Is Check-Cashing a Potential New Profit Center for Self-Storage

By Amber Shepherd

Every small self-storage business struggles with the need to retain existing customers and add new ones while striving for increased revenue. Justin Shepherd, owner of Shepherd Storage Solutions in Phenix City, Ala., knows this battle all too well.

Shepherd Storage Solutions consists of two locations offering climate-controlled, drive-up and boat/RV storage. The properties also offer truck rental as well as moving and packing supplies. Even with all these prongs for add-on profit, Shepherd saw potential to bring in even more. He began researching different endeavors that would add money and value to his business. He soon narrowed his focus to the check-cashing industry.

Breaking Into a New Biz

Taking on a new product can present an already overwhelmed self-storage owner with a daunting challenge filled with unknowns. Still, Shepherd was drawn to many aspects of the check-cashing business. With more than 68 million wage earners who don’t regularly use a traditional bank, the industry is growing significantly.

However, there were too many drawbacks for Shepherd to open a traditional check-cashing company. His chief concerns included the exorbitant cash needed to get started—ranging from $100,000 to $300,000 for a brick-and-mortar operation—his limited available square footage, and the overwhelming responsibility of having to learn and comply with local, state and federal regulations. Furthermore, it’s a business that requires time and attention, something in short supply for most small-business owners.

Shepherd thought his goal of adding revenue through check-cashing might never come to fruition. That is, until he stumbled across the SAM (Simple Automated Money) kiosk. Then he knew he’d found a good fit for his operation.

Built-In Benefits

What sparked Shepherd's interest in SAM was its simplicity—the fact that adding an automated kiosk to his facility would be effortless in comparison to a traditional check-cashing operation. To get started, he merely had to buy one. At $35,000, with financing options available, it was a low-cost addition for the return. National averages vary by location, ranging from $45,000 to more than $200,000 in fee income to the kiosk owner. Even at the lowest rate of return, a kiosk typically pays for itself within the first year, making it an excellent way to increase store profit with little in the way of expense.

SAM provides all the tools to cash checks and requires less than 10 square feet of floor area. Hardware and software for transaction encryption and processing, risk management to eliminate bad checks and fraud, and complete regulatory compliance are built in. The kiosk comes with manufacturer hardware and software warranties, and there are trained service personnel to provide repairs if needed. The end result is a fast track into business. The kiosk was the solution to all of Shepherd's concerns regarding traditional check-cashing.

Up and Running

Once a kiosk is purchased, the manufacturer delivers, programs and installs it, and trains the owner on how to load cash, receipt paper and checks as well as how to print reports. An optional Web portal allows the owner to monitor available cash from a computer, smartphone or tablet. The kiosk starts generating revenue from check cashing and, where allowed by law, small loans. Customers can cash checks in less than a minute without interacting with the facility’s staff, which helps alleviate concern over employee dishonesty.

SAM can cash any type of check including business, government, insurance, payroll, personal, tax return and unused money orders. The typical transaction time is less than a minute, making it fast and convenient for today's time-starved consumers. The ability to combine tasks is a major market driver. Stopping to cash a paycheck while also using a facility’s storage services is more desirable than having to make two different stops. This is also a benefit to a kiosk owner, as check-cashers will be at the facility with cash in hand, likely remaining to buy products or services.

The kiosk was an opportunity Shepherd couldn’t pass by, and his company is reaping the benefits. "Once we placed the SAM kiosk at one of our stores, we received a lot of positive feedback from our customers,” he says. “They love that there’s little to no wait, as opposed to traditional check-cashing stores, and they can be out of the door in less than a minute if need be.”

Shepherd also noticed an increase in traffic to his facility, including first-time customers who otherwise wouldn’t have patronized his store. "It provides a valuable service to my existing customers while attracting new ones in the process,” he says.

Justin Shepherd is the owner of Shepherd Storage Solutions in Phenix City, Ala. He was so impressed with his SAM (Simple Automated Money) kiosk that he became a distributor of the machine. For more information, call 334.298.8814; visit www.shepherdstoragesolutions.com.