By Paulina Pineda
Picture this: A self-storage customer needs to pick up his holiday decorations from his unit, but he also wants to buy a few bottles of wine for a party he’s attending that night. The solution? If he’s a tenant at On the Way Mini-Self Storage in Athens, Ga. , he can simply stop at the facility’s onsite convenience store, good for “when you want a soda or something stronger,” according to the company website. The business also offers a 24-hour gas pump, snacks and soda for the road, party supplies, and more.
Storage facilities across the country have found innovative ways to generate add-on revenue that go well beyond the sale of locks, boxes and other items traditionally found in a facility’s retail center. For example, one facility in New York also provides a pet-grooming business, while another offers a drive-through carwash and redemption center.
I recently asked facility operators for their thoughts on products and services they could use to generate extra income for their business. Potential ideas included equipment rentals, artisan crafts, vending machines and coffee services. Robert Madsen, president of Canada-based U-Lock Mini Storage Group, latched onto the coffee idea, saying he dreams of adding a Starbucks franchise inside one of his facilities to feed his “Americano habit.”
Other owners and managers tossed new options into the pile. Some are practical, others not so much. Here’s a look at some possible revenue generators to consider. Can you use some of these to make more money at your facility?
Stephanie Tharpe, vice president of operations and marketing specialist for A+ Management Group in Tennessee, suggests that operators start small with ventures that are practical for the business and easy for staff to juggle. Essentially, don’t forget your main mission: to rent units.
Tharpe once worked for a self-storage company that installed a boutique and full-service shipping center. The offering was successful, but it also caused the storage side of the business to suffer. “There simply wasn’t enough manpower to run the whole combination, and the profit wasn’t there to justify hiring more people,” she says.
Tharpe also suggests trying products or services that don’t require a big investment. She thought she hit the jackpot after purchasing two mobile-phone accessory kiosks that featured phone chargers, headphones and stylus pens. She placed them in two of her most successful stores.
“I thought they would do very well,” she says. “Much to my disappointment, they did not.” Fortunately, the initial cost was small.
Consider Boutique Sales
Selling local, handmade jewelry and other arts and crafts or hosting an arts fair are two other revenue ideas. Gina Six Kudo, general manager at Cochrane Road Self Storage in Morgan Hill, Calif., hopes to launch a seasonal arts boutique at her facility. The state’s popular and successful artisan craft fairs sparked her interest, she says.
Operators who are interested in boutique sales but don’t want to oversee that side of business might consider renting space to local artists for studios or pop-up galleries. However, doing so could be tricky because it would be difficult for a manager to monitor who’s coming and going on the property, says Kudo. A safety and security system would need to be in place.
Another concern could be obtaining the property permits to sell these items, says Jim Chiswell, president of self-storage consulting firm Chiswell & Associates LLC. A handful of operators have added work spaces for local artists, obtaining the appropriate zoning permits, he notes. Insufficient parking to accommodate customers visiting the boutique could be another obstacle.
All About Vending
Snack and soda machines can be profitable, and soda distributors such as Coca-Cola or Pepsi will often provide your company with a free vending machine and even fill it as long as you buy the product directly from them. Chiswell says snack and soda machines are good services to provide, but warned that they must be viewed as a service to customers as much as a source of revenue for your business.
Kudo researched what it would take to install a lottery machine at her facility. After speaking with a lawyer, she determined the business didn’t get enough foot traffic to cover the cost, plus the profit margin would be very slim. The endeavor comes with too many “contractual agreements,” Kudos says, after discovering she’d have to pay for any expired, unsold scratchers. “Not a good fit, but it sounded like fun for a few minutes,” she says.
DVD rentals are another possibility, but they require a lot of hoop-jumping. An article in the small-business section of “The Houston Chronicle” reported that businesses looking to install a Redbox kiosk should tally foot traffic of at least 15,000 people every week. In addition, a Redbox Customer Care statement recently stated, “Due to disappointing results, Redbox is no longer pursuing kiosk placement in airports, apartments, office buildings, hotels, hospitals and universities.”
Things to Keep in Mind
The moral of the story is to keep trying until you find something that works for your operation. “There just simply is not a ‘one-size-fits-all’ for add-on revenue sources,” Chiswell says.
Explore your options, thinking beyond traditional products and services. Be on the lookout for something that could be fun or unique to your tenants and community, but it should still be a business that’s manageable for your staff. Above all, any add-on profit center should complement, not detract from, your main business of renting storage space.
Paulina Pineda is a senior journalism major at Arizona State University (ASU) in Phoenix. Her emphasis is print journalism with minors in “Spanish for the Professions” and history. She recently interned as a daily wire correspondent in the Washington, D.C., bureau of ASU’s Cronkite News Service and hopes to find her way back to the nation’s capital after graduation. To reach her, e-mail [email protected].