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Friday, December 15, 2017
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SSA Blog

26

Identifying and Working with Managed Facilities

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I recently spoke with John Eisenbarth, the Vice President of Operations for West Coast Self-Storage in Mill Creek, Washington, to get his take on how West Coast goes about finding the right types of storage properties to manage.

 

When identifying storage partnerships, what attributes are necessary to being a good fit?

Geographic location is the first thing. Since we’re located on the West Coast, we want to work with storage properties that have proximity to us. We currently work with facilities in Washington, Oregon and California. We operate from a very hands-on perspective, so we want to be geographically close enough to allow our District Managers and Training Managers to work intensively with our stores. Our District Managers don’t have offices, so they spend every day in stores within their respective Districts.

 

Outside of location, the best attribute for being a good fit is determining if we can add value for the owner of the property. Adding value comes in a lot of forms and it depends on what the owner wants out of a management company. It may be that a single owner would like more free time in his or her life. If it’s an investment group that has the capital but doesn’t want to run the day-to-day operations, then we can add value. It could be a current management company in place that isn’t doing the job they were hired to do, or even a situation where the owner thinks everything is going smoothly, but in reality, there is a large opportunity for increased revenue and reduced expenses.

 

One other important factor is making sure there is a good connection between the owner(s) and our Team. Our aim is to be working together for years, so we need to have a mutual respect and share the same values in regard to the vision for the property now and in the future.

 

There are instances where we’ve had to say no to a potential management contract too. Sometimes the location is too far away from our other properties, which would mean spending more time traveling to the location and less time being able to support it the way we need to.

 

We’ve also had to say no based on the size of the operation. For stores that are smaller and bring in a small amount of revenue each month, having to pay a management fee would really cut into the owner’s profit. But even then, sometimes it works. For instance, a few years ago, we began talking with the owner of a smaller storage business. He was dubious that we could help him, and on the face of it, it didn’t look like we could. He had been running his storage business for many years and was generating a decent amount of revenue with almost full occupancy. But once we started digging into the details of the operation, we realized there were many areas where revenue could be optimized and expenses trimmed. For example, he had thousands of dollars in uncollected receivables. He had units that hadn’t been moved out, even though the lease had ended. And he had advertising expenditures that weren’t returning ROI. On the revenue side, the store hadn’t implemented a tenant insurance program or a truck rental program. After putting these in place, putting more emphasis on retail sales and doing some rate optimization, our fee was more than paid for within the first three months. Three years later, the property has increased revenue by over 61% per year and has increased net profit.

 

When should storage owners consider hiring a third-party management company?

There are a variety of reasons why an owner or owners should think about using a management company. But the decision should be based primarily on whether they want to make more revenue, minimize their expenses, and increase the value of their asset. If these factors are true, then they should hire a management company.

 

However, there could be other factors that go into this decision. The owner may want more free time back. They’ve been running their storage business for years and it’s taken a lot of hard work, time and dedication. So, they’ve come to a point where they’d like more freedom to do what they want.

 

Perhaps the owner just doesn’t want to deal with the headache of running a business and all that entails, such as managing employees, dealing with customers, doing all the accounting and administration.

 

Lastly, it could be that they are currently being managed by another management company, but they feel like it’s not being managed appropriately. A management company can come in and do an audit of the business to show them what they are missing.

 

What should owners look for when shopping for a management company?

Look for a management company that is hands-on and actively involved in ensuring the success of the business. Our District Managers are in their stores every day supporting Managers and Assistant Managers. When we have this much interaction with the stores, we are able to stay on top of emerging issues and take advantage of new opportunities to increase revenue and minimize expenses.

 

Look for a management company that hires the right people and cares about their people. This may be the most important part of a successful storage operation. Hire and employ people that are great at sales and customer service, and care about the customers and doing a good job. This is reflected in how efficiently stores are run as well as how clean they are. Also, take care of your Team Members by providing a supportive atmosphere that allows them to work toward their career objectives and enjoy coming to work each day. 

 

Another factor to consider is whether the company is local to the trade area and can provide staff that knows the market well already. This goes a long way to understanding how to promote the business and how to position it for success.

 

What steps do you take with any new managed facility to get it up to your standards?

  1. Perform in-depth research to understand the local market. Look at the competitors in the trade area to see what their pricing, customer service and product are like. Look at demographics of the community — the age of the population, the percentage of home ownership, the educational opportunities in the area, and other data to really help understand the types of customers you’ll have access to.

 

  1. Turn your attention to the store itself. Look at the store’s sales, their current customer service processes, the curb appeal of the store and what types of marketing they’ve done in the past and are doing currently.  

 

  1. Look at the store from a consumer perspective. When the customer drives by, what do they see? When a customer comes in, what do they see? What do they get? How do they feel?

 

  1. Look at it from a business perspective. Is the store clean and operational? What additional capital expenditures are needed? What are the current pricing and discount strategies? What is the store’s past and current financial condition? What revenue streams are currently being offered such as boxes, packing supplies, truck rentals, etc.?

 

  1. Finally, put a plan together based on all that knowledge. Every property is different, so there’s no way to use a cookie cutter method in developing a successful plan. One of the most important parts of the equation, if not the most important, are the people that we work with from the owner or investment group right down to the store Team Members. With the right people in place, success can be achieved, but if you’ve got the wrong people, you’re never going to get there no matter what you do and how much money you put into the asset. That’s why we take the time to understand the life and work goals of our Team Members. Once we understand what they’d like to accomplish, then we help them put a plan in place to achieve those goals.

 

How do you work with the owner of the property?

Cater to the goals of the owner. They can be involved as much or as little as they want. I have owners I meet with monthly, some owners I meet with quarterly, and some owners I only meet with every six months or a year. Each owner decides the level of interaction they want with us based on their needs and wants.

 

When we first take over a property, I have some owners that want to be very hands-on. And that’s perfectly understandable. But after the first three to six months to a year, they become comfortable with us managing their property because they see the quality of work and the job we do.

 

What kind of training do you recommend for employees of these facilities?

Develop a comprehensive in-house training program that teaches every aspect of storage management including revenue optimization, sales, customer service, clean and operational, collection foreclosures, and other strategies.

 

Hold district-level group training twice a year where you can work on advanced skill development, allowing Team Members to share success stories and best practices.

 

In addition, we have a mystery shop program that performs in person visits quarterly and phone calls monthly.

 

| Categories: Operations | Tags: Third Party Management, Management, Operations | View Count: (804) | Return
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