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Seven Deadly Sins of Self-Storage

Seven Deadly Sins of Self-Storage
Are you really recession-ready?

By R.K. Kliebenstein

Talk of recession is in the air. Whether you are a seasoned operator or the newest store in lease-up, this has to be a subject of interest. Have you already prepared for an economic downturn, or do you believe your business is recession-proof?

The prosperity of the last seven years has made many of us lazy. I have noticed a trend among owners to let important issues slide because they have gotten comfortable in their self-storage business. Let me share some of the most disturbing comments I hear from owners:

  • "I know my manager is not at the top of his game, but I just don't know where to find another good manager."
  • "I let my tenants pay a little slow because it's good customer relations."
  • "I know I should spend a little money to fix the place up, but my customers are happy with the way things are."
  • "Yes, my occupancy has dropped, but it's because there is so much competition."
  • "My facility is full, so I don't really want to raise my rents--it might create some vacancy."
  • My manager used to do that (some activity such as sweep out units or paint the bollards), but he just doesn't have time anymore." (Meanwhile, there is a newspaper or TV in the office.)
  • "My manager used to visit the businesses in the area, but he ran out of key chains to give out." (The manager has not made an outside sales call in months or years.)

These statements are sure indicators of the seven deadly "sins" of self-storage. They are really just examples of how comfortable we can become when the work has gotten easy. Do you remember the days when you first opened your store and were trying to reach 80 percent occupancy--when the grass was green, the driveways were fresh and the paint in the office was still wet? Do you remember how you looked at your occupancy (or lack thereof) each day--and then did something about it? Let's take a look at each of these seven deadly sins and some ways to correct them.

Staff Replacement

This is a really tough issue. We could spend volumes debating the pros and cons of staff changes, deciding whether they are necessary. But let's concentrate on those of you who know your manager or staff is not working anywhere near peak efficiency. What did their last review look like? Is it your fault as an owner or supervisor that you did not address issues that needed attention because it was uncomfortable, or because you did not want to spend the time? This is particularly bad if you have things about your staff's performance that really bother you, but it was just easier to let them slide. I'm willing to bet your staff thinks they are "doing the best job they can." We all do. Who wants to admit they are not doing their best?

First, organize your thoughts as to what your expectations--as a supervisor--really are. Set written, achievable goals, then discuss them with your team. Make sure they have input regarding the solution. Have a written plan of action with goals, criteria, measurements and, most important, time frames. Make certain you communicate the importance of performance, then give your employee a chance to offer a workable solution to meet your goals. Use definite, measurable standards, such as a percentage of delinquency, occupancy levels, call-to-visit conversions and turnover reduction.


Are you reviewing the aged receivable reports with your employees? Are you charting the delinquency to show how it has increased? Do you review each account more than 30 days past due and formulate a plan of action with the staff to collect? Are you working to settle potential auction accounts, moving out the tenants in high-demand unit sizes?

Let your team know the importance of collections. Even if you are a single-facility operation, you should have a collection policy that outlines when to make the first call, send the first letter, etc. You should also follow a regular auction schedule. Each account more than 30 days past due should be tracked, and a weekly plan of action should be discussed.

Perhaps you need a consultant to review your auction procedure, limiting your risk and exposure. Does your team need a pep talk on professional collection calls? Give your team responsibility, but also the authority to make collection decisions. Make sure each collection action has a definite result and doesn't just delay the issue. This often means when you "make a deal" with a tenant, part of the deal is a move-out!

Custodial Duties, Repairs and Maintenance

You only get one chance to make a first impression. Look at the entrance to your office. Is the door clean? Is there trash between the parking area and office? Are all your signs professionally produced and bright? I recently consulted a store where the owner was looking for suggestions on curing declining occupancy. There were potholes and cigarette butts in his parking lot; the grass was growing in the cracks in the sidewalk; and the front door was dirty. The "Do Not Tailgate" sign was faded. The "Hours of Operation" had changed four years ago--the vinyl letters had been peeled off the sign and the new hours handwritten in magic marker. I know I was impressed!

I asked the manager about his tenant base and he said, "We just don't get as good a tenant anymore. It must be the neighborhood." Oddly enough, there were two new buildings down the block: a professional office for lawyers and CPAs and a new Starbucks.

Carefully examine your office for cleanliness and good repair. Do you know the cost of clogged gutters and downspouts? The answer is roof repairs! If you cannot afford to enlarge your office, at least make sure the desks are clean, there are not hand- written or photocopied signs, and that everything the prospect sees is spotless. If your area code has changed, spend the $20 to make your business cards correct--don't scratch out the old number and write in the new. And remember: This is a place of business. Your manager may live on-site, but the office is for business only--no pets, children, TVs or loud music.

Declining Occupancy

Is there more competition in your area, or is that just an excuse? Do you keep regular market-intelligence reports on the competition? Do you know their rates, or do you speculate? When was the last time you conducted a thorough rent survey? Do you know how to estimate your competitor's occupancy? What size categories have more vacancy than others? Have you recently removed or added partitions between some units to create more popular sizes? (If not, you absolutely should.)

Learn more about your competition. Do you need to add wireless, individual door alarms to help your facility compete? Are you regularly adjusting pricing to create some vacancy and keep rents moving upward? Are you testing rental-rate resistance with higher "street" rents? Think economic occupancy, not physical occupancy. You can't spend physical occupancy, but you can take economic occupancy to the bank. Are you keeping copious traffic reports? Are you making use of mystery shoppers and then evaluating, with employees, the results and making suggestions? Do you have good incentive plans for full-rate new leases?

Reluctance to Increase Rents

I will admit it may be too late for this step. "When the going is good, the good get going" or "Make hay while the sun is shining" might have been good titles for this section. Increasing rental rates is the purest form of beauty in self-storage operations. It is the primary reason many investors get into self-storage.

If you have unit sizes that are full (in demand) and you are referring tenants to your competition, you are basically running a Yellow Pages ad for him. One of the greatest mistakes you can make is to answer a tenant inquiry by saying, "I just don't have any of those units available." If you are already at the high end of rental rates among your competitors, raise your rents! If you are full in a size category and are turning away potential revenue, you might as well start mailing checks to your competition.

You can always lower the rents later, but once you have lost the customer and he goes elsewhere, the opportunity to get him back is gone. Think about sitting on an airplane: Your seat cost $250 because you booked in advance. Look at the same seat in the row behind you. That traveler may have bought his ticket at the airport today and paid three or four times as much for the same seat. Revenue management is a common business practice. We used to call it supply and demand.

Examine your rental rates and occupancy on a weekly basis and adjust rates accordingly. If you need a consultant to do this, then hire one. (Some industry professionals will even do this for a small fee and a percentage of the increased earnings. You win and the consultant wins.) Discount those sizes that have high vacancy with temporary "specials."

Declining Productivity

There is no excuse for having a newspaper on the management desk or a TV in the office. There should be no time for your manager to read a book or watch TV while at work. If you are willing to pay people to sit around and read for their own benefit, please contact me immediately! If you are giving away money, I want to get in line.

Start a daily checklist of custodial duties. Put tasks such as painting the office, striping the parking lot, changing the flowers and washing the doors and buildings on a monthly rotation. Weekly duties should include washing down the sidewalk, and removing all items from the desks and counters and cleaning with a solvent. The office should smell clean and be clean.

When was the last time the carpets were shampooed or the tile grout cleaned? Are you cleaning the front door and sweeping the sidewalk daily? Is every window washed weekly? And what about the computer? Have you looked at the monitor and keyboard lately? Are they as clean as new? I am certain if you walk your property, you can develop a checklist that will require your employee to hustle.

Decreased Marketing Efforts

Outbound sales calls will create demand. You have to make the phone ring to make the cash register ring. If your staff is not getting off the property to create traffic, it is only a matter of time before your competitor reads this article and takes it to heart. The sales call is a high-rejection, high-energy activity. It must be made by enthusiastic, knowledgeable sales counselors who are looking to solve your prospects' space problems.

An employee who has to be forced to make sales calls is one who does not really care if you succeed. That is a bold statement, but a true one. Professional managers who read this article and have become lax in their sales activities will be calling their supervisors and owners to get counter coverage so they can make calls. If you get resistance from your employees about making sales calls, you have problems. As competition gets tougher and the economy weakens, you'll have bigger problems.

Create a incentive program to motivate your manager to make outside sales calls. Make sure you have the office covered so competent help will assist prospects as they arrive. Make certain your salesperson has up-to-date brochures and some kind of "cha-chi." Do not send him out in the field with dirty or unshined shoes, an untucked shirt, etc. He is a representative of your business, and he is making a first impression.

Make certain your salesperson knows his mission. Specifically focus on unit sizes or amenities. Role play with him to counter common objections. Start a cross referral program. Make sure he has a supply of brochures and printed "storage tips." Prepare a special discount for the sales call, for example, 25 percent off the customer's first box and supply purchase with a new rental. How much money can you make if they take you up on that offer? What about an offer such as "free automatic debit to your checking account for the monthly rent" as a special promotion?

Let's get up out of the Lazy Boy and make things happen. Did you know there are even some benefits to a recession--some hidden opportunities? Think about it: The Federal Reserves' cure to a recession is the lowering of interest rates. This may be the perfect time to refinance your property. Perhaps talk of recession has made you think about taking out money for improvements such as painting or repaving, or even adding that climate-controlled building you were thinking about. If nothing else, reading this article should have stimulated you to take a morein-depth look at your operations and motivations.

R.K. Kliebenstein is the president of Coast-To-Coast Storage, which specializes in financing and consulting services to the self-storage industry. For more information, call 561.367.9241; e-mail

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