The key to sustaining a healthy relationship with employees who handle facility revenue is a clear set of operating rules, segregation of duties, and a checks-and-balances atmosphere. Many operators ask, What if my operation is too small to accomplish separation of duties? What if I dont have or want a specific set of job functions assigned and defined? What if I have longstanding employees I dont want to embarrass?

The solution to all these concerns is to establish policies and procedures. Before implementing any changes, however, discuss them with a qualified attorney.

Employment Cycle

You should look at three phases defining the employment cycle:

• Pre-employment 
• Ongoing employment 
• Dispute 

A necessary step during the initial hiring phase is a background check, which includes criminal and financial checks. Nothing automatically prevents an individual from being hired or assigned a specific job function, but wouldnt you prefer to know if an applicant lied on the employment contract or behaved inappropriately in the past?

Once potential employees pass background checks, they should enter a documented training program. Hand them an employee handbook explaining company policy, rules and regulations governing job titles. Responsibilities and duties need to be defined; otherwise its a prescription for negative outcomes. If employees are handling customer payments, more safeguards are necessary, including a rigid separation of duties, and a rotation of responsibilities and work environments.

The dispute phase occurs when an employee is the subject of investigation for possible wrongdoing. Make sure all alleged misbehavior is well documented and consult an attorney before taking action.

Common Breach Points

Employees steal or defraud employers in multiple ways. Cash-handling is the most vulnerable. When your facility accepts cash, a receipt should be issued and placed in a register, recording all transactions. Never allow employees to put money in their pockets for settlement later. Also, the person preparing the cash deposit should be different from the one who physically makes a cash bank deposit. If you have only one employee, make the deposits yourself.

Avoid accumulating cash in the office. Many smaller operators tend to stash money for several days before depositing it in the bank, but this invites theft. Checks, especially electronic ones, are probably the safest form of payment. Its highly unlikely an employee can disrupt the electronic chain, particularly if external auditing is used. 

You can accept a paper check and immediately convert it to an electronic version. Ask tenants to use recurrent electronic payments for rents whenever possible.

Credit card handling is particularly vulnerable because no system can uniformly prevent misuse. Identity theft is a big concern, as is stealing and selling credit card numbers, or using credits and voids, which need to be carefully monitored.

Some employees issue credits against non-existent charges to the account of a friend or relative. External monitoring of the number and type of credits and voids can flag misuse. Make sure transactions are logged and matched with corresponding activities. Questionable activity should prompt an external investigation.

More people are pilfering credit card numbers and associated data PINs or CVV numbers. Employees can steal the electronic information off the magnetic stripes of cards without cardholders even knowing it. This information is sold in the black market and new cards are produced using stolen data. Less-sophisticated schemes include recording the pertinent numbers, double running a card, and failing to return the card to the customer.

If youre processing credit cards, be sure youre in compliance with the Payment Card Industry Data Security Standard, now required of all merchants dealing with credit cards. For more information, visit the VISA website at www.visa.com/cisp. 

Its impossible to bulletproof yourself against rogue employees, but a regimented program helps safeguard you and your business.

Ross Federgreen is a co-founder of CSRSI, which provides an integrated approach to the analysis, design, implementation, deployment and management of electronic transaction services and systems. Since 1999, the company has helped more than 600 public and private institutions reduce the cost of acquiring money and minimize the liability exposure related to payment transactions and customer data. Its products include monitoring of merchant service activities for fraud, charge-backs, credits and disputes, as well as the Credit Card Analysis System. For more information, call 866.462.7774, ext. 23; e-mail [email protected]; visit www.csrsi.com. 

Its hardly surprising that so many in the self-storage industry still underestimate the potential of retail sales. After all, retail falls under the category of ancillary products and services. The dictionary defines ancillary as subordinate, so its understandable when owners decline retail meetings. Im not interested in anything that distracts my people from renting units, they say.

To convert skeptical self-storage executives and show the already-convinced how to make more through retail sales, its time to dispel the fictions and review the facts.

Fiction: Selling retail products distracts employees from renting units.

Fact #1: Retail products actually facilitate the renting of units by adding to the initial comfort level of prospects. A bare-bones office can make prospects uneasy about choosing your facility to store their possessions. A store-like surrounding is more familiar and friendly.

Fact #2: Helping new renters with products they need builds goodwill and adds profit to the initial sale. And a well-rounded selection of handy products makes your operation appear more helpful and thoughtful than other self-storage firms.

Fact #3: Well-designed packaging and displays encourage self service. When renters return to make other purchases, they can easily find what they need without interrupting employees closing another rental deal.

Fiction: At best, the total level of retail sales doesnt justify the effort.

Fact: On average, retail sales could account for $12,000 to $24,000 in added profits per year. By using the real estate rule of thumb that commercial property should sell for 10-times earnings (10 cap), $24,000 additional retail sales translates to nearly a quarter of a million dollars in added market value! Do I have your attention now?

Fiction: Retail products take up valuable space.

Fact: A well-planned retail area mostly uses wall and floor space currently unused and not rentable. In fact, that $12,000 to $24,000 in added profits could be generated by an 8-by-6-foot wall space and less than 16 square feet of floor space. In case youre wondering, thats $250 to $500 of profit per square foot for office wall space!

Fiction: Self-storage cant compete with retail prices of big-box stores.

Fact: This would be true if we actually had to compete with them. But, just as with convenience stores, people will gladly pay a little more for your retail products to save time.

Fiction: Self-storage people arent trained to sell retail.

Fact: Training takes on many forms and your staff can quickly learn without formal training sessions. Heres how:

1. Well-designed signage helps the consumer and your staff. Ask your retail supplier for signage that lists everything needed for storing, shipping, moving and packing. For example, my firm has a series of five consumer posters aimed as much at the staff as the public. And they work.

2. Organize products into kits. Display together everything a customer would need for storage or shipping and give it special kit pricing. Create signs for kits that teach your people to cross-sell products.

3. Motivate staff with extra rewards for extra SKUs sold. Most people are creatures of habit. Sure, theyll sell boxes and tape; but to make selling Bubble Wrap and protection kits a habit too, you need to motivate them for awhile. If your average sale is for four items, reward those who sell six or more. Given the right motivation, people train themselves.

Fiction: Self-storage people dont know what products to stock.

Fact: Care to tap into the combined experience of all successful self-storage operations? The secret is in two words: plan-o-grams and displays. In simple terms, plan-ograms are shelf-stocking blueprints. Professionals, like soup and cereal companies, supply them to supermarkets to explain pictorially where the best sellers should go on the shelves and how many facings to give them.

In self-storage, the best retail suppliers offer plan-o-grams along with displays and merchandise. After all, its in their interest to sell you only those items that sell welland tell you how to make them sell even better.

The best suppliers furnish professional displays that keep your retail area from looking overcrowded. They should be pre-organized, with each spot labeled to ensure a permanent home for every item. At a glance, you can re-stock and even re-order inventory. In other words, the displays should be pre plan-o-grammed.

Fiction: Inventory ties up too much capital.

Fact: How much inventory is too much? Well, a good supplier can provide you with recommended minimum- and maximum-inventory levels for each SKU based on experience.

Your supplier should average a 24-hour order schedule. Just add one day of processing to the number of days in transit, and youll know exactly the minimum inventory level youll need. On a daily basis, re-stock display slots and pegs, and advise your manager on inventory levels. Youll soon find it easy to keep capital investment to a minimum.

Fiction: Renters arent a good source of repeat business.

Fact: While many renters may limit their initial purchases to locks and boxes, they often become good repeat customers if you offer other products and services. For example, because they know their way to your business and parking is no problem, you can become their parcel shipping center. After all, you already carry cartons, packing materials, labels, tape, etc. Arranging for shipping and regular pick-ups with a major parcel carrier isnt difficult. As a shipping center, youll be able to sell decorative packaging products and promote holiday gift shipping as well.

Fiction: Good retail consultants are hard to find and expensive.

Fact: The problem with hired consultants is that once they are paid, they often disappear. On the other hand, retail-goods suppliers work for free and have a vested interest in seeing their customers succeed.

Fiction: To succeed all you have to do is stock the products most people want.

Fact: To succeed you need to sell them what they neednot just what they want. If youre only prepared to meet customer wants (the three most popular locks or box sizes), youre basically in the commodity business. The answer is to borrow a page from the retailers playbook. Your goal is one-stop convenience. Stock all the markers, tape, labels, box cutters, and other odds and ends your customer will need once they see them ...not just the boxes they want.

If you dont know what to stock, call in a company that offers turnkey merchandising programs with displays and plan-o-grams based on sales experience. With displays designed for self service, you can find yourself making more money on what customers suddenly need than what they think they want.

Im sure many more fictions about ancillary products are making the rounds in the self-storage industry, but I hope Ive managed to dismiss a few of the more prevalent and encourage everyone to devote more time and attention to retail sales. 

Bob Strenk, president of Supply Side, has more than 20 years of marketing and sales experience. Supply Side, distributor of shipping, packaging, moving and storage supplies, has developed merchandising programs for the U.S. Postal Service, The UPS Stores, Kinkos, Mail Boxes Etc., Uncle Bobs Self-Storage, Extra Space Storage and many other leading companies. For more information, visit www.suplyside.com. 

Every month, no matter which trade publication you pick up, you will undoubtedly find another article on ancillary income for the self-storage facility. Why is so much written on the topic? The answer is both simple and complex: income.

All of us derive our revenues from only two cash streams: rent and its associated administration and late fees; and ancillary income. Most of us sell boxes, tape, locks and other moving supplies.

To keep pace with rising operating expenses, were always searching for new ways to get cash flowing into the till. Along with records and boat/RV storage, there are car washes, wine storage, cell towers, notary services, private mailbox rentals, private day offices, local moving services, key cutting, e-Bay drop-off stores and propane filling. Lets face it, if it can be sold, its probably being sold at a storage facility somewhere.

However, I believe several items on this list dont qualify as ancillary income because they require significant capital expenses. Examples are car washes, wine storage, mobile storage, moving services and records storage (if file retrieval is involved). For all practical purposes, these businesses are separate operations. In fact, you may want to review statues in your state to see if its legal to combine them with self-storage on your site.

Truckin in Dollars

Lets look at true ancillary income sourcesthose that yield the most profit with the least capital expenditure. The best source Ive found is truck rental. Income potential can range from $20,000 to more than $200,000 per year in commissions, with absolutely zero in capital outlay. Granted, to reach higher revenues, the operator may have additional increases in operating expenses.

Weve operated truck rentals with most of the dealerships out there: Budget (formerly Ryder), U-Haul, Penske, as well as privately owned trucks or leased ones from On The Move. They all offer maintenancethe difference is how much you want. The big three assume general maintenance on the trucks. Your daily duty is fluid checks and fills, but you dont have to worry about inspections and licensing. If you own or lease your own truck, youll obviously have more responsibility.

Another advantage in working with the big three is significant commissions from one-way truck rentals. One-ways are customers who rent a truck from you and drive it across the country to their new home. If you owned the truck, you couldnt provide the serviceunless you wanted to run up frequent-flier miles.

One-ways also help build tenancy. When people move into our communities, they drop off the trucks at our storage facilities, where we can pitch them storage. And when they reserve the truck for a one-way, we have the chance to sell them boxes and moving supplies. Its a double dose of ancillary income!

Manning Trucks

Trucks should not be a significant burden on operations or managers until rentals reach $100,000 to $150,000 per year. At this point, the manager most likely would need additional help. Phone traffic is the most time consuming, depending on your profit goals. Some of the big three want the facility to follow up and close the prospect. Others will do it for you, or ask you to quote the rate and book it right away.

You wont always have a truck for every customer, a negative factor thats hard to accept. Most rental companies have a commission-split program if you have to send the customer to another location to pick up the truck. I recommend you pick up the truck yourself so you can pocket the entire rental.

Another advantage of trucks is that commercial businesses will rent them for local use. These are usually repeat customers. Not only do they rent regularly, but they provide you with an inside track on companies that may need extra storage space.

Tower Power

Cell towers now provide some operators with significant ancillary income. If you have the right property, you ought to explore this kind of lease. No costs are involved and any tower-construction fees are the burden of the cellular carrier. Ideally, this option should be considered during site planning because the carrier may need the tower in a certain area for access.

The beauty of cell towers is companies pay monthly on leases that could be decades long. This is the easiest income source for an operator; invest a few hours in lease negotiation, and enjoy a yearly income as high as $50,000.

Private mailboxes, day offices and conference rooms are more of a value-added benefit for your tenants than a source of revenue. Some facilities benefit from a direct revenue stream, but most do it to one up competitors.

Boxes and moving supplies are a given ancillary sales item in our industry. Every facility, no matter how small, should stock at least a minimal number. The trend is to increase the office space and call it the office/retail area.

Make sure your box inventory is right out there to be seen and touched by all customers. Make them walk around it to get to your rental counteryoull sell more. About 3 percent to 5 percent of your income will stem from selling boxes and moving supplies.

We cant end without invoking McDonalds famed marketing slogan, Would you like fries with that? If you really want to increase sales, remember that line. Your best bet is to ask customers if they need boxes when they inquire about storage. That also goes for truck rentals, propane refills, private mail boxes, and so on. You cant make the sale if you dont ask for it! 

Scott Harris is the president of Dana Management Group and owner of Movin On Storage Centers. The company provides consulting services, from facility startups to third-party operational contract management, as well as feasibility studies and facility audits. For more information, visit www.danamanagement.com; e-mail [email protected].  

All of us want a crystal ball to predict with absolute certainty our most profitable services. We want to know the hottest trends and which ancillary services will be viable in the future. There is no magical solution, but you can make wise choices by looking around your area. Notice traffic patterns, hard-to-find services and customer preferences. Then tailor your facilitys offerings to fit your target audience.

For example, at my company, we know our largest segment is males aged 36-45 years; 74 percent of all tenants live within 5 miles; half are moving, and the other half are long-term customers. About 20 percent of the client base is commercial, preferring facilities with hi-tech devices and automated systems.

In crafting a service program and determining products, you must know your customer. A successful plan also considers the following:

1) Each store is unique. What works at one may not be correct for another.
2) Retail items need great visibility to produce sales.
3) Know the area to stay ahead of the competition and predict which future services will be in demand.
4) Great customer service is always a factor.
5) Allocate appropriate resources of time and money.
6) Track activity to measure effectiveness.
7) Know your customers, and listen to their comments and suggestions; combine this input with local demographics to identify trends and create desirable programs.
8) Set budget targets for income and expenses, then measure the results.
9) Train and retrain staff.

A lot of successful planning is commonsense. If your store has poor drive-by visibility, then its retail sales wont compare to those of a facility next to a McDonalds. However, if you have the only contractor space offering easy entry for trucks and trailers, yours is a unique situation to market to the right prospects.

Get With the Times

Lets say you have a site with great visibility and access, and youre in the planning or remodeling stage. Todays consumers expect a facility that is upscale, high-tech, sturdy and rich with retail options. Consider these top amenities:

Drive-Thru Buildings. This is an immeasurable benefit in areas with extreme temperatures. Customers love to get out of the elements when moving loadsparticularly commercial tenants, who are often onsite. Also, moving companies will refer their clients to your facility because its easier for their staff.

One-way traffic flow is important. Youll need enough width (30 feet) and height (15 feet) to allow access to all users, especially moving vans, as well as 24-hour access and digital cameras.

To increase visibility in your drive-thru buildings, install glass-panel section doors like those used in car-dealership service lanes. They allow drivers to see what is on the other side of the door while they are in the building, and the view enhances peace of mind during after-hours access.

Drive-Thru Window. Make it easy for customers to drop off payments or rent another unit by adding drivethru window service. (Office configuration and street egress may determine feasibility for your facility.) Make sure the window can be seen by passersby to generate demand. If no one else in your market offers the service, advertise it as an exclusive benefit!

Glass Storefront. I cant say enough about the importance of an all-glass storefront to retail sales. Try to minimize mullions and wall partitions on the office side facing the street.

Laptop Work Stations and WiFi. Allow plenty of electrical outlets and multiple Internet connections. Outfit your entire site with wireless Internet access so reps can do online inventory reporting and check e-mail while in their unit.

Business Center and Conference Room. This should be free for customers and marketed to nonprofits and the public as available for a small fee. Offer print, fax, scan, color printing and enlargements, copying, etc., free to premium customers who pay extra for 24-hour access.

Coffee Bar and Neighborhood Board. Add the human touch to your high tech-environment by keeping hot coffee next to a business-card board. This is a great way to direct customers to various vendors, including those with loading services.

Click-to-Talk Button. Visitors to a facility website see a Push to Talk button on the left side; they click it, enter a phone number and almost instantly a manager calls to discuss their needs. I have an Australian client doing this. To see this cool feature, visit the website www.safensound.net.au. 

System Displays and Controls. They are used at the managers desk to control the intercom, music, gate operation, DVR camera views, and allow remote communication with customers needing help in other buildings.

Electronic Locks for Multiple Users. On one of their newest sites, Bill Bohannan and Ray McRae of Arizona-based Storage Solutions have a remote-controlled electronic lock that can be activated from almost anywhere. Commercial users greatly appreciate the ability to easily program keyless entry.

Referral Programs. The best and brightest in our industry build their referral base to keep an unending supply of traffic coming through the door. We aim for a minimum of 30 percent of monthly business to come from repeats, referrals and marketing. Pay a referral fee (hand-deliver the check) to anyone who sends you a new customer.

Box Delivery. If you already offer a free move-in truck, why not deliver retail-box sales of more than $199 free within your service area? This keeps the truck out and about with everyone seeing your name. The order form can be on your website or faxed to you.

Other valuable ideas are self-serve kiosks, truck rentals, wine storage, and adding a digital-time and temperature display to your facility street sign to keep people looking at it. In this day and age, you want to offer web-based transactions enabling tenants to pay online; and you should also conduct e-mail marketing and invoicing. With web-based systems, you can also tie into third-party vendors for leasing and rentals.

Continuous Improvement

Even new stores need to be focused on continuous improvement. Evaluate your customers regularly and ask yourself what you can do to make them happier (and where theyd be willing to pay more).

In many affluent areas, service and convenience are worth far more than the rental charge for a storage room. Consider offering an Express Check-In and other privileges for premium-level renters. Gold-star customers deserve your best and will spread the word about your high-level customer care and benefits. Always look for something new to bolster profit. To reach into the future, pay attention to what others are doing, talk to your peers, tour other operators websites, and get out there and see for yourself what works. 

M. Anne Ballard is President of Atlanta-based Universal Management Co. (UMC), which provides global consulting for evaluations, feasibility studies, training and development services. The company also offers full-service fee management in the United States, where it manages more than 35 locations. For more information, visit www.universalmanagementcompany.com.

Creating a competitive edge in todays self-storage environment is extremely important. Set yourself apart with a mix of retail products and services to meet your markets special demands.

Begin by conducting thorough due diligence. The process isnt unlike the one used in determining a self-storage location. Heres what youll need to ask:

• How competitive is the market in terms of offering retail products and services?
• How will this affect your retail sales?
• Do you want to offer retail products and services as a tenant convenience and to help rent units, or do you want a viable profit center?
• What are the demographics in terms of population, average household income, housing growth, disposable income, etc.?

All of the above have an impact on how profitable retail sales will be in your market.

The One-Stop Advantage

If your primary goal is to provide an added convenience for tenants, find out what the competition offers. Is there anything else you can provide? If you fill an overlooked niche for consumers, you will certainly attract attention.

Many facilities offer retail products and services but never market them to customers. Is this true of your competition? If so, make the most of this by advertising and letting people know exactly how theyll benefit from your offerings.

The first advantage for customers is convenience: Youll take care of all their moving needs in one locationrenting a storage unit and moving truck, purchasing boxes, locks and moving supplies. Play up the fact they dont have to run all over town for satisfaction.

Our society favors one-stop-shopping convenience and many will pay a little more for the privilege. The No. 1 reason someone chooses a specific self-storage location is convenience. The second most important reason is perceived trust. Put convenience and trust together, and you offer a tremendous value to customers.

The Marketing Message

Once you decide what products and services to offer, youll need to market them. In every sales presentation, make sure you mention the benefits of your retail offerings and how youre different from the competition. If people are pleased with what they hear, it may sway their decision to rent from you.

In fact, prospects will drive farther to rent storage if they like the person giving the sales pitch. A good retail mix matched with excellent customer service conveys the message that your site is truly a full-service operation.

Dont forget to list your moving products and services in your advertising: Yellow Pages, brochures, direct mailings, press releases and any other forms of promotional materials. This reinforces the message and keeps it in front of customers.

Your blurb about moving boxes may bring in customers whoonce inside your one-stop shoprealize they also need packing tape, labels and a storage unit. Even if they dont rent now, theyll remember the great service received and think of you for future rental needs. Plus, if customers have a great experience theyll tell friends and family how wonderful you are.

To combat the competition you must find creative ways to differentiate your operation. A terrific solution is a thoughtfully marketed retail mix and excellent customer service. 

Brad North is founder of Advantage Business Consulting, which specializes in on-site sales, marketing, feasibility and operational training for the self-storage industry. He has produced two live videos and a workbook titled Maximizing Your Sales and Marketing Program, designed to help managers improve their sales and marketing efforts. He most recently launched A TelePro, a mystery shopping service for educating, evaluating and improving the phone-sales performance of self-storage professionals. For more information, call 513.229.0400; visit www.advantagebusinessconsulting.com. 

To increase your self-storages net operating income, you have two choices: increase revenues or decrease expenses. Lets assume youve done a good job of rental rate management. That leaves us with collections of fees, charges and ancillary sales.

While most self-storage operators dont distinguish between asset and property management, consider an asset manager as someone who focuses on value creation, not just revenue growth. This person must be cautious not to create such huge ancillary income streams that theyre discounted in the valuation process.

This is factually a problem that appraisers are going to have to address. Income is one of three approaches to valuation; appraisers begin to get conservative and will even cap ancillary income because its not produced by the real estate asset but by business activity.

Some of us see the day when a self-storage appraisal will have two elements of value: real estate and viable business entity. The capitalization rate would be based on real estate and a value based on X times gross, as many retail businesses are valued.

And what about financing a project? Ronald Pope of Wells Fargo had this to say about our example of other income exceeding 20 percent of revenues:

Our group would look at ancillary income at those higher levels if there was a good track record from past history or strong contracts accompanied with a strong feasibility study supporting the market need. We typically will use 3 percent to 7 percent gross sales from ancillary sources. As always, we would listen to the story and build the case from there.

So, if there is a potential penalty for increasing revenues, why concentrate on such activities? One reason is you believe that someday self-storage valuation will be changed to account for strong ancillary. The second, and perhaps best reason, is to enjoy increased cash flow, even if the value does not increase commensurately. Third, youll be fully engaging your assets.

If your location meets most modern standards, you may have a property where the highest and best use of the property may not be self-storage but retail. Many self-storage sites today rival Wal-Mart, Home Depot or car dealership locations.

Enough Why ... Heres How

Rather than overwhelm you with 20 or 30 revenue generators, lets deal with just one: packing and shipping. Most operators see a decrease in business activity during the Thanksgiving to New Years period. What if you could generate an additional $10,000 during that short period?

The pack and ship business is really no more complex than self-storage, according to Brandon Gale of the AMPC. Staff will need to be trained to:

• Recognize sales opportunities
• Manage inventory levels
• Become more people focused

No ancillary-income growth should come at the sacrifice of the self-storage property. Given the levels of investment, the front counter staff must recognize self-storage is the primary and core activity, and pack and ship is a side business.

To be successful at pack and ship, you must have buy-in from the staff. If your staff resists you, they better have a darn good reason. As operator, you must provide:

• Physical space
• Some specialized equipment
• Training
• Inventory
• Skilled personnel
• POS policies and procedures
• Start-up energy
• Initial capital investment

Promotion

The operator also will be required to set up relationships with shippers, suppliers and, in some cases, government entities. There may be zoning issues. Some of us have done such a good job convincing P&Z officials that were low-traffic generators we create a counter-productive scenario by increasing retail sales.

You may want to promote your ancillary business through banners or signage. If you decide to add pack and ship, formulate your business plan early. You want to be ready to go full throttle by the time holiday season rolls around. Start your plan after July, and youre not dedicating the proper resources to be optimally successful. A half-hearted effort will yield lackluster results.

For many operators, the best solution will be to spend a few extra dollars and have a turnkey pack-and-ship operator set up the business for you. While a bit more expensive, its a great alternative for operators who have plenty of ideas but actually implement only a few. 

RK Kliebenstein is president of Coast-To- Coast Storage, providing feasibility studies and market analyses for self-storage projects, in addition to financing and consulting with self-storage owners. This article is an edited excerpt from his book How To Make Money In Self-Storage, scheduled for 2007 publication. Mr. Kliebenstein is also the author of How to Invest in Self-Storage, available at Amazon.com. For more information, call 561.367.9241; e-mail [email protected]; visit www.askrk.com. 

Some owners are passionate about providing ancillary services as profit centers and marketing tools. In the opposite corner are those who believe ancillaries are nothing but a drain on the main attraction of renting units. Obviously, the scope of ancillary services has evolved beyond selling boxes, tape or locks. Many facilities now offer free moving trucks, package delivery, mailboxes, Internet access, business centers and wine storage. Are their efforts worthwhile? We asked operators in the ISS 2006 Top Operator list to give us the skinny on what works for them.

Rank No. 4
U-Haul International Inc., Phoenix

All U-Haul International storage centers stock a full complement of moving supplies, trucks, trailers and towing equipment but many have expanded their inventories to include ski and bike racks, cargo carriers, furniture pads and more. Some larger facilities offer propane, lifting aids, carpet cleaner and dozens of other retail items. These are all revenue generators, says Joanne Fried, director media and public relations.

Of the companys 1,047 facilities nationwide, only a few provide record or wine storage. These services usually are in place when the site is acquired by U-Haul, Fried says. Its dependent on the store, where its located and when it was built, For instance, a U-Haul site in Chicago offers wine storage, but its not in the companys game plan. The demand drives services and products, Fried explains.

U-haul offers eMove, a free online relocation service that connects consumers with businesses in the do-it-yourself moving industry throughout the United States and Canada. With more than 1,700 companies listed, a customer can locate a U-Haul center or independent storage company, reserve and pay for a truck, moving equipment or unit. Shoppers can purchase supplies and have them delivered. The site links to other affiliated vendors offering packing, loading, unloading, driving, maid service and more.

EMove is a one-stop shop that is great for seniors, single mothers, baby boomers or parents with children moving across the country to attend college, Fried says. The site contains unedited customer reviews to help other consumers select the mover that best fits their needs. This is not only a convenience for our clients, it protects them from moving scams.

Rank No. 17
StorageMart Partners, Columbia, Mo.

Everything a site offers should reinforce the theme of making moving and storage experience easier, says Chris Burnam, president for StorageMart Partners. If its not connected, then chances are it doesnt belong in the store.

Each of the companys locations devotes about 1,000 square feet to products that can include almost 200 different moving and storage-related items. The bulk of sales is in boxes, tape and packing materials, but stores also stock items such as closet organizers and furniture covers.

Although an extensive line of retail products reinforces the company image, the items also add significantly to the bottom line. Wed be pleased if we broke even with product sales, but we actually make a lot of money, Burnam says.

Image is also behind StorageMarts approach to truck rental. The service drives traffic to the store and some truck customers become tenants. Truck rentals are not for everybody, Burnam says. Whether you own your trucks or are an agent or franchisee for another company, you have to be prepared for challenges such as vehicle maintenance, forms and insurance.

Private mailboxes are an inexpensive service that keeps customers coming into a facility daily, Burnam says. They are cheap to install, take little room and are easy to rent.

StorageMart sites dedicate a space equivalent to a 5-by-5 unit that can accommodate 30 to 60 mailboxes in a prominent location such as the lobby. Even at only 35 percent occupancy, its considered profitable. The rule of thumb is to plan three times more mailboxes than the site thinks it can rent, he says. Lots of mailboxes give the image you do a big trade in private post boxesthat you can be trusted with the consumers mail.

Although wine storage can be profitable, StorageMart offers it at only a handful of stores. Wine lockers are situated next to the office, in view of all storage customers. It gives style and a positive statement about our security, Burnam says.

Marketing wine storage has its challenges. It takes considerable time to lease up, but once full, it stays that way, he says. StorageMart used word-of-mouth and held on-site wine tastings with local merchants to cross-market the service to collectors and dealers.

Its all about renting units, Burnam says. You must communicate the quality of your service and products from the first moment the customer contacts you all the way through the rental period.

Rank No. 23
Pogoda Management Co., Farmington Hills, Mich.

Maurice Pogoda, owner of Pogoda Management Co., says his storage facilities limit ancillary services to truck rental, boxes and related packing items as ancillary services. The reason? Our mission is to provide storage, and we need to keep focused on the main business. The company offers its own branded trucks for new customer move-in. Van use is free for a certain time period or customers can rent one when they move out.

Pogodas stores are local dealers for U-haul and Budget trucks. Each facility keeps vans on site and handles the reservations. Truck rentals are advertised in the Yellow Pages, on the Pogoda website and are marketed by the call center. The service has a tendency to market itself, since people looking for rental trucks look at a number of different sources, he says. Pogoda doesnt consider it a moneymaker, although some storage companies do. You can make a fair amount from it, he says. But its a supplement to our main business of storage. At our strongest facility, we earn about $1,500 from trucks, but typically a site may see $200 to $300.

Pogoda questions what a shipping outlet or business center has to do with storage. I know people argue that it brings in more peopleand that is positivebut it takes the managers focus away from renting units.

Rank No. 25
Urban Self Storage Inc., Seattle

Ancillary sales and services allow a store to build depth into its customer base, since breadth is limited by the number of storage units it has, says Patrick Reilly, vice president for Urban Self Storage Inc. Wherever an Urban site offers truck rental, the company found it earned more in merchandise sales and unit rental. Customers renting a truck realize they also need moving and packing supplies. Typically they come in for a van before deciding they need storage, Reilly says. Those who rent a unit get credit for truck use.

Merchandise is a revenue generator for Urban. Weve revamped the way we market moving supplies and have added many impulse items to the inventory, Reilly says. The company retrofitted several stores and stocks them with a variety of items.

It does no good to keep products in the back room, he says. There is a psychological factor: If people see a near-empty display, they dont buy. Product sales vary by region but are usually tied to the amount of discretionary income in each market. Some stores report taking in as much as $3,000 per month, occasionally exceeding $5,000. And if the customer is unable to load the merchandise in his small vehicle, Urban will deliver it free.

Urban also offers mailboxes, not only for recurring income, but to maintain a business relationship with customers. A client keeps his mailbox even after he no longer needs storage. Later, he will rent again from the facility without shopping around. Part-time help is used to ensure mail is distributed on time. Mailboxes arent considered major profit centers, but some locations generate $2,000 a month.

Although wine storage is offered at a few facilities, results have been mixed, Reilly says. This service is demographically driven, but weve found if youre keeping wine, there is an expectation of a higher quality of storage and additional security. He adds that wine storage comes with liability issues when climate-control systems fail.

Operators have to be willing to test new ideas, even if they might not generate the income expected. Urban tried a program of leasing Rubbermaid totes, but the poor response didnt justify continuing it. The company also tried installing shelving in some markets. Unfortunately, the supplier we partnered with underperformed, Reilly says. This reflected badly on Urban. If you decide to partner with a company for any services, be sure they deliver.

Wireless Internet is an easy service to offer and is popular with business renters such as pharmaceutical reps. Urban set up a simple counter where customers could place their laptops and log on for free.

Rather than generate income, the Internet service is an excellent customer perk. However, if an operator is considering establishing a business center, he must be willing to staff it appropriately. Not doing so is a disservice to employees and the customer, Reilly says.

Reilly has seen storage facilities retailing impulse items that range from automobile parts to novelty toys. He believes the practice dilutes from the main focus of storage. Our managers wear a lot of hats, so if we were selling bumper stickers for 50 cents apiece, that takes their focus from renting units, he says. If we decide a service is good for the business, we staff it appropriately; we give it space and we give it time.

Rank No. 29
Investment Real Estate Management LLC, York, Pa.

All Investment Real Estate Management storage properties offer moving trucks and a full-line of Supply Side products, says Dennis Nelson, vice president operations. The companys larger facilities also sell additional moving supplies, such as packing blankets and metal bars designed to hold a truckload in place.

Van rental is an enhancement to renting units, Nelson says. The stores offer the truck free with a move-in, or the customer can rent it at reduced rates. Some locations are affiliated with U-Haul, but mainly the company has its own vans for the branding opportunities. Store managers are encouraged to use a truck for short errands during the day so people see the advertising on the side, he says. A new facility may not yet have a Yellow Pages listing, so the truck acts as a rolling billboard.

Wine storage is available at only one climate-controlled site in an upscale neighborhood. The store dedicated a 10-by-20 unit near the office and installed small lockers. We worked with several larger wine stores, went to wine tastings and spent considerable time promoting the service, Nelson says. Now revenue is excellent, although it took about two years to fill.

Every facility should offer some supplies, Nelson says. If youre on a busy thoroughfare, the reader board is an effective method to advertise moving and packing products. Its best to target the customer who is planning a move, usually when he comes in to rent a truck. By the time he rents a unit, he has already started the packing process and doesnt need supplies. With proper marketing, retail sales can be considerable$2,000 to $3,000 per month, he says.

Rank No. 35
Storage Deluxe, White Plains, N.Y.

Storage Deluxe offers a full range of packing and storage supplies and two truck-rental options at all of its stores. In its online reservation program, customers can order products from the companys website and have them delivered.

Storage Deluxe provides two means for clientele to transport their goods to the facility. Through an affiliation with U-Haul, two to four co-branded trucks are maintained at every store for rent at U-Haul rates. In addition, Storage Deluxe has partnerships with local movers to provide a truck and a driver free for the first two hours on the day the client moves into his unit. Although labor is not included in this service, our customers love its convenience and use it a lot, says Nick Coslov, president.

One of Storage Deluxes sites offers a business center with an ATM, UPS package service, a computer with Internet access, and fax and copy equipment. We are considering expanding the business centers to all of our locations within the next 12 months, Coslov says.

Ancillary services should be included with a companys marketing strategy. Storage Deluxe promotes its supplies, trucks and moving plans in the Yellow Pages, on its website and in every telephone sales presentation.

Although providing ancillary services is for the customers convenience, some of our locations earn a modest income from it, Coslov says. We use these services more to differentiate us from competitors than as an additional revenue generator.

Owners considering ancillary services should be prepared for some loss leader, according to Coslov. It costs Storage Deluxe to pay for the first two hours with a mover. But if you can negotiate good terms with a local mover, it can actually cost you less than offering the first-month free on a unit.

Conclusion

Whether ancillary products and services are considered a loss leader to attract customers or an integral part of a companys bottom line, storage consumers are looking for easier solutions to moving and storage. Will your company be on the progressive edge to meet those needs? 

Editors Note: The Inside Self-Storage top-operator ranking is based on rentable square footage.

He that would have fruit must climb the tree. Thomas Fuller

If it aint broke, dont fix it. Many facility owners subscribe to that philosophy when it comes to self-storage ancillaries. Self-storage rentals are chugging along, customer-service quality is high, staff is busy, and customers seem happy enough. Why toss in another fish to fry?

Some would say its the money, honey. To which operators already wielding a heaping skillet of sizzling haddock would reply, Im making plenty.

But there is no such thing as extra moneyeven if you have to climb high up the tree to get it. Remember the excitement of the early days of self-storage, when it was a shiny industry brimming with potential? Maybe youve only heard the stories because you came late to the game. In some circles, mobile storage and boat/RV storage are considered close relations to that rarest of creatures: the ground-floor opportunity.

RV is the next wave in self-storage, R. Christian Sonne of Self Storage Economics told us at the ISS Expo in Reno this summer. How many would like to go back and buy some self-storage land or facilities or build more? I think all of us would. But maybe there are some opportunities here in RV/boat storage that would really help all of us.

According to Mr. Sonne, one of the industrys leading appraisers and researchers, a study of 3,000 recreational-vehicle storage spaces revealed occupancy steady at 95 percent. Supply-side analysis also showed rapid absorptionone facility filled 275 stalls in eight months.

Of course, storage operators need to do their own market research and number crunching. The point is that ripe opportunities abound. Just a couple years ago, mobile storage was considered a fadthen PODS grew to a $200 million-a-year business. Recent articles on the company trumpet: PODS takes big chunk out of moving, storage market.

Should you be getting your chunk back? Mobile-storage suppliers say portable containers are the next logical evolution of self-storage. Scores of conventional facilities already have moved in on the action.

In this issue, our writers give you a realistic picture of the ancillary branchesrecords, car wash, etc. Please take a look. Maybe youve overlooked some low-hanging fruit worthy of your attention.

How sweet it is,                      

Kimberly Hundley 
Editor 
[email protected] 

Recreational vehicle owners across the nation are up in arms as city ordinances restrict where large toys may be parked.

RV lovers in residential areas are pushing for freedom and convenience while their neighbors argue the large vehicles are a blight and nuisance. Cities increasingly say bulky vehicles cant be parked in the front or side yard of homes. To meet ordinances, boats and RVs typically must be hidden behind a 7-foot fence.

As the debate wears on, tremendous opportunities arise for storage developers to work with cities in promoting a win-win solution. Developers can attend city council meetings and discuss how a storage project will help beautify neighborhoods and improve homeowner relations. Some storage owners may even be successful in negotiating a transition period in which the city agrees to cover some storage costs for the first few months an ordinance is enforced.

A review of numerous letters written by disgruntled RV owners to media and city councils reveals a harsh truth: Its not uncommon for communities to experience an extreme shortage of vehicle storage space after such ordinances pass. One Northern California city took a particularly strict stance on residential RV parking only to learn no professional facilities were within city limits; RV owners were forced to store vehicles 30 miles away.

Make Lemonade

The saying goes, When life gives you lemons, make lemonade. As the owner of an RV and boat storage facility you have the opportunity to flip a potentially volatile situation to your favor. The trick is to appease an already displeased group of people. With a creative marketing and well-timed promotions you can have the opportunity of a lifetime. But dont delay. Work with city officials and residents as early as possible, even before your facility is up and running.

Your marketing plan should emphasize several points:

1. Protection. A professional RV and boat storage facility provides far more benefits than parking at home. The best example is protection from the elements. Most exterior damage to RVs and boats is caused by sun, wind and rain. Its unlikely a customer can give their vehicles equally impressive protection at home. Home-based measures usually consist of a canvas or plastic tarp hardly the way to protect an investment costing an average of $50,000, a point you should underscore.

A professional facility also protects from vandals. Highlight your sites security measuresvideo cameras, keyed entry, on-site manager, security guard, door alarms. A little education of tenants can go a long way in signed contracts.

2. Convenience. Folks causing the greatest uproar in the residential RV parking question dont want to lose the freedom to access their vehicles whenever they want. You can debunk this myth by touting 24-hour access to your site. The message should be clear: Little freedom is lost by using a vehicle-storage facility.

3. Neighborhood Improvement. Inform would-be renters that quality of life can actually improve once their vehicles are parked elsewhere. Theyll be free to reclaim yard space for landscaping or home additions. And, by removing behemoth vehicles from their property, neighbor relations will likely improve and tensions disappear.

Into the Future

Among U.S. households that have never owned an RV, more than one in six expressed interest in a future purchase. With as many as 30 million RV enthusiasts and renters already on the road, the vehicle-storage problem is expected to only get worse.

Industry experts have witnessed a change in how RV and boat-storage facilities fit into communities. Traditionally, lots were located off the beaten path in industrial areas. Today, many cities are requiring residential developers to include vehicle storage into community designs during the planning phases. Therefore, just as weve seen a trend of developments building schools and shopping centers within communities, the future will have them building RV and boat storage into the designs.

Industry experts have also noticed that, because of the lack of adequate facilities, many cities are going into the vehicle-storage business themselves and looking into what public lands may be available for the purpose.

While its likely most municipalities will continue prohibiting boat and RV parking on city streets or on private property visible from city streets, many California cities have revamped parking ordinances in the last few years. One area in Southern California recently began requiring RV and boat storage of 10 percent to 20 percent density as a condition of approval. This applies to all new construction in the area. If history repeats itself, the California trend will likely spread across the nation, boding well for storage developers coast to coast.

As the RV and boat craze rages on, new entrepreneurial opportunities for huge profits will continue to soar. Hop on board and enjoy the cruise.

Bob Hayworth is CEO of Baja Construction Inc., at the forefront of the turnkey metal-structure industry for more than 30 years. The companys offerings include self-storage, carports, and RV and boat storage. Baja maintains the highest standards while keeping costs low and construction time to a minimum. For more information about starting a project in your area, call 800.366.9600; visit www.bajacarports.com.

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RV Acquisition in High Gear

RV purchases throughout the United States have once again reached record levels, reveals a 2005 University of Michigan study commissioned by the Recreation Vehicle Industry Association. Nearly one-in-12 households owning a vehicle also boasts an RV. Thats nearly 8 million homes.

Ownership rose by 15 percent between 2001 and 2005. A leading force behind the upswing is the enormous baby boomer generation, supported by strong gains among younger and older buyers.

Generation X represents the newest gang of RV enthusiasts. These high-energy travelers opt to vacation on the road with their cargo hauler RVs, which can easily accommodate mountain bikes, kayaks, all terrain vehicles and other sporting equipment.

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Quick Questions

Q: Is it possible to add RV and boat storage to an already existing facility?

A: Although difficult, its not impossible if adequate space is available. The first step is to send your design builder a site plan showing existing structures. The company can suggest the best layout design at the most affordable price.

Q: What are the different types of RV and boat-storage design, and which is more popular?

A: There are basically three types: covered; covered with three walls; and fully enclosed. Customers gravitate to different levels of protection so its best to offer a selection of all three. Covered is the most popular and easiest to market.

Q: Is RV and boat storage as strong a business as self-storage?

A: Some investors are discovering its even easier to run. Youre dealing with people who own expensive things and are willing to pay for their care. As a result, theyre not likely to be late on monthly rental fees. In fact, the delinquency factor is less then 2 percent! Considering the growing number of RV owners and the stricter ordinances regarding storage, you have a positive and profitable business outlook.

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WANT TO LEARN more about offering vehicle storage as an ancillary service to self-storage? Check out Design and Construction for Boat and RV Storage, an audio-cast available exclusively through the Self-Storage Training Institute. Visit www.selfstorageeducation.com for details.

The young Turkish immigrant showed up alone in Quebec in 1984 with $150. Today, he owns 11 self-storage properties throughout the province with several more glinting in his crystal ball. Turan Kalfa says his destiny is being is the right place at the right time. Maybe that helps explain how a student with a van came to own a moving business and fleet of trucks in a scandalously short period. Deregulation shrank the license fee to $250 at just the opportune moment for Kalfa.

Fate may have stepped in to juxtapose his moving success with the debut of self-storage in Montreal. The industries were compatible, and Kalfa already stored property in warehouses for his moving customers. Self-storage caught his notice and in 1996, he seized an opportunity with partners to rent a 25,000 square-foot space in downtown Montreal.

Depotium, as the company was named, would compete against about a dozen established facilities, changing Quebec’s self-storage landscape in the process. The company has grown into a provincial mini-empire with annual revenues of $4.5 million. “Real estate was going down the tube in Montreal. I was there to buy the buildings at low prices,” Kalfa says, shrugging off that part of his fortune to chance.

The Luck Stops Here

Syncronicity did its bit, but Kalfa can’t discount the force of his own convictions. A true maverick, he’s resisted following the self-storage path blazed before him. He doesn’t even use accepted industry lingo. Units are “lockers.” Facilities are “warehouses.” To introduce the self-storage concept to French-speaking Quebecois, he borrowed the term “self-stockage” from operators in France. Lockers vary wildly in size, from 9 to 500 square feet. And his pricing philosophy makes competitors grind their teeth.

“Like the moving business, I set rules in whatever industry I go into,” Kalfa, 45, says. “I am good at building at lower cost—I know the market very well. Because of conversions, we have to actually use the area as best we can. Sometimes we have no choice but to put in smaller sizes because we don’t want to lose a lot of space to corridors.” Whatever the reason, customers adore the sizing options.

In construction, Kalfa again trots his own way, shunning most self-storage vendors. He says his buildings are “almost multipurpose,” designed to assume new identities for future buyers. He pays $800 apiece for custom-built wooden doors because snowstorms “were going right through the roll-up American doors when I tried them 10 years ago.” (A U.S. vendor Kalfa met at ISS Las Vegas Expo ‘06 is now talking to him about newer metal options).

As a former mover, he also designs his facilities to accommodate the reality of moving. Rather than outfit two-story Depotiums with elevators, he strives to provide a ramp so tenants can drive up their loads. Bigger lockers sit on lower levels, close to wide doors; smaller ones on higher ground.

His background contributes more than design savvy. In Quebec, about 60 percent of those needing storage still will call moving companies, not mini-storages, for guidance. His old compatriots promptly refer clients to Depotium, a fortunate circumstance that jump-started Kalfa’s client base.

Nice Price Vs. Vice

Depotium’s pricing plan can only be called Kalfaesque. He was the first to publish rates in his Yellow Pages ad, prompting pleas from others in the industry to stop because customers were calling to complain. “I said, ‘I’m sorry if you are uncomfortable. Maybe you should also bring it down to $110.’”

Kalfa proudly claims he’s single-handedly lowered rental rates in the province. “If you look at prices before and after Turan Kalfa, you will see prices have come down overall,” he says unabashedly. In the meantime, many would-be developers grumble Montreal’s high real estate values make it economically foolish to compete.

Turan well knows that industry consultants in the States advise lower occupancies and higher rents for maximum profit. “Maybe I am not as capitalist as America,” he says. “I believe in having full lockers at lower prices rather than empty ones at high prices.” Seventy percent of those relocating in Quebec move between April and June. Most facilities join truck renters and movers in kicking prices to the moon during moving season. Not Kalfa.

“My prices are the same 365 days a year. I don’t believe in getting the better of the client when they need you,” he says, and not without reason. “This is Depotium’s 11th year in the self-storage business, and the 11th year it’s been a Consumer’s Choice winner in Quebec. Our repeat customer-referral rates are very high compared to other companies.”

American Ingenuity?

A couple years ago, Kalfa reviewed stats at his flagship metro Montreal store. The facility was nearer downtown that any competitor and had been full since opening. “I thought I should learn something from America and decided to increase prices at that one location,” Kalfa recalls. “I went from 98 percent occupancy to 75 percent.” To his shock, prospects announced they’d rather drive 20 kilometers to save $20 a month than pay for a climate-controlled location down the street. “I changed managers and put my top people there, and couldn’t bring the occupancy back up, not even to this day,” Kalfa says. “I don’t care what people say. The reality in Montreal is price brings in clients.”

Stateside facility owners often dazzle prospects with state-of-the-art security features. But in Montreal, that selling-point is colder than sorbet in January, according to Kalfa. “In 10 years, I have not had a single break-in—I should knock wood. The No. 1 thing in Quebec, unfortunately for American competition, is price.”

Vendors also will have a hard time impressing Kalfa with the new advances in self-storage kiosks, a development the U.S. industry fast embraced. “I’m not interested,” he says. “Every client who is renting from us must come into the office to sign a register. We tried punching in codes at the gate and all that, but I realized how important it was for us to see clients and tell them good morning, and offer coffee and water. The relationship between manager and client generates a lot more friendship and trust.”

Many facility owners recognize the value of multilingual call centers, especially in Canada’s intensely diverse cities. In the classic model, would-be tenants phone to inquire about a unit and are directed to a trained operator who speaks their language. Kalfa’s created his own version of the service. Callers with special language needs are transferred within Depotium’s own string of facilities to talk to the right employee; onsite staff members speak Spanish, Turkish, Italian, German, Danish, Tagalog, Flemish, Russian, Romanian, English and French.

Local storage entrepreneurs have been slow to band together to form an association to further common goals and win government consideration. They are content with their investments, and most have no plans to expand. As time winds on, Kalfa figures Americans will probably take over the Quebec market, of which he estimates they already own 50 percent. Not that it makes him happy.

Kalfa admits he never wanted to be a businessman. He’s been swept along by his success, and destiny. “The small things in life—a hug from my kids, dinner with my beautiful wife, a glass of wine with a friend—all are much better than a major meeting with total strangers in a glass office tower.

“So what do you think?” he laughs. “Are those big American companies facing a major competition, or what?” For more information, visit www.depotium.com.