Anytime two or more owners of a similar business get together, the question that usually comes up is, What are you doing to survive the latest (fill in the blank) crisis? Inevitably the discussion becomes intense, varied and often confusing. Part of the confusion stems from the conflict identified in this old cliché: One mans meat is anothers poison.
Every crisis is different, affected by timing as well as social, economic, ecological or cultural events. It could be that a mega-facility is opening up down the street or a hurricane blew the roof off your building. No one can predict the future; nor does a silver bullet solution fit all business challenges, so forget about looking for one.
What does exist is your ongoing, core business, which should always be your primary focus. Ask yourself, Is my facility running smoothly? Am I in control and aware of all the facets that affect my business? Do I maximize every opportunity and tool to run my operation successfully?
Always be on the lookout for ways to improve your business environment. Its possible you are not aware of some simple procedures employed by successful managers and owners to make strategic decisions, establish goals and objectives, and measure achievements. Focus on building stability and profitability with every move or decision you make.
Take the Test to Proceed
Business consultants, books and seminars typically dont focus on ancillary products and services. Most experts recommend entrepreneurs gain total control of the main enterprise (in this case, self-storage) and refrain from redirecting and distracting efforts through diversification. In other words, if you take your eye off the prize, you might miss the target completely. This can be devastating to businesses.
On the other hand, if your business is already solid, perhaps youre ready to expand your horizons and earn even more money by offering an add-on service. How do you know the time is right? Ask yourself the following questions. If youre successfully tackling this list of responsibilities, chances are good that a new challenge may be in your future. Are you:
Establishing monthly and annual budgets and forecasts?
- Receiving timely financial results (by the 10th of the following month) and comparing them to the budget?
- Using 13-week rolling cash-flow statements?
- Using flash reports?
- Creating annual strategic planningestablishing goals and objectives and holding people responsible and accountable?
- Managing the balance sheet, tracking the impact of operations on the net worth of the company?
- Keeping pace with inflation and appreciation of your hard assets?
- Comfortable with an already defined exit plan, and will your net operating income support a fair asking price for your business?
- Meeting with your team weekly, reviewing and readjusting your metrics where necessary?
If your business is running like the proverbial Swiss watch and all procedures are being followed, consider a reassessment. Is it time to plan for future growth? One simple planning exercise is the use of a SWOT analysis: strengths, weaknesses, opportunities and threats. As you look at your business or evaluate your competitors, this business tool enables you to perform an honest evaluation of your operation as well as your others. At the completion of this exercise, you should have a clear choice of objectives and strategies from which to choose.
The SWOT Challenge
For each of the four SWOT categories, youll need to create a chart. Then, begin filling in appropriate information as follows:
- Strengths: What does your company do well? What sets you apart from competitors? What advantages do you have over other businesses?
- Weaknesses: List the vulnerable areas of your business. Some questions to help you get started are: What do tenants complain about? What are the unmet needs of your sales force?
- Opportunities: Look for what the competitors are not fully covering, then go a step further and think how you can add these to your business plan and make them strengths. Also, try to uncover areas where your strengths are not being fully utilized. Are there emerging trends that fit your companys strengths? Is there a product/service not yet offered that you might include?
- Threats: Threats are considered an external force. By looking inside and outside your company for things that could damage your business, however, you may be better able to see the big picture. Some questions to get you started: Are competitors becoming stronger? Are there emerging trends that amplify your weaknesses? Do you see other external threats to your companys success? Internally, do you have financial, development or other problems?
The Results
Once your business plan is completed and implemented, it may be the time to grow through diversification or the addition of ancillary profit centers. What are the logical candidates? The obvious ones are those that you identified from your SWOT analysis. If you have uncovered weaknesses, fix them first. If all else is well, then look at those goods or services identified as opportunities through the strategic planning process.
Many owner/operators using large tracts of land are faced with the challenge of driving revenues to meet appreciated values, an important goal in managing the balance sheet and maximizing any exit strategy. A buyer or an investor will be evaluating your price or performance by how well you support the value of the business as a result of your net operating or EBITDA performance. The key here is to look at opportunities that are not only synergistic but manageable.
Many storage operators have added services to meet the needs of their existing customer base. One that has been very successful at many sites is the addition of a car wash and related services. Car-wash addition is complicated, and theres not one model to fit all applications. But the beauty of car washes for storage sites is they can offer high cash returns while using and spreading the risk of overhead, and they are generally very compatible with your existing customer base.
In past as well as future columns, I have and will spend more time discussing car washing as well as some profitable related ancillaries such as vacuums and vended products. For now, if you have an interest in car washing, contact some top representatives or manufacturers and have them visit your site. Once there, you can interview them and acquire learn more about this ancillary venture, which may just be a perfect fit for your self-storage business.
Fred Grauer is president of Grauer Associates and executive vice president, investor market and conveyors, for Ryko Manufacturing Co., a car-wash equipment manufacturer in Grimes, Iowa. He has made a lifelong career of designing, selling, building and operating car washes. He can be reached at [email protected].