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Why, When and How to Perform an Audit at Your Self-Storage Property

Why, When and How to Perform an Audit at Your Self-Storage Property
While some self-storage operators might cringe at the thought of performing a facility audit, this routine check is an invaluable opportunity to understand performance and catch problems. Read about the benefits, who should perform the audit, when and how often, and what it should include.

No matter how you try to cushion or sugarcoat it, it seems one of the worst things you can tell your self-storage manager is, “Good morning. I’m here to audit your site.” We often try to soften the blow because the term “audit” has such a negative connotation for most people; but the fact is, this is a big deal. It’s also a very necessary part of business operation. That said, it shouldn’t be a cause of fear for your facility employees.

When performed properly, a self-storage audit will ensure compliance with company standards, identify problems that need to be corrected, and create a learning tool to help train and improve the effectiveness of site staff. Occasionally, it’ll be used to right some specific wrong being perpetrated intentionally or unintentionally against the property, such as employee theft. In fact, it’s the disciplinary actions that sometimes come out of an audit that staff tend to remember and fear. This mentality can be turned around if you review the assessment with your team. Praise them for the things they’re doing well and come up with a plan to remedy items that need attention.

There are actually different types of audits that should be performed at a self-storage facility over various timeframes. Some we might not even consider to be true “audits,” for example a facility walk-through or lock check, cash count, bathroom-cleanliness check, or merchandise-inventory count. All technically qualify as audits and, incidentally, should be performed as part of the more comprehensive review we’ll be discussing below. I’ll walk you through who should perform this inspection, what it should include, and when and how often it should be done.

Who Should Perform Your Audit?

If you want a true, unbiased representation of how your self-storage property is performing, the best route may be to hire a third-party, non-affiliated auditor. This doesn’t need to be a professional employed by an accounting firm. Anyone can be trained to perform this task if they have the will and the right tools. Because hiring an outside vendor comes at a cost, many of us choose to use existing personnel, which has its pros and cons.

On the positive side, by using someone in-house, you know the person already has a basic understanding of self-storage operation as well as your company’s policies, procedures, expectations, etc. Plus, there’s no additional expense. Choose someone in a supervisory role, as it’ll feel more legitimate than having a manager audit their peers. Consider a team leader, trainer, district manager or corporate-level personnel.

One of the obvious cons is there tends to be some internal bias. We’ve seen situations where the auditor has been very harsh on one facility but easy on another based on their relationship with or opinion of the property manager. We’ve even seen the auditor allow a manager to correct a deficiency so it wouldn’t be reflected on the report. At the end of the day, you need to decide which option works best in your company.

What Should Your Audit Include?

Next, you need to decide the types of things your self-storage audit should cover and ensure you have the tools in place to make the process efficient and effective. At our company, we use an electronic template we created, which can be completed with a computer, tablet or even a smartphone. It allows us to attach pictures or documents that can easily be stored or distributed via email.

We suggest breaking your audit into the following three components. Each of these could consume an entire article themselves, but we’ve simplified each for you here.

Operational. In this category, focus on in-store tasks that promote organizational efficiency and adherence to company policy and procedures. For example:

  • Make sure self-storage leases are signed and dated in the correct location and all other required information is complete.
  • Documents including leases, permits and licenses should be stored or displayed correctly and maintained accurately for the required period of time.
  • Perform a detailed property walk-through, taking the time to open vacant units, then review any discrepancies or questions with site staff. In our experience, problems with a simple lock check usually equate to a property being poorly managed.
  • Check all lien documentation and auction files. A wrongful sale can be costly and time-consuming.

Financial analysis. This portion of the audit aims to ensure your money isn’t being mishandled. You’re looking for things like employees who work off the clock or don’t work while on the clock, missing petty cash, and bank deposits that aren’t being made timely or in accordance with company policy. It can be a real eye-opener.

First and foremost, count every dollar in the store and make sure the operating cash, including tenant payments, is consistent. Also, review unpaid charges, discounting, and adherence to company standards regarding sales techniques. When you check payroll, include overtime analysis, clock in/out history for all personnel, and adherence to company standards. Payroll is one of the biggest expenses for any self-storage business. It’s also one of the most easily abused if it isn’t being carefully audited.

Curb appeal. When a consumer visits a business for the first time, they typically do a mental evaluation of the sort of experience they’re likely to have based on what their senses tell them. This is why curb appeal should be part of your self-storage audit. There are many items to look for during this portion of the evaluation. For example, you want to check the condition and cleanliness of:

  • Overall property
  • Parking lot
  • Landscaping
  • Front door/windows
  • Sales office
  • Merchandise display
  • Unit doors
  • Bathrooms
  • Signage
  • Moving trucks
  • Golf carts

Take pictures of everything and share them with the onsite team. Work with them on easy fixes that’ll make an immediate positive impact on curb appeal.

When Should Your Audit Be Conducted?

The last piece of the puzzle is the frequency with which your self-storage audits are conducted. Some site assessments, like lock checks, should be done daily by the facility manager and, ideally, during every site visit by a supervisor. Regular spot checks typically lead to fewer issues when it comes time for a more comprehensive audit. Expectations are then set, and corrections can be made to ensure staff understand their responsibilities. Everyone is put on a path to remedy any shortcomings.

A more thorough audit should be executed at least twice annually or as often as necessary. If you audit once and uncover multiple issues, review the results with site staff and schedule another review within a set timeframe. Based on the results of the second audit, a third may needed. Of course, this may be difficult, depending on the number of facilities within the company and the time and resources available.

However often you conduct your self-storage facility audits, remember they only have value if you use the information collected. It doesn’t make sense to go through the process only to file it away and check a box. Use the audit as a tool to help train your employees and set expectations. In the event an audit catches theft, gross mismanagement or other major deficiencies, use it as a source to create an action plan, disciplinary action or termination.

Dwight Broering is vice president of self-storage operations and Hailey Teal is a corporate trainer for The Jenkins Organization. Dwight has more than 25 years of industry experience. He’s been with Jenkins since 2007, overseeing facilities in multiple states. He also owns Dayton Texas Storage in Dayton, Texas. To reach him, email [email protected]. In addition to training, Hailey assists in performing audits for the company’s facilities.

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