Inside Self-Storage Magazine 03/2001: Self-Storage in Nicaragua

March 1, 2001

6 Min Read
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Self-Storage in Nicaragua

Developing in foreign countries takes education,determination...and a lot of patience

By Mike Iacoboni

Editor'sNote: This month's Market Profile is out of the ordinary. Rather than detailingthe self- storage climate of a specific U.S. market, this article tells thestory of a couple who have tackled a "virgin," foreign territory, thechallenges they have faced and their ongoing success.

How often have you said to yourself, "If I only knew then what Iknow now"? What would you do differently if you could? Whatpioneering steps or risks would you take, fortified with a clear vision of thefuture? Outcomes are determined by a lot more than knowledge, so success isnever a sure thing. It requires desire, persistence, effort--and a fair amountof capital.

My wife, Jane, and I have taken the opportunity to be the very first peopleto introduce the concept of self-storage to Nicaragua. It takes a lot ofeducating and patience to bring a new service to a virgin market and convincepotential customers that secure, weatherproof, accessible self-storage ispreferable to the corner of the yard or a friend's field.

Nicaraguais located in the middle of Central America. It enjoys a semitropical climateand is a land of verdant beauty. There are hundreds of miles of empty beaches onits Pacific Coast. Nicaragua has an emerging economy similar to that of theUnited States in the 1950s (or 1850s in some cases), with an appetite for allthings American and a growing means to afford it. Managua, its capital, is ashort hop from Miami or Houston, making for an easy business commute. TheNicaraguan government is offering generous tax breaks for foreign investment,while the international community is discovering what a bargain travel and realestate are in that country. Consequently, warm-weather second homes andexpatriate businesses are springing up everywhere.

It is a time of vigorous dynamic growth in Nicaragua's economy andinfrastructure; and wherever you find dynamic transitions, you find a need forself-storage. Nicaragua has provided us the opportunity to apply what we know nowin a land of then.

At First...

When we first posed our idea to others we were greeted with loud guffaws."The Nicas don't have anything to store" was a common refrain. Trueenough, but as you would in the United States, we were targeting a specificmarket sector. Jane and I were comforted by an often-quoted phrase from AlbertEinstein: "If at first an idea does not seem absurd then there is no hopefor it." We also took heart when people would stop us on the street and askus how soon before they could rent a unit. We knew we had to build a smalldevelopment.

Obviously, you want to start any new concept/service business in a majorpopulation center. For Nicaragua, this would mean Managua, a big,not-very-pretty city. We considered quality-of-life factors as well asquantitative elements in our deliberations and settled on San Juan del Sur, asleepy fishing community nestled in a cove on the Pacific. This town gets amajor share of national vacationers (seasonal rental for water toys) and is nowhost to international cruise lines that began calling in January 2000. Thelittle town with a population of 5,000 is gentrifying, with new hotels beingadded, and vacation and retirement homes springing up everywhere.

To our delight, we discovered a complete absence of zoning or building-coderequirements or other outside forces to distract the project. We have found,though, that this freedom is a double-edged sword. To our dismay, we discovereda complete absence of borrowing opportunity--this being a cash economy. Thisraises the stakes of the game and means we cannot enjoy the benefits ofleverage, the ninth wonder of the world (with compound interest being theeighth, according to Einstein).

The Project

For our entry project, we chose an existing 11,000-square-foot warehouse andset about transforming it into a world-class self-storage demonstration project.The primary language here is Spanish. We were faced with the challenge oflocating an English-speaking contractor who can accomodate North American timetables, contracting practices and level of quality. I would do all thearchitectural and take-out renderings.

Afterseveral failed interviews, we were at an impasse. We could not find all thenecessary qualities in one builder. Then a chance encounter brought us intocontact with Nelson Estrada, owner of GENSA, a contracting firm in Managua. Heearned an MBA from Harvard, is fluent in English, and understands qualitybuilding techniques and practices. As an added bonus, his wife, Martha, is astrong equal partner in the firm and lends valuable support.

As this project was unique in Nicaragua, we had to iron out a few wrinklesalong the way; but we were able to handle them. We have a mix of units,including 17 12-by-25-by-20-foot units that are climate controlled with roll-updoors; 11 10-by-12-by-12-foot units with hinged doors; and two 20-by-25-footoffice suites. The center driving aisle is 28 feet wide. There is some openstorage space as well. The final numbers for the project came in at $3.73 persquare foot for acquisition and $4.64 for build-out and completion.

A Market Challenge

More of a challenge than the construction was the marketing. We knew what wewanted to say; our challenge was to deliver our message to others in a languagewe did not yet speak. Communicating the benefits of an unknown service was amajor task. It's like e-commerce, which five or 10 years ago was untested anduntrusted. Today, it's an accepted fact of ordinary life. We are climbing thatsame hill now. After much consideration, we chose the name Sano y Salvo torepresent our company, which, loosely translated, means "safe andsound." We think it has a nice ring to it, but we do get ribbing from ourSpanish-literate friends for our poetic license.

Getting a placement in the local Yellow Pages presented another marketingchallenge. The publishing company simply did not understand what our serviceprovided. They had no fields in the computer to accomodate us and were somewhatinflexible about meeting our needs. After several meetings with ever higherlevels of management and using pictures from Inside Self-Storage magazineas a teaching aid, we finally got our placement.

We officially began operations on Oct. 1 and are at 60 percent occupancy inour large units and 10 percent occupancy in our smaller units. Our most popularstorage items are actually vehicles, as we have a large expatriate communitythat spends a few months here during the year.

Weaggressively handed out leaflets in town during the holidays to educate ourpotential clients and create demand. The Yellow Pages directory with our ad isnot yet in general circulation, but the telephone plays a minimal role in ourbusiness. In this country of 4 million people, there are only 40,000 phones,including cell phones and pagers! Word of mouth and direct referral has provedto be the major driver of our business.

So far, Jane and I have been energized and challenged by our little project.History will be the judge of how well we applied our know-how to the land of"then." For the moment, though, we have chosen to mark our entry rampwith our handprints and the letters WWTT: What Were They Thinking?

Mike Iacoboni and his wife, Jane, are the proud owners of Sano y SalvoSelf Storage in San Juan del Sur, Nicaragua.

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