January 20, 2012 § Leave a comment
The debate over aggregators is heating up in the self storage industry. Clearly, a healthy discussion is underway.
As I think about it however, I wonder if the real problem is not aggregators, but what I would like to call a “culture of discounting”. With the growth of excess capacity, coupled with the sluggish economy, operators have increasingly turned to discounting to rent units. In much the same way as foreclosures and short sales have disrupted the real estate market, discounting has disrupted ours.
We have become a nation of consumers where “price is king”. Think Walmart. They dictate price to such a degree than China has difficulty competing. Yet, this begets a vicious cycle where prices are expected to be increasingly discounted. Self storage has, unfortunately in my view, been caught in this cycle.
Whether operators offer discounts directly or through third party aggregators, the result is largely the same — less money.
Self storage operators need to market VALUE not just price.
Think about how you can sell the VALUE of your facility, rather than succumb to the knee-jerk habit of discounting.
January 11, 2012 § Leave a comment
Many of you may have heard of the brewing brouhaha over the growth of aggregators marketing storage units for operators, such as Spare Foot and others. Sort of like Expedia is to the airline business.
For many, aggregators are a necessary evil to help move excess space; to others, they are an unnecessary expense that reduces an operators bottom line. Better that you should market your units yourself, than use a third party to do it.
If you remember, companies like Expedia became possible when the airlines eliminated travel agency fees. Consumers were forced to shop many airlines sites individually. Time consuming. Inconvenient. Kayak and others filled a necessary void.
Is this true of self storage? Who knows? I offer no opinion. Each operator needs to figure out the value of aggregators on their own. However, as the aggregators grow they may become increasingly necessary to a successful marketing effort.
To my mind, a more harmful trend is discounting. Discounts offer no value and they go right to the bottom line. In the near future, I will be discussing ways to attract and keep customers without discounting.
January 2, 2012 § Leave a comment
With this post, we come to the end of my series on having less stress and making more money in self storage. Over the past weeks, diverse topics like plain language contracts, bailments, reaching out to your competitors and the like have been discussed.
My final topic is one that is both obvious and makes sense, as well as necessary to draw the “less stress” theme together. Simply put, be sure that you carry adequate insurance.
Less stress is what insurance is all about. You pay someone else to shift a risk from you to them. Of course, you have to pay for it, but you save the worry.
In many instances, insurance is required by your lender. These you already (hopefully) have. But what about other, optional coverages. Do you have directors and officers coverage to protect your Board? How about coverage in case your staff improperly auctions a customer’s goods? Coverage options for your tenant’s property in case of fire, etc? All are important to your business and will help reduce stress.
There are a number of insurance firms specializing in coverage for self storage operators. Reach out to them. See what they offer. Compare.
Having adequate and diverse insurance coverage will mean less stress and more money in self storage.
December 29, 2011 § Leave a comment
As John Dunne famously said, “No man is an island unto himself”. This is particularly true in our inter-connected world today — as well as in self storage, too.
For a number of years I was involved in an unformal, local group of self storage operators known as WASSA or the Washington Area Salf Storage Association. We met monthly for lunch. We typically had a speaker on a topic of mutual interest.
I am sorry that the group is no longer active. Why? Because of what occurred during the luncheon prior to the speaker. We had an open discussion between the members regarding current self storage issues in our area. Occupancy. New products. Managers. Marketing. What is working. What isn’t. Any issue but rental rates (think antitrust here). These discussions were always valuable and I always learned something.
Am I suggesting that you form such a group? Maybe. You would benefit from it.
However, the important thing to do is to reach out to others, including your competitors for information, advice and, yes sometimes, comfort.
Maybe you are experiencing an unexplained loss of occupancy. Wouldn’t it be useful to know if it is just you — or the industry as a whole having the same issue. In short, reach out to your competitors and start a dialogue. You may be surprised at the result.
You can reach out in other ways, too. Join your local Chamber of Commerce. Even if most members are in different businesses, they will have similar problems.
Reach out to your local elected officials. The local police and fire departments. Churches, charities. Start dialogues there, too.
Who have you started a dialogue with? I would love to know.
Learning to open up and end the isolation can mean less stress and more money in self storage.
December 19, 2011 § Leave a comment
Just like the stock market, self storage operators thrive on certainty. “Covering all the bases” in your relationship with your tenants is an important consideration. Through this process, you know that if you get into a dispute with a tenant, you will more than likely prevail.
How do you do this? One way is by having a strong and understandable self storage agreement.
By strong, I mean being sure that the agreement contains all of the appropriate language to protect your business in the event of a default. For example, does your agreement cover the lien process adequately? Can you evict a tenant for a breach of the agreement without undue delay? Obviously, you should consult an attorney to be sure your agreement is complete and up to date.
By understandable, is your agreement written in such a way that both you and your tenant understand it? Oftentimes, contracts contain “legalese” to protect you but at the same time fails to convey this fact in an understandable way.
In my view, contracts that are plainly written are less liable to result in disputes because all parties know where they stand and can act accordingly. On the other hand, contracts that are ambiguous and not understandable often result in disputes — and stressful litigation.
Consider having your storage agreement reviewed periodically to be sure it continues to be complete and up to date. At the same time, consider having it redrafted in plain language so that it is easy to understand.
Having a storage agreement that is complete and understandable means less stress and more money in self storage.
December 12, 2011 § Leave a comment
Now that you have mastered the laws pertaining to self storage, particularly your jurisdiction’s lien law, it is important that you apply them correctly. If you have any confusion at this point, be sure to consult with your attorney.
In applying these laws, it is essential that you pay attention to the details (that is where the devil resides, so to speak). No shortcuts. Meet deadlines. Follow procedures.
This is especially true of your lien law. As I have noted before, the self storage industry has been given a gift. Operators are allowed to enforce their lien without having to go to court (extra-judicially). Saves time. Saves money. At the same time, it is essential that operators follow the lien procedure to the letter, even if they appear fruitless. Why? Because many of those details have been put into place to protect the consumer. Failure to master the details and to make sure they are applied completely each time can result in an expensive and stressful lawsuit.
If you take away only one thing from this post, remember this: if you feel that some detail leading up to an auction has been overlooked, cancel the auction as to any unit involved. Do not proceed.
If you do not have an auction checklist, create one and follow it.
Sometimes, postponing an auction can result in less stress and more money in self storage.
November 29, 2011 § Leave a comment
In an article I recently wrote for Inside Self Storage, I discussed the importance of gaining a general knowledge of bankruptcy law prior to receiving your first bankruptcy notice. Learn what your rights are. Understand your obligations. Plot your options. Doing this in advance will reduce anxiety later. And maybe legal fees, too. :0)
This is an axiom true of all laws related to self storage. Knowing the ground rules that go along with your business entity is essential. Ditto, your local, state and federal tax laws and regulations. Understanding building codes, public safety rules and work related regulations are equally important.
Of particular importance are the laws that permit self storage operators to enforce their self storage liens following default. These are essentially gifts given by state legislatures to operators allowing them to bypass the courts to evict a tenant and recover some monies through the auction process.
It is ESSENTIAL that every operator have a good working knowledge of their jurisdiction’s lien law. Get a copy of it. Learn it. Do not delegate this task solely to someone else in the office. This way you can avoid surprise later.
Understanding the laws that affect your business will mean less stress and more money in self storage.