Most people would say there is a big difference between a self storage facility and a McDonald’s restaurant.
But is there?
I love using McDonald’s as a benchmark company because everyone knows who they are. They were also one of the first to systematize their operations. Like Henry Ford, but not manufacturing (and they don’t pay their workers as much as Ford did).
Think about McDonald’s. Who is the person you interact with at the counter? Who is cooking the food? It’s always the same no matter where you are in the world.
What amazes me is that in many cases, the restaurant is being run by kids who probably don’t or can’t make their beds. But a million dollar enterprise is successfully run by them. And run in such a way that it doesn’t matter where in the world you are, the result is exactly the same.
If you think about that, it’s amazing.
What’s the secret?
Systems. Their business model, particularly their operations, is nothing more than a series of systems and procedures. These systems and procedures have been written down and everyone follows them. No matter where in the world they happen to be.
It’s not based on people. It’s based on systems.
If you are a self storage owner with managers, is your self storage run on systems or is it more based on the skills and personality of the manager?
If you are not yet in the business, are the facilities you’ve looked at for acquisition run by systems? Or did it seem like decisions were being made based on the manager’s personality?
Don’t get me wrong, I like strong managers who bring their personality to the job. But as a business owner, it’s your job to create the procedures and systems. Then seek and hire people with skill sets that fulfill on what you have created.
“But I don’t know what systems and procedures to create?”
Doesn’t matter. It’s still your job to do so.
The value of a franchise, in my opinion, is twofold.
- Systematized operations
- Name brand recognition for the consumer.
I have owned franchises before in real estate. I get the value of a franchise.
Early in my self storage career, Storage USA had a franchise program and I almost bought into it. I wanted in self storage what I had experienced in real estate.
I’m not trying to discount anyone out there creating self storage franchises at this moment. I wish them luck and perhaps I am 100% wrong. But I saw that, yes, they could give me the systems and procedures for self storage operations. But as far as name recondition, the consumer could care less.
It was strange. When it comes to self storage, name recognition ranks very low. In the research I did, I saw that almost no one would even cross the street to use a known name. In the world of self storage, the consumer wants location, convenience and cleanliness, and price… in that order. Women, who by the way are still the majority of the decision makers, also wanted safety in the second slot as well.
I couldn’t justify the cost of a self storage franchise because there are so many free or low-cost resources for operational systems and procedures. And again, I love franchises.
Build a business to sell.
From day one, build a self storage business you can sell at some point. I have learned the hard way that much of the value of our self storage business is a function of our systems and procedures. Yes, the value is a function of the current CAP rates applied to the Net Operating Income. I know that.
But a consistently increasing NOI is a function of your operations systems and procedures. Again, it took me a while to get this. Take my word for it if you are just starting out. From day one, you want solid systems and procedures in place that all managers, even you, follow.
Then as you grow, it’s the same everywhere you go. The systems evolve and change somewhat, but the basic concept of a business run that way is critical. That single business concept will do more to add value to your self storage business than you can imagine.
So where does one go to get operational systems and procedures?
I think the best way is a combination of two methods.
Method One:
Take a month. Anything that a manager or you do more than once a week, write down the step by step procedures for it.
Do this for how you find deals, how you negotiate deals, how you analyze them, how you present them, etc. Get the picture?
Then when you put a facility in service, write down how you take them over, what you do the first day, the first week, etc.
Every day you open the store. Write down (or have your manager do it) exactly what is done to open the facility that day. Then write down what is done weekly, monthly, quarterly.
Everything that happens more than once is written down. That can eventually be your operations manual.
Method Two:
The Self Storage Association (SSA) and Inside Self Storage (ISS) have self storage operation manuals you can buy and modify to meet your specific needs.
Almost any aspect of self storage operations is already spelled out. From daily operations to maintenance, to financial reporting procedures, to monthly, quarterly and yearly maintenance procedures.
Use these resources. Join these organizations. Your business will benefit from them.
Then, take both methods and put them together to create your operational systems and procedures.
Create a manual everyone follows (that means you too).
I woke up one day and realized every facility I was involved with had a different way a customer was treated. In each facility, a new customer walked away with a different takeaway. Auctions were handled differently. It was a mess.
I had allowed a culture and operational structure to evolve by default. That is no way to run a business. If a manager quit or was sick, someone from another facility had no idea how this one was run.
Don’t do that.
It does take some work up-front but systemize your operations. Fortunately, I have support in that now. If you feel like this is something you don’t want to do, hire it out.
Just do it. If you can do it from the start, you are ten steps ahead.
If you are already in business, do it now. Don’t wait until you have three facilities (or whatever goofy thing we tell ourselves to avoid work we don’t like).
Create your business to run like a McDonald’s restaurant and you will have a business run on systems, not personalities.
Create that self storage business and you will add more value to your business than you can ever imagine.
Start now and Create True Wealth With Self Storage.
