory, software or new staff, it’s important to look at the opportunities and obstacles.

Any profit-center crusader will tell you the advantages of ancillary services are myriad: increased foot traffic at your facility, new tenants, better reviews, a positive reputation in your community and, most important, greater revenue. But what about the cons?

Depending on the scope of your offering, these might include disruption to your day-to-day operation in the form of construction as well as a potentially tough learning curve and increased workload for your staff. If employees are busy assisting customers with truck rentals, for example, what does that mean for your self-storage sales inquiries? Everyone should know to always prioritize the essential mission of the operation: renting storage units. Ancillary services are meant to support that, not take away from it.

“Keep in mind any ancillary income should add to the bottom line and not detract from the real money-maker of self-storage,” Fritts says. “It’s important for staff to understand this as well.”

Make the Leap

Adding supplementary products and services to your self-storage operation is important to help you stand out from competitors and grow your business. “I would say that it’s imperative to add ancillary profit centers and to be looking for others to add,” Hines says.

Mixon sees them as a benefit to the owner but also to employees. Increased revenue means owners can pay staff more. “By adding these ancillary services, you can be a better employer.”

The question isn’t whether you should offer ancillaries but which ones to pursue and how to go about it. It comes down to analyzing your market, choosing options that complement your existing operation, and ensuring that you have all the resources necessary to support your new venture.

Once you’ve launched, you must regularly assess how the new offering is performing. Be prepared to make changes or even start over with a new revenue stream. In the evolving world of self-storage, the ability to try new things and adapt is essential.

“One thing we do is build evaluations directly into our audit,” Kunkel says. “Just because something works right away doesn’t mean it will continue to work. Don’t lose sight of constantly evaluating.”

Kate Ramsey is a Las Vegas-based freelance writer who covers technology, business and hospitality.