Preparing your facility for sale

Recent reports have shown that as baby boomer entrepreneurs head for retirement, there may well be a torrent of businesses put on the market over the next 10 years.

Whether you are selling your business to a third-party or passing it on to a family member, ideally your exit strategy should be planned from day one. Realistically, this is rarely the case. Why should you plan your exit from day one? The process of getting your business ready to sell can help streamline the business, making it more efficient, systematized with proper processes, policies and procedures in place.

Most first facility owners are excited about the challenge of launching their businesses. One they often forget is that decisions made on day one can have huge implications down the road. You see, it’s not enough to build a business worth a fortune; you have to make sure you have an exit strategy, a way to get that fortune back out.

When you are getting ready to sell, you need to be able to get the best price, so you need to have as much ‘value’ in your business as possible.

The most common reasons found for people being complacent about exit planning are:
– A failure to recognise the long and short-term benefits of exit planning
– Fear of life beyond the business
– Inability to make the separation between their own identity and the businesses identity
– The issue just seems too big and day-to-day activities are given priority over strategic planning

For those of you who like to plan ahead, (and for those of you who don’t but should) we will be discussing ways to get your business ready to sell. Even if you have no intention of getting out any time soon, making sure your business is always ready, not only means you will maximise its value, but more importantly, when the time comes (whether it’s planned or not) it also means you can do things on your terms and no-one else’s.

When you are getting ready to sell, you need to be able to get the best price, so you need to have as much value in the business as possible. Value is not just about the amount of profits your business has made, it is also about whether someone else will be able to run the business successfully without you. A comprehensive valuation by an informed self storage industry expert can act as the first step in maximizing its value and increasing its chances of reaching its optimum sale price. Such a valuation can act as a health check for the business highlight its strengths and exposing its weaknesses.

Those that have taken action are often pleasantly surprised to find immediate benefits. Their concern about diverting their time from what seems more urgent and important quickly turns to ‘why didn’t I do this sooner?’ The immediate benefits to businesses that have gone through this process include:
– More profit
– Higher efficiency
– Greater peace of mind
– Clearer focus

The valuation process can help the facility owner think objectively, like an investor. Generally the purchasers of storage facilities fall into one of the following categories:
– First time self storage investors looking for a business to operate themselves
– Industry participants, competitors
– The current management team (within the family or the next generation)

Each purchaser will have a different perspective on which qualities are considered attractive. For example a first time self storage investor may be attracted to a business with a highly qualified and experienced management team who can assist in running the business following the departure fo the vendor. A competitor on the hand, who wishes to add your facility to their portfolio may be more interested in the are or market that your facility is situated in and the demographics of that market. Acquiring key assets such as building and equipment, customer lists, technology and the like are much more tantalising than the presence of an expensive management team.

By recognising the key characteristics of potential purchasers and the value drivers sought, it will become easier to groom your business towards this market. Generally however, businesses that attract high sale prices are those with the following characteristics:
– A comprehensive understanding of the industry to which they belong, and the market in which the facility is located
– Strong protected revenue with sound profit margins
– A strong management team that is not heavily reliant on the owner
– Comprehensive and detailed financial records
– Procedures implemented so that each area of the businesses processes are documented

Facility owners who understand the desired value drivers are better able to identify and highlight them in their business prior to sale. Similarly, it is crucial to identify issues, which may challenge the sale or depress the sale price. Business owners who are unprepared for sale often only discover such weaknesses during the purchasers due diligence, which will invariably have a negative impact on their position in negotiations. Some of the most common impediments to sales are:
– Gross profit margins are too low. Businesses with low gross profit margins relative to the industry are considered more vulnerable to change
Static or declining turnover. When selling the business remember you are selling to the future not the past.
– Low market share. Generally businesses with a large market share enjoy a higher sale price.
– Lack of statutory compliance. In areas such as OH&S this can be a big concern for purchasers.
– Obsolete technology. Management software, security and the like are big factors in the industry.
– Goodwill is not transferable. It is crucial to ensure key members of staff are trained to ensure goodwill is not lost when the business is sold.
– Inadequate financial records. Purchasers are generally wary of this.

The first step in rectifying weaknesses is in their identification. As such a thorough review of the business should be conducted. A professional advisor can facilitate this process through undertaking preliminary vendor due diligence and conducting an indicative valuation to assist in the identification of any impediments and the implementation of strategies to minimise their impact. Some impediments to sale (when identified) take little more than common sense to rectify, while others can be considerably more challenging. It may come as no surprise therefore that they will require different amounts of time to address.

While some concerns may be very quickly remedied, it is of utmost importance that adequate time is allowed for benefits to be realised and evaluated. Generally, the biggest determinant in achieving a favourable sale price is the businesses bottom line. Having implemented strategies to improve the value of your business it is important to allow at least a year for the improvements to be translated into your financial results. One of the biggest and most common mistakes make by owners is to leave preparation of their business sale to the last-minute.

Business owners spend time and money presenting businesses products or services for sale: Why not give the same care and attention to the business which houses these products or services? A timely and comprehensive analysis of the business should give the owner the necessary tools to prepare the business for sale and increase its value long before the decision is made to sell.

The problem with many business owners is that they try to sell a business that isn’t ‘ready’ and end up getting a fraction of its true value. To maximise the value in your business, you need to have most of the day-to-day activities systematized and thoroughly documented. Each person in your organisation needs to have a clearly defined role, job description and designated tasks and procedures. New owners want to buy a business that will be able to run without you. This means that other staff members need to be capable of running it. You need to start preparing your business several years before you wish to sell, so it is able to operate in ‘auto pilot’ mode.

By systematizing your business and having well-trained staff, you will be able to maximise the value of your business when you do finally sell…and the new owners will fit comfortably into your business, and make the profits that you previously enjoyed.

For more information on recommended valuers and industry consultants see:

Media Plan

As a self storage facility owner, it can sometimes be hard to predict if and when you may face an emergency situation, after all the very nature of emergencies are that they are unpredictable and no one is immune to the risks. They typically given no warning and facility operators need to be able to act swiftly, confidently and knowledgeably in the midst of chaos.

In addition to dealing with the business and customer related effects of such emergencies, self storage operators also at times have to deal with the media and the public interest that some instances create within the market. Your response to media enquiries that can follow instances such as fire, flood, burglary, explosions and/or crime, can directly reflect on a facilities image and competence in a crisis. Negative media coverage can have long-term effects on your business and even the industry as a whole.

An effective media relations policy can help deal with potentially negative situations and can assist in a positive publicity outcome for your facility. All businesses with more than one employee should have a clearly written media policy that spells out who in the organization may respond to media inquiries, what kinds of information can or should be released to journalists, and what information must be kept confidential.

It’s important to assure your employees that talking to the media, and establishing good relationships with them, can and should be constructive. It can help to establish an accurate public perception of who you are and what you do. There’s no need to feel intimidates: Journalists need you as a source of news and background information as much as you need them to give you positive publicity and clarify your point of view.

A good media policy should incorporate or take into account the following elements:
– A list (by name or position) of who in the company may respond to media inquiries; and to whom they should direct media inquiries.

– Be sure you’re familiar with the publication or broadcast that the journalist represents.

– Treat journalists, editors and program directors courteously. Their impression of each individual in your business, all the way down to the receptionist, affects their impression of the entire business, and that may influence how they report about you.

– If possible return journalists calls within the hour. They are usually on tight deadlines and they appreciate (and occasionally reward) promptness. If they leave a message for a member of your staff who is not available or can’t be reached, another staffer should return their call. You don’t want to hear on the evening newscast that your business ‘could not be reached for comment’.

– Explain to the media who you are and what you do, as you would at the end of a written media release. Prepare a brief statement to which all authorized business members can refer. Aside from that brief statement, don’t try to promote yourself – just answer the questions.

Speak in plain English that average readers and listeners can understand. Don’t use industry jargon or bureaucratic language.

– Your media relations policy should describe what kinds of data or information must remain confidential.

– Feel free to ask the journalist questions about the story such as what’s the theme, what’s the point of view, who else is being interviewed.

– If the reporter asks for information that is already a matter of public record, don’t hesitate to share it. Withholding such information will only force the reporter to develop other sources.

– Always be truthful and accurate. Never exaggerate or inflate. Understatement usually works better than hyperbole, especially when dealing with experienced journalists. Trust, as in most good relationships, is key to good media relations.

– Discuss with reporters only what is in your area of expertise. Do not speculate. If you don’t have personal knowledge about a subject, help the journalist reach a source who does, even if that source is not a member of your business. Providing reliable resources enhances your credibility with the media, and they will likely come back to you in the future.

When you talk to a journalist, remember that you’re really talking to the public.

– If you need time to research or think about how to answer a question, it’s okay to tell the journalist that you need more time. Ask what his or her deadline is, and then assure them you’ll call back with an answer before that time.

– Avoid disparaging other businesses or defaming other people. Not only is it actionable, but it makes you appear unprofessional.

– Refer media questions about your businesses policies or political views to the businesses designated executive or spokesperson.

– If you cannot answer a question, make sure the journalist understands why. Don’t simply say ‘no comment’ as this may be interpreted as evasiveness. You might say, for example, ‘I’m sorry but this matter is the subject of a pending investigation’ or ‘I’m sorry but I’m legally obligated to protect my customer’s confidentiality’.

– Keep it simple. If you finish answering the question and the journalist remains silent, don’t feel pressured to elaborate. It may only serve to dilute your message. Instead ask, ‘have I answered your question?’

– If a reporter asks about a pending lawsuit or criminal action, it’s normally not advisable – and in many cases it’s improper – to discuss it.

– Record or take notes on any interview you have with the media, and send a memo about the interview to a designated executive as soon as possible. That person needs to be aware of stories in progress that involve your business, in the event additional information or clarification is needed. If you plan to record the interview be sure to ask the journalist’s permission to do so.

– Unless you’re an experience public relations professional, assume that everything you say to a journalist is on the record. If you don’t want to see it in print or on the air, don’t say it.

Don’t argue with the reporter. You can be persuasive, but never confrontational.

– Don’t ask the reporter if you can review the story before it’s published. If the story is highly controversial, you may ask the journalist during the interview to read back your quotes to confirm accuracy.

– If the published story contains minor factual errors or omissions, endure it – in fact, expect it! If the story seriously misrepresents your position or miss-states an important fact, call it to the journalists attention in a polite email or letter, requesting a correction. Unless the timeliness of the correction is critical, do not call to complain. Never go over the journalists head to complain to their editor or news executive unless their response is wholly unsatisfactory. Again, be careful, you never want to alienate journalists.

Ancillary Income

As self storage specialists I’m assuming you already have the knowledge and skills needed in order to maximize space fees, and are putting this into practice or at least passing this skill onto staff. Noticeably though quite a few facility owners are not maximizing the opportunities available to increase their second cash stream – ancillary income. Income streams other than lease paying storers can comprise up to 8 percent of your total revenue. David Blackwell, of Blackwell consulting says: “Anywhere between 4 and 8 percent of total revenue can come from other items. It depends on how hard the operators drive their business or the use of their site”.

These other items that David mentions above include sale of merchandise (such as boxes, bubble wrap, packaging, tape, rope and locks), insurance for stored goods, telecommunications, signage or advertising space and late payment fees. So lets look closer at two of the above money earners in greater detail; Communications towers and billboard/signage advertising. There are two main reasons that self storage facilities are great for these types of money earners. Firstly, self storage facilities tend to be in prominent locations (whether it’s fronting or backing) on main streets or highways. These prominent positions are great locations for outdoor or billboard advertising. Secondly, the facilities are of passive use and because of this, tend to be suitable for telecommunications – either an antenna placed on a building or tower erected on the land.

Communications Towers
Self storage sites also have the ability to be available for telecommunications towers and other utilities because of the facilities passive use. A tower can hose more than one carrier, thus the ability to gain several leases from the one site is a real one and it’s not usual for site or land owners to make between $20 000 and $30 000 per year from rental. How can you get a communications tower on your property and start receiving money?

Perhaps the easier way to address this question would be better understood by asking a similar one, ‘how can I get a McDonald’s on my site?’ Both McDonald’s and Towers are everywhere, both sometimes lease land, and both pay very good lease rates. But, most landowners understand that McDonald’s build their locations where they are going to sell as many hamburgers as possible. They build in high traffic locations, along busy highways and in the middle of small towns. They don’t build within a few miles of an existing location unless there is enough foot or driving traffic to support each location fully. McDonald’s can also only build where the local council and planning office allows them to build, typically in commercial zone areas.

Property candidates will almost always be one of the following types:
– Raw land or vacant location
– Co-location (an existing tower that has space for additional antennas)
– Existing structure such as buildings or water towers.

That being said, there are certain factors that may make your site a more likely candidate.
1. Distance to adjacent towers. If there is an adjacent communications tower within a certain distance to your location chances are not good that another will be built. The local zoning jurisdiction is that existing towers will be utilised first.

2. Dense population or high traffic counts. Your site is surrounded by either an urban or suburban population or alternatively nearby roadways of highways that have high traffic counts.

3. Zoning. This is where zoning or land use come in. The likelihood of your site being useful to communications companies increases if you are within an industrial parcel, surrounded by residential property, keeping into account point 1.

Communications companies such as Telstra and Optus are companies that exist to make a profit. Thus these companies position their towers for essentially two reasons:
1. To provide coverage in areas where customers will use it.
2. To provide coverage where customers travel between those areas.

McDonald’s for example don’t build in areas where it is not profitable. Nor do they build where there is an existing restaurant. Where the McDonald’s analogy fails is that they will build where their competitor has built. You often see a McDonald’s next door to a KFC. There is a however, a difference with towers; communication companies do not often build towers next to existing towers. There are a couple of reasons for this. The main one being that a tower is much like a shopping centre in that it can accommodate multiple companies.

For every one of these communications sites, someone will be compensate for use of the land or structure upon which it sits. Yes, there are some pitfalls. But with careful planning and lease negotiations, their effects can be minimized or avoided all together. Anyone considering making major changes to their property in the next decade or so, such as redeveloping, selling or changing land use, will want to think long and hard about whether they want a comms tower on their property. While a long-term contract can pay well, it is quite difficult to change.

People who shouldn’t contemplate this would be those that are not sure what their long-term plans are for the site, as you wouldn’t want a communications tower on a long-term lease to come in between a major development. For some a negotiation buster is the fact that communications carriers need 24hr access to their equipment. This can prove to be a problem for sites that have off-site management or those that lock-down during non-business hours.

Outdoor & Billboard Advertising
Billboard or signage rents that site owners can collect from other advertisers can range between $10 000 per annum for a modest highway sign up to $80 000 per annum for a prominent strategically placed billboard. The sign or billboard may be a free-standing erection or the use of the side or back of your existing structure or building. Outdoor or billboard advertising is an important communication medium for businesses, government and the not-for-profit sector. It can exist on road sides, around airports and other transport hubs, on public transport, within retail environments or fixed against buildings and warehouses in prominent positions.

As already mentioned, leasing out billboard or advertising space to another can prove to be quite profitable, with very little effort. You may be asking, ‘why should I lease out perfectly good advertising space that I could use myself?’ Your site may already be adequately advertised through signage. Majority of main road or well positioned facilities take advantage of the structure itself and sign write branding and the business name on the building along with other well placed signs around the site.

Billboards or outdoor media consists both of a structure and the advertisement (interchangeable) that appears on it. The mediums approval process is regulated by local councils and authorities. Most outdoor displays require local council approval. The nature of these approvals depend on the size and location of the structure and sometimes more than one approval may be necessary. Legislation often prescribes when and what approvals are required and from what body such approval must be sought. Legislation varies from state to state (and territory). Advice must always be obtained from the relevant local authority, such as local council or state and territory government.

Big business is constantly looking for the right advertising medium to target their demographic and are increasingly acknowledging the effectiveness and reach potential of outdoor advertising. Outdoor advertising has been growing steadily and together with on-line, has been identified by industry analysts as offering the greatest growth potential. In today’s busy and fast paced life, outdoor advertising is perfect for people on the go. Increasingly people are spending less time at home, and as a result are less exposed to traditional media like TV, newspapers and magazines. Big advertisers know this – they are aware of the research and are looking for sites where they can advertise their message.

If you have a facility that backs or fronts onto a a main road or is within a high traffic area it may be well worth your time investigating the activities raised above as you may be a candidate for earning further ancillary income with very little ongoing effort. If you want to increase your income remember this line. You need to ask yourself and your customers; what else can you do? What else do they need? What else will your market benefit from?

David-Blackwell
David Blackwell
Urbis

How to improve your on-line presence

1. Put some video on your website
Adding video content to your website or YouTube improves your search results, creates a whole new channel for people to find you and makes your whole on-line presence more professional. It doesn’t have to be a fantastic video production; you can even film it on your mobile phone! Make it relevant to your business: how to pack boxes, filling a self storage unit, how much stuff will really fit into that sized unit.

Remember the golden rule, video is great but don’t auto play. Let the user choose to play the video by clicking on it, particularly if the video is on your home page or a commonly used landing page.

2. Clear out your Inbox
Whether you use Outlook, G mail or any of the other email programs out there it is important to regularly clean out your inbox and create some rules to keep it clean. Try to think of what your Inbox would look like if it really was an Inbox sitting on your desk with all this correspondence in it. Would it be a nice tidy pile with only the current items in it, or would it be an unruly mess spilling over your whole desk?

Use the folder functions in your Inbox to ‘file’ your emails as you receive and respond to them, you can even make rules in most email programs that can automatically put messages into the folders from certain people or when you have replied to them. You actual Inbox should only have messages that are new or you need to action immediately. This will help your workflow as you will only be looking at current messages and you won’t lose or forget to action messages.

You can also create an easy to use file of all the messages relating to a certain issue that can be more easily searched at a later date. If you want more information about this then there are loads of examples on YouTube for all the email programs. While you are at it, have a look at the archive settings on your email: Do you have messages from 2011 or earlier still on file? Create an archive data file and get all your old messages filed away where you can still get them if need be but they are not cluttering up and slowing down your email program.

3. Update your website
You really should be updating certain items on your website regularly, that’s not to say it needs a total redesign every 6 months, but just refresh it with new information and images. Once again, this will help improve your websites search rankings. Have you noticed that you can search on Google within a date range (it’s under the more search tools on the left of the screen). If your website has not been updated recently and users limit their search based on date, then you will miss out.

Take a good look at your website, remove all the out of date information, add some new items and most importantly schedule some time regularly to refresh your website at least once a month.

4. Critically evaluate your on-line marketing spend
If you are using Google AdWords or some other pay-per-click based on-line marketing, then I would expect your costs on a per click basis have increase significantly over the last 12 months as more self storage businesses bid for the same words or space that you have. I know some Google AdWords phrases in relation to self storage that have tripled in cost over the last 12 months. You need to critically evaluate how much your business these programs are really generating for you, not just how many views of a webpage or clicks, but how much revenue is generating business. It might be worth looking at alternative phrases that are not as expensive and may not generate the same volume but have a higher conversion rate for actual sales.

You should know how much you are willing to pay for a customer, and validate this against your total spend on an on-line campaign and how many customers (and how much the spent) it generated. It is very easy to set your budget for these kinds of campaigns and just let them run, but as you have a fixed budget the number and size of your campaign will gradually shrink as the campaign words and triggers become more expensive.

You need to be constantly monitoring these programs to make sure they are working for you. If you can’t do this yourself, then consider using an agent to do it for you, while they will take their cut of costs, they should be able to optimise and monitor your campaign to improve your returns. On-line advertising is not like the old Yellow Pages where you pay for the ad once a year and then forget about it, it requires continual monitoring and adjustment as the on-line environment changes.

5. Google Places
If you have not yet claimed your Google Places listing what on earth have you been doing for the last few years! This takes only a few minutes to set up, will allow you to be listed on the Google maps feature and the location-based searches, and is ALL TOTALLY FREE! Self storage is such a localised business it is ideal for a Google Places listing, yet I know that many of you have still not claimed your listing. I have written about this in countless previous issues of Insider and you can follow the easy prompts at www.google.com/places/. Your competitors will be making the most of this service, you need to be as well.

Lead the way at your workplace in a leadership role

Sometimes we question if we are doing a good job or if we could be doing a better job and it helps to have a few reference points to fall back on in times of uncertainty. A truly proficient leader of staff will understand that guiding them is all about personality – because you are effectively managing personalities, not merely ‘staff managers’ or ‘part timers’ – and yet you must lead them despite their personalities.

Difficulties can arise when you realise that you don’t really bond or connect with everyone who reports to you, but in your capacity whether you bond with them or not, your obligation to manage them remains the same. In turn, the way you lead your staff can affect the productivity of your self storage business and its overall success.

Leadership involves many aspects under your control and some beyond your control such as: creating targets and effectively communicating to staff how you will go about achieving these targets, rallying them, motivating them, assisting them and encouraging them so they will successfully aim to reach those targets. Sounds simple enough doesn’t it? The challenge is to remain flexible and approachable while maintaining your authority. Employees value being treated fairly and with respect – and you will certainly get more productivity from them if you fulfil this basic human need.

Assessing yourself as a leader:
1. Seek feedback from staff

It’s all in the way that you do it – whether it be in casual conversation or a scheduled meeting. Asking for feedback on how you communicated something or advice from those whom you lead can be quite illuminating. Leaders should not be so self-conscious or arrogant that it prevents them from seeking an honest perspective from people. Besides, asking for advice can actually help you gain the respect of your staff.

2. Get educated
There are various leadership books, seminars and/or conferences you can attend or find on-line in order to improve your skills, and give you the much needed inspiration you need to go from being a good leader to a great one. Arm yourself with the know-how: you won’t know what you didn’t know until you learn it! Updating your skills keeps you humble and open-minded and more equipped to deal with staff matters.

3. Mingle
At the team lunch or staff meeting, make sure you move around the table. Don’t just sit next to or talk to the people you always do. Don’t make it a point to single anybody out but make it a point to include everybody. Maybe not all the time, but at the next meeting or even, focus on people who you did not focus on last time and make a connection.

4. Regular contact
This might sound left of field, because working together provides a natural day-to-day contact. Despite this you might want to think about having group meetings once in a while or regularly (once a fortnight) to discuss workplace goings-on or issues. This allows for lines of communication to be developed and opened, leads to better working relationship with you and your staff and amongst themselves too. A veil of remoteness helps no-one and should be avoided at all costs. It’s all about contact and connection.

5. Know your work environment
The environment you all work in is the place where work gets done (that’s obvious)! But the right mix can lead to staff taking direction more easily and more productivity. The balance is the key ingredient. Too little support, and staff are less likely to communicate with you and more likely to establish their feelings through negative means. Too much of a casual environment means that not enough work gets done because it is un-motivating. Too much pressure means that employees become tense and feel expectations are unrealistic. As the leader, it is your job to establish the right balance for work ethic and light-hearted interaction.

6. Lead by your example
If you spend all day on your mobile taking personal calls, if you attend work in your sloppy gym clothes, if you show up late to scheduled meetings – staff will inevitably form a preconceived idea about how you operate and in turn, what you expect from them. If you expect staff to behave responsibly and with integrity (especially when you are not around) then you should lead by example.

Your staff look to you, on how to behave in your self storage business. Demonstrate the work ethic you expect through your behaviour.

7. Same rules for everybody
Never allow your ‘star players’ to get away with murder. You should enforce team rules at all times for everybody. It takes a gutsy leader to take a stand and stick to it, when staff are behaving disappointingly or taking advantage because they have been praised regularly in the past and it sends a message that you are not playing favourites.

Doing it better – Part 2

Previously we looked at various methods to increase profits which included how to identify lack of appropriate knowledge, getting your priorities straight, providing your staff with tools to thrive and knowing your worth. Here we will revisit the theme and focus on a few other areas as well, without losing sight of your number one priority which is of course leasing space.

Make it part of your process
Successful self storage operators unearth opportunities to increase revenue, even in the slowest periods or most financially challenging times. They know that every dollar increases value, that their efforts to boost revenue is worthy of their time and creating this routine for themselves and their staff is a worthwhile exercise. There are certain things that are fairly uncomplicated to make part of your process, habit or routine…Consider the following:
1. Direct Debit
Direct debit is a simple way to collect regular rent from customers. It is something that you can set up at the time of sign-up, it is an automatic procedure whereby the funds are deducted by the bank and not subject to human deliberation (it eliminates the ‘will I or won’t I pay this month?’) and once it is locked away customers rarely alter this payment method until they move out. If you are not currently using Direct Debit as part of your sign-up process…why not?

2. Selling insurance
This is an effective way to increase revenue as it is standard practise that you would buy the insurance and sell it at a premium to the customer. In the end, you are providing the customer with a service that will benefit them and yourself. (Their items are insured and they won’t have a bone to pick with you if their items are damaged).

3. Making assumptions
This is the way in which you sell these two things. It’s as simple as the language that you use and the fact that you make it a habit. For example, never ask the customer a question that they may answer ‘yes’ or ‘no’ to as this could lead to a wasted opportunity, such as when you ask ‘do you need insurance?’ and they say ‘no, I don’t’. You will have greater success with an open-ended question or leading statement such as ‘most of our customers use Direct Debit because…(now sell the benefits)’ OR ‘what kind of insurance do you require?’. This type of phrasing tends to direct the customer to make an assumption in their own mind about what you have suggested. After all, they are already in the frame of mind to make a purchase as they have just decided to store with you and there is no better time than NOW to offer them Direct Debit and insurance.

Another tactic is a non-verbal, yet highly effective one. Self storage managers have had huge success with offering the new customer their contract to sign in one hand and their insurance or direct debit agreement in the other hand. You will be surprised at how many customers sign both without question. Using these simple revenue management tactics at your self storage site not only adds value to your business, but increases the revenue earned from each customer and ensures the same prediction for further customers. Who wouldn’t want that?

4. Improve your rent collections
There is one commitment that should be made on your part that could indeed improve your rent collection from your customers. It is something that many self storage operators find difficult to do..not waiving late fees. Ever. The late fee has been earned by the customer and is legitimate (so long as you are charging an amount that corresponds with the costs incurred on your part in chasing them up). If you are running a business and impose certain rules then it is your job not to cave in and to enforce these rules without negotiation. The rule you have for a good customer should be the same rule you have for a bad customer.

Why reward a late paying customer with waiving the late fee simply because they have made a fuss? If you waive it once, they will almost certainly expect you to do so again. Imagine telling a customer ‘if your payment is late a late fee will be automatically deducted from their bank account, but you will waive the late fee…’ Sounds pretty wishy-washy, doesn’t it?

It can be tempting to please the customer but the actual possibility of them terminating their contract because of a late fee is almost nil. They will, however, undoubtedly want to avoid paying that late fee ever again (no matter how small). Try to remember, the message is worth more than the late fee you have collected.

5. Why bother with it?
Why bother with all this, you ask? Is it really going to make a difference? The answer is yes! As an owner or manager, you should be focussed on all that goes on with your site and this takes discipline. Maintaining discipline can be tedious but it will pay rewards in the long-run. It takes discipline to run your site as if you wanted to sell it tomorrow. It takes discipline to stop being on auto-pilot and take responsibility for increasing the value of your business.

However, constant evaluation and improvement on findings is the easiest way to increase your profits. Discipline puts operational systems into place, so you know even if you are away from the business (at a conference or family vacation), the wheels keep turning. This leads to accountability and gaining a clearer insight into what needs to be done to accomplish the businesses goals. And of course, let’s not forget about market positioning…this is where you clearly define your self storage facility’s place in the market as a force to be reckoned with.

Risk and Insurance. Are you vigilant?

The recent fire at a Wellington self storage facility again highlights that members need to be very vigilant and focused on risk management. The SSAA and our industry at large are concerned for the owners at Kiwi Self Storage and the many customers who lost goods in the fire. We are very glad that no one was seriously hurt, but saddened by the loss to the owners, the staff and the customers. It is always easy with the 20×20 “retro-specto- scope” to be wise. However this fire is a timely reminder to all members to review how they deal with these risk issues.

Please, review your overall emergency procedures NOW:
• Check your insurance covers, review and refresh the levels of cover and management of insurance
• Ensure your staff are fully prepared to implement evacuation procedures and the procedures for protection of life and property
• Monitor and review your fire protection systems and ensure the currency of your systems and procedures
• Assess how you monitor access to your site, especially after hours access
• Consider live site monitoring
• Ensure the security and back up of access control and your video surveillance.
• Remind your customers of the value of taking customers goods insurance

In terms of insurance we strongly urge our members to check your policies of cover and use a reliable and professional broker. The current sums insured, extent of your covers and capacity to claim in the case of an incident is crucial. Aon and Midland Insurance are two long-standing supporters of SSAA members with the requisite expertise to assist with insurance needs as required. Use them if your current broker doesn’t have the skill set to assist you.

Staff training is ongoing. A map on site or a set of rules for evacuation are useless unless read, understood and practiced. Owners and Directors stand liable if they haven’t taken proper steps. Do it now. Life health and safety is the most important issue for any operators! Have a crisis management plan on hand to deal with questions from emotional and potentially disgruntled storers and members of the Press who likely will come looking for answers about the cause and effect of such unforeseen events. Importantly, don’t speculate on matters that are the subject of further investigation i.e. fire investigators on site assessing the likely cause of the fire.

Ensure that the systems on your site are regularly tested and monitored. It’s too late if they fail in a fire. If you use fire compartments, smoke detection or sprinklers check that they are adequate, are monitored and that your response systems are best practice.

Finally, just spend some time on the “what ifs”. By doing so you can quickly determine how you would content with the disaster faced by our member in Wellington. Invest now in good practices and reap ongoing rewards.

gary headshot
Gary Vick
SSAA Chairman

Entrepreneurial spirit embraces new opportunity

Following five years spent as the National Operations Manager for a shopping centre company, the lure of the self storage industry rose to prominence on Jason Keane’s employment ‘radar.’ Jason sensed the skills he had honed when managing the varied requests (and demands) he received from centre vendors were readily transferable to the many customer facing and staff management activities he would be required to master in the self storage industry.

Fortunately, Storage King shared his optimism when he was appointed as a Store Manager. Quickly proving his worth, Jason was later promoted to head office in an operations capacity. The role afforded him the sought after opportunity to coordinate the set-up of Storage King’s franchise operations in the United Kingdom in 2005 and 2006.

In 2011 Jason was offered a position at Fry’s Self Storage to assume the role of General Manager of a nine store storage portfolio in Victoria. Over his employment tenure in the industry, Jason has seen a shift in consumer demand as customer lifestyles change resulting in a greater demand for facility access, outside of traditional business hours. He has noted the dilemma for many facility owners wanting to provide their valued customers with such flexibility, but also appreciating the need to control wage costs and not compromise the security of their site, when allowing customer access during non-staffed hours.

Jason has also had first-hand exposure to evolving technology developed by Sentinel. Technology that not only provides self storage site access control to customers and wage cost savings to the owner, but enables individual unit alarm monitoring and notification to the facility manager of customer entry and egress ‘transactions’ and instant smart phone alerts if a unit access alarm is activated. Importantly, this software will interface with any site management software program.

In his various site operational management roles, Jason has been impressed with the competitive price of the Sentinel product and its flexibility to allow site access in different time zones for different days. A distinct competitive point of difference for the Sentinel product is also its functionality to incorporate machine readable barcodes (QR codes) to avoid the need for storers to remember pin codes as they gain access to the site. Sentinel’s product functionality and ease of useability, coupled with a comprehensive service and customer support capability led to Jason’s interest and ultimate decision to purchase the Australasia Sentinel distribution franchise recently from well-known industry identity, John Poulton.

Jason’s entrepreneurial spirit senses bright horizons for the Sentinel product in the region. He estimates that approximately 40% of its self storage businesses have access control systems and appreciates there will be greater future demand for the product as self storage operators renovate or expand their facilities, and respond to consumer demand for greater access. His extensive work experience in the self storage industry has also enabled him to rigorously road-test the Sentinel product and be confident of its application in providing desired flexibility of site access, wage cost management and owner peace of mind.

To arrange a no obligation free quotation from a highly respected and experienced self storage industry identity, call Jason today on +61 3 9418 3942 or email Jason@storagesecurity.com.au

Doing it Better – Part 1

When you simply cannot cut back any more, perhaps it is time to look at ways to increase profits. You may think you’re doing ok, travelling well and don’t need to think about increasing your profit margin. Have you considered refinancing? Selling your business? Your legacy? Your expenses…are they slowly increasing? Let’s explore a few underrated tactics that could go the distance and really assist in improving your profits down the track.

Sometimes we as people fall into a rut regarding our life’s practices. In our relationships, work-out routines or in the way we conduct our business. This can manifest in several ways such as, not maximizing opportunities, not managing uncollected rent from self storage customers or quite simply, not understanding what to do with the investment. A lack of knowledge, or an inflated ego about knowing it all can hold you back, and the ‘if it ain’t broke don’t fix it’ attitude is doing you no favours.

Lack of appropriate know-how
Remember, you don’t have to do it all yourself, just because you run your own business. You don’t have to become an expert on everything, just surround yourself with experts. Nobody can achieve everything entirely on their own and sometimes it’s the most successful people who are encircled by smart people. It’s OK to not know everything about everything; but it’s not OK to no accept help and guidance. Involve your staff and let them shine, they have areas of expertise to offer and in the end it might just be your staff teaching you something.

If you encourage the chase for knowledge in the workplace, you may end up with better business protocols, enhance procedures and more satisfied customers. Have a brainstorming session with your staff on why you do things and don’t accept ‘because we have always done it this way’. Explore new initiatives and make sure you are doing it because it is the best way of doing it.

Get your priorities straight
In a self storage business, you are in the business of leasing storage units. This is your number one priority. Administration, accounts, chasing payments, cleaning, ordering merchandise, updating your website – all of these tasks certainly assist with achieving priority number one but they are not your priority. Drill this into the mind of your staff. Never forget it for one moment. When you deal with an enquiry, when you answer the phone, when you do anything at the office – keep this in mind (your priority is leasing space) as the common thread running through everything you do, and you will soon find that a focused mindset can work wonders.

Ever got bogged down with paperwork and lost sight of your priorities? Ever finished typing a sentence on the computer when a customer was standing in front of you? Ever let the day pass by wondering, “what exactly am I doing here today?” Keep your priorities straight and unwavering and it will definitely improve your mood, productivity and quality of work. Remember without customers all you have is very attractive, neatly arranged and proportioned space.

Space that is not leased has little value to you because:
1. You can’t do something else with it while you wait for customers
2. You can’t increase the rate on unleased space
3. You can make an ancillary sale to a non-existent customer
4. You can’t get a referral from a non-existent customer
5. You can’t welcome back for another year a paying customer if they weren’t there in the first place!

Tools to thrive
Should you ask a lot of your manager? Absolutely! Should you give them the tools to succeed? Absolutely!

Your manager is one of your greatest assets and should therefore also be one of your greatest investments. Ask of them, but invest in them. Give them leeway but evaluate them.

Consider, has your manager had any training regarding debt collection? How do they go about collecting late rent? Is it a case of you telling them ‘collect rent’, because that does not constitute training. There are webinars online and short courses available that specialise in this area and should be considered. You wouldn’t ask an unqualified person to cut your hair – you would ask a hairdresser, so how can you expect a manager to draw on their natural reserves and become a debt collector overnight? Natural ability and common sense do go a long way and are probably evident qualities in your manager (which is why you had the good sense to hire them) but giving them the best possible tools to achieve their goals ensures the best chance of success.

The same applies to data base management, sales skills and so forth. An investment in your staff is an investment in the business and the business is your livelihood. Something to consider.

Know your worth
Do you and your staff know precisely what your units are worth? If not, do all you can to change that answer to YES. How can you make effective business decisions if you don’t know what you’re worth? If you don’t know what you’re worth: you may not know what you’re losing, and that is a dangerous proposition. Work out what it cost per square metre of occupiable space to run your business. Factor in a mature occupancy level of around 90%, so make sure the lettable space figure you are using is 90% of that available, as you should never be completely full.

Don’t forget property and finance costs and the realistic wages of the owner if they are active in the management of the business, but don’t include cost of merchandise, customers goods insurance and other items you on-sell. You will come up with a dollar figure per square meter that tells you the cost of running your business, multiply this by the size of your units and you essentially have a cost of sale figure for that unit.

How much above or below this figure are you selling your units for? What is the profit margin? Are you selling your product below cost?

When a customer calls to make an enquiry, have you heard yourself say “Yes, we have plenty available in that size”. You should never say this to a potential customer because it implies that they can bargain down the price from you, and your site is not in demand. Attach a sense of vitality and importance to your number one priority (leasing out storage units) and make sure 90% of tasks either assist or accompany your number one priority in order to give you and your staff a turbo boost to increased revenue!

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