As self-storage operators, we all need to hire vendors or contractors from time to time, whether it’s for the occasional odd job or an ongoing service. Some of the things we commonly outsource in this industry include:
- Pest control
- Landscape installation and maintenance
- Snow removal
- HVAC service and repair
- Information-technology services
- Security-system service and repair
- Security monitoring
- Gate repair
When you need help, finding the right provider is critical to success; but choosing from the sea of options can be overwhelming. It also depends on the complexity of the work in question. Below is some tried and true advice on how to pick the right service partner for your storage operation and how to set terms that’ll keep all parties accountable, safe and happy.
Know What You Want
As the client, you’re the one driving the process. Before speaking with contractors or vendors, outline your expectations. This will help you negotiate your contract.
First, it’s important to know whether you’re seeking a short- or long-term commitment. Some companies are geared toward one-off jobs, while others can provide the customer service, time and patience necessary for the long haul. The potential length of the relationship will also affect loyalty and pricing.
Clearly define the project or service you need. This helps in soliciting good bids; plus, you want to make sure you’re comparing apples to apples. The best practice is to set a budget and determine the amount of work, then get at least three bids. If you’re comfortable getting more, it can give you a clearer picture of how companies stack up against each other. Not only will you get a better perspective on appropriate costs, you’ll get an idea of the caliber of work each vendor will provide. One may offer a bargain rate and only marginal-quality work; another’s higher bid could indicate quality or reputation.
Bear in mind: Some companies are specialists and some are generalists. Make sure your candidates’ abilities are appropriate to your project.
Once you find a reliable provider, it’s easy to stick with the company for many years. However, you should still price out the service at least annually to ensure you’re paying a reasonable rate. Sometimes, you may find that an annual contract can be less expensive than an individual service call. Weigh the options to determine if it’s better be on a service plan or a buy-as-needed basis.
Always vet a provider’s background. Verify its credentials, licensing and insurance, and insist on a detailed contract before hiring. Even if a friend or relative has recommended the company, confirm at least the following:
- Legal business name (especially if it’s “doing business as”)
- Type of business (sole proprietor, partnership, limited-liability corporation or corporation)
- Years in business
- Valid and current business license
- Business address and phone number
- A point of contact and e-mail address
Here are some other things to do or consider:
- Determine whether there are any formal complaints or legal actions pending against the company.
- Check out the company’s online reviews and how it responded.
- Track indicators that signal professionalism or a lack thereof. Are your phone calls returned in a timely manner? Are appointments and meetings honored? Do company vehicles and/or dress code reflect pride and cleanliness? Carelessness in these small matters doesn’t bode well for the quality of work.
Finally, make sure the contractor has adequate insurance coverage. Typically, you want the company to have at least $1 million in liability and workers’ compensation. Liability insurance covers property damage and injuries caused by the contractor’s work. Workers’ comp, required for any business with employees, provides payments to injured workers for lost wages and medical services. Not all states require workers’ comp for self-employed contractors. Don’t learn the hard way that you’ll be responsible for an injury or other costs because your vendor was uninsured.
Personally, I don’t allow anyone to step on one of my properties without a certificate of insurance to perform work. Further, require each vendor to list your entity as an additional insured on its policy.
Any vendor or service contractor you hire to do work at your self-storage facility will become part of your life for at least the duration of the project, so pick someone with whom you can communicate; and trust your gut if a first impression leaves you feeling uneasy. During initial meetings, ask how unexpected issues or differences might be handled. This can include simple things like change orders (which should always be in writing, by the way) or more serious disputes, such as unintended damage to your property or a failure to meet legal or reasonable standards.
Create a Solid Contract
Once you’ve chosen a company, it’s time to establish a contract. Any reputable provider will insist on a clear, written agreement to protect both parties. This is a critical document, and you shouldn’t move forward with any work until you have one and it’s signed. It should describe the products and services that are to be provided by the vendor or contractor as well as:
- Project start and completion date
- Scope of work and the process for changing the scope
- Deliverables schedule
- Payment terms (schedule and method)
- Any applicable permits and fees (These are typically handled by the contractor, but legally, they’re your responsibility.)
The contract should state that the person/entity being hired is an independent contractor and not an employee, and it can’t disclose any sensitive information about your business. It should also address Bottom of Formany subcontractor issues, such as license and insurance verification and warranty of workmanship. Finally, it should outline the consequences of default by either party, for example, the contractor's failure to pay subcontractors. This agreement should exclude you from liability if that occurs.
Collect Tax Forms
With limited exceptions, if you pay an independent contractor $600 or more for services provided throughout the year, you must provide that person or company a 1099-MISC tax form by Jan. 31. You should also have a W-9 form on file for each contractor/vendor you use.
I strongly suggest you collect a W-9 from every vendor or contractor with whom you work, regardless of how much you spend with it annually. Getting these upfront saves time at the end of the year when you get things ready for your accountant. It also gives you much of each company’s basic business information, and can support the assertion that you’re treating the person/company like an independent contractor, not an employee.
Pick the Best Fit
To sum up the process:
- Understand the project at hand, and know what you want and expect before you begin to search out candidates.
- Get at least three bids.
- Hire a service contractor or vendor who has experience in the area in which you need service performed.
- Listen to your gut, and make communication a priority.
- Vet each company thoroughly, including its licensing, financial ability and references.
- Use a trusted, legally binding contract that details the project costs, scope of work, schedule of values and timeline for completion.
- Gather the appropriate tax forms.
Finally, and perhaps most important, hire a company that stands behind its work and has a reputation for fairness and honesty. Following this advice will help you avoid expensive and perhaps unnecessary legal issues if a conflict arises during the project.
Susan Haviland is the owner of Haviland Storage Services, which specializes in auditing, manager training, market studies and operational reviews. She has more than 32 years of industry experience, from serving as a site manager to acting as vice president of operations at Extra Space Storage Inc. and Price Self Storage. She's a frequent speaker at industry conferences and tradeshows. For more information, call 760.401.0297; visit www.havilandstorageservices.com.