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September 1st, 2013

Memo From Frank & Dave

We recently negotiated a deal from a mom and pop seller. When the deal was not going anywhere, I turned the table on the seller and said “this deal is just not compelling – what can you do to make it more compelling for us to buy?” This made the seller start having to convince me why it was a great deal, and in his effort he agreed to seller finance at a below-market interest rate. Too many times, we lose sight of the fact that both the seller and buyer must be happy for a deal to be win/win. That means that the seller has to participate at least 50% in that outcome. If you are looking at a deal that is marginal, see if you can get the seller to realize that a deal won’t happen unless you can win, too, and see if they can find something to make the deal more compelling for you. Win/win deal making is a two way street.

Marketing Your Facility Online

Self-storage owners all have one common problem, how did they make their facility stand out? Being a low tech but highly competitive business, it can be hard to differentiate one facility from another. Some owners are turning to complementary business operations as a way to increase foot traffic.

These operations can range from filling propane tanks to having a UPS Franchise. These sidelines work on a case-by-case basis, it all comes down to your location and surrounding customer base. It seems that business centers and pack-and-ship operations are a particularly good boost for revenue and foot traffic. On the plus side of these operations, UPS is looking to encourage self-storage owners and make it that much easier to open a franchise in association with your facility. Besides wanting to make franchising easier, UPS stores average between 500-800 customers a month that is a huge amount of foot traffic. Adding a business center or pack-and-ship to the facility can entice more small businesses, a plus since they are typically long term renters. Another plus, consumers will always need boxes, shipping supplies and assistants with moving.

Of course if you want a less labor intensive option consider a billboard or a cell tower. If you are on the main road with great visibility, a billboard is a great option with little extra work. Cell towers are a good option for you and the carrier. With self-storage facilities located close to residential areas and already have commercial zoning. Ideally if you are approached by a carrier, you can put a 20 year lease under contract, with a 3% escalation on the rent per year. Of course rent can range from around $450 to $1,000 a month, still a pretty good income for not much work. They don’t necessarily increase foot traffic but they can supplement your income.

Adding an on-site business comes with its own shares of challenges or potential pitfalls. Like any other business it’s important to have good staff and good mangers. Side businesses may not always be a perfect fit with the facility, and that can cause a bigger headache then it is worth. Consider the needs of the new operation, will you have people calling all day, are there trucks that will need maintenance. Also consider the time it will take staff to manage and run the day to day operations. Is it going to affect the customer service to the self-storage renters? Your primary business is the self-storage so that is where your focus needs to be.

Self-storage facilities have remained the same over the years; advertising and operation has worked so well for so long, it’s hard to change. The trend of adding sideline businesses has not been going on long enough to see how much it really affects the revenue of a facility. One add-on could work great in one area but not the other, it all comes to down to your customer base. Take the time to research and really learn what it takes to operate before jumping into it.

What Does Your Storage Unit Look Like?

Frank Rolfe's Storage Unit

Here’s a picture of mine. Actually, only one of the three that I rent. Have you ever noticed that they pretty much all look the same? You could make an interesting coffee table book photographing the self-storage units of the rich and famous. People would be shocked – probably boxes of junk and old Christmas tree decorations. Why do we all store this same stuff? Probably because we can’t bear to get rid of it due to what we paid for it originally or for sentimental reasons. And it’s our inability to part with our stuff that makes self-storage demand a constant.

Self Storage Home Study Course

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