Last week was the beginning of “The Self Storage Management Series.” I noted that if you keep your eye (or your Manager’s eye) on five things you’ll do great in this business. Today I want to delve deeper into the first one: dollars per month.
In many ways, this is the easiest for managers to watch. In my experience, they already understand the importance of the money the facility is generating.
What works well is to have them involved in creating the budget for the facility (a topic we will dive into in November of this year). This turns their relationship to the income to one of ownership since they had a say in what that income should be.
The real secret here is in who you select for your manager.
And they need to see how you actively relate to the business, as well as to life in general.
Our managers know that a budget is not just a guess at what the cash flow will look like – something we hope will come in. It is something we’ve created that requires their participation to generate.
They see me relating to the facility as if I am generating the entire thing. I’m not just observing how much money flows in. I’m responsible for generating the cash flow, the new facilities going into service, even how many people walk through those doors to rent.
They see me relating to my business that way, so they relate to theirs that way. They know they are responsible for hitting their income numbers. And they have a lot of ways to do it besides just hoping someone walks through and rents.
I have one manager who will call me in the morning and “create” how many rentals she is going to get that day. If by noon she’s not there, she’s on the phone “causing it” as she says.
Income per month is a simple number a manager can track and relate to.
To make this work, you need to really celebrate when those income targets are hit. I let my managers know that I’m aware they did that. They “caused’ that income number to come in and I publicly acknowledge their achievement.
When the number isn’t hit, I also let them know I’m aware they are the “cause” of it. I ask them what they need from me to win at the game they had a hand in creating. These are not public conversations.
Now the truth is, as the leader, I am the one completely responsible for hitting the numbers. I don’t want to disempower anyone by telling them that, but my personal relationship to the facility income numbers, or any number in my company for that matter is, is that I am 100% responsible for it.
That way I have the power to alter it. One way to make that change may be to hire a new manager. Thankfully, it’s been a long time since that was the solution needed.
The second KPI (Key Performance Indicator) the manager should keep their eyes on was….do you remember?
It was “Percentage Occupied.”
Remember to drill this into the heads of your Managers: it’s the percentage of square feet, not the percentage of units rented!
I will often walk into a facility and quiz a Manager on their occupancy rate. Do that enough, and they watch it vigilantly. Why? Because they know I am. I know their occupancy rate, and I expect the Managers to know their facilities better than I do (and they usually do).
In a lease-up situation, when we are filling up a new facility or expansion, we closely track “net square feet rented” for the month. Sitelink has that line item right on the “Daily Management Report.”
Whatever that number is on the last day of the month is the Manager’s number for that month. Each one has a target number to hit, and again, when hit or exceeded, it is publicly celebrated.
In a lease-up situation, the income numbers are determined by the new rentals we are expecting each month. For example, we have one new facility in lease-up and the Manager knows her occupancy number is a minimum of 1,200 net new square feet per month. The income number goes up a minimum of $1,500 per month.
These numbers come from the ten-year cash flow statement and ProForma we create before buying the facility.
When I go into a facility, I may not talk about the other KPI’s every time, but I doubt a day goes by when I’m not asking the Manager about their occupancy rate and where are they on their income this month.
If they know I’m watching it, then they watch it. They know I know it, so they know it.
If they have their eye on it, it moves. My experience is whatever a human being measures is affected by their attention on it.
The Managers we hire are powerful people who can increase whatever they put their attention on (I made this up…but don’t tell the Managers). And remember, if a human being thinks something is true it becomes true for them and reality adjusts accordingly.
Because our managers are measuring these KPI’s, our facilities consistently exceed our projected numbers.
