Inside Self-Storage

MAR 2019

Inside Self-Storage (ISS) is an information source for industry owners, managers, developers and investors covering news, trends, facility operation, finance, real estate, construction, development, marketing, technology, insurance and legality.

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OWNER'S TOOL KIT "Beware of little expenses. A small leak will sink a great ship." —Benjamin Franklin M any self-storage owners focus on revenue management, increasing occupancy or adding ancillary services to make more money in their business. However, it's equally important to regularly review and control expenses. Consistent, predictable costs will make it easier to budget future profit and loss and make your property more attractive to a potential buyer, if and when you decide to sell. The first step in controlling expenses is to have a clear and clean approach for recording them. Work with your accountant to create a chart of accounts that works for you. A good one will be sufficiently detailed but not overwhelming. Here are some areas to examine and ideas to help cut costs. Advertising Every storage budget should have an advertising category. These expenses include website hosting and maintenance, search engine optimization, Google AdWords, social media advertising, billboards, sponsorships and any other activity you perform to promote your facilities. Talk to your existing vendors and see if any of these services can be combined. Use tracking numbers and reports to confirm you're getting leads and customers from your marketing efforts. Software Expenses Software as a service (SaaS) is the new business model. According to Wikipedia, it's "a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted. It is sometimes referred to as 'on-demand software.'" Tracking SaaS fees as a category on your income statement can help you realize what you're paying each month. These small amounts add up to big numbers when you don't pay attention. Examples of SaaS include software for marketing, property management and time-tracking. Talk to your manager and make sure all the services are used to their fullest capacity. Is there anything you can cancel or downgrade? Insurance Re-evaluating your business insurance can yield huge benefits. One owner I worked with saved $20,000 a year by bidding out his policy. Working with an insurance provider that knows self-storage will ensure you have proper coverage around customer goods and disposal, wrongful sale, and other coverages that are unique to self-storage. If you have a moving truck you allow customers to use, make sure you have proper insurance limits for it. Also, review the value of the truck on your policy. An adjustment could save you money on the premium. Referral Programs If you're in lease-up mode, paying for referrals can be a great return on your investment. Referrals can come from existing customers, third-party directories or community members such as realtors or moving companies. Once a property is full and stabilized and other marketing programs are in place, this expense can be reduced. Repairs and Improvements These expenses are commonly broken into "building" and "grounds." Any repairs or improvements to the building should be coded accordingly. Always get three bids from contractors before you commit to any work. If you've used the same vendors for a while, make sure they're still charging you a market rate. Ground expenses might include lawn care, snow removal, pest control and anything else needed to maintain your facility. Bid out your monthly contracts at least once per year. Also, review repair and maintenance items. Are you spending on a temporary fix for something that needs a larger investment? If you're constantly having a gate issue, for example, you may need an overhaul. Decide if expenses in this category are too high or you need to allocate money to capital-improvement projects. Utilities Utility contracts are famous for creeping up over the years. Do you need a land line for your phone or can you use VOIP (Voice over Internet protocol)? Can your Internet contract be renegotiated? Is there another dumpster company in your area that may give better value for a lower price? Payroll Payroll is one of the biggest expenses for self-storage owners. If you pay too little, you won't keep good employees and you'll make your life much harder. If you pay too LEARN MORE Learn more from author Magen Smith at the upcoming ISS World Expo in Las Vegas, where she'll present as part of the Management Mastery and Ownership Excellence Workshops. Get details and register at issworldexpo.com. Can't wait? Check out Magen's videos including "How to Audit Your Self-Storage Facility Like a Pro: A Case Study" and "Money In: Managing Self-Storage Rental Rates," both available in on-demand and DVD formats at iss-store.com. By Magen Smith REVIEWING FACILITY EXPENSES, BIG SMALL 76 ISS I March 2019 www.insideselfstorage.com

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