Anyone involved in owning or operating a self-storage facility should be interested in generating more business revenue. Following are five solid, easy-to-implement strategies you can use to increase cash flow and boost success at your properties.
1. Use Management Software
Facility-management software should be a self-storage operator’s best friend. It tracks every important detail pertaining to the business: rentals, unit details, collections, pricing, revenue sources, tenants and much more. However, most operators never use some of the best tools and functions their software offers, for example, the ability to set dynamic pricing.
Have you ever noticed that when you’re looking to purchase an airline ticket, the price continues to change over time? If you look at a specific flight today and then again two weeks from now, the cost would be different. This is due to supply and demand. We see this same concept applied to many other businesses including hotels and car rentals. This is dynamic pricing, and it should be applied to your self-storage units. Your rates and promotions should change as often as daily, depending on availability.
Why should a tenant pay the same amount for a 10-by-10 when you have 20 available as when you’re down to your last one? That just doesn’t make sense. Always use dynamic pricing to ensure you’re getting every possible dollar from your rentals. All the most popular management-software companies offer this feature within their programs, and you can set the parameters to automatically adjust your rates.
Your management software can also be used to improve other areas of facility operation. For instance, if your program integrates with your website, you can allow online reservations and rentals. It comes in handy for managing collections. It can also generate many useful reports that aid in effective revenue management, marketing and more. It’s essential to not only use management software but to learn how to maximize its features and benefits.
2. Build a Quality Website
Every self-storage operation must have a website! And not just any website—a good one. More than 30 percent of all rentals happen because of a facility website, according to industry marketing firm Automatit. I believe this percentage is rising every day.
You can easily imagine that most potential renters visit self-storage websites to find pricing and other information before committing. These days, we make purchase decisions on our hand-held super-computer smartphones. My grandparents are in their 80s and they use eBay, Facebook and Priceline more than anyone I know. Everything my grandfather buys is online, even his cars. If 80-year-olds are using the Internet to make large purchases, you can rest assured that most storage customers are using it to rent space.
I’ve seen just about every self-storage website type imaginable, from those with just a logo and phone number to a 20-page site with a drone-flyover video and changing graphics. There is a correct way to build a website, and simple is the name of the game. Include unit sizing and pricing, a map to the facility, operating hours, features, and contact information. For reference, look at what the big operators are doing. They’ve found that simple websites containing the information mentioned above is the key to increased rentals.
Also, the website should be tied to your management software so pricing is accurate and customers can reserve units. Another perk to integrating your software with your website is the ability for customers to make online payments. Case after case shows the more ways you give customers to pay, the fewer collections you’ll have to make.
3. Train Your Staff
It’s increasingly difficult to find and hold on to good employees these days, which makes it more important than ever to properly train your staff. They need to be coached in proper sales techniques: how to answer the phone, how to follow up on leads, the in-store sales presentation, how to sell add-on products and services, how to encourage tenant autopay … All these are vital to increasing revenue.
On the opposite end of the spectrum, collections efforts are essential to lowering your accounts receivable. People aren’t born to collect money. Managers must be trained to ensure customers stay up-to-date on payments, and they must properly handle collections calls. You don’t want them stepping outside the lines of legality. They need to understand how to take notes on delinquent accounts and abide by state lien laws. Properly trained staff should have no problem keeping delinquencies below 3 percent.
4. Create Ancillary Income
Another great way to increase self-storage revenue is through ancillary products and services. These can range from merchandise sales to propane rentals to packing and shipping services and many others. You can be creative, so long as whatever add-on you’re offering doesn’t interfere with the primary business of renting storage units.
Popular items to sell include moving supplies, tenant insurance and truck rentals. These are fantastic forms of extra income because they complement self-storage and can even promote more rentals. Customers renting storage space tend to need boxes, tape, bubble wrap and an assortment of other packing supplies; similarly, customers engaged in a move can often use storage. They also need a truck to transport their stuff.
Tenant insurance might be my favorite form of ancillary income, for a few reasons. One, it protects the tenant if anything happens to his belongings while stored at your facility, which adds value to your product. Two, it adds a layer of protection between you and your tenant. Third, it’s an easy way to get an additional $4 to $11 from almost every rental.
5. Regularly Raise Rates on Existing Tenants
There are usually two reasons self-storage operators are afraid to raise rental rates on existing customers. The first is based on emotion. They might say, “Well, these tenants are like family and I could never give them an increase.” To which I would respond, “What’s your contact info because I’d love to talk about buying your facility.”
Second, they’re scared tenants will move out. This simply isn’t the case, however. For starters, every one of the real estate investment trusts raises rates aggressively. These companies have poured millions of dollars into research and have discovered that the best way to make more money is to raise the rates of your existing tenant base. Think about it: Your money will always be made from the 90 percent of units currently rented, not the 10 percent of spaces that are vacant.
The number of tenants who’ll move out after an increase is so miniscule compared to the revenue gained that it just doesn’t matter. In fact, 99 percent of your tenants won’t leave. We started managing a facility in Upstate New York last year that had only done one rate increase in eight years. Within the first two months, we increased rent for more than 350 tenants. Only three moved out. If you can make more money at 90 percent occupancy than you did at 98 percent, what do you have to lose?
This isn’t magic or voodoo science. These are practical, proven, easy-to-implement strategies to increase self-storage revenue and asset value. Give them a try and find out what the best facility operators already know.
Brett Copper is director of operations for Self Storage 101, a provider of market and feasibility studies, acquisition due-diligence audits, and management and training services. He can be reached at 205.643.0712; e-mail firstname.lastname@example.org; visit www.selfstorage101.com.