Former President Dwight Eisenhower once said, “Plans are useless, but planning is indispensable.” If COVID-19 has taught us anything, it’s that even the best plans can quickly go askew. For this reason, I don’t make a plan for my self-storage business each year; but I do use a planning process to create specific strategy, one I can share with my team to show them the direction we’re headed. Following is the four-part approach I apply to my buildings, team, money and company growth.
For My Buildings
A substantial component of the self-storage business is real estate—physical structures—which begin to depreciate and fall apart the moment they’re complete. Thankfully, it’s easy to strategize their care; you just start at the top and work your way down:
- Roofs are a critical component. I consider the type of material used to build it and how old it is, then decide what needs to be done to it over the next 12 months.
- The building exterior and frame are next. I make note of their condition and think about possible improvements such as bollards, signage or lettering.
- Doors are easy. They’re either good or need to be replaced. You can’t account for how many may be damaged later in the year. Just focus on the now.
- Finally, there’s everything else—driveways, signage, fencing, gates, lighting, etc. I look at their condition and anticipate what the need will be for the upcoming year.
During all this evaluation, I focus on priorities and cost and assign a budget. I typically try to invest about 5 percent of gross revenue into my buildings annually. I use 3 percent as the target, but I know routine expenditures will typically be about 2 percent.
For My Team
The next major component of my business is my staff. Some might claim they should be the most important, but they’re harder to predict.
First, I consider whether my team is structured properly. I don’t think about the individuals at this point, only their positions. Do I have enough or too many? Can I offer a better product if I adjust roles or responsibilities? Can I replace duties with technology, or unreliable technology with more people?
Then I look at the actual team members who fill the roles. Who’s capable of more? Do I have a way to promote that person, or at least shift some duties? Conversely, who’s struggling? Is it talent, ethics or knowledge that’s holding this person back? If it’s knowledge, what tools can I provide to help him succeed? If it’s talent or work ethic, he needs to be allowed to seek other opportunities. In short, help yourself by helping your team.
For My Money
The next area I consider in my strategizing is money, the part we all like! First, I need to analyze recent performance. I look at each facility independently. How did it do last year, and how did that compare to the year prior? How accurate was last year’s budget? What’s the net operating income and expense ratio? Are they in line with industry standards and personal experience?
Once I have a good grip on current conditions, I can look ahead. Budgeting is important, but so is the calendar. For example, no one wants to undertake all capital improvements in a single month. So, I spread out the major expenditures, then take that info back into individual facility budgets. Will there be enough cash on hand in May to replace 24 doors at Facility A? Will there be enough cash in August to recoat three roofs at Facility B? Do I need to refinance to accomplish the tech and security upgrades at Facility C in October? If so, when do I start that process?
For My Company Growth
The final component to annual self-storage strategizing is also the hardest: to outline company growth. Again, I look at how we’re currently performing at each property. Are any sites struggling with occupancy, collections or reviews? Is there a new social media outlet we should be using, or a location that needs more marketing? Should any facilities be expanded due to performance and demographics? Is there a market into which we should enter or expand?
Once I’ve answers those tough questions, my annual strategy is complete. All that’s left is to implement it! Thankfully, I have some really good people to help with that challenge.
Gary Edmonds has been an owner of self-storage facilities since 1999. He and his wife, Diane, currently own more than 1,800 units at 15 locations. Additionally, they’ve started a new company, The Storage Manager, to offer third-party management services. With a background in banking, financial services and construction, Gary strives to be surrounded by people who are smarter than he is. He can be reached at [email protected].