Its time for self-storage operators to start thinking about their operational budgets for 2013. Here are seven critical steps to creating a realistic financial plan.

Alyssa Quill

August 3, 2012

6 Min Read
7 Steps to Creating a Realistic 2013 Budget for Your Self-Storage Facility

Schools back in session, summers over, Halloweens around the corner Its time to start thinking about your self-storage facility's operational budget for 2013! Already!?!? you ask. To budget well, we need to prepare, research and take our time. Budgets are usually completed for the following year by Dec. 1. The process can take about a month, so you should begin by mid-October.

Why is budgeting important? For starters, many investors and bankers require it. Even if its not required, a budget helps predict cash flow, sets goals for revenue growth, and creates a framework from which operators can manage their expenses. Without a budget, it can be easy to spend more money than youre bringing in. Here are seven critical steps to creating a realistic 2013 budget for your self-storage operation.


Step 1: Gather Tools and Data

Before you begin assembling your budget, spend some time gathering important data. If you have a bookkeeper or property accountant, ask him for copies of the propertys profit-and-loss statements for the last two years, and year to date for the current year. Also, find out when paychecks will be cut next year. If payday is every two weeks for your manager, which two months will have three payroll periods instead of two during 2013? Review any existing contracts that will continue into 2013. This may include Yellow Pages ad commitments, preventive maintenance or Internet-marketing contracts.

You should also generate a couple of critical reports from your self-storage management software, including the most recent monthly summary report. It will give you starting points for gross potential, occupancy and total actual rent. It would also be really helpful to have a historical report that shows move-ins, move-outs, occupied units, total rent collected and discounts given for the last 36 months.


Step 2: Review the Competition

Budgeting season is also a great time to visit your local competitors. How does your facility compare in terms of quality, service and value? Are there any changes you could make in 2013 that would significantly improve your occupancy or revenue? This might include adding climate-controlled units, sealcoating your parking lot, purchasing new banners to improve signage, instituting a new move-in special, or hiring a more sales-oriented staff.


Step 3: Audit for Maintenance and Capital Project Needs

After youve visited your competitors, do a thorough walk-through of your property, trying to see it from a customers perspective. Make sure all the lights are working, and review the condition of the signage, gutters and roof. Are all keypads, gates and cameras working? Are there any signs of asphalt damage or wear and tear? Are there any doors that need spring adjustments or replacement? Create a list of capital improvements and maintenance projects youd like to complete next year, and then gather estimates.


Step 4: Ask Experts for Help

Who knows your property better than you? Your property manager! Include your manager in the budgeting process. Ask what he would do differently if he owned the property. Managers often have great ideas for improving the property and bottom line but are hesitant to say something to owners because theyre afraid of insulting them. Your manager should also be able to provide you with his expectations for growth in occupancy and rental rates for next year.

If you know other self-storage owners in your area, give them a call. In this industry, people are generally friendly and eager to help one another. Share your thoughts on the market and expectations, and then ask for their opinions. Maybe theyve heard rumors of a potential new competitor you didnt know about. Other storage investors can be a great source for information on the industry and your market.


Analyzing trends in key areas at your property over the last couple of years can help you make a more accurate prediction for the next 15 months. If you have some experience with Microsoft Excel, Word or PowerPoint, creating quick line charts is a piece of cake. If you havent done it before, you can use the help tool within the program itself or search online for tutorials.

I recommend plotting these six line items on individual charts by month for the last two to three years:

  • Total revenue

  • Total discounts given

  • Total expense

  • Move-ins

  • Move-outs

  • Square-foot occupancy

Look for seasonal and long- and short-term trends. Does occupancy usually peak in August? Do move-ins spike in May due to local college students leaving for summer break? Do you have to give more discounts in the summer months or in the winter? Knowing this information can help you plan accordingly.


Step 6: Make Projections

Now the fun really starts! To predict rental income, start with last months rent, add in the expected rent from move-ins next month at your average street rate per unit, and subtract the expected move-outs at your average rate-per-occupied unit. If youre increasing existing tenant rates on a regular schedule, add an appropriate amount on a monthly basis for those increases. Lastly, subtract the amount expected for discounts and bad-debt write-offs.

Remember to add other revenue line items to your budget. For example, it's easy to predict items such as administration fees and merchandise sales by using an average cost per move-in. Looking at the last six months, on average, what were your merchandise sales divided by the number of move-ins? Use that number to predict next years merchandise income. Insurance premiums, truck-rental income and rent from any other sources (cell towers, office space, etc.) should be factored into your budget as well.

For expenses, review the amount youve spent for each line item over the last couple of years. For many categories, you can just assume an annual growth rate, such as 3 percent. For marketing, decide if you want to spend more or less next year. How did the investments you made for advertising work last year?
For items like credit card processing and management fees, calculate the percentage of revenue you paid last year, and then apply that percentage to your 2013 revenue projection to calculate your budget for next year. Use the contracts you gathered and maintenance list you created earlier to predict your repairs and maintenance budget.


Step 7: Make the Final Review

A good sanity check for your budget is to layer on a line for your 2013 projections onto each of the six charts you created earlier. The charts should look similar to the ones below.

Self-Storage Move-Ins Budgeting Chart***

Self-Storage Revenue 2013 Budgeting Chart***

Do the lines indicate the same general trends as the 2010, 2011 and 2012 year-to-date data? If they vary dramatically, you may not be predicting realistic numbers. After working on the budget for next year, the numbers can start to blend together. This is a good time have someone else to take a look. Accountants have a keen sense of expectations, especially for expenses. Ask one to review your proposed budget and provide feedback.

Hopefully, this article will help you organize your thoughts, streamline the 2013 budget process, and create an accurate prediction of net operating income and cash flow for next year.

Alyssa Quill is an owner of Storage Asset Management Inc. (SAM), a third-party management and consulting company that currently manages 27 self-storage facilities across the mid-Atlantic and Northeast regions. For more information, call 717.779.0044; visit

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