It’s a great time to be in the self-storage industry, isn’t it? It is also a great time to check on where you stand with your goals and take actions to correct any deficiencies or give yourself a pat on the back for exceeding your goals!
With leasing season in full swing, we all want to see how we are doing against our goals. By the end of June, you should know where you stand on each activity, leasing, budgets, occupancy, and improvement projects, as well as what needs additional focus to catch up, if needed, and even exceed those goals by year end.
Tracking Goals
In storage management, we typically have several goals we are tracking constantly. First, our occupancy: How has it changed since the beginning of the year, and what are our three occupancy types (economic, area, and unit occupancies)? Developers and owners tend to track area or square footage occupancy, while managers tend to track unit occupancy. However, we all should be tracking economic occupancy, as it is the real benchmark of our efforts. If you are 95 percent occupied on square footage, you would also want to be 95 percent or higher occupied economically. This is often not the case. We commonly see economic occupancy as the lowest of these three types, usually due to discounts, free units, complimentary units for the owner or company, and lack of rate increases to existing customers. Make sure you compare all three occupancy types to get a feel for your priorities. Should you be leasing more smaller units, larger ones, or getting rid of freebies to improve economic occupancy?
The seasonality of leasing is clear to see in the chart below, so we all want to maximize the net gains we see during the spring and summer months. Here is a look at the last two years’ move-ins by month for our stores; we primarily see most activity for move-ins between March and October. Is this the same for your location, or are you located in a college town, resort area, or other special attribute that may change your leasing patterns? Pay attention to this pattern in order to maximize rates for high-demand units and your existing customers.
More importantly, what is the average net gain for these months? The net gain is what is left when you subtract the move-outs from the move-ins each month. As you can see, for the last two years, most of that net gain came in the summer months.
Tracking your activity involves more than just move-ins and net gain numbers; it also involves your ability to convert the online and in-person traffic and calls you receive into actual customers. Are you measuring the number of calls, walk-ins (both actual people coming into the store and the leases and reservations coming into you via your website online), and how many of these you convert into customers? It is critical to do so; convert your traffic, in order to make good use of the traffic you develop, and not run through the leads you get without closing them. However, to do this, make sure everyone on the team tracks and measures them the same way. Just counting them daily can move your team towards higher awareness and closing ratios. In our system, if you are getting 100 calls a month, you should be getting at least 150 or more walk-ins or online leads (150 percent); from those 150 leads, you should be closing 90 percent of them, or at least 135 new customers moved in. How is your team doing on this? If you improve your closing ratios, then more move-ins are the result, as well as higher occupancy and income.
Perhaps you need to improve your phone skills, as this area within our industry is woefully lacking and yet so basic and fundamental to our operations. Oftentimes, while shopping competitors for our feasibilities, we get no answer. Or, if anyone does answer, they don’t ask for our name, contact information, or any means to follow-up or even attempt to get us to rent with them. Don’t make these fatal mistakes. Greet callers with your store name and your name; ask them, “How can I improve your life today?” Then watch the magic happen, as they are amazed someone is really paying attention to them. Ask all callers for their phone number, and don’t just sell price! We have developed “five magic questions” that our teams use to qualify and close on more sales from calls. (Contact USG if you are interested in finding out more on our sales training and want to receive the presentation on telephone techniques.) Find out what makes you unique and sell those benefits. Visit your competition and offer to pay them a referral fee for sending you the customers they cannot help. Our industry is experiencing the highest occupancies we have ever seen, and most of them are full. Those are easy leases to pick up just by asking. Calls should last only 2.5 to three minutes and focus on getting callers to your store, not being the information giver who never closes any sales.
Next in our list of things to review for our mid-year checkup would include two important and critical areas of the operation: an inspection of our physical plant and our budgets and cash flow statements.
Walk your property looking at it the same way customers do. It is easy to let things go when you see them daily and get used to them; it’s the “can’t see the forest for the trees” syndrome. Try this trick to see with a new perspective and vision: Take photographs with your phone of the entry, gate, front doors, customer showroom and front desk, keypads, signage, drive aisles, entry doors, and restrooms. Then load those up and look at them as a team or print them out on full-size 8-by-10 sheets and take a look. Are there weeds in front of unit doors? Are there cobwebs, rusty hasps, or broken doors? Is your front door clean and clear in its messaging or cluttered with homemade paper signs? Are the drive aisles in good repair, trash free, and all buildings clearly marked? Is your showroom inventory priced and fully stocked or unpriced and dusty with faded packaging? Are directional signs used to make customers comfortable and knowledgeable about how to use the gates, keypads, and other amenities? Every single thing, old or new, can be and should be clean, neat, and well organized—not full of sticky notes, paper signs, and frayed edges. Keep it sparkling clean. There should be no weeds anywhere; the curbs and drives should be clean and in good repair. If you need repairs on the property, remember you can earn that money through higher closing ratios and rent increases. Keep that front desk clean, neat, and ready for customers.
What do they expect to pay based on the appearance of your property, office, and units? We never want to be ashamed of price; instead, be proud to be the market price leader.
Measuring Performance
Next, onto the budgets, incomes, expenses, and projections for the year. First, let me say, owners and operators who don’t have budgets for managers to work from are missing out on the great improvements most of us are experiencing now. With nothing to measure yourself by or compare yourself to others, how do you know what the target is for each month, quarter, or year? It is like simply saying, “do good!” That can be interpreted in a million ways. To me, “do good” means setting record performance numbers in all areas, while “do good” to another might mean just keep the store open and not collapsing. In business there is no status quo; you are either going forward or falling behind. Even if you just tell your team to do 10 percent better than last year each month, then at least you have established a target to reach (10 percent higher income, box sales, rentals, rate increases, insurance sales, fewer fees waived, less rent discounts, fewer other fees waived, etc.). Every activity within our operation has a target. Every manager and owner/operator should know their Same-Store Sales Increase, which means how much income has improved versus the same period last year or same month or quarter last year.
We measure in several ways, but one of those ways is to compare our income and expenses per square foot each year, counting all square feet whether occupied or not. This benchmark helps us to see visually how we are doing each month or compared to the same year over year results (as shown in the chart below).
We also track expenses monthly and to compare them to our past performance and to others in the industry. MiniCo Publishing produces an annual Expense Guidebook that shows common costs and incomes for each region and nationally. This is a great way to measure your own performance. By producing monthly cash flow statements, we can show where we are versus each line item in the budget, over, under, and any variances, and compared to a year ago (same period). If, as an owner/operator, you are only using the money in your bank account, how do you know which line items need inspection or improvement? Are your sales increases too low, expenses too high, or a combination of both? The best way to produce profits is to increase income and reduce expenses as a percentage of income simultaneously. Note: I did not say just reduce expenses; these must be measured as a percentage of income as well as just cost per foot of overall costs to see the trends. Expenses are increasing rapidly, as we all know. How are you increasing your income to keep pace with this?
One thing that has assisted us in recent years in reducing expenses is to deploy lots of low-cost technology offered in our industry to perform administrative functions and track activity. Being involved in the industry, attending trade shows and conferences, and keeping abreast of new offerings is key to a constantly improving operation.
This is the value of tracking and monitoring expenses and income to see the trends, avoid surprises, and reward the great efforts of our teams. Our teams are bonused monthly on how well they perform against the budget. This clear signal tells them we are focused on meeting and exceeding these agreed upon goals. Monthly rewards work best in our industry and must be simple for managers to calculate to keep them motivated.
Once you take a look at all these functions, processes, and physical attributes, employ this three-step technique: 1. Set some priorities. 2. Give your team the tools they need to achieve them. 3. Track and measure performance. You will see better results all around from the process.
M. Anne Ballard is the president of marketing, training, and developmental services for Universal Storage Group in Atlanta, Georgia. USG is an award-winning management company and provides ongoing services to over 70 facility owners as well as consulting services for operators everywhere. Visit www.universalstoragegroup.com for details.