Not too long ago, self-storage was considered a recession-proof industry. When things were good, business was good; when things were bad, business was still good. At the top of the real estate bubble, new investors were pouring money into self-storage based on historic numbers and the expectation of similar results moving forward. It seemed self-storage was the investment of which everyone wanted a piece.
Then came 2008. The downtown in the economy has had such a pervasive effect on the American population that self-storage is seriously feeling the pinch. This, coupled with increased competition and rising expenses, has become the perfect storm keeping many storage owners from getting a good night’s sleep. Businesses that once were considered or expected to be cash cows are now finding the grazing pasture sparse.
A Second Opinion
In this economy, facility owners have to ask hard questions and make even harder decisions. It’s more critical than ever that these questions are answered with diligence and scrutiny, and decisions are followed by action and evaluation―not an easy task even in the best of times.
Now could be the time to consider partnering with a self-storage consultant or management company to guide you. Whatever your priorities are for your business operations, an outside assessment can provide objectivity and perspective. Here is a short yes/no assessment to help you identify potential problems:
Yes No My competitors are getting more business than I am.
Yes No I don’t audit. I trust my manager completely.
Yes No We have not increased rental rates in more than a year.
Yes No I think our delinquencies are higher than they should be.
Yes No We pay way too much for Yellow Pages advertising.
Yes No I'm not sure we are following the right auction procedures.
Yes No My rates are significantly lower than my competitors’ rates.
Yes No We generally let the manager decide what special to give.
Yes No We are not getting the results we need from our marketing or advertising.
Yes No We have not had our lease and letters reviewed in a long time.
If you’ve answered yes to one or more of these questions, it might be time to talk to an industry consultant who can provide you with some solid solutions. When the car is not running correctly, we take it to a mechanic. If we have a legal question, we call our attorney; a tax issue, our accountant. It only makes sense that when our self-storage business needs a boost, we consult an industry professional.
When doing what you have always done is just not enough anymore, a fresh initiative may be just what you need. Sometimes a conversation, site assessment, audit or market review from an unbiased party can jumpstart your business with realistic expectations and a plan of action.
Perhaps you enjoy the self-storage business but no longer want to oversee your store’s day-to-day operation. If self-storage is just one of your business ventures, you may find the demands on your time and attention have shifted. Or maybe you want to spend more time on other activities and pastimes.
Employing a management company whose sole focus is self-storage will enable you to spend your time and attention where you want or need it without your business suffering. The cost can also be minimal, if you consider the value of your own time and effort. Management companies generally charge between 5 percent and 10 percent of a facility’s gross revenue. However, the increase in results—higher occupancy, employee training, advertising programs—usually recovers this additional cost many times over.
Having your operations assessed or run by a professional can offer a broader range of new ideas, and steer you away from mistakes toward solutions that are right for your business. Sometimes, a few minor tweaks are all you need for increased success.
With a fresh perspective, a workable plan in place and a professional partner on your team, you can leap ahead of the competition with more money in your pocket and more time on your hands without losing anything in the process. Isn’t that what attracted you to the self-storage industry in the first place?
Linnea Appleby is president of Sarasota, Fla.-based PDQ Management Solutions Inc., which provides full-service facility management, consulting, startup, auditing, management and training services. For more information, call 941.377.3151; visit www.pdqmanagementsolutions.com.