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Articles from 2001 In April

Financial Feasibility

Financial Feasibility
Proving it to your lender

By Jim Oakley

The good old days of scratching feasibility on the back of an envelope are gone. Yesterday's answers are not good enough for today's lenders. If you don't show profitability simply and clearly at the outset of your self-storage project, you might not get another chance to do so. Lenders review several packages weekly and pick only the best. You can't go back and change the numbers once you have been turned down without losing credibility.

The Lethal Questions

A banker has three lethal questions he wants you to answer: 1) How will you make payments during construction?; 2) Can the project pay for itself through rent-up? and 3) Can you prove the project's feasibility in a monthly format? An appraisal will prove a facility's worth once it's completed, but you better have a financial business plan to prove how you will make payments during rent-up.

The transition between development and occupancy is critical as a project is most vulnerable to negative cash flow during this period. Occupancy is increasing while interest expense is needed. Loan payments are required every month, and bankers need assurance that money is on hand to meet them.

The Loan Package

An effective loan package should include documentation of six key financial events, tracked on a monthly basis and presented in a one-page summary: construction draws, occupancy level, rental income, operating expense, loan payments and cash flow. Then a seventh event, overall return, should show the investment from conception through hypothetical sale.

Projects are often shot down unknowingly by developers themselves. Such is the case in Exhibit 1 (page 50). The six vital events are displayed monthly during rent-up to unmask where the shortages in cash flow occur.

Notice that by month seven of construction, negative cash flows of -$43,469 have accumulated. After the first eight months of operation, the project is in a negative cash-flow position of -$88,689. Surprisingly, this situation is often hidden from the developer, even though it's easily curable with proper diagnosis and treatment.

The deal-breaker question your banker will ask is, "Where is the money (that -$88,689) that will make the loan payments?" This question can cripple your attempts at securing financing unless your financial plan has been engineered to address this deficiency in advance.

Interest Reserve

Interest Reserve is a financial mechanism used to defeat negative cash flow in the first year of a project. It allows the loan to "make its own payments" for a short period. These payments occur in the starting months of the loan and are made by increasing the principal balance for each payment made.

To determine interest reserve, it is necessary to map monthly cash flow. This map is also necessary to prove the need for interest reserve to the lender. (See Exhibit 2, page 52, which shows the critical monthly loan-payment calculation with interest reserve and construction draws.) This calculation shows the total amount of negative cash flow needing to be addressed (-$88,689). In order to put the development in a positive cash-flow position, $11,311 is added, bringing the interest reserve to $100,000. (Note: Don't assume spreadsheets calculate the complex construction loan. They don't. Such loans require variable take-out draws and unequal payments. Most important, there is interest reserve, a key factor that must be interwoven monthly.) Notice how interest reserve is depleted as it is used to make payments on the loan.

In Exhibit 3, an interest reserve of $100,000 has been implemented. The same project is now showing positive cash flow of $18,202 as a result. The loan has made its own payments to the extent of the interest-reserve limit.

Vacancy is Expensive

When the six vital events of the project are exhibited on one page in the loan package, it is obvious vacancy can be a crippling factor. Construction-loan payments are being made on units sitting empty for several months. This is a red flag indicating this project should be phased.

Delaying construction of units until they are needed is making better use of capital. This becomes extremely clear when cash flow is mapped monthly, as in Exhibit 3. When loan payments and absorption are shown on the same page in your loan package, decisions can more easily be made to maximize the efficiency of construction draws.

By developing the project in two phases, loan payments have been reduced in the initial months of construction. Instead of payments of $15,023 after four months of construction (Exhibit 3), the payments are reduced to $9,014 (See Exhibit 4). Now compare the cash flow of Exhibit 1, in a negative cash-flow position of -$88,689 at the end of month 15, to Exhibit 4, which is in a positive position of $5,126 after the same month. This is an overall difference of $93,814.

Improved Lender Confidence

In the case of construction loans, lenders generally require collateral or recourse. When a project is phased correctly, less collateral is required because less capital is borrowed at any one time. Lenders are then more confident about what they have extended until rent-up on the project proves itself. And having less recourse to provide can make or break a project.

Securing a permanent loan can be a major source of profit to the developer, but it must be justified to the lender in his own terms: net-operating income, debt-coverage ratio, loan-to-value, etc. The permanent loan should be larger than the construction loan--hence the developer's profit. In Exhibit 3, the construction loan is $2,060,250 while the permanent loan is $2,427,292. The difference comes from a much higher value determined during an income-approach appraisal. An amount of $367,042 more can be borrowed in this case, which is profit the developer can put in his pocket. Don't shortchange your profit because you haven't made monthly calculations in your loan package or lack a professional presentation.

Lay The Groundwork Now

The permanent-loan terms should be negotiated with the lender at the same time construction financing is secured. Using a full monthly cash-flow presentation ensures the developer his biggest profit. Seldom do developers negotiate the term of the construction loan. In most cases, developers don't even bother calculating the best time to bring the permanent financing on line, much less propose it to the lender.

Is there an advantage to paying higher interest and points on a construction loan to extend the term? In the examples we've used here, the loan proceeds can be increased from $367,042 to $561,225 if the permanent loan is brought online 12 months later. That's 53 percent more profit! What if you extended the construction loan by only six months?


Cash flow in the first year of a project should be optimized through the use of interest reserve. Moreover, the timing and amount of the permanent loan can be the source of greater profits. If you are not using critical financial feasibility, you don't have the tools to prove your case to a lender, and you're probably making "guesses" rather than decisions. Sure, a developer can get financing with a spreadsheet, but is he leaving his real profits on the table? Taking time to run the numbers and present them in a way that appeals to lenders can make all the difference in the success--and profitability--of a self-storage project.

Jim Oakley is a pioneer and national authority in computer-modeling feasibility. His methodology was taught at Arizona State University and its Center for Executive Development. He has addressed major national conventions including the National Association of Corporate Estate Executives and the National Association of Real Estate Educators. His articles have appeared in Inside Self-Storage, Professional Builder and Lodging magazines. Mr. Oakley consults from Prescott, Ariz., and can be reached at 520.778.3654;

Exhibit 1 thru 4

Bon Jour

Bon Jour

"Who let the dogs out?"

I don't actually speak more than eight words in French, but having just returned from Brussels, Belgium, where a large portion of the population is French-speaking, I am now inspired to learn more. Brussels was the site chosen by the Self Storage Association of UK and Europe for its annual conference and tradeshow, March 8-10. It's a fantastical city with gorgeous architecture--and the best chocolate-covered waffles I've ever tasted.

With large companies such as Shurgard and Devon Self Storage concentrating their efforts on European development, the attention of other developers is being drawn over the Atlantic as well. Facilities are sprouting throughout the UK, Sweden, the Netherlands, Italy, Germany, Belgium and France. And industry suppliers are quickly seizing the opportunity to distribute product throughout these unpermeated areas. Shifting our focus to include overseas expansion seems to be the next natural phase in self-storage evolution.

But on the homefront, there are plenty of companies--independents and chains alike--working to fine-tune their operations and optimize profits. This effort is greatly simplified by advances in automation, and with more than 20 companies offering software packages specifically tailored to self-storage management and accounting, an owner or manager should have no difficulty finding a program to suit his needs. On page 24, you'll read about the latest software features, tips on purchasing and the future trend toward web-based systems. You'll also find profiles of 16 different vendors, complete with contact information and summaries of their products and services.

This month you'll also read Douglas Olson's summary of the Phase I environmental site assessment, which may be required of you by your lender during the initial phases of financing (see page 46). Starting on page 52, Jim Oakley explains how to simply and clearly demonstrate profitability to your lender at the outset of your self-storage project. And Claude and Gregory Hawkins emphasize the importance of training on page 78, saying employees must become comfortable with the mechanics of your operation before they produce the results you expect.

Inside Self-Storage is in the process of compiling articles and information for a supplement publication it will be distributing to overseas owners and developers in June: ISS Europe. Keep watch in upcoming issues for features on self-storage projects in Italy, the Paris market, the European association and more. Let's see where this all leads us.

And for those of you who have never travelled to Europe, I'll impart just a few little pieces of advice based on my recent experience: Don't exchange currency at the airport or train station (you'll get a horrible rate). Don't wear high-heeled shoes (the cobblestone streets are treacherous!). Take advantage of the train system to see as much as you can (Major cities such as Brussels, Paris, London and Amsterdam are all within mere hours of each other). And watch out for swiftly closing doors on the subway car (you'll never see them coming!).

Au revoir,

Teri L. Lanza
[email protected]

For a complete list of references click here

Inside Self-Storage Magazine 05/2001: Business-Interruption Insurance


Business-Interruption Insurance
Protecting your income during temporary business shutdowns

By David Wilhite

Every self-storage facility owner should be aware of the need to protect his income against business interruptions. If you should sustain a direct physical loss from a fire or other covered cause of loss, the chances are good you will also suffer an indirect loss of income. (Indirect losses refer to the lost profits and fixed expenses that continue month to month whether your facility is operating or not.) You are also likely to incur extra expenses as you attempt to resume your normal business operations.

Business-interruption insurance--specifically, loss-of-income insurance and extra-expense insurance--are designed to minimize your risk in the event of a loss. "Loss of income" refers to the suspension of your business operations by direct loss or damage as a result of an insured cause of loss. "Extra expense" refers to any extraordinary expenses you incur during the period of restoration that you would not have incurred had there been no direct physical loss or damage to property. The "period of restoration" begins with the date of direct physical loss or damage resulting from any covered cause of loss.

Also known as time-element coverage, business-interruption insurance provides several important benefits: 1) it protects you against reduced sales income (and increased expenses) that result from damage to your buildings or business-personal property; 2) it allows you to retain key employees by maintaining their salaries and benefits; 3) it encourages prompt settlement of building and business personal-property losses; 4) it helps you to retain your tenants; and 5) it can restore you to the same position you were in before the loss occurred.

Business-interruption insurance is usually included in most business-owners' policies as a standard endorsement, which might lead you to take it for granted. However, when you consider that business-interruption losses can easily exceed direct-damage losses, the importance of this coverage becomes clear. Business-interruption insurance is of particular value to self-storage facility owners who sustain a covered loss in that it compensates you for lost profits based on your self-storage operations' projected monthly earnings, thus taking into account the seasonal nature of the market.

When shopping for business-interruption insurance, keep in mind that loss-of-income and extra-expense coverages are limited to the actual length of time required to rebuild, repair or replace your damaged buildings or business-personal property. In other words, the amount of financial loss is determined by the length of time it takes to get your facility back in business. For loss-of-income coverage to kick in, the suspension of your business operations must be caused by direct loss or damage as a result of a covered cause of loss. Payment is based upon your operation's past history of seasonal profits and losses. (Note that it is your responsibility to make every reasonable effort to resume complete or partial operation as soon as possible in order to minimize loss.)

It is a surprising but true fact that a small percentage of self-storage facility owners choose to operate without business-interruption insurance, perhaps because the coverage is not required by most lending institutions. However, when you consider the value of this insurance and its very reasonable cost it's very difficult to understand why anyone would knowingly skip this essential coverage.

As a general rule of thumb, it's a good idea to secure a full 12 months of loss-of-income coverage to protect yourself against business interruptions. While it may only take three to six months to rebuild your business after a covered loss, you will first be required to remove debris, obtain bids and building permits, and perhaps face ordinance and zoning requirements prior to starting reconstruction. Since most conventional coverage ends when rebuilding is complete, you should ask your insurance agent about an extended period of indemnity.

This important enhancement provides for loss of rental income during a specific period following reconstruction. While an average retail store or restaurant can begin generating profits as soon as it is re-opened after a covered loss, self-storage facilities may take several months to locate enough new tenants before becoming fully profitable. No matter how large or small your self-storage facility may be, securing adequate coverage is essential for protecting your business and your peace of mind.

In addition to loss-of-income and extra-expense coverages, Universal Insurance Facilities Ltd. offers a complete package of coverages specifically designed to meet the needs of the self-storage industry. For more information, or to get a quick, no-obligation quote, write P.O. Box 40079, Phoenix, AZ 85067-0079; call 800.844.2101; fax 480.970.6240; e-mail [email protected];

Self-Storage Software 2001

Self-Storage Software 2001
Making the right choice

By Barry Morris

The concept of "hands-on management" has changed through the years. Before the advent of technology as we know it today, many business functions, such as bookkeeping, were done manually--literally "hands on." But in the 21st century, we use a helpful tool called the computer, and if you're not using one--in conjunction with management software--to handle many of your business functions and make life easier, you may be unecessarily attached to your facility.

Do you ever lie awake in bed wondering if your self-storage customers are paying on time or getting extra days free at your expense? Were all the appropriate tenants subject to the most recent rent increase? Are employees skimming cash from the till? Does your unit mix need adjusting? Which marketing methods are bringing in the most business? Good self-storage management software programs can answer these questions and more.

For self-storage operators, the computer can be like a trusted friend. Virtually any management or accounting function can be accomplished, depending on the software package--inventory management, printing of deposit tickets and leases, invoicing, late-charge processing, lock-out of delinquent tenants, monitoring marketing efforts, etc. The right package greatly enhances the efficiency of every task it performs, leaving managers with more time to accomplish other tasks and more money toward the bottom line.

Whether your facility has 50 or 500 units, automation has its advantages. But for smaller facilities that have always gotten by with manual record keeping, the thought of relinquishing control of daily business to a machine can be intimidating. For others who jumped in at the dawn of automation with a DOS-based system, the emergence of Windows is creating pressure for many to convert, sometimes at considerable cost. Regardless of which system is used, most agree the effort required to computerize a self-storage business is a short-term inconvenience with long-term benefits.

A World of Possibilities

Fixing broken unit doors or persuading potential tenants to sign on the dotted line are beyond the capabilities of management software. But make no mistake, these programs can simplify management and financial functions so a manager has more time to devote to facility maintenance, customer relations and other duties. Other benefits of the self-storage software packages include greater operational accuracy, revenue enhancement, more detailed management reporting and theft deterrence.

The majority of programs will generate any paperwork needed by a self-storage owner or manager. Bills, statements, notices, letters, sales and transaction reports, move-in/move-out reports, payment and fee-collection reports, and overdue/delinquent tenant reports are among the documents routinely produced by most available software packages. Most also provide integration with familiar accounting software such as QuickBooks, and many interface with access-control systems to limit entry to customers in good standing.

Some packages have unique features or variations in the way they perform functions that may make one more suitable than another for your particular facility. Graphic interfaces, such as facility maps, are offered by a handful of software vendors. These maps vary in flexibility and function, but the vendors who offer them are careful to ensure self-storage operators can use them easily.

Most vendors of programs with interactive map functions agree a property map needs to be flexible. It's critical the user can go into the map at any time and change it around to suit his needs. For instance, operators frequently turn two units into one, and vice versa. A map needs to be able to reflect that. The ability to add or delete units is another vital function. What users don't need is to depend on the vendor at every turn. The program should be flexible and user-friendly, allowing the user to handle those tasks.

Printing the map falls into the same category. With self-storage being the hands-on business it is, a frequent walk-through of a facility is seen by many owners and managers as the best way to keep track of what's going on--they don't see a map as necessary. Yet other operators mainly use the map feature so they can print out the map for customer use.

Other features, such as pay-at-the-gate, create convenience for managers and tenants. Besides allowing facilities an instant, hassle-free way to collect delinquent rents and late fees, it provides tenants a way to reconcile their accounts at any time, even after hours, without embarrassment.

What many operators want most from a software package, however, is strong financial-reporting capability. With varying degrees of detail, virtually all available packages perform these tasks admirably. SMD Technologies of Wake Forest, N.C., producer of the SiteLink software package, has made great strides in this area, according to Marketing Director Markus Hecker. "The way we can track or analyze activities at a facility has really come a long way," he says. "We're not just talking about discounts or adjustments; we break it down by what kinds of discounts or adjustments they were.

"One of the biggest problems in reporting is showing where the money didn't come in," Hecker continues. "Think of it as rent or receivables at the top of the page, and receipts at the bottom of the page. Somewhere in the middle, you need to itemize where money went away because the bottom line doesn't equal the top line--receipts don't equal receivables. That's a very complex task--to show the financial performance of your facility on one page."

Financial controls are also important to self-storage owners. What was perhaps the most dangerous drawback to manual accounting systems, and even some early computer programs, has largely been eliminated in many of today's software packages. "We make sure that transactions entered into the system cannot be modified after the fact," says Ron Plamondon, president of Integrity Software Systems in Traverse City, Mich. Financial controls, says Plamondon, are a major strength of the company's software, Mini Storage Personal Accountant. "In our software, we post information into what we call a batch, which is basically like a trip to the bank.

"Whenever you go to the bank--close out a batch--that information is permanently recorded in our software and can't be changed. If you're doing your accounting practices of balancing your software to what actually went in the bank, you can be sure that people aren't going back on those records and changing them later. You can still do adjustments within a new batch of information, but it makes sure that things aren't changed and tracks aren't covered."

Empower Software Technologies of Sun City, Calif., was readying the release of its new version of Storage Commander, 4.0, at press time. The company also plans to release a stand-alone tool kit that works in conjunction with Storage Commander. The tool kit contains a market analyzer, which reads a customer database to show where customer concentrations are coming from based on the addresses they give at move-in. Other demographic filters will allow market assessment according to new housing developments, new freeway construction, median income and many other factors. "Literally hundreds of other demographic filters can be put into the system so you can see where your customer concentration is," says Tom Smith, Empower's managing director. "That helps from a planning standpoint, so you know where to target new customers and where your business is coming from."

Umbrella Systems of Poulsbo, Wash., was also planning to introduce its next-generation package, Umbrella 3.0, at press time. The new version has been redesigned to look similar to the popular QuickBooks accounting program, though users have the option of using the package on a stand-alone basis or exporting data to QuickBooks, Peachtree or other popular accounting packages. Automatic report distribution is also featured, says Umbrella's president, Clark Stave.

DOS: Dead Operating System?

The dominance of the Microsoft Windows operating system might suggest that DOS-based systems are going the way of the dinosaurs. But this isn't the case in the self-storage industry, where a handful of vendors still have a sizable DOS user base. Most of these vendors have also developed and introduced Windows-based software packages, but pledge as much continued support as possible to their loyal DOS customers.

"You have a lot of facilities that go by the 'If is ain't broke, don't fix it' philosophy," says Jon Reddick of Denver-based Sentinel Systems Corp. "Our DOS program is so solid, we never hear from those users. It's something they have installed, it continues to run and works great for them, and they don't want to spend the dough to upgrade it, so they don't."

Besides Sentinel, there are other software providers still working in a DOS environment, and these vendors' many customers are an indication the old operating system shouldn't yet be relegated to the pages of history. Yet most of today's self-storage software companies have long since moved away from DOS because the latest PCs simply aren't designed to run DOS programs. "There's still a lot of DOS hanging on out there because people don't necessarily want to change or don't know why they should change," says Mike Skrentny, CEO and president of Mystic Systems Technology Corp. (MSTC). "But what we're finding is that the new technology is starting to force them to change."

Peripheral hardware is also a consideration--most modern printers are designed only for use with Windows systems. And product support is very difficult--there is little or no ability to modify DOS to meet changing needs. The laws of supply and demand are also a factor. "We don't do a ton of new development in the DOS version simply because 99.9 percent of the product we sell now is Windows," Reddick says.

An apt real-world analogy illustrating the situation was offered by yet another vendor. "Computers have become like toasters and TVs," says Michael Kelley, president of New Braunfels, Texas-based Dilloware Inc. "When you have a problem, you don't fix them--you throw them out and get new ones." The Billing Clerk, Dilloware's software package, is designed for smaller self-storage operators who need basic business functions.

Hardware requirements for running Windows instead of DOS are significantly different. The best way to ensure you have the necessary computer power to run the management software of your choice is to consult with your software vendor. He can tell you minimum and recommended hardware requirements for programs, and can probably help determine whether your existing system will make the grade. Generally, new Windows-based PCs come with enough memory to run any self-storage management software, but buyers should always ask to be sure.

Alternative Revenue Sources

Self-storage managers nationwide are discovering how ancillary products and services, such as packing materials, boxes, tape and even rental trucks, are providing a boost to their bottom line.

Storage facilities of all sizes are also taking advantage of another type of profit center--their otherwise idle space. Many law firms, banks, hospitals, insurance companies and others have a volume of critical business records--patient files, client files, as well as backup tapes for data processing, etc.--that get rotated off-site for a period of time prior to destruction.

Often, these firms just don't have the room or don't want to pay for the valuable office space to keep all those records on site. So they ship them to outside facilities, such as self-storage, where they are stored and retrieved as needed. Moving and storage companies, which typically boast higher-capacity buildings than would be found at a self-storage facility, are becoming especially active in this area.

To serve this growing niche area, Cleveland-based Andrews Software Inc. (ASI) offers an information-management software package for commercial records centers. Features of the ASI software package include a client/departmental database module, user-defined fields and reports, dynamic warehouse tracking, multilevel invoicing for customers, and unlimited capacity. The program is barcode driven for speed and accuracy.

ASI is a wholly owned subsidiary of the Andrews Companies, a records-management and transportation firm. The size of the facilities involved and the number of containers stored by Andrews clients makes it absolutely crucial to have an efficient software program capable of handling all aspects of the business, says ASI National Sales Manager Scott Bidwell.

"Our Cleveland operation has about 1.2 million cubic feet of records. There are two buildings, each about 65,000 square feet and 40 feet high. Say a customer calls up and says, 'I need box 22.' Imagine trying to run that operation without a software program," says Bidwell.

"The benefits of using a true commercial records center application are that you get into the business with the right tools," he continues. "There are no bad habits created by trying to wing it. It pretty much does everything for the business aside from going out and selling to customers. If you follow the business rules and logic in the software, it will pretty much run the operation. There are few industries where the software runs the operation or drives the business on a daily basis like the records-management business. It does everything from creating the bar codes to tracking the boxes in the warehouse."

Even though self-storage companies tend to get into records storage to provide an additional revenue stream, Bidwell stresses the importance of treating records storage as a separate business. "The ones who understand it and treat it as a separate business with a separate building--with a high ceiling or multistories--do very well with it," he says. Self-storage companies are usually not as successful with this type of endeavor as moving-and-storage firms, says Bidwell, because the building dimensions are not as conducive to high-volume storage.

While moving and storage companies might be better suited for records storage in the United States, Irvine, Calif.-based O'Neil Software says that's not necessarily the case overseas. O'Neil serves more than 700 records centers in 37 countries. According to Ian Thomas, vice president of business development, all but two of the company's 20-plus Australian clients have emerged from that country's self-storage industry. "Some of these operate within their self-storage facility, but others have become so big that branching out was necessary," he says.

Noticeable consolidation has occurred in the records-management industry in recent years, with three major players dominating the landscape. But that's not to say that there's no room for competition. "We find that as quick as an acquisition takes place, a new player emerges in that market filling the void," says Thomas. "We still think the industry is only on the tip of the iceberg."

Many operators don't think of security as a potential source of income, but it can be. QuikStor, which produces keypads and alarms in addition to its software, offers empty alarm boxes for installation on storage-unit doors, which can be replaced by working alarm boxes for tenants who choose the option. "Crooks can't tell the empty boxes from the real ones," says Doug Carner, marketing director. "What you do is 'rent out' the security to the tenant. When you do, you replace the empty boxes with the real ones. With most systems, you have to buy the security system outright and hope you get your money back. In this case, you only install it as tenants want the service." Carner says the reasonable price of the alarm boxes--$60 per unit--allows operators to quickly recover their investment even at modest rental rates.

Getting Together

The prevailing opinion remains that universal interface--a standardization of software protocol to allow any management software to automatically integrate with any security/access control system--will likely never exist in totality. "I'm a strong believer in universal integration," says QuikStor's Carner. "It would really make me happy to see that a person could buy any management software and any security system and tie the two together." But as Carner points out, there are too many forces at work that prevent universal interface from being in the best interest of the most important industry players.

Most companies' management software can be made compatible with any other company's security/access control system. This task is often undertaken on a case-by-case basis by a vendor--usually the second one to come into the picture--as a courtesy to a customer.

Empower Software's Smith says his company interfaces with all major security systems "as much as they'll allow us." But, he adds, "I think we're at the same old impasse. There are three standards out there now that are similar, but not completely the same. We would like to see universal interface, obviously, but I don't see it happening anytime soon, even though it would be better for the market in general if it happened. But we can understand the reluctance of the security providers in that they don't want to give any features away by making a standard."

Economics are a big reason companies like Empower don't press harder to make universal interface a reality. "You only have finite resources, and we would rather spend our resource money on improving and maintaining the leading edge in software than trying to divert into hardware, gate systems and so forth," says Smith.

But at least one vendor feels the absence of universal integration encourages buyers to place too much emphasis on "one-stop shopping" for management software and access-control hardware. "With one-stop shopping, there are some benefits when it comes to troubleshooting and assigning responsibility for problems," says Tom Garden, president of Syrasoft (formerly Automation Technologies), which produces the Storage Management System software package. "But some companies are good at hardware, and some companies are good at software. No one is very good at both, in my opinion. You really need to see that they are two very distinct entities.

"The consumer, when he is making this difficult decision about access-control and management software, really gets confused. The question you have to ask is, 'Do you want one company that does both in a mediocre or average way, or do you want to pick the best for both hardware and software?' Some people limit themselves in this way, and I think do themselves a disservice as a result."

Helpful Hints

Checklists for buying software typically adhere to common principles. First, when compiling a list of vendors, it's best to stick with those specializing in the self-storage industry, as there is no substitute for experience-based knowledge. Trying to adapt software designed for other purposes, such as apartment management, will likely produce disappointing results. "Choose someone who's established and has a good Windows-installed base," says Syrasoft's Garden. "Many of the old companies that were and still are powerhouses in the DOS world either have not finished a Windows product that's viable, or have not put one out there that's really ready for prime time."

Research product offerings. Obtain demonstrator copies, references and brochures from several companies. Attending a tradeshow makes side-by-side demonstrations possible and allows direct, in-person contact with salespeople. If visiting a show is not possible, most vendors offer an abundance of information on the Internet, and some even provide downloadable demo programs on their websites.

Garden advises that customers ask vendors whether they can get a working demo, or if they'll only be shown some PowerPoint presentation. Plamondon of Integrity Software agrees. "I would recommend they get a demo copy of a piece of software. You can't really look at a brochure and say, 'Yeah, that's going to fit what I need to do.' If I was buying software, I would want to actually try it before I bought it--and not just glossies on a self-running demo." Plamondon says there's a big difference between a self-running demo and actually sitting down to a real-life demo that shows what the software can do for your particular facility.

About references: Getting input from other operators is never a bad idea. But remember: Software vendors only include their satisfied customers on reference lists. Don't simply ask fellow operators about the product they're using and why they like it; also find out if they tried other products before settling on their final choice. By doing this, you'll learn about red flags that may never arise in a salesman's demonstration.

"I would print out the reports, making sure they have real data in them," says Hecker of SMD Technologies. "Look at a bonafide paper copy of the reports--there should be about a dozen or so. The software should come with a printout of the reports, but if it doesn't, print a report through the demo CD-ROM and make sure it has some sample data in it. You don't want to print an empty report. It needs to have totals at the bottom. There needs to be explanations of terms on the reports every time you print a copy, so if you are not at the office and you wonder what a certain term means, you can see it at the bottom."

Ease of use is something most buyers will want to emphasize. "There are some people who get a little hung up on the features, and get lost when it comes to the ease of using the program," Carner says. "You definitely want something powerful, and something that can do the marketing and financial analysis that it takes to run a successful business. But you don't want something where your manager is constantly battling to understand what to do with the program, and your relief manager is lost."

The customizability of a program should also be examined, Hecker says. Does it customize to your late fees? How easy is it to change the interactive map? Being able to tailor a program to the unique nuances of your facility is important.

"People should use a program that adapts to them, rather than them adapting to the program," says Calvin Quayle of Quayle Computer Concepts, whose software package, SWAMP (Storage and Warehouse Asset Management Program), caters mainly to the small, independent owner/operator. "Even though I say that, there isn't a lot they can do to change (our) program. But we've written SWAMP with that in mind, so that they can do things in simple language and let the program do the work."

After-sale involvement is extremely important, vendors say. "Support is the number one key," says Sentinel's Reddick, whose company employs 10 dedicated support staffers. "Software is only going to work as good as the people who built it, but at the same time customers are going to have questions. You can't expect to just put a product in and never have a question about it. You've also got to have a good support staff customers can get to."

Customer satisfaction is the main goal of every software vendor's tech-support efforts, but there are different approaches. Most offer access via e-mail or a toll-free phone number, but some offer other methods designed for simplicity. Hawaii-based HI-TECH Smart Systems has devised a method that is not only easy, but provides the technician with maximum information at the time of the request. "Within our screen, a user can fill out a request for tech support," says HI-TECH President Michael Richards. "They hit the send button, and it comes right into our database. From our point of view, it saves a lot of time because we have all the information about their system we need relevant to our software, and are better able to help them."

Your present and future situation, as well as that of the software company, should also be strongly considered. Are they going to be there for you every step of the way while you reach your comfort zone? Are they going to be there down the road? And exactly what value does the vendor place on personal relationships?

A proliferation of programs has altered the marketplace in recent years, says Umbrella Systems' Stave. "Two years ago, we were one of 10 or 12 software companies," he says. "I'll bet there are 30 of them out there now. The market has been flooded. It's much more competitive and, as a result, I think everyone has been in a race to upgrade their programs."

Looking Ahead

Software packages are continually being improved by vendors, with new features being added and existing ones enhanced. A number of vendors are still in their infancy in the Windows operating environment, a fact that will require those vendors to stay current with improvements and upgrades.

Wireless keypads, along with remote consoles that allow a manager to open and close units and gates and make other system changes from anywhere on the property, are among the new bells and whistles expected in the near future. Further development of Windows software packages, dealing with bugs and incorporating enhancements as the Windows system itself evolves will also actively continue.

Interfacing with personal digital assistants such as the Palm Pilot are already materializing. Innovations such as touch-screen technology are also on the horizon, though its viability in many markets is uncertain. "I think, ultimately, that's where everything is going to head--away from the mouse and toward a touch-screen application," says Dilloware's Kelley. "It's expensive, but if enough people get on it, it could come down in a hurry."

To varying degrees, most vendors believe the future of self-storage software lies on the Internet, another advantage for the Windows system. Some say accelerated involvement of the Internet is still a few years away, but others are gearing up to grab the bull by the horns much sooner.

"We see it evolving now," says Smith of Empower Software. "At this time last year, it wasn't there in any measurable amount. But we're seeing more and more interest, primarily from larger, multifacility owners and corporations. We've taken that to heart, and we will be releasing this year a version of the program that will support that."

Empower has "major commitments to produce a very sophisticated Internet solution," Smith adds. "All I can say now is that it's going to be major--there's not going to be anything like it as far as we've been able to ascertain in reviewing the market trends ourselves."

Burlington, Mass.-based MicroTask Inc., which used to produce and support the Stor-Rite software package, recently shifted its entire focus toward its self-storage Internet portal, The site gives would-be self-storage customers an easy, one-stop method of locating a suitable site and reserving it without ever leaving their computer. To accomplish this, a handful of software vendors are including in their packages a piece of MicroTask-written code, enabling operators using those software packages to update their space inventory as shown on

"We have a lot of customers on with us right now who are dying for that feature, so it's to software companies' benefit to put it on," says MicroTask President Chris Capozzoli. "It's a nice, seamless way to get that information up on the web so people can reserve online--you don't have to worry about managing the database."

Capozzoli says MicroTask plans to provide self-storage customers with the ability to pay their rent online. Multifacility operators will even be able to provide their customers a link to the online payment service from their own websites. "That way, if they don't have an online inventory system like we do, they can use ours and park it right on their site," Capozzoli says. "So whenever they update the inventory to, they're looking at the same data."

According to MSTC's Skrentny, an Internet product can be complex. "We're spending a lot of time creating the foundation and the blueprint for (an Internet solution) because we don't want to lose what we've currently got. It's a whole different environment--it has its own set of capabilities and limitations. In developing a new system, we want to be really careful. I think it's going to become an option, but I don't think it's going to be the right solution for everyone. Rather than replace the Windows program, it's going to be a viable option for businesses that want to gain in some areas but lose in others."

Syrasoft's Garden, however, offers more bridled enthusiasm about the Internet's prospects. "I'm sure it will be very real in three years, but today it's not what makes us money," he says. "We're doing web enabling of certain features like e-mailing of statements, using the web to get updates automatically--things like that. I'm sure we'll be there when the time is right, but right now I don't think the investment would be regained for quite some time."

Predicting the response of users, Garden adds, "If they're not forced off the Windows platform the way Windows forced people out of the DOS world, many of our current customers will be there forever. The web-enabled application is certainly two to three years away, and I think it will be kind of a new market at that time. I think the large chains will certainly be going that way."

Acorn Products/DCAL Computer Systems
4100 Adams Road, Suite C101
P.O. Box 3936
Bartlesville, OK 74006
Phone: 918.333.2996; 800.328.3225
Fax: 918.335.0240

Acorn Products/DCAL Computer Systems, a producer of software products designed for self-storage, has been in business for 20 years and serves the United States, Canada, the Bahamas and Australia. Acorn Products for self-storage consist of UNItroller Management Software, UNIkey Access Control Software System, Vertical Lift Gate, Central Office Systems and all ancillary items to provide complete control of a self-storage facility. UNItroller Management Software and the UNIkey Access Control System operate on one computer simultaneously. The UNItroller system communicates to the UNIkey system who to lock out for nonpayment, and will automatically unlock them when their account is brought current.

Andrews Software Inc.
One Andrews Circle
Brecksville, OH 44141
Phone: 440.838.8611; 800.807.2093
Fax: 440.838.8781
E-mail: [email protected]  

Andrews Software Inc., a wholly owned subsidiary of the Andrews Companies, boast 90 years of experience in the records-management and transportation industries. Andrews believes its experiences running commercial records centers and serving hundreds of customers enables it to provide proven quality software solutions to the information-management industry. The company uses these tools every day in its Cleveland and Columbus facilities. Its goal is to maintain a leading-edge position in the industry. Andrews Software products have a proven track record accommodating most (if not all) of the management and operating challenges in records management. These products include Visual Corporate Keeper®, a records center's "backbone"; and InfoKeeper®, an Internet solution giving clients total control of their databases through a web browser.

Dilloware Inc.
2825 FM 2722
New Braunfels, TX 78132
Phone: 800.880.0887
Fax: 830.899.2124
E-mail: [email protected] 

Dilloware has been providing storage facilities with easy-to-use, affordable billing software since 1981. The Billing ClerkTM automatically bills and tracks monthly rents, insurance, etc., and generates invoices, statements, late charges, past-due notices, receipts, multiple reports and much more. Unit availability is easily accessed. History is maintained for as long as needed for an unlimited number of units and customers. There is a large notepad for information on each (comments, credit card numbers, access codes, contact person, etc.). Technical support is provided by the people who actually developed the program, offering no long hold times or waiting for call-backs. The first year of support (up to 60 minutes) is included in the initial price of $599.95.

Empower Software Technologies
27851 Bradley Road, Suite 120
Sun City, CA 92586-2202
Phone: 877.672.6257
Fax: 909.672.6258
E-mail: [email protected]

Storage Commander was designed as a 32-bit Windows-based modular system, allowing owners of small, medium or large facilities to purchase a basic management system at an inexpensive price, with the ability to add additional components for increased productivity as needed. This concept allows Empower to offer turnkey versions of Storage Commander to meet the needs of all management companies requiring advanced functions such as Internet facility control, manager security access based on a unique ID and password, photo ID system, interactive site map, comprehensive tracking of all accounting and facility activities, and a complete range of facility and financial reports.

HI-TECH Smart Systems
407 Uluniu St., Suite 312
Kailua, HI 96734
Phone: 808.263.7775; 800.551.8324
Fax: 808.261.4447

HI-TECH has been producing software for the self-storage industry since 1986. RentPlus is HI-TECH's self-storage software for Microsoft Windows. RentPlus was designed from the ground up to provide all of the features needed for self-storage today and in the years to come. Highlights include an on-screen interactive map of your facility; daily, weekly and monthly rentals; multiple plans; automatic charges and notices; complete built-in inventory management; customizable letters and much more. Customer and other photos may be attached and viewed with a customer's record. RentPlus includes technical support, updates and a risk-free money-back guarantee.

Integrity Software Systems Inc.
3211 Continental Drive
Traverse City, MI 49686
Phone: 800.THEY.KNOW; 231.941.2322
Fax: 231.941.9544

Integrity Software Systems' Mini Storage Personal Accountant has been designed to offer self-storage facilities an accounting system that is easy to use and provides strong financial controls. Such controls prevent locking out customers who have paid and helps prevent manager theft. Chris Ray, a certified public accountant, and Ron Plamondon, a professional system developer, are well qualified to design, develop and support installation.

Mystic Systems Technology Corp. (MSTC)
7430 E. Butherus Drive, Suite A
Scottsdale, AZ 85260
Phone: 800.BUY.MSTC

Mystic Systems Technology Corp. (MSTC) has been developing automated management systems for the self-storage Industry since 1984. MSTC offered one of the industry's first PC-based property-management software systems complemented by a billing-sensitive, PC-based security system. The company also offers 24-hour-a-day, seven-day-a-week technical support to its users. Windows-based 32-bit applications for property management and security systems are available, as well as a full line of security hardware to meet all facility automation needs. MSTC also offers a one-of-a-kind Computer Based Training (CBT) system that offers complete on-site interactive property-manager training and testing tools.

Quayle Computer Concepts
3204 Cherrywood Lane
Eau Claire, WI 54701
Phone: 715.832.2614
Fax: 413.451.2511

Storage & Warehouse Asset Management Program (SWAMP) is the result of a father in the storage business and a son who is a programmer. Both have more than 20 years experience in their respective fields. It was a natural merger for Calvin and Gordon Quayle to combine this experience and create a software product specifically designed for the smaller operation at a reasonable price. The company takes pride in keeping its overhead low and listening to its customers. It will continue to add the features customers want. Quayle believes in software that fulfills its promise of making users' lives easier; helps users manage their business; is affordable; and saves money and time. The motto at Quayle Computer Concepts is "making computers work for you."

O'Neil Software Inc.
8 Mason
Irvine, CA 92618
Phone: 949.458.1234

Founded in 1981, O'Neil Software provides records-management solutions to more than 700 records centers in 37 countries. Through its corporate headquarters in Irvine, Calif., and international offices in London and Brisbane, Australia, O'Neil has helped hundreds of people increase their opportunities in the commercial records-storage industry through superior software design, comprehensive barcode-tracking hardware and portable receipt printing. Committed to ongoing advancement, O'Neil invests a great deal of money in development, consistently providing its users with a top-notch software product.

13908 Ventura Blvd.
Sherman Oaks, CA 91423
Phone: 800.321.1987; 818.990.5575
Fax: 818.501.5785
E-mail: [email protected]

QuikStor provides digital, wireless door-alarm security available with 20-plus years of battery life and long-range, spread-spectrum, 900MHz configurations to penetrate metal walls and unit contents. QuikStor has four years of wireless experience protecting more than 100,000 self-storage units. Permanently installed or rented to tenants on demand, QuikStor's wireless security can provide an outstanding return on owner investment. The company's access-control keypads allow delinquent tenants to use a credit card to pay at the gate. Keypads are designed to survive violent storms, vandal attacks and years of neglect. Video surveillance offers pan/tilt control, multiple-input display and time-lapse recording. The package allows a manager to instantly retrieve the images of the people who entered a gate code at any date or time. QuikStor's management software automatically collects tenant rent, e-mails invoices and provides marketing analysis to increase owner profitability. Installation packages are economical, professional and won't disrupt existing tenants. Call for a custom quote.

Real Management Systems
3200 N. Hayden Road, Suite 230
Scottsdale, AZ 85251
Phone: 480.941.6047; 877.877.7325
Fax: 480.941.4121
E-mail: [email protected]

Real Management Systems offers a complete integrated system of management software, gate access, door monitoring and interactive graphics displays. Task Master is a user-friendly, Windows-based management software program designed to handle all aspects of a self-storage business. The client-based system simplifies management of collections on delinquent accounts, assigning multiple rentals, consolidation of billing, and a one-step payment process for single- or multiple-lease clients. Task Master manages merchandise sales, inventory, insurance and other income; and provides infinite client history with demographic and client profiling for use as a powerful marketing tool. Automatic functions for daily processing, FTP downloading, e-mail and accounting exports are included. Site Master interactive graphics are featured. Master Access System features a hard-wired Multiplexers alarm system. Master keypads offer system intelligence and the latest technology, and are equipped with a light-sensing LCD display, back-lit keypad and a built-in intercom speaker, in an all-weather aluminum case with a card-swipe option. Responsive, cost-effective support is available 24 hours a day, seven days a week. Contact the company for an operational demo CD.

Sentinel Systems Corp.
1620 Kipling St.
Lakewood, CO 80215
Phone: 800.456-9955; 303.242.2000
Fax: 303.242.2010

Sentinel Systems has provided security electronics and property-management software to the self-storage industry for more than 26 years. What began as a way to eliminate break-ins for a group of self-storage facilities has grown into one of the largest security and software suppliers in the industry. The firm now serves more than 16,000 systems worldwide, with a tenant-user population in the millions. The company's mission is to provide superior products and outstanding customer service through innovations in technology, people, systems and marketing.

SMD Technologies Inc.
152 N. White St.
Wake Forest, NC 27587
Phone: 919.562.6711
Fax: 919.562.0269
E-mail: [email protected]

SMD Technologies has been developing Windows-based software since the early days of the Windows operating system. The company's self-storage experience has led to the development of SiteLink, a powerful, user-friendly tool for managing storage operations. Unique features of SiteLink include the Task Master for tracking of deadlines and past-due events. Letters and the site map are unsurpassed in their flexibility and ease of use, SMD says, with documents and property map printable at any time. Users can automatically send reports and backups to other locations. SiteLink's e-mail capabilities allow management of data at home offices, archiving of backups anytime, and importing of data into QuickBooks.

Space Control Systems Inc.
2815 Mitchell Drive, Suite 205
Walnut Creek, CA 94598-1622
Phone: 800.455.9055; 925.943.6222
Fax: 925.943.6370
E-mail: [email protected]

Since Space Control's inception in 1984, President Ramona Taylor has kept the company's sights on providing a software-management package that would address the unique requirements of the self-storage industry. To meet this goal, the product has to be instantly understandable to anyone in that field, intuitive to the novice user and highly automated. When research indicated absentee owners needed on-site control, Space Control filled that need by auditing every variance from standard procedure. From the smallest single facility with 85 spaces to the largest facility with more than 5,000 spaces, Space Control has met the demand. The same philosophy has now been applied to Space Control II, the new Windows package.

Syrasoft (formerly Automation Technologies)
P.O. Box 194
Marcellus, NY 13108
Phone: 800.817.7706
Fax: 315.673.0911
E-mail: [email protected]

Syrasoft, formerly known as Automation Technologies, provides state-of-the-art software for self-storage applications: the Storage Management System. Available in standard and professional editions, the system includes add-on modules such as gate interface, automatic credit-card billing, networking, inventory, personal digital assistant and photo capture. Syrasoft supplies the needs of small to large owner- or manager-operated facilities. The Storage Management System also interfaces with QuickBooks accounting software. A free 60-day trial is available on request.

Umbrella Systems Inc.
P.O. Box 1808
Poulsbo, WA 98370
Phone: 800.544.0652
Fax: 888.525.1414
E-mail: [email protected]

The Umbrella System is a complete software package for the management of self-storage facilities. Programmed from the ground up, the Umbrella System is not an adaptation of an existing software package, but is designed to be a powerful, flexible and simple product to use. The strength of the Umbrella System is that it maintains a line-item record of all transactions, giving the user an accurate account history, preliminary lien notices, an itemized rent statement and fully auditable cash-flow statements. New additions include: new site map, new checkbook, new P&L, balance sheet and new layout screens.

The Phase I Environmental Site Assessment

The Phase I Environmental Site Assessment
An overview of the process, its components, timing and pricing

By Douglas A. Olson, P.E.

Has your lender required you to have a Phase I environmental site assessment (ESA) conducted on your self-storage facility? Are you are thinking about conducting an ESA on a property you might like to acquire? This article will provide you with a general overview of environmental due diligence, the components of an ESA, the ESA process, and general pricing and timing.

The reason typically given for conducting a Phase I ESA is the potential property-owner liability created by the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), also known as "Superfund." CERCLA liability for the cleanup of hazardous substances lies with the current property owner unless, at the time of acquisition, he did not believe--or have any reason to believe--that hazardous substances had been or may have been released on the property. In order to safeguard himself from CERCLA liability, a property owner must establish the defense that he had no reason to know of an actual or threatened release of a hazardous substance on his property. To do this, CERCLA requires he undertake, at the time of acquisition, "all appropriate inquiry into the previous ownership and uses of the property consistent with good commercial practice in an effort to minimize liability."

Obviously, lenders do not want to loan on an environmentally impaired property due to liability under CERCLA as it may effect their exit; however, there are additional reasons to conduct ESAs. For example, CERCLA excludes petroleum products and asbestos, often the most common causes of environmental contamination. There may also be potential environmental liability on a state or local level. A mandated environmental cleanup by a government agency will likely impact your self-storage income stream, which may be tight to start with. Moreover, contamination identified during site development can substantially increase your hard and soft construction costs. Finally, on-site contamination can significantly impact or negate your exit strategy.

The ASTM Standard Industry Practice

Initially, there were no established standards for conducting Phase I ESAs. Many banks, insurance companies, governmental agencies, REITs, etc., had their own unique protocols for conducting such assessments. But varying levels of inquiry and formats made comparison of reports difficult; Phase I assessments would vary from a single-page letter report for $250 to and in-depth study costing thousands of dollars. In order to provide a level of consistency, the American Society for Testing and Materials (ASTM) created industrywide standards in 1989.

The result of the ASTM's efforts was the creation of E 1527 (Phase I Standard) and E 1528 (Property Transaction Screening). These standards meet the requirements of "appropriate inquiry" established under CERCLA and are now considered the industry standard and good, customary practice. However, there are potential items of environmental concern that are not addressed under the ASTM Standard.

An analysis or discussion of wetlands, which may impact the amount of your site that can be developed, is not required under the ASTM standards. Moreover, asbestos and lead-based paint, items of potential environmental concern that may significantly impact construction costs of a building's conversion to self-storage, are not addressed by the ASTM standards. You should establish the scope of the Phase I with your environmental consultant. Often, this will result in conducting a Phase I in accordance with ASTM Standard E 1527 enhanced for an analysis of wetlands, asbestos-containing materials and lead-based paint.

The Phase I ESA Process E 1527-00

The purpose of the Phase I standard is to identify recognized environmental conditions in connection with a property using the methodology recommended by the ASTM. The objective is for the property owner to qualify for the innocent-landowner defense against CERCLA liability, or to help understand potential environmental conditions that could materially impact the operation of the business associated with the property.

Recognized environmental conditions are defined by ASTM Standard E 1527-00 as: the presence or likely presence of any hazardous substances or petroleum products on property under conditions that indicated an existing release, a past release or a material threat of a release of any hazardous substances or petroleum products into structures on the property or into the ground, ground water or surface water of the property. The term includes hazardous substances or petroleum products even under conditions in compliance with laws. The term is not intended to include de minimis conditions that generally do not present a material risk of harm to public health or the environment and that generally would not be the subject of an enforcement action if brought to the attention of appropriate governmental agencies.

The ESA process essentially consists of four components: records review, site visit, interviews and report preparation:

Records Review
The records review consists of the reviewing of records maintained in certain governmental regulatory databases, and the review of historic, topographic and hydrogeologic information. The governmental-database review includes the review of federal and state regulatory databases such as lists of leaking, underground storage tanks. The lists are reviewed to determine whether the subject property--or surrounding properties within a defined distance of the subject property--has known environmental conditions such as a leaking, underground storage tank.

The history of the site is analyzed to determine whether former site usage or the historic usage of nearby properties have resulted in environmental degradation of the site. Essentially, the ASTM Standard E 1527 requires the history of a site be determined back to the earliest of either 1940 or the site's first developed use.

Site Visit
The site-visit portion of the process includes a site reconnaissance of the subject and nearby properties. The purpose is to characterize the on-site conditions and obtain visual evidence of recognized environmental conditions that may impact the subject property.

Interviews are often overlooked, but are an integral part of the site assessment. This portion of the process should not be "skimped on" as people knowledgeable of the site and/or its environs can be an invaluable source of information. Interviews should be held with current and former property owners, tenants, neighbors and local and state regulatory agencies. The interviews should be documented in the report along with the interviewee's title, affiliation and phone number.

The Report
Finally, the findings and conclusions are assembled with the supporting documentation in a report. Although providing recommendations is not required, the report should include recommendations and cost estimates. In any event, the inclusion of recommendations should be discussed with the environmental consultant at the start of the assignment.

The Transaction Screening E 1528-00

The transaction screening, ASTM Standard E 1528, is typically conducted on smaller loans--usually those ranging in size from $250,000 to $1 million--because the lender has less exposure. It is much easier to write-off a $500,000 loan than a $5million one. However, inasmuch as environmental remediation costs are based on the size, level, type of contamination and the media impacted, and not the purchase price of the property or the amount of the mortgage, I do not recommend transaction screens for those taking any equity position in of a property.

The transaction screening consists of three steps:

  • The completion of an ASTM-designed environmental questionnaire regarding current and past uses of the property and surrounding sites;
  • An inquiry and review of governmental records and specific historical sources pertaining to hazardous-waste activity on or near the property; and
  • A site reconnaissance and visual inspection.

The checklist or questionnaire is to be filled out by at least three parties, usually the owner, the occupant and the person conducting the assessment. Since the transaction screening is not as thorough as a Phase I ESA, the site will often fail the transaction-screen process, resulting in a recommendation to conduct a full Phase I ESA.

Timing and Costs

Typically, the cost of a Phase I ESA ranges between $1,500 and $2,500 for a standard turnaround time depending on the location, size and complexity of the site. Turnaround times range from two to three weeks, with three weeks being the norm. Transaction screens range in price from $500 to $1,200, and can usually be completed within one to two weeks.

When choosing a consultant, make sure his report will be acceptable to the lender, that he has at least $2 million in Errors and Omission insurance, and he has the depth to follow up on any potential recognized environmental conditions he identifies.

Douglas A. Olson, P.E., manages the Phase I environmental site-assessment department at IVI Environmental Inc., a full-service environmental-engineering firm. IVI is a recognized firm headquartered in White Plains, N.Y., with branch offices in Washington, D.C., Miami, Dallas and Los Angeles. The company, which has extensive experience with investment banks, the CMBS market and rating agencies, conducts more than 1,200 Phase Is per year on behalf of developers, owners, buyers, lenders and insurance companies. In addition, IVI's Phase II and Phase III departments and asbestos department conduct investigations, and remediations and abatements throughout the United States. Mr. Douglas can be reached at 914.694.9600; e-mail [email protected]

Thoughts From the Road

Thoughts From the Road

By Jim Chiswell

Spring Clean-Up and Dress-Up Time

Spring is upon us, and with it comes the opportunity to catch some extra attention for your facility. If you are in the Northeast, it's time to remove all signs of the winter that is now behind us. The few pieces of trash you could not get to because of snow piles or because the ground was too soft should get top priority. Filling in the tire marks and reseeding the grass will give you a jump-start on the remainder of the year.

It is also the time to plant spring flowers. I have met many managers who would welcome the chance to dress up the front of their property if only they had the budget and authority to get the job done. In many cases, I would rather challenge my managers to coordinate the spring plantings than turn the job over to a contractor. The majority of facilities across America are being managed by people who live on site. Even if owners pay those managers what they would pay a landscaper, I believe they would get a better end result.

I would love to share photos of facilities where the owners or managers have done the landscaping. If you would like to share your results, please send me a photo to the address at the end of this column. Write "Spring Dress-Up" on the envelope, and be sure to include details about your facility along with your name and contact information. I will select two photos to publish in an upcoming column.

Self-Storage in the Media

All at once, I seem to be seeing self-storage facilities featured in various types of media. Recent motion pictures have featured scenes set at facilities. They usually don't present us in the best light but, then again, it's hard to imagine a self-storage location as the backdrop of a love story! An MSNBC news story included an entire interview with one subject as she stood at her self-storage unit. The setting was unmistakable as others helped to unload her rental truck into her 10-by-20 unit. Even radio and TV shrink Dr. Laura has discussed the use of self-storage.

During one of my last trips, I was searching the radio dial in my rental car for some "oldies" music. I caught the end of Dr. Laura's response to a woman who was at loose ends over having to store all of her 35-year-old daughter's stuff. Dr. Laura told her she had a very simple solution: Get out the Yellow Pages and turn to the section for storage. She recommended the woman pick out the self-storage location closest to her daughter's apartment and tell her daughter to move her stuff there. It was one of the best responses I have heard from Dr. Laura.

The increased visibility of our industry can be a double-edged sword. Publicity and news items about self-storage are generally negative. Usually, they either highlight a tragic occurrence or someone who has been caught doing or storing something illegally at a facility. As an industry, we should go on the offensive across the country. There are so many other positive stories about our grand openings, or how we help people in trouble, or how our facilities have helped new businesses get started, or how a facility has assisted a local charity.

I challenge every owner to come up with a positive story about his facility that can be sent as a press release to a local paper or business journal. As long as our industry is going to be seen regularly in the media, we should fight to get our share of positive press. There are literally hundreds of local weekly and business-oriented journals that could be inundated with press releases if even just a few of the people who read this column would accept my challenge. When your story runs, please send me a copy of the article.

Who Put the Butts Out? (Follow-Up)

I could not resist writing a follow-up to the item about cigarette butts in my last column. If Maine State Legislator Joseph Brooks gets his way, butts could become a new profit center for facility owners in that state. It seems Brooks has introduced the first national cigarette-butt-deposit legislation. Designed to mirror the state's bottle-deposit legislation, the Brooks proposal would place a 5-cent deposit on every cigarette butt. Simply returning your used butts to a retailer would allow you to claim the deposit.

If this proposed legislation is enacted into law, every chain smoker in New England will be visiting Maine on a regular basis. It is too bad they are still not producing the Seinfeld television show. I could write that episode myself. But until the "Butt Bill" has been signed into law in each of our states, I guess we'll just have to keep picking up the butts ourselves to keep our facilities and grounds clean.

Return to Biloxi

I am very excited the ISS Trade Fair is returning to the Beau Rivage Resort and Casino, Biloxi, Miss., in June. And, no, not just to visit the money I left there last time! Our last trip to Biloxi was an outstanding opportunity to meet in a relaxing environment with people considering getting into the business, as well as with current owners to talk about their issues. If you have not already made plans to attend, visit the ISS website at to get all the details. I look forward to seeing you there.

Jim Chiswell is the president of Chiswell & Associates. Since 1990, his firm has provided feasibility studies, acquisition due diligence, expert testimony and customized manager training for the self-storage industry. In addition to contributing regularly to Inside Self-Storage, Mr. Chiswell is a frequent speaker at Inside Self-Storage expos and various association meetings. He can be reached via mail at Chiswell & Associates, 1260 N. Forest Road #2A, Williamsville, NY 14221; e-mail [email protected]; call 716.634.2428;

A Self-Storage Outlook

The Fabulous San Francisco Bay Area

By R.K. Kliebenstein

The San Francisco Bay is 50 miles long, from three to 13 miles wide, and is entered through the Golden Gate, a strait between two peninsulas. The city is on the southern peninsula, while on the northern peninsula are the residential suburbs of Marin County. On the eastern shore of the crescent-shaped bay are such industrial cities as Alameda, Oakland, Berkeley and Richmond. The Santa Clara Valley, part of a great depression parallel to the coast, is the landward extension of the bay. Angel Island, Alcatraz and Yerba Buena Island are in the bay itself.

The San Francisco Peninsula not only holds the city, but also some of the oldest and most elite suburbs of the Bay Area. These suburbs, including Silicon Valley and San Jose, can be found to the south of the city. Attractions of the area include The Cannery, Pier 39 and the Santa Cruz Beach Boardwalk.

A drive across the Bay Bridge to East Bay will take you to the lively towns of Oakland and Berkeley. Even though 30 years have passed since the political uprising, Berkeley still remains the national symbol of political and social activism and, most important, it still upholds its idealistic spirit.

The pure, unspoiled beauty of the coast of Marin County greets the visitor who ventures across the famous Golden Gate Bridge. Besides the natural splendor of the mountains, Redwood forests and the ocean, there are also some affluent suburbs in the county, such as Sausalito. Marin offers attractions such as the Point Reyes National Seashore and Muir Woods wilderness.

The scenic wonders may lure some, but the tranquility of the wine-growing regions of the Napa Valley attract many. Within an hour's drive from San Francisco, the prestigious wineries of the valley offer unique opportunities to taste wines of superb quality and dine in even finer restaurants. The Silverado Trail that passes through the Napa Valley provides an ideal view of the scenery of the wine country. The Sonoma Valley affords a break from city life with its rural, informal atmosphere.

The Bay Area is at the cutting edge of the emerging global-information economy, and is a leader in key indicators of success, including:

  • The highest percentage of fastest-growing small businesses in the country;
  • The highest concentration in the nation of people with college and advanced degrees;
  • More than double the average number of patents per employee;
  • The highest concentration in the nation of high-tech exports;
  • The largest concentration in the nation of major national-research universities and federal-research laboratories;
  • The highest Internet penetration of any U.S. region;
  • The highest density of venture-capital firms in the world, and the highest concentration of invested venture capital (35 percent of the U.S. total); and
  • A gross regional product of more than $200 billion annually.

This vibrant tourist area is also the home to one of the largest population centers in the United States. Self-storage is no less important in the Bay Area than in any major U.S. metropolitan area. With a population of more than 6 million, this is one of the major U.S. self-storage markets.

A Self-Storage Outlook

Bill Kenney is an attorney who has been involved in developing real estate for about 25 years and self-storage for almost 20 years. Kenney owns and manages facilities in the San Francisco Bay Area. He has been president of the national Self Storage Association as well as its Western region division, and has participated in numerous conferences and panels regarding storage matters. He tells us:

The Northern California storage market continues to be very strong. The exploding growth in the San Francisco Bay Area led by Silicon Valley and Silicon Gulch, continue to cause the multiplication of new businesses. These growth industries have also generated a strong increase in population. Office rental prices have been driven up by these new businesses.

The recent downturn in dot-com companies has caused a slight downturn in the office-rental rates in the major markets, but the release rate has been good. Large companies such as Cisco, Intel, Oracle and others continue to expand their office space. Office rents in the Bay Area are now among the highest in the world. This makes the alternative of storage very attractive. The office-rental rates have also resulted in some existing storage facilities being sold to groups wishing to build offices.

Residential home prices and rental rates have also increased. The median price of homes continues to rise. This has put pressure on all land prices, making entry into the storage business more expensive. However, the higher land prices call for more density and smaller homes. The people in the smaller houses need storage. These prices also have resulted in people commuting from outlying areas to the core Bay Area business areas. Many people drive two or more hours per day to work. This has caused an increase in the growth of areas outside the immediate Bay Area. There has been growth to the south in Morgan Hill, Gilroy and Salinas, to the north in Santa Rosa and Windsor (though the Santa Rosa area has become saturated) and to the east in the Brentwood, Antioch and Sacramento areas.

The California energy crisis is now looming for the state, but it appears it will be of minimal impact to storage operations because of the low use by facilities of natural gas, where the major price increases are occurring. It still will be a factor.

Government has become more sensitive to storage issues, and some communities have placed moratoriums on new storage construction. This is beneficial to existing owners in those communities by making entry into the business more difficult and expensive.

The demand for participation in storage property in the form of investments is very strong as more people have become familiar with the industry and the potential returns. This has helped as far as sales of existing facilities are concerned, with sales going at very good capitalization rates.

The Pegasus Group, which currently owns and operates more than 50 facilities throughout the United States, is headquartered in the Bay Area. Pegasus General Partner Dwight Davis affirms Bill Kenney's comments:

The San Francisco Bay Area has been one of the hottest self-storage markets in the United States in the last three years. Occupancies tend to be high and rents average well above $1 per foot. Obviously, with high rents and high occupancies, there has been significant self-storage development in and around the Bay Area. Some markets are beginning to reach saturation. Examples of markets that are becoming saturated include Walnut Creek--with several new projects recently opened and several large ones under construction--Concord, Tracy, Santa Rosa and, perhaps to a lesser extent, San Jose. Markets that are underserved include San Francisco proper, the San Francisco Peninsula south to Palo Alto, and the San Ramon Valley from Danville to Pleasanton.

Land costs have accelerated in the last 24 months. Two years ago, land was available at $5 to $12 per square foot. Today, land ranges from $12 to more than $100 per square foot. In most cities in the San Francisco Bay Area, entitlements will be difficult. You can expect from six to 18 months to complete the entitlement process. Fees and requirements by local planning agencies may add $3 to $10 per square foot to your overall costs. Then, there is the matter of off-site improvements: signalization, street widening, curbs, gutters and street lights are a few of the additional costs developers face.

With all the negative information, though, there still seems to be an abundance of developers proposing deals in the San Francisco area. Currently, there are approximately 50 new storage projects in the planning or development stages in the San Francisco Bay Area and another 50 that have opened in the last 12 months. As in any market, there are always good submarkets. Developers should continue to be aware of overbuilding and make their development choices wisely.

Carl Touhey, a local broker specializing in self-storage sales, has had very few new opportunities for the purchase of existing properties as sellers were holding the investments and not selling. Projects that were of "B" and "C" class two years ago are now either sold or under contract as buyers have acquired whatever seemed to be available.

I recall looking at acquisitions in the Fremont area two years ago, and while the market seemed at that time to have vacancies and new projects coming on-board, even those properties have leased up and are doing well. Cap rates are very tight in the market for existing acquisitions, and properties still experience a frenzy of activity when they become available. All this is just an example of how good the self-storage business is in this market.

R.K. Kliebenstein is a consultant with Coast-To-Coast Storage, which provides feasibility studies, acquisition and due-diligence services, as well as financing for self-storage projects on a nationwide basis. He can be reached at his South Florida home office at 561.367.9241.

Business Entities

Choosing the Form of Your Business Entity

By Jeffrey Greenberger

This column provides general insight into the legal aspects of self-storage and should not be substituted for the advice of your own attorney.

"To LLC or not to LLC--that is the question." If the great bard Shakespeare were alive today, the form of the business entity that owned the Globe Theater would be of far more importance to him than the metaphysical questions posed in Hamlet.

All analogies aside, in this day and age, it is extremely important self-storage owners don't overlook anything they can do to insulate themselves from liability in the event of an unexpected disaster or business failure. This is a difficult topic to cover since the laws of each state vary regarding the forms of business permitted, and the specific rules and regulations that apply to them. This article is intended to give you a general overview of the issue of selecting a business entity. Please discuss any plans to form a specific entity with your attorney.

Business Entities

There are several forms of business entities that exist somewhat universally:

  • A Proprietorship--A proprietorship is any business, owned by one or more people, that has not formally filed for recognition with the appropriate authority of the state in which it is located.
  • General Partnership--A formal ownership arrangement between two or more individuals or entities that provides no additional protection or insulation from liability to the individual owners.
  • Limited Partnership--Limited partnerships allow certain owners/investors to limit their exposure or risk for liability to the sum total of their investment. However, every limited partnership must have a general partner. The general partner--including all his individual assets--is exposed to all liability from the investment. The general partner can be an individual or another form of a business entity.
  • The Corporate Form--We are all familiar with a basic corporation format, such as large Fortune 500 companies. The corporate form (the "C-Corp") provides the benefit of insulating, to a certain extent, the personal assets of the shareholders from liability in the event the business fails. The IRS permits certain corporations to make what is called an "S" election, which allows qualified corporations to be taxed like a partnership and avoid the potential double tax on corporate earnings that apply to businesses without it.

Until about 10 years ago, the S-Corp was the best corporate form for a small self-storage operator. It provides the same type of protection from certain individual liability as non-electing corporations and provides the benefits of avoiding double taxation on earnings. But S-Corps have other limitations; for example, the number of shareholders is limited to approximately 35 and regular minute books and resolutions have to be kept, just like in a C-Corp.

Limited Liability Company

About 10 years ago, we also began to see the emergence of limited liability companies (LLCs) in various states, and most now permit an LLC in some form. An LLC allows the same type of insulation from certain types of personal liability for actions of the business, allows for single taxation of earnings, and also has less rigid requirements for the type of record keeping typically associated with corporation law. But before you drop this issue of ISS to call your attorney, LLCs and S-Corps are not the solution to every problem in your business.

Here are some things to consider: First, several of the things you can do with an LLC or an S-Corp can also be accomplished by purchasing good business insurance with a large business-liability umbrella policy and a large personal umbrella policy. Second, the assets of the business in the LLC or S-Corp are always at risk. Finally, there are certain types of actions that give rise to liability that cannot be insured against and from which you cannot form an entity to avoid personal liability.

Examples of these types of conduct are: failure to pay certain payroll trust taxes; certain wrongful-discharge and sexual-harassment charges; violation of certain consumer-protection laws; willful or malicious and criminal types of acts; and contract obligations, such as trade debt. Most--if not all--insurance policies exclude payment for these types of damages. No matter what business entity you have set up, your personal and other business assets cannot be protected.

Here's an example: If you are accused of improperly discharging an employee of your facility with the allegation of some type of sexual harassment, your insurance may not cover this type of action. The assets of your business would, as always, be at risk. But in many states, the law imputes personal responsibility to the person who actually conducted or permitted the alleged act. To the extent a judgment is rendered, it would be against the business and yourself. The fact that your business is in the form of an S-Corp or an LLC would grant you no additional protection.

On the other hand, let's say an employee, in the course of his work, is driving the company vehicle and crosses the center line, hitting a bus and killing 25 people. Your insurance in not adequate to cover the amount of damages awarded. Having your business in the form of an LLC or an S-Corp will allow you to limit that which is subject to attachment to the assets of the business. You will be able to insulate from judgment your personal assets and other business ventures. You may lose the facility, but will be able to protect your home, bank accounts, automobiles, etc.

The best reason to consider setting up an LLC or an S-Corp is the unfortunate event the business fails. Obviously, there is no insurance against a business failing and, if it does, there will most likely be many unpaid creditors from the business. If you have not personally signed or guaranteed debts, and you were properly set up and operated as an S-Corp or LLC, creditors can only collect the debts from the business assets. Conversely, if you were doing business as a sole proprietorship or a partnership, your creditors would be able to look beyond the assets of the business to your own personal assets and assets of other businesses you own (even LLCs), for collection of the amounts due.

This leads us to the second best reason to form an LLC and/or an S-Corp: If you are an owner or part owner, or have interest in multiple facilities or other businesses, setting up an LLC or an S-Corp can help insulate the liabilities between each business. For example, let's say you own a successful manufacturing business and two self-storage facilities. All three are separate entities such as C-Corps, S-Corps or LLCs, and they are not cross collateralized. If one of the facilities fails, you would be able to insulate the other facility and your manufacturing business from the creditors of the failed facility.

Other Things to Think About

The formation of a business entity like an LLC or an S-Corp is not a panacea. There are certain actions and liabilities from which you cannot insulate your personal assets. In addition, the setting up of an LLC or S-Corp will not insulate your interest in the LLC or S-Corp from personal judgments. For example, if while driving home one night you cross the double yellow line and hit the same bus as the employee we mentioned earlier, you would have personal liability to pay for the injuries or deaths that occurred. This is why you carry personal-liability insurance through your automobile policy.

However, in the event your policy does not have enough dollar coverage to address all the potential claims of the victims, a judgment could be rendered against you personally. Your insurance company would only have to pay the limits of its policy, and the balance would be collected from your personal assets such as your home, cars, bank accounts, etc. If these personal assets prove insufficient, one of the other assets creditors can attach is your interest in any business. In this example, it does not matter if you are a partnership, S-Corp or LLC--creditors would simply attach your share of the partnership and try to force the business to be liquidated.

So we have come full circle. An LLC or S-Corp is not a substitute for proper insurance, but a soundly formed business entity complements a good business plan and personal insurance. It can insulate your other assets and businesses from liability in the event something goes awry within your self-storage operation. It also insulates the facility in the event something happens in another one of your businesses.

There are multiple other requirements to properly operate your business in the form of an S-Corp or LLC, and your attorney can help you with these. For example, it is important for the public to know you are operating in a specific business form. This is why businesses include the notations "Inc.," "Co." or "LLC" after their names. If you are operating in the form of an LLC or S-Corp and are not identifying yourself to the world via your signage, invoices, checks and document signatures that you are operating in this form, you may be waiving the protections granted under the LLC or S-Corp laws in your state. If you are an S-Corp, you should be signing all documents on behalf of the corporation, in your official capacity in the corporation. Further, if you are a corporation and have not kept your minutes up to date, you could be running a risk of someone claiming your corporation is no longer valid.

The same requirements exist for an LLC. The world must know you are operating as an LLC. The letters "LLC" or the words " limited liability company" must appear in the title of your business, on your letterhead and on your checks. Checks received should be made payable to the business as an LLC, not to you personally. Correspondence and checks should be signed by you in your capacity as a "member" of the LLC. There are many ways to ensure the world knows you are operating as an LLC or corporation. The above examples are ones I often see businesses not using. They are running the risk of losing their protection after going to all the trouble of forming a business entity!

My firm generally recommends the LLC form for self-storage owners. The true beauty of an LLC--if it is available in your state--is it is not particularly expensive to form, and not particularly intensive in terms of maintenance, labor or attorneys' fees once properly formed. However, there is a learning curve involved in getting up to speed as an LLC. There are printing and signage costs that are unattractive to small-business owners, but they are minute compared to the costs of losing your home, or other business interests or assets.

If you are already in a corporate form, it is worth a phone call to your attorney to ensure you are up-to-date with your documents and filings to the appropriate authorities in your state. If you are operating as a sole proprietorship, partnership or limited partnership, give serious thought to whether an LLC or S-Corp might be a better business form for you.

Jeffrey Greenberger practices with the law firm of Katz, Greenberger & Norton LLP in Cincinnati, which represents owners and operators of commercial real estate, including self-storage. Mr. Greenberger, licensed to practice law in Ohio and Kentucky, is the legal counsel for the Ohio Self Storage Owners Society and the Kentucky Self Storage Association, as well as a regular presenter at Inside Self-Storage Expos. Questions, comments or suggestions for future topics can be sent to Jeffrey Greenberger c/o Katz, Greenberger & Norton LLP, 105 E. Fourth St., Suite 400, Cincinnati, OH 45202; call 513.721.5151; e-mail [email protected].

The Benefits of Systems Sales

Systems Sales Methods

By Cary F. McGovern

"Systems sales" is also known as the "business-process sales" model. It has proven to be quite valuable to many sales organizations. This article discusses the benefits and the general approach of applying systems sales to records-management services.

Although there are numerous variations to this time-tested method, the approach outlined here has been successfully utilized for selling records-management services. How do systems or business-process sales differ from product or event sales? There is quite a difference indeed.

Systems sales presumes you don't know the solution to the customer's problem. In fact, you may not even know the question. It is about understanding the business system that delivers the results of records management to the customer. Selling records management is an example of systems sales.

In selling products or events, we are typically selling something already pre-packaged and that fits as a generic solution to a problem. Selling records storage is an example of product selling.

The Benefits of Systems Sales

In principle, the benefits of systems sales revolve around two very important issues. The first is the enrollment of your customer as an ally in the sales process. The second issue is the opportunity to investigate the problem through the eyes of your customer's employees. Let's take a look at how this derives benefit for you in selling records-management services.

The customer as an ally--Once your customer has opened his door to have you investigate his problem, he has taken ownership of it. He has a stake in resolving the problem. He has exposed his "pain" to you. Finding the pain is the key to selling anything. In records management, finding the pain is relatively easy. It is important the pain be his pain, and not your perception of what the pain is.

Walking in the customer's shoes--Once you're "inside," your customer will tell you what is wrong. The key to understanding his problem lies in asking the right questions and listening to the answers without proposing solutions. The questions best asked are who? what? when? where? how? and why?, the most important being "why?"

Selling the Survey or Needs Assessment

The principal means of gathering information from the customer is generally called the survey or needs assessment. In records management, then, the goal for the sales call is selling the survey, not records management itself. When you sell the survey, the sale potential may double or triple, and the percentage of closed sales doubles.

The survey usually consists of three stages: the questionnaire, interview and walk-about. Each of these stages plays a very important role in the process.

  • Questionnaire--The role of the questionnaire is to acquire information before the interview. If the questionnaire is simple and easy to answer, the results could expose the customer's greatest "pain."
  • Interview--The interview allows the opportunity to ask our six questions (who, what, when, where, how and why). Finding the right person to interview is very important. It may not be the person who invited you in. It may be the person closest to the records-management system, as this is the person who feels the "pain" the most.
  • Walk-about--The most important part of the survey is by far the walk-about. It is during this stage you find the "dirty laundry." During the walk-about, the most important question to ask is "why?" I have found in my 25 years of consulting that simply asking "why?" exposes most problems.

Identifying Issues

I have written about "issues" in numerous articles. If there is a central focus to the closure of any sale, it revolves around the "issues" found in the business system. Simply put, an issue is something that should be considered. It is not necessarily a problem. It could be a pointer to a problem. It is always an attribute to the resolution of the customer's pain.

Issues are detected in each of the three phases of the survey process. You must be aware of them and record them as they are uncovered in each stage. One issue may point to another issue, a problem or the customer's pain. Issues are not generally hidden. They are, for the most part, obvious to the observer. One of the anomalies of systems work is the old adage, "You can't see the forest for the trees." I personally recount many examples of this. For some reason, the person closest to the problem, or "pain," doesn't recognize it. I suppose it boils down to familiarity. Most people are shocked when you ask them, "Why do you do that?" The most common answer is, "I've always done it that way." When you hear this answer, you are close to the heart of the problem.

The Proposal

Your proposal should be assembled around the uncovered issues. It should include five sections: a thank-you letter, issue statements or findings, recommendations or solutions, the contract and a price list.

  • Thank-You Letter--A concise one-page letter thanking the customer for the opportunity to review his business process.
  • Issue Statements or Findings--Clear and succinct statements that identify the issue. Simply state the issue that should be considered.
  • Recommendations or Solutions--The recommendations should resolve the issues and always point to a sales opportunity.
  • Contract--The only contract to use is the standard industry contract promulgated by PRISM International (, the records-management trade association. It includes standard wording that protects you from liability.
  • Price List--Remember, pricing should be specialized for each customer. There are many factors that will allow you to charge a higher rate to one customer over another.

Next month's column will focus on how to create issue statements that sell services.

Regular columnist Cary F. McGovern is a certified records manager and the principal of File Managers Inc., a records-management consulting firm specializing in implementation assistance and training for new, commercial records-center start-ups, as well as marketing support for existing records centers. For more information call 877.FILEMAN;

Staying on the Cutting Edge of Technology (For Free)

Staying on the Cutting Edge of Technology (For Free)

By R.K. Kliebenstein

It recently occurred to me that with the advent of new technology, we all should to be able to dramatically reduce our office costs. Following are some ways to increase office productivity and cut costs in our daily operations. Please be warned that not all of these cutting-edge ideas are for you, but there are ways to cut costs with services that are absolutely free.

Free Long-Distance Calls

There are a number of websites through which you can make long-distance calls for free. My recommendation is The faster your modem and the better your Internet-connect rate, the better the sound quality. There is absolutely no charge for a subscription. If you'd like to hear the sound quality, send an e-mail to [email protected], and type "DIALPAD" and your phone number in the subject header. We will call you back on Dialpad so you can hear the quality of voice transmission. There may be a small echo or delay, and the quality is compromised by simultaneous speaking.

Free Internet Access

Again, there are a number of free dial-up connections, but my favorite is The connect speeds are good and they have a good catalog of local-access numbers. There are some annoying banners, but if you are paying the standard $19.95 per month for dial-up access, this can save you more than $239 per year.

Free E-Mail Address

There are at least 15 "free" e-mail portals. My favorites are either Yahoo! ( or Hotmail ( The biggest drawback to these free e-mail sites is you are likely to be bombarded with "SPAM" or junk e-mails, and some of the content is totally unacceptable. There seems to be less inappropriate SPAM sent through, and it seems the site's e-mail client is easier to interface with Eudora or Outlook. Hotmail has a larger capacity, but both services limit your storage capacity (the number of e-mails you can save). There may also be a limitation on the size document you can attach to e-mails (incoming and outgoing).

Free Fax--No Machine Needed

My office subscribes to eFax ( This allows us to send and receive faxes electronically for free. The service can be upgraded to convert incoming faxes to Microsoft Word documents, and to fax directly from either Word or Excel. In addition, for a small monthly fee, you can upgrade to a toll-free fax number so those who send faxes to you can avoid long-distance charges. Through this feature, I can receive weekly reports from facilities, and save them in directories on my computer. Then I can print them later at my leisure. This allows me to archive all incoming faxes without wasting any paper.

Free Hard-Drive Space

Need a place in cyberspace to back up your computer? Storing back-up tapes on site won't help you in the event of a fire--or in the event of theft by an employee who knows where the back-up tapes are. One website,, allows you to store files for free. Once you outgrow the provided free space, you can purchase more space at a very nominal cost. It is also a place to store files for other Internet users to access. Imagine telling users they can go to an address on the Internet to get a picture of your storage property or a site plan!

Free Web Hosting

Want to build a personal or business website and have it hosted for free? Try or and you can get a free website. I prefer the latter. The site has a free engine to build a website that gets the basic job done. To see an example of a typical website built through this free service, visit

R.K. Kliebenstein is the president and founder of Coast-To-Coast Storage, a consulting firm in the self-storage industry. Coast-To-Coast has a special interest in technology consulting to assist owners in the upgrade of their facilities. For more information, call 561.367.9241;