If you start a new business in the US, including a self-storage business, you have about a 50/50 chance of surviving over five years…
A report from Bloomberg shows that the number that survive is under 20%…
I don’t know about you, but I don’t like these odds!
That is why I have been creating this training series exploring the mindset principles involved in developing a successful business. In this last conversation, what I see is missing from most business owners, including self-storage owners, is a basic “business” approach mindset to running their business.
The three step approach I have been advocating (see the CreatingWealthThroughSelfStorage.com 3-part video series) is a business approach to purchasing self-storage. However, it is after someone is already in the self-storage business that this concept will make or break the business.
I have seen most Owners have a basic skill they are comfortable with. In the self-storage business it is often construction. Owners are very comfortable building, or repairing, or tinkering with the facility and keeping it in good shape.
Sometimes Owners have a sales background and are good at marketing or setting up in store sales systems for managers to follow. Sometimes, but rarely, does someone getting into business have a financial background. They love running the numbers, analyzing sales per move in, rentals per call ratios, and so forth.
Mostly, what happens is the Owners focus on what they are comfortable with.
They may or may not hire or vendor out people to address other areas. Mostly they pretend like they don’t exist, or if they do, they hire someone, or contract with someone, then pretend it is “handled” and go back to focusing on what they are comfortable with.
Then the “manager” quits. The bookkeeper is caught embezzling. Customers start complaining about poor service or about poor upkeep with a facility. Some crisis happens, the Owner needs to jump back in the area they thought was handled, and they wonder how did I ever get in this mess.
Sound familiar?
Growing a self-storage business then seems crazy because you think, I would just multiply my problems exponentially.
”Perhaps I was better off with a job,” is often the mantra of Owners at this point.
The self-storage business is like any other business, only better. But it does have the same three components that UPS, Ford Motor, McDonalds, or the corner coffee shop have:
(1) Operations
(2) Sales
(3) Financial Reporting
Every business has these three components to address. Before you close on your first facility, or if you won three and are pulling you hair out, stop and address how these three aspects of the business are to be addressed. You are only good at one of them at best.
You have to have a procedure in place to open the facility, run the facility, close the facility every day, handle past dues, handle auctions, etc. It needs to be systems oriented not people oriented. In other words, you want a system that you can drop anyone in with some basic skills you are seeking, and have a procedure for them to follow.
You want to be system oriented, not people oriented at this level of your business. Care for your people, treat them consistently and well, but have a system for them to implement. They, your customers and your business will appreciate it.
Think about McDonalds. Those systems are in place such that a kid who can’t even make up his bed can run a restaurant and in less than a minute create a consistent meal customer after customer. Systems do than, not relying on a specific person.
Next have a marketing system in place. Today that includes lots of online marketing. If this is a foreign concept to you, there are great industry specific vendors out there. Owners can no longer afford to say “I don’t get this.”
It is your business and if you don’t get it, your competition will and you will soon be irrelevant. Study, change, experiment and use the best professionals you can find to implement your marketing. Track it and if what you are doing isn’t producing results, change and go another direction. We have great vendors in our resource page to use.
Finally track everything financially. Where your new customers come from for example. That will tell you where to spend your marketing dollars. Track average value of a customer, average time, know your seasonal income trends, and so on.
I know the value of every facility we are involved with almost to the dollar right now. I know how far ahead of budget or projections I am. Know your numbers. If you are not good with numbers, hire or vendor out to someone who is and knows the industry.
If you are going to invest your money and go on the line for millions of dollars, you owe it to yourself, your employees, and your customers to really approach this like a business. That is where the fun is, creating a great business from mere concrete and steel.
If you’re ready for some more in depth free training, be sure to check out the 3-part video training series where I share a ton of my journey, failures and lessons from more than 15 years in the game.
How to Buy Self-Storage & Excel In Today’s Competitive Market
3-Part Video Series (FREE Training)
