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Can Self-Storage Operators Climate Control Their Business?

Self-storage operators regularly market the climate-controlled features of their facilities, but can they apply the same principles to their business operation and its ability to withstand the impact from an extreme-weather event? A new report discusses why small businesses are particularly vulnerable to extreme weather and the collective impact this can have on the economy.

Teri Lanza

July 26, 2013

4 Min Read
Can Self-Storage Operators Climate Control Their Business?

Tony Jones***A guest installment by Tony Jones, Manager, Inside Self-Storage Store

Self-storage operators regularly market the climate-controlled features of their facilities but can they apply the same principles to their business operation and its ability to withstand the impact from an extreme-weather event? A report released this week from the Small Business Majority and the American Sustainable Business Council makes the case that small businesses in the United States are uniquely vulnerable to damage from extreme weather events, and that the collective impact of widespread disaster recovery and business disruption can severely impact the economy.

In recent years, the financial repercussions of weather variability and extremes have significantly impacted the U.S. economy by affecting both supply and demand for the products and services of almost every industry. For small businesses, the imperative for action is particularly acute, said Lea Reynolds, a senior policy analyst for the environmental consulting firm M.J. Bradley and Associates and author of the report.

When disasters strike self-storage facilities, there is an impact on business operation, services to the community and renters personal property. Combined with the impact and disruption to other businesses over a wide geographic area, the financial fallout can be staggering. According to the National Oceanic and Atmospheric Administration, 2011 and 2012 set a record for extreme-weather events, causing more than $170 billion in damages. Hurricane Sandy alone had an economic impact of $65 billion, hitting an estimated 60,000 to 100,000 small businesses, of which up to 30 percent failed to recover, according to the report.

It doesnt take a major catastrophe to impact the structural integrity and operation of a self-storage facility. An isolated hail storm can do that on its own. But extreme-weather events, insurance claims and financial impact are all on the rise. Nine of the top 10 insured-loss events in the United States occurred last year, with six related to weather, according to the report. This was one of the points emphasized by Mike Gong, self storage practice leader for Arthur J. Gallagher Insurance, during his panel session on understanding insurance premiums and terms during the 2013 Inside Self-Storage World Expo.

A perusal of the stories filtered by the ISS natural disasters topic page provides a snapshot of the impact weather-related events have on the self-storage industry and the communities it serves. Personal accounts, like those provided by BroadwayStorage, a member of Self-Storage Talk, provide an eye-opening glimpse of what its like to live through a disaster like the devastating tornado that struck Moore, Okla., in May and the business challenges that arise.

One of the reasons the report focuses on the impact weather has on small businesses is they are generally less equipped than larger organizations to absorb the effects. According to Reynolds, 57 percent of small-business owners believe extreme-weather events are an urgent problem, but 57 percent also do not have a disaster-recovery plan. Understanding insurance trends and coverages and how to manage risk and mitigate losses are vital to business survival.

The impact of a disaster also reverberates locally, with up to 90 percent of small businesses garnering the majority of their customers from within a two-mile radius, according to the U.S. Small Business Administration. Self-storage facilities generally draw business from at least a three-mile radius, so the ability of operators to manage a crisis and handle the fallout from customers is crucial to assisting in the recovery of a community.

Not long ago, ISS asked self-storage owners and managers how they would handle some of the common crises that can occur at their facilities. If you dont have a disaster-recovery plan in place, I highly recommend you read this What Would You Do? article and compare the procedures practiced by operators to the advice submitted from industry experts.

Whether youre likely to be impacted by hurricanes, tornadoes, wildfires, hail, floods or ice storms, it pays to be prepared. You may not be able to control the weather, but you can control how your business is positioned to absorb disruption and losses when faced with a catastrophic event. Let us know how you have positioned your self-storage business to handle weather-related adversity in the comments section below.

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