Between the religious holidays and annual turn of the wheel, December is often a time for reflection. The season encourages people to take stock of their lives and, hopefully, count their blessings. So this seems an appropriate issue in which to discuss appreciation and recognition of those who are important to us, not the least of whom are our co-workers.

This is critical, because the dynamic works in all directionsrespect and admiration are as essential moving down the organizational chart as up, or laterally to those of equal rank. Bosses and supervisors generally expect to be treated with deference simply because of their position within a company. What many dont consider, however, is that regard must be earned. And it is most often and best won by first imparting it to others. An employer who shows respect, compassion and fairness to staff will have it in return. And thisnot moneyis what makes the business world go round. Cash can only carry you so far.

What constitutes courteous, just treatment in the workplace? The answer might depend on the type of business, geography and individual values, but here are a few items of import:

• Open and honest communication, including positive feedback and criticism, when necessary. Failure to communicate and dont ask, dont tell policies only create resentment and poor attitudes. Employees like to trust and feel trusted.
• Sociability and kindness. It is neither wise nor prudent to overly mix ones business and personal life, but no one wants to work with a machine, either. Be friendly with co-workers. Avoid gossip, but dont be afraid to ask questions. You cant be compassionate if you dont understand the place from which people work, mentally and emotionally.
• Fairness and predictability. Be the kind of employer/employee others trust to be consistent, rational and just. Always listen to both sides of any story and think before acting.
• Awareness. Know staff members job responsibilities and something about their workloads. It is impolite and irresponsible to add to someones burden through sheer ignorance, so know who does what and when enough is enough. Those with whom you work should view you as an ally, not an enemy.
• Verbal and material generosity. People love their paychecks, but money is far from the only way to let co-workers know you value them. Words of praise go a long way toward increasing confidence and good feeling. Reward others with compliments and, when appropriate, tokens of appreciation such as movie tickets, lunch or time off.

This issue addresses the vital processes of employee hiring, training, evaluation and retention. It contains the information you need to develop or be part of a successful sales and management team. Self-storage, like any other business, depends on the quality of its people to thrive. The product can be luxurious or basic; in either case, it can be lucrative when bolstered with the strongest foundation of all: talented employees.

Treat your supervisors, fellow workers and employees with care and courtesy and, like any good investment, they will give up great returns. In this season and all others, give the best. Give of yourself.

Happy holidays,

Teri L. Lanza
Editorial Director
[email protected]

Wouldnt buying a car wash be so much simpler if the industry were standardized with a code of ethics for all manufacturers and suppliers? The accounting, legal and architectural trades have standards; why shouldnt the car-wash industry? Is it too much to ask, when you begin to investigate and interview prospective vendors, to know they adhere to a set of principles? A fair and equitable way to judge businesses is required to level the playing field.

I broach this topic for many reasons, not the least of which being that I have been in the shoes of buyer and seller. I have listened to and witnessed things in our industry that I find despicable and irresponsible. The carwash industry should hold its members accountable, without relying on the old fallback of buyer beware. Toward this effort, this article offers some tools and thoughts for would-be car-wash buyers.

The Address Period

In any business endeavor, you need a starting point, a way to interview and evaluate potential providers. In the sales arena, we call this the address period, a time to get to know the business partner, explain your needs, and understand what each of you brings to the table. Why is this necessary? You need logical and complete answers to your inquiries. You want to make decisions based on fact! Remember, the car wash itself is just the vehicle. In the end, the business is about being profitable.

Enter your address period prepared, with an interview plan and an assessment of the project, including your goals, financial commitment, a description of the facility you envision, and the level of involvement you expect from your vendor. Pre-planning is critical to a successful meeting. Use the SWOT (strengths, weaknesses, opportunities and threats) approach to evaluate your competitors as well as yourself. To assist you in the process, following are 25 sets of questions to ask your car-wash supplier.

Initial Interview

1. Tell me about your business. How many years have you been in the industry? Who are your companys principals? What is their experience in carwashing? Do they own and operate washes? If so, how many and what kind? Why did they make the decision to be (or not be) in the business? How do I benefit from their decision?

2. What other suppliers do you represent and why? How can they offer me a competitive advantage? Who are their key accounts? How long have they been in business? What support do you receive from them that will benefit my business?

3. If I choose you as my provider, what tools or assistance will I receive in terms of design, consultation with engineers/ architects, representation to government boards, and meeting with lawyers and other team members? What success have you had in these areas? Would you demonstrate and validate your statements? Is there a cost involved with this service? If so, what is it?

4. How do I do business with you? What are the terms and conditions of sale? Are there deposits, refunds, payments or guarantees? Will you provide financial references? Will you provide vendor and/or primary bank relationships?

5. Who are your customers? How do you serve them? What references can you provide?

6. What is the normal timeline for equipment manufacture? What about delivery and installation?

7. What are my responsibilities in terms of equipment and installation? What are yours? Do you have a list that clearly delineates both? Will you acknowledge and include this as part of our agreement?

8. What will you do in terms of site review, financial projections and recommendations for which type and method of wash to build? Do you offer various systems? What are the advantages and disadvantages of each, mechanically and financially?

9. What do you feel is the best approach to my market and why? Are there sites similar to mine and, if so, have they met stated projections? Do their owners feel they have met expectations? Why or why not?

Create Your Wash

Assuming you get through the address and interview stage and are comfortable with the answers you receive, the next step is to begin creating your car wash: what type, where it will be located, how big, how costly, what kind of return you desire and a timeline.

10. How would you lay out my property and why? What would you project the total cost to be?

11. I have been told that highest and best use is the mantra for all real estate investments. Does the facility I am proposing meet that requirement? Will the projected income support the investment?

12. You have suggested a certain approach to my market. How competitive will I be? What threats could affect my business? What opportunities might there be?

13. What is the life expectancy of the proposed equipment? What programs do you have to minimize downtime? Do you provide cost-per-car programs for maintenance and chemicals? What is my commitment? What is yours?

14. Car-washing is a cash business. What systems will enable me to manage and track the variable expenses? What are the costs? What are the benefits?

15. How far from my operation is your service facility? Will you guarantee a set response time? Will you consider a program guaranteeing a specific uptime? If so, tell me how it works.

16. What assistance will you provide in creating my business plan? Is there a cost? Will you meet with my bankers if necessary?

17. What can I expect from you in terms of keeping me informed and competitive in my market?

18. What assistance will you provide in marketing? Is there a cost? Are there any co-op advertising dollars available? How does that work? What advertising and public-relations mediums should I use?

19. What assistance will you provide in terms of training? Is there a cost?

20. Do you have complete service manuals and installation drawings? When can I review them?

21. Do you recommend certain contractors? Will you assist me in making contact?

22. Will you walk through the mechanical requirements of your system with my team?

23. I understand some of the equipment you provide comes from different suppliers. Will it all be guaranteed the same?

24. What ongoing assistance can I expect from you moving forward?

25. Why should I buy from you?

Im sure there are other questions you could add to this list. The key to the whole process is to receive honest information, and choose a vendor that has both your best interests at heart. Your numbers should be realistic, and you should be comfortable that your financial projections will support the investment you make. Finally, create a program that will create wealth. Car-washing is a relationship business. It is important the chemistry between you and your vendor works.

Fred Grauer is the vice president, distributor network, for MarkVII Equipment LLC, a car-wash equipment manufacturer in Arvada, Colo. He has made a life-long career of designing, selling, building and operating car washes. He can be reached at [email protected].

 

This article is intended for smaller self-storage operators as well as managers who purchase their own health insurance or who, for economic reasons, have insurance with high deductibles. For the rest of you, tune in to this column in February for something more relevant for those who have low-deductible health insurance provided as an employee benefit.

The Health Savings Account (HSA) was created by the U.S. Congress in December 2003 and is essentially a custodial account into which you or your employer can deposit money to pay for certain health-related expenses. It is similar in some ways to an IRA in which you deposit funds that you invest or have invested on your behalf.

The HSA can be set up at a bank or other financial institution or a health-insurance company for the specific limited purpose of paying for costs of healthcare. When used properly, it can save you hundreds of dollars in taxes, as it allows you to pay many medical fees and insurance deductibles with pre-tax dollars. Congress believes if people spend their own money on medical expenses, they will be more conscious of costs and spend less. The tax benefit is the added motivation.

How It Works and Who Is Eligible

First, let me explain how an HSA works. Assuming you qualify, you make deposits to the account, either in a lump sum or installments. The deposits must be cash, as opposed to other assets like stock. Your employer can also make contributions to your HSA as an employee benefit. In this case, payments are tax-deductible for your employer and are not taxable to you. Therefore, this might be an excellent benefit to request of an employer if he does not or cannot provide health insurance. Its also a great way to supplement high-deductible insurance.

Who is eligible for an HSA? First, you must be an individual or family covered by a high-deductible health-insurance plan. Second, you may not be covered by any other health plan that is not a high-deductible policy (there are minor exceptions). Third, you cannot be eligible for Medicaid. Fourth, you cannot be claimed as a dependent on anyone elses tax return.

A high deductible is characterized as one of at least $1,000 per person or $2,000 per family. This amount may include co-pays but not the premium itself. A high-deductible policy can sometimes cost as little as half of its low-deductible counterpart. An HSA may encourage you to save money on your premiums by opting for a higher deductible and saving the difference in the account.

The premium for your health insurance cannot be paid out of the HSA, but costs associated with diagnosis, treatment, and prevention of illness or injury can. Eligible expenses include doctor visits, prescription drugs, over-the-counter drugs, vision care, dental care, orthodontia, laser eye surgery, long-term-care insurance premiums, long-term care and even COBRA insurance premiums. One word of caution: Prescription-drug benefits that cover a portion of drug costs before you meet your deductible may affect your eligibility for the plan.

Benefits and Limitations

While insurance premiums must be paid independently, virtually everything else you need for healthcare purposes, including deductibles and the expenses previously mentioned, can be paid for out of the HSA. Contributions can be made with pre-tax dollars, which are not included in the calculation of gross income subject to taxation at the end of the year. Another benefit is interest on deposited funds is not taxable, nor is the money you pay out of the account for eligible expenses. As an added bonus, any dollars left at the end of each tax year can be used to increase the account reserve for the future.

However, there are limitations. In 2004, the maximum you could deposit into an HSA was equal to your individual or family deductible (which, by definition, must be at least $1,000 and $2,000 respectively) but could not exceed $2,600 per individual and $5,150 per family. This amount is scheduled to adjust every year.

For example, if you are single and have a $1,000 deductible, you or your employer can contribute up to $1,000 to the account to cover medical expenses not covered by your health insurance. If you do not incur enough expenses to use up your savings, you can roll over the balance to use in following years or use the money for other uncovered medical items, such as medications or the laser eye surgery you always wanted. If you actually spend that $1,000, what you have saved yourself is the amount of tax you would have paid on that money if it had been included in your gross income, plus any applicable interest. On the other hand, there are penalties for withdrawing the money for nonhealth-related items, including imposition of the previously avoided tax and a 10 percent additional fee.

When you view an HSA this way, a little shrewd planning can save you money in taxes. It can also become a tidy little reserve mechanism for other medical-related expenses or an elective procedure. Any way you slice it, you save money at essentially no cost.

This article is a simple explanation of a complicated subject. As with any Congressional creation regulated by the IRS, there are rules and tests that should be reviewed before opening an HSA. Please consult with an attorney, tax advisor or financial advisor before acting. However, those of you who set up an HSA may find your wallet feels a little thicker come tax time next year.

Jeffrey Greenberger practices with the law firm of Katz, Greenberger & Norton LLP in Cincinnati, which primarily represents owners and operators of commercial real estate, including self-storage. Mr. Greenberger is licensed to practice in the states of Ohio and Kentucky, and is the legal counsel for the Ohio Self Storage Owners Society and the Kentucky Self Storage Association. He is a regular contributor to Inside Self-Storage magazine and the tradeshows it sponsors. For more information, call 513.721.5151.

Not too long ago, when self-storage was a fairly new product, there was a seemingly endless supply of customers with a need to store goods. It didnt matter how much emphasis was on the sale because the product sold itself. However, as time went on, the product grew at an exceptionally fast pace. Occupancy rates began to falter, and vacancy thrived. Renters started to disperse and check out the competition.

Some new storage companies popped up with all the luxuries there are to offer, from classy and sophisticated buildings to rental equipment and supply stores. But really, what makes us different? We have essentially the same products, and service is still service, isnt it? If you went to a fancy facility and the managers didnt accommodate you or were too pushy, would you rent there? What sets you apart from the competition is the combination of your product and your presentation.

Product is important. Not because of how sophisticated it is or how much it costs to build, but because of how well-maintained and welcoming it is. How is your curb appeal? Does the facility seem safe and secure? How much do you care about the environment in which you work and live? Is it important to you to have a clean, friendly atmosphere? It should be.

I have seen old sites, built as far back as the '70s, that still look great. The managers run them with pride. The key to success is enjoying what you do. You have the control to keep a tenant and rent to new customers, regardless of the facility down the street with its bells and whistles. If you want to be successful, dont be a storage robot. Use your individuality and personality to win customers over. Be confident! The key to sales is all in your presentation: 10 percent of each sale is the product itself, the other 90 percent is how you offer it to the customer. First impressions really do count every single time.

Sometimes, the best way to grade the performance of your site and its staff is to shop your competitors. Create a grade scale of all the things you expect from a successful facility and visit your neighbors in person. Evaluate everything from customer service to the propertys appearance and anything in-between. This is a great tool to work on any improvement you might want to make to your property or your own skills.

If you still dont think any of this matters, consider to whom the owner turns when a facility is in a sink-or-swim situation because of competition: the staff. Sooner or later, we are all judged by our superiors, whether for a job well-done or missed mark. For which do you want to be recognized? If you are doing your very best, others will notice. You will reap rewards of success because you know youre a winnerand so do they.

Trina Van Alstine is the administrative support manager for Lyons Investment Properties LLC of Newport Beach, Calif. She has worked with the company for seven years. For more information, call 949.752.5000; e-mail [email protected].

I realize many self-storage companies thoroughly train their employees. But there are others that live by the sink or swim theory. They would rather allow new hires to possibly fail and jeopardize their businesses than spend the time, money and resources to effectively train them. Why would you spend millions of dollars to develop a facility, and then put an untrained person behind the counter to operate it?

Training can definitely be tedious, time-consuming and downright draining, but the alternative is a lot worse. I would rather do the training myself, even if it keeps me from doing other things, than allow a new employee to be trained inadequately or thrown into the fire. It is far too difficult to find good people these days, not to mention expensive. There is no bigger priority than ensuring your staff is fully educated to perform their jobs.

Find the Right Trainer

The first thing to consider when developing a training program is what resources are available. It would be nice to have a dedicated training facility on the West Coast, but Im quite certain that isnt the case for most companies and never will be in the self-storage industry. So at a minimum, you need to find someone with the proper experience, ability, patience and time to spend with employees, and you need some basic training materials.

When considering whether you have someone who can handle the training duties, keep in mind direct supervision and instruction is an important element in the process and shouldnt be underestimated. There is no substitute for one-on-one training. A person cant simply read a manual and know everything. Furthermore, you absolutely want the right person doing the trainingsomeone who will set a good example, which is critical.

You want someone who will not only teach how to do things, but why they need to be done, and why it is important to follow company procedures. You want someone who will take the time to teach employees about company philosophies, the importance of image, and the little things that are significant to your organization.

All too often, we simply explain how to do things and think the hire is on the same page with the rest of the company, only to find he doesnt understand how the business works. He can answer the phone and quote prices, but doesnt know how to control the call and market the facility. He can rent and vacate units, but doesnt know what it takes to maximize revenues. He can handle the basics, but not the things that really make owners and operators happy.

If you choose the right person to train employees, someone who can devote the time necessary to convey the companys entire message (not just the hows, but the whys), your result will be employees who can truly run the business. Isnt that what you want?

Training Materials

When you consider the issue of training materials, once again, dont skimp. You wouldnt send your child to school without books. People learn more easily and effectively with visual aids. Furthermore, they need them to fall back on when trying to recall what they have already heard and observed. Therefore, you must have some sort of training manual.

I know what you are saying at this point: I dont have the time to do the traininghow am I going to find the time to create a manual? I agree. It can be a lot of work. But again, you cant afford not to create one. What you need to keep in mind is you already have many things in writing. You simply need to organize them into some sort of logical training format.

For example, sample copies of a completed lease, late notices, legal documents, and other applicable forms make great learning tools and reference materials. Make copies, slip them into sheet protectors, insert them into a three-ring binder in an organized manner, and slap a label on the binder that says Training Manual.

While youre at it, include copies of your written policies and procedures. It would be nice to have an official manual like some of the bigger companies, but if you dont have full-time human-resources staff, that probably isnt realistic. However, compiling basic materials into an effective format is practical and shouldnt take more than a day or so to complete.

Of course, you need to revisit any training manual periodically to keep it up to date. Two good practices are to 1) update it whenever you create a new document or revise an existing one; and 2) always review it prior to training a new employee. Take the time to look through the binder before working with the employee for the first time. You very well may find outdated material that has slipped through the cracks. You certainly dont want the hire to discover it, as that can be embarrassing (I speak from experience!).

Other training materials can include video and audiotapes, which can be produced in house or purchased from the Self Storage Association and other industry providers. There is a lot of material out there. There are also numerous training programs available if you have the resources to enroll employees in them. You may even want to compile some reading materials (e.g., articles, books, etc.) that convey information about self-storage as well as general business practices. For example, materials that address customer service carry over nicely into self-storage. And tapes and reading material come in very handy when you get busy and simply need something to keep a new employee occupied.

First Impressions

When thinking about your training regimen, consider the first impression you make on new employees. When they see you have set aside your own time or that of a staff member to personally train them and have basic materials to help them learn their new position, they will be impressed by your operation and commitment. On the other hand, throwing them to the wolves without the necessary tools will leave them the impression you dont care about your people or the business. Just as it is with your customers, the first impression is critical. So dont blow it!

How Long Does It Take?

If I havent scared you off by now, you probably want to know how much time is required to get through this training process. Will it take a week, a month, a year? That will depend on the sophistication of your operation. When I was operating facilities, I devoted between one to three months to bring a new employee up to speed. Keep in mind my business included the sale of moving supplies, truck rentals and many other services. If your operation is less involved, it may not take as long.

It takes time for things to sink in, and the amount of time can vary from person to person. I always felt that if an employee was making progress every day, remembered what was learned the day or week before and, in general, fit in with the company, I had a winner. If you truly believe you have a good person, dont panic if he takes a little longer to catch on. You can teach procedures and techniques, but you cant teach attitude and character. If, on the other hand, you find someone is truly not a good fit, even though he has all the ability in the world, cut the cord early. Why waste time and money training someone you know will never do things the company way?

Other Training Tips

Try not to move ahead too quickly. For example, if a new employee walks through the door on his first day and the place is a madhouse, dont feel compelled to explain everything. Its hard to back off sometimes (for the trainer and the trainee), but have that person sit back and start reading, etc. What you dont want to do is confuse the employee right out of the gate or burden yourself unnecessarily.

Always proceed in logical order. Dont try to teach a new employee how to vacate a unit before teaching him how to answer the phone and rent a unit. Keep it simple and use commonsense. You may have to wait for the opportunity to teach certain things, but they will make more sense to the employee if he has the proper foundation in place to understand what is going on.

Although training really goes on forever, a great litmus test for when you can begin to leave new employee alone to run the store is his ability to answer the phone and handle prospective customers. I am absolutely convinced the hardest thing to teach self-storage managersand the most important thing they need to learnis the ability to turn inquiries into rentals. One of the reasons it is so difficult is you typically have to teach them about self-storage in general, and that takes time. Obviously, an employee with industry experience will have an advantage and catch on to your systems more quickly.

At any rate, when an employee is ready to answer the phone and handle calls the way your company has prescribed, he can probably be left alone. Sure, he may make some procedural mistakes or need to call you to get through something, but mistakes can be fixed, and help can be administered.

If a hire isnt sure what to say when the phone rings or how to ensure a rental when a customer visits, forget it. You dont get a second chance in those situations. Furthermore, you have spent too much money to make your phones ring and get customers in the door to have even one inquiry mishandled. Ultimately, you will have to determine when an employee is ready to work solo, and your comfort level is certainly a factor. But dont leave that person alone if he cant handle the sale.

It is going to take at least a few weeks for an employee to listen in on enough calls, accompany you on enough facility tours, and get the necessary exposure to prospective customers. During that time, you will certainly be training him on other aspects of your operation. And most of the time, he will have experienced enough of the basics to get along with his prospecting skills and feel comfortable behind the counter.

Just reading this article and thinking about training may have exhausted you by now. Believe me, I was always the most tired when I came home from a day of training a new employee. You end up standing on your feet most of the time, you have to watch everything the employee does, and you have to be careful about everything you do and say to set the right example. Furthermore, you end up talking the entire day, as you try to explain every little thing you do as a manager. Then your spouse cant understand why you have nothing to say in the evening! Sure, it gets better as the days go by and the employee picks up on things, but it is never easy.

Training is one of those necessary evils. But like so many things in life and business, the more thought and effort you put into it, the more benefit you and your employees get out of it. Whatever you do, dont treat training like a four-letter word!

Jim DiNardo has more 16 years of experience in the self-storage industry, having served as a partner and operations manager for The Storage Depot until the company was sold to Extra Space Storage in February 2004. He recently formed J. DiNardo Consulting, which performs self-storage feasibility and market studies, analyzes a wide range of facility operations, and performs general business advisement. For more information, call 781.944.9848; e-mail [email protected].

I recently looked at a self-storage facility that was up for sale with a reputable broker. During conversation, he told me the site should be able to produce more income based on its occupancy and rental rates. I admitted I was not overly impressed with the on-site manager. Apparently, since the manager had been hired, the site had produced less revenue with the same occupancy than with the previous supervisor.

I immediately suspected something was wrong. When I asked about the last time an audit had been performed on the facility, the broker said one had probably never been done, as the owner did not possess the skills, knowledge, time or willingness. The owner was trying to sell for a substantial sum, yet he did not know if the facility was producing the revenue to justify it. If I were a prospective buyer, I would somewhat rely on the sellers information but would want to verify it for accuracy. A scenario like the one mentioned above could change or even kill a deal.

These sorts of issues are not unique, and there are many owners, operators and even management companies who do not regularly audit their stores. However, when you consider the effect income has on revenue and facility value, an audit can be critical to discovering problems and maintaining optimum performance.

What Is an Audit?

In simple terms, the function of the audit is to review financial transactions, physical-inventory reconciliation, banking transactions and other activities (not always related to accounting). Its goal is specific: to ensure the facility owner that all the funds received are properly accounted for in the appropriate time frame.

Audits are generally associated with negative deeds, but in reality, they are as important to your overall success as marketing or sales. If you are selling the product but not receiving the appropriate compensation, you are wasting time and losing money. On the other hand, it can be a relief to learn your employees have a solid grasp of your system and are performing duties honestly and correctly.

A lot of operators hire companies to review our sales skills (i.e., phone- and rental-skills checks), but how many confirm funds are being correctly deposited into their bank accounts? They spend hundreds and even thousands of dollars on training programs, but many are reluctant to spend an equal or lesser amount to audit their stores. Sometimes, a manager may be doing things honestly but incorrectly. In a worst-case scenario, you may have a thief working for you, benefiting from your lack of management controls and systems.

Owners sometimes assume that because they use a computer system in their stores that managers cannot steal or make mistakes without them knowing. Wrong! There are always people who can manipulate computers and circumvent the supposed controls to allow them to access files, change and erase data, etc. Simply having a computer system is not the answer.

How It Works

Lets describe a simple audit and how it works. Usually, the task is performed randomly by an impartial third party to avoid personal involvement. It is important that you do not notify the party or facility being audited, since this could give them time to fix the books.

The auditor should have a written document from the owner/management company stating the purpose of the process (to ensure proper operating procedures are followed), an authorization for access to the information he will need, and a statement giving the manager permission to allow unlimited access to the physical plant and records. The auditor should provide the client a written description of the methods he will use, an estimate of the time frame necessary to complete the evaluation, and a disclosure statement ensuring the owner complete confidentiality of the audit results.

Once the audit begins, the auditor will follow the outlined procedures. He should not discuss any of the process with the manager other than what is necessary to perform the audit or discuss the results with anyone other than the client. He should also have detailed notes on any discovered discrepancies. The auditor should make it a point to ease the anxiety of the person being audited. However, if he concludes early in the process that unlawful acts are being committed, he should immediately notify the client to act on the discovery.

An auditor should never accuse a person of stealing, even if evidence is overwhelming. His job is merely to review the facilitys systems, not confront employeesthat is the duty of the owner or supervisor. On the other hand, if results indicate an employee is honest and trustworthy and follows proper procedures, the auditor can let him know the results are good. This provides positive reinforcement and alleviates any anxiety the employee may have. The owner should acknowledge the positive feedback as well and perhaps reward staff with an appropriate token of appreciation.

There are many more details involved in the audit process. This article presents a brief but accurate description of a critical function an owner, operator or management company should perform as par of normal business practice. Costs for an audit should be evaluated and the benefits weighed. But in the end, you may find it is money well spent and will assist you in becoming a better self-storage operator.

Mel Holsinger is the owner and a managing member of Tucson, Ariz.-based Professional Self Storage Management LLC, which specializes in facility management and operations in Arizona, Mississippi, Nevada, Pennsylvania, Tennessee and Texas. For more information on site audits, call 520.320.9135; e-mail [email protected]; visit www.proselfstorage.com.

Truth be told, these tools can actually aid Joe Golfer in achieving better results. It is simply a matter of how he sets them up and if he uses them properly and regularly. Similarly, mystery-shopping is a unique and necessary implement designed to improve your game in the self-storage arena. All businesses look for ways to increase revenues and expand their customer base. Mystery shopping has become a heavy hitter due to the extensive benefits it provides. It is a serious, convenient, economical device designed to aid owners in achieving that ever-evasive birdie or eagle in their businesses.

I am sure a few of you have already mastered your golf game (yeah, right!), so the tool analogy may not pertain to you. However, as a storage operator, you will still find the following information helpful.

Basic Revenue-Generating Factors

When your storage facility is not producing projected revenue, it makes sense to take a step back and get a fresh perspective. There are many reasons profits can be lacking. By using mystery-shopping services to analyze the basic revenue-generating factors below, you can decide how to make the best use of various tools to improve your business. The following should be in place at every storage facility from day one:

Advertising. Advertising dollars should be budgeted at an appropriate level to generate the traffic required to rent up your store. Note that it costs an average of $16 in advertising (Yellow Pages, etc.) to generate just one phone call.

Visibility. Make sure your store has the necessary visibility to generate drive-by business as well as create convenience for other prospects and tenants. Your store should have easy-to-read signage visible from the main roads and surrounding areas.

Maintenance. Your store should be professional-looking, with fresh paint, well-maintained pavement and concrete, and attractive landscaping. It should present an atmosphere that projects a secure environment to potential customers.

Management. How are your sales consultants at providing customer service? The employees running your store should be friendly, outgoing and personable enough to close the sale on walk-ins as well as win appointments from incoming calls. You can have a great-looking location, but if you dont have the proper people running it, it will be beautiful and empty.

Competition. What are your competitors up to? How can you have an edge on competition if you do not know what they provide? Make it a point to shop neighboring facilities and be aware of their features and offerings.

Legal Issues. Delinquency, overlocks, notices and auctionsare these items being handled in a timely, appropriate manner? Are your employees adhering to applicable laws?

In addition to providing feedback on how these basic factors are working in an operation, on-site mystery shopping directly benefits self-storage owners in the areas of training, auditing and bonus structures for employees. Soliciting the observation of an unbiased third party is a cost-effective way to obtain a birds-eye view of your business.

Obvious Revenue-Generating Factors

The ins and outs of the self-storage industry are not common knowledge to the general public. To the potential customer, one store is just as good as the nextafter all, storage is storage. Because most stores offer the same features and benefits, an objective view of your store is extremely useful in determining if the tools you have in place to better your game are, in fact, working. If they arent, you need to direct your mystery-shoppers attention to more obvious revenue-generating factors:

Advertising. Now that youve spent that $16 to get your phone to ring, who is answering the call, and how is he handling the potential business? Is his speech clear and inviting? Does he make the customer feel like he wants their business? Does his sales presentation sound natural and unrehearsed? Potential customers rely on advertising to find the products and services they need. If the sales consultant does not pursue the customer, selling his site and actually getting the prospect to visit, the advertising money for that phone call is wasted.

Visibility. When your sales consultant provide directions to your store, can customers find you without difficulty? Or are you are having trouble with prospects calling your location but visiting and actually renting from your competitor across the street? Shopper input is extremely helpful in this area, as there seems to be a storage facility on every corner these days. One wrong turn, and your customer could end up at your competitors locationoops!

Maintenance. Is your facility perceived as a safe and attractive environment to store personal belongings? Is it site well-maintained, well-lit and secure? Are your driveways paved and well-tended? Is your landscaping appealing to passersby? Is your office clean and free of smoke and unpleasant odors? If your site is in need of repairs or looks dumpy, your competitor may get the business you are trying to earn. No one likes to put his treasures in a dive.

Management. Your staff is the key factor in sales and revenue. Mystery shops can reveal information imperative to the success of your store. Are your sales consultants always in uniform? Do they sell your site based on features and benefits? Are they present when signage indicates the store is open? Do they offer any specials or promotions? How is the daily paperwork handled? Are deposits being made in a timely fashion? Are late fees being applied and collected? These are just some of the important items mystery-shoppers look at when visiting facilities.

The most important aspect of your management team is obvious customer service. This means your employees go out of their way for customers, and the customers not only notice, they appreciate the attention. A few great examples are:

• Driving up to customers in the golf cart when they are loading or visiting their units and asking them about their day.
• Asking customers about their opinion of your store and letting them know their input is important to you.
• Offering a nice cold bottle of water on a hot day or coffee/hot chocolate on a cold day.
• Keeping umbrellas next to the front door so you can walk customers to and from their car or unit when it rains.

These are just a few simple things that tell your customers you care about them. They are acts of kindness that go a long way and build trust and security, which in turn makes the customer loyal to your store.

Competition. Competition shops are a must in any industry. To stay ahead of your rivals, you should know the same things about their operations that you know about your own store. For instance, what does their site look like? What is their occupancy rate? How does their management team treat customers? What specials do they offer? You should have your competitor shopped on at least a quarterly basis. It is a very cost-effective way to maintain your edge. Warning: If you think your sales consultants are checking your competition for you, you are probably wrong. They are most likely making a phone call and just getting a price list.

Legal Issues. Mystery shopping can be used as an auditing tool to track revenue as well as adherence to company policy. Do your late notices go out on time? When do you overlock units? Are your auction dates published legally?

To take mystery shopping one step further, a mystery renter will actually visit your location and rent from you. Hell pay each months rent in cash so the deposits can be tracked. Once all necessary information has been obtained through the rental process, the renters unit goes delinquent and you can track the late and legal notices, publications, etc., right up to the actual auction of the unit. This is to ensure your managers are following the proper legal channels required by law.

Mystery shopping is an extremely useful tool for business owners. It is not only used to uncover negative information but to celebrate good customer service. Since service is a huge component of business success, evaluations should be used to acknowledge the positive aspects of your business, just as negatives should be noted and corrected.

This article provides a general idea of how mystery shopping can offer an eye-opening perspective for you and your sales consultants. Make sure you are up to speed on what you offer potential customers by putting your tools to the test. Dont assume you are at the top of your game. Without mystery shopping, that little chip shot and putt for par could turn into a double bogey. Wouldnt you rather have a hole in one?

Lori Niemczyk is the owner of Littleton, Colo.- based A Top Shop!, which specializes in customized physical or phone mystery shopping and site audits. For more information, call 720.283.8377; e-mail [email protected]; visit www.atopshop.com.

Par 3: Customer Service Here are few quick suggestions for on-site management to win new business: Every time the phone rings, assume it is a mystery shopper, and give your best on the phone. Tell the caller how great your store is. This positive attitude will give potential customers incentive to visit your store and see why you are so happy! Assume every customer who comes through your door is a mystery shopper. Treat him like royalty. After all, he could be a real customer, and securing his business makes you look good. Take pride in yourself and your surroundings. Dont settle for being average shine, shine, shine!

 

Todays self-storage managers are much more challenged in their day-to-day operations than in years past. This is mostly due to the ever-increasing competition they face. It is not uncommon for markets to be overbuilt with new, existing facilities or those in the development stages. This puts greater responsibility on personnel to market each site and make the most of every rental inquiry.

Managers can no longer wait for the phone to ring or for customers to just stop by. In fact, it becomes increasingly necessary for them to actually reach out to their customers. This means staff must be marketing-oriented and have more of an outside-sales personality, which is opposite the mom and pop and babysitting style management we have seen at facilities in the past. What does it mean for owners, and where do we find the right staffing solutions for our facilities?

New-Breed Management

First, owners need to establish job descriptions and identify the personality traits managers need to successfully interact with their customer base. These qualities and duties may be different for each market area. Onsite personnel need the communication skills necessary to adequately relate to their particular demographics. They must also be trainablein other words, willing to learn and adapt to the ever-changing storage environment.

Many owner/operators are going outside the industry to recruit these individuals. The managers of today are polished and professional. They seek marketing opportunities in their communities. They think outside the This is the way it has always been done mentality and no longer believe the If you build it they will come strategy. They understand the need to know their market and competition and consistently strive to do better.

Of course, this means they need a higher level of expertise, motivation and energy than ever before. Therefore, a higher salary and better benefit package is necessary to attract the right management team.

Where to Hire

Now, where do we find these power managers? A good place to start is current employees who already fit the profile. They understand your expectations and requirements. Many operators will even pay a finders fee to existing employees for referring qualified candidates. Some are finding the right fit in the retail, hotel, multifamily and service industries, as employees in these fields tend to posses the personality traits and backgrounds conducive to self-storage management.

Industry publications have classified sections for the advertisement of available positions. Self-storage associations usually have referral avenues for people seeking jobs through their websites or offices. Industry-specific placement agencies are available to aid in the hiring process, which saves time in interviewing numbers of unqualified candidates. They recruit, interview and refer only prospects that fit the qualifications and traits specified by the owner/operator.

Due to ever rising costs of recruiting, hiring and training employees, it is not uncommon for candidates to undergo personality and performance testing prior to hiring. This helps determine if they posses the qualities to be successful. An interview often will not uncover negative traits or work habits that would be detrimental to the team effort. There are many tests available for this purpose and information can be found on the Internet or in bookstores.

Ongoing Support

Finally, one of the most important factors to having the right staff for your business is ongoing training and support. It is a known fact that employees are more loyal and productive when given the tools to be confident in their abilities. Award programs, bonus structures and promotion opportunities are just a few ways to attract and retain personnel. Incentives such as attending outside seminars and conventions are a great way to reward and give ongoing training to productive employees.

Lets face it: Solid staffing is the key to the success of any business. It is an investment that gives returns over and over. It is important employees be treated as a valuable asset, and given responsibility with the training and support necessary to be successful.

Cheryl Kelley is president of Innovative Management Solutions, a full-service company providing management, feasibility studies, training and consulting services throughout the United States and abroad. For more information, call 972.396.0511; e-mail [email protected].

So how do you attract sales-savvy people? You have to build the culture first. Every workplace has its own feel and unspoken understandingsthis is your culture. It revolves around language; stories, myths and legends; rituals; and unwritten rules. When your culture encourages sales and the development of selling skills, you have created a workplace where sales-savvy people are comfortable and can excel.

Language

Start speaking the language of sales. Teach employees how to use qualifying questions, alternate-choice closes, concerns and assurances, assumptive statements, closing percentages and missed opportunities. Learn the keywords and code words that help your staff keep sales at the front of their minds.

Stories, Myths and Legends

Share stories and myths about selling with your staff. For example, there is a great story about a young kid straight out of high school who went to work for a department store that sold everything you could imagine. At the end of his first day, the store owner asked him how many customers he had helped. He was shocked and dismayed to hear the hire had only helped one customer and asked him to explain.

The kid explained he had offered a customer a fishing hook, only to find the man had no rod, reel and or tackle. After he helped the customer pick out that gear, he discovered the man had no fishing boots or outdoor clothes, so he helped him choose the right boots, pants, jacket and hat. Then he realized the customer had no boat, so he helped him select a boat and appropriate trailer. When the man mentioned he would have trouble hauling the boat with his Volkswagen, the young sales clerk took him to the truck department and helped him choose a pickup truck with a towing package and CD/DVD player.

Finally, at 4:45 p.m., the customer who had been with the young salesman since 10:30 that morning had everything he could possibly need for a weekend of fishing. The owner of the store was amazed. He asked, You sold all this merchandise to a man who came in to buy a fishing hook? The kid replied, Well, actually, I started the day in the pharmacy, and the customer asked me where to find the band-aids. While I was helping him, I happened to say, Looks like a good weekend to go fishing.

There are all kinds of fun stories about salespeople. There are some great cartoons, too. Have you ever seen the Far Side cartoon featuring the King of Salesmen? He is waving good-bye from a boat as he pulls away from a shore-side Eskimo village. The Eskimos are standing proudly by their new refrigerators and waving back. You can tell their fondness for the salesman in the sad expressions on their faces.

Then there are sales myths, like the Rule of Thirds, which breaks customers into three distinct categories:

• One third of customers will rent from you, as long as you dont chase them off, because they already like your location or know someone who has rented from you. Your job is simply to not talk them out of the sale.
• Another third of customers will not rent from you, either because you cant meet their current needs or their needs are too far in the future. If you are nice to these folks, they might remember you when it is time to rent.
• The final third could go either way. These are the people with whom you need to use your best sales and listening skills.

Finally, talk with employees about legends of great sales feats accomplished by members of your business. For example, tell them about the time one of your managers had a record rental day. Talk about the funny ways staff has asked for the rental and gotten it. At my company, we still talk about the day one of our sales reps, Dana, reserved seven 10-by-20s for one caller, and we still try to beat Paulas eight-hour record of 23 credit-card reservations.

Rituals

You can also establish business rituals for your staff. These might include the manner in which you make notes on your call logs, the way you stand up to greet customers who walk through your door, the way you turn the lease toward new tenants so they can see where to initial and sign. Look at the things you do during your selling routine. Use consistency to allow some of these actions to become rituals.

Unwritten Rules

Then there are unwritten rules. For example, consider the rule that you should never end a rental inquiry without asking which day the person would like to move in; or the rule that says theres no eating at the front counter; or the rule that says you should look everyone in the eye when you greet them. You probably have many such guidelines that work in selling your facility to new tenants and re-selling it to current ones. They may not be typed in the policies and procedures manual, but you encourage employees to follow them nonetheless. Let employees know what those rules are so they can use them.

Attracting the Sales-Savvy

Now that you have created a selling culture, you need to attract people who are sales-savvy. How do you get the right people to inquire about your positions? What do you call those positions? Do you look for managers, sales assistants, marketing reps or retail-sales reps? Think about this before advertising or promoting an opening. You will generally get what you ask for in an ad.

Start screening candidates with some qualifying hoops. The first a potential new hire jumps through is the recorded audition. When a candidate calls your employment hotline, he is invited to talk about himself and his experience on a voicemail message. Listen to all the messages and only contact the people who sound good on the phone, use visuals in their stories and sell themselves well. The impression employees make on the phone is essential to getting rentals. Why not hire only people with a great phone presentation?

If a potential hire passes the recorded audition, the next step is the phone interview and mystery shop. If you like the way the person deals with you and sells himself during the phone interview, move on to the shopping phase. Wait a day or so, call his place of work, and interact with him as if you are a prospective or current customer of that business. How he treats you in this situation will tell you a lot. Did your potential hire ask for your business, try to fix your problem, and attempt to cross-or up-sell?

Testing, 1,2,3

Next is the personal interview. For this, you will need to create a test that will weed out the wrong people for the job. It can be frustrating when a person interviews well, then turns out to be a bad fit for the position. I once hired someone with a good resume and appropriate work history who interviewed very well. When the other team members learned about the hire, they asked if I was nuts. Apparently, he had been rude and even hostile to three or four people while waiting in the break room for his interview. Enter the birth of The Break-Room Test.

Now when I conduct personal interviews, I intentionally leave the candidate waiting in the break room for five or 10 minutes before I meet him. I have several team members interact with him during that time and gauge his reactions. If the prospect does not offer natural, friendly responses or is impatient or rude, the interview is extremely short and I move on to the next candidate. This test has almost entirely eliminated unsuitable hires and decreased our turnover in trainees. Create your own version of this test. You will be very pleased with the results.

Another great test is the Sell Me Something Test. During the interview, ask the potential hire to sell you a pen, note pad or picture on the wall. If he freezes up and cant even try, this is a red flag. Anyone who is a little sales-savvy should have fun with this and come up with some entertaining features, benefits and closing questions.

Finally, there is the Chuckle Test. You should only hire people with a little bit of a sense of humor. Sales people without one are no fun to deal with as a customeror as a supervisor! If you cant share a laugh with your interviewee, that is another red flag. Look for these warning signs. If you see them, end the interview cordially. Tell the person the position probably wont be a good match and move on to the next.

Taking a Chance

Once you have found someone who does well on the recorded audition, telephone interview, break-room test, sell-me-something test and chuckle test, you have someone worth trying out. You may have noticed I did not address how to read a resume or factor in work history. There is a saying that says, Beauty is as beauty does. So if someone comes to you with a beautiful resume and very appropriate work history, he still may not pass any of the tests that really count.

But resumes are interesting. They will tell you if someone has jumped from job to job. If each job was a step up in responsibility and compensation, it is usually a good sign. Work history can tell you about how other employers saw fit to use the person and what fields of interest the person had.

The proof is really in the pudding. Hire someone for a temporary assignment or on a probationary basis. Not everyone is well-suited for every job. You need an evaluation period, which will tell you if you should spend more time and money training and preparing a new hire to be a part of your team.

When I ran a bottled-water dealership, we had many people apply for a route job delivering 5-gallon bottles of water. But until someone has delivered 150 bottles in a day, you dont know if he is well-suited for the position. So we would hire a potential recruit for one week as an assistant route driver. Each day, he got more responsibility and, by the end of the week, you either had a good candidate, or the recruit quit or was released. The retention rate of people who made it through the first week was very high. Why not let your recruits work a week as a sales assistant, giving people tours and showing them units?

The Right Hire, The Right Job

If a candidate jumps through all of your qualifying hoops, does not raise any red flags during the process, and successfully completes the first temporary assignment, you have someone worth hiring. Now it is up to you to keep him interested and engaged. Give him enough responsibility to keep him challenged but not so much to overwhelm him. Everyone is a little different, with his own strong and weak points. Know with whom you are dealing. Great shortstops usually dont make good outfielders. Great pitchers generally dont make good first basemen. So mind how you direct your new talent.

For example, I had a sales rep who did great on all the qualifying hoops and did well during training, but something was amiss. I hired her to work evenings, but it wasnt working out. She didnt appear happy, and her numbers were not what they should have been. One day, she volunteered to cover a Saturday-morning shift. She had a great day. Her spirits were good and she had great results. Was it a fluke? I scheduled her for a few more Saturdays, and the result was the same. She finally told me she was really a morning person and felt and performed better early in the day. I had put her in the wrong slot. In the evenings, she was tired, physically and emotionally. I moved her to mornings and she did very well.

Getting a sales-savvy staff is not just a matter of careful hiring. Its also a matter of watching how people progress and grow in your culture. There are several thresholds a new recruit will cross, usually at the end of week two, month two, month six and month 12. The person hits a wall and either goes through it or decides to seek other employment. Be aware when someone is going through a phase and see what you can do to help. If he has been successful and enjoys working with you, it only makes sense to help him gain confidence in his place on your team.

Sometimes, a good hire will only last so long. People may need to move on. Thats OK, too. But considering the cost and effort of finding, qualifying and training a sales-savvy employee, you like to keep all your good team members for as long as you can. Once they have been around for a while, they gain so much knowledge that they become a mentor and go-to person for less experienced team members, and their very presence helps move your project along.

Having a sales-savvy staff takes time and considerable effort. You may have to terminate employees who seem disinterested in developing the necessary skills. You may have to reassign those who are great at some things but are notand will not becomesales-savvy. But if you are determined to create a sales culture and attract and hire the right candidates, your business will see results in increased rental activity, average lengths of stay, rental rates and customer satisfaction. This all amounts to higher profits and a more advantageous cap rate. Good luck in your efforts.

Tron Jordheim is the director of PhoneSmart, which serves the self-storage industry as an off-site sales force that turns missed calls into rentals. This rollover-call service serves as a backup to store managers. Mr. Jordheim has started several successful businesses from scratch and assisted with acquisitions as general manager of the Mid-Missouri Culligan Bottled Water franchise. For more information call 866.639.1715;
e-mail [email protected]. 

This month, I gathered real estate experts to discuss the state of self-storage in the South-Central United States. Letís hear what they have to say about their respective cities and regions. Our panel of brokers includes: Bill Barnhill, Omega Properties Inc., Mobile, Ala.; Barry Comiskey, Westar Commercial Realty, Lubbock, Texas; John Raines, The Real Estate Connection, Trenton, Tenn.; and Tyler Trahant, Richard D. Minker Co., Fort Worth, Texas. I asked our brokers straightforward questions every owner and potential buyer will find pertinent, including their predictions for self-storage in the new year.

1. As you look back on 2004, what are your thoughts about the self-storage market in general?

Barnhill: The demand for well-located properties has been exceptional. It has been a banner year.

Comiskey: Things have been extremely competitive on the leasing front, with deep discounts. This is because of overbuilding in most of the larger markets. The overbuilding is driven by low costs and liberal loan underwriting, but the demand for well-located and -occupied facilities remains very strong.

Raines: The self-storage market has remained strong this year, with more buyers than sellers. There has been an equal amount of interest in small facilities as in large ones.

Trahant: In our markets, we are seeing a lot more building and, therefore, more rental concessions. There are still a large number of investors looking to get into the market; however, they are a lot more particular on the type of property. Many facilities will need to reinvent the way they conduct their marketing to compete in todays marketplace.

This has been a stellar year for self-storage buyers and sellers. Clearly, low interest rates are driving this phenomenon. And, at least for the time being, rates are still low. However, pressures in the financial markets auger higher rates in the future.

2. Did you witness a lot of transactions this year? Describe the activity in your market.

Barnhill: There have been quite a few transactions closed in our marketplace, with others to close before year-end. It has been the most active year in recent history.

Comiskey: There was not heavy transaction volume in West Texas. The buyers are here, but the sellers just like the cash flow and dont have many alternative investments that produce like self-storage.

Raines: The market in Tennessee saw more transactions than in the past couple of years. I expect this trend to continue in 2005. Ive noticed more owners considering selling. Buyers continue to outnumber facilities for sale.

Trahant: Oklahoma was very active with the sale of the SUSA portfolio of 14 properties, plus a handful of other properties changing hands between existing owners. The North Texas market has not seen many sales in 2004, but the final quarter of the year could prove to be fairly active.

This will be a record year for transactions. Many owners are finding now is the time to sell, and buyers are finding low interest rates irresistible, creating a remarkable consensus on the highest values ever seen in terms of value per dollar of income.

3. Are other types of real estate underperforming and drawing buyers to self-storage?

Barnhill: I believe self-storage has certain attributes, such as low maintenance and ease of management, which attracts buyers to this industry. Although some types of real estate might be underperforming, self-storage has remained steady.

Comiskey: In general, I dont think real estate is underperforming as opposed to other investments, i.e., stocks, bonds, cash, etc. Real estate is a good value. I have not seen asset relocation in my market area.

Raines: Yes, I believe this may be is true. However, the majority of buyer prospects I have talked to are current self-storage owners looking to add facilities.

Trahant: In the markets I serve, the competition in self-storage is becoming comparable to that of other real estate types. Buyers are becoming smarter, analyzing the potential for competition to move into an area, and will discount the value of a property if the barriers to entry are too low. I have seen as much activity in the office market as in self-storage due to the fact that competition in the business has increased.

4. I have seen a lot of investors pull out of other real estate types to buy self-storage this year. Do you foresee the same for 2005?

Barnhill: Unless interest rates hit a critical point, self-storage should perform about the same in 2005 as in 2004.

Comiskey: I have seen strong money inflow to my market, mostly from West Coast investors who feel they get more value in Texas property than in their local markets. They have pushed up prices, especially in the multifamily and duplex markets. I feel this trend will subside in 2005.

Raines: Some investors are leery of the stock market and are moving into real estate investments. Many are interested in self-storage. I get calls every week from buyers new to the business, and I believe this will continue in 2005.

Trahant: I have seen a lot of investors pull out of other investment types to buy self-storage this year. The answer is different for each market. In a market that sees overbuilding of one sectorfor example, what happened with office buildings in Dallasthere will be investors looking to other product types. In markets that have seen a lot of self-storage construction, I dont see an influx of new buyers occurring.

5. Describe how you view the recent cap-rate trends in self-storage. What will happen with cap rates in 2005? What impact do they have on buying and selling?

Barnhill: Cap rates should edge upward if long-term interest rates increase, although not necessarily in a linear fashion. Cap rates are used merely as an estimate of value. If cap rates for self-storage were higher than for other types of real estate, it would continue to drive the acquisition market.

Comiskey: Cap rates have bottomed out, but they will rise again. This will be based on increasing interest and vacancy rates. It depends on which side of the transaction you are. I think buyers will get a better value with properly structured deals.

Raines: Recent trends in self-storage have put cap rates at historically low averages. Thats no secret. In 2005, I expect the market to push cap rates slowly upward. Cap rates greatly affect the buying and selling of self-storage properties. When they are more constant and the range is narrower, its easier for a buyer and a seller to agree on a rateand value. When cap rates are moving up or down, buying and selling activity increases. However, if the rate is moving, it becomes more difficult for buyer and seller to agree.

Trahant: Cap rates have gone up slightly on the properties with which I have been involved. Buyers are now looking at the trailing 12 months income as well as the possibility of new competition coming online in their markets. In my experience, buyers are not willing to pay for income that has never been achieved and are even hesitant to pay a slight premium in heavily developed markets. Over the next year, we will see cap rates remain fairly constant. With interest rates at current levels, buyers will still be active in the market. However, I do not believe the self-storage industry will see either a great number of new buyers or existing owners exiting the market.

Please refer to my column in last months issue, Cap RatesA Mystery Revealed.

6. What would you like to see different in the self-storage marketplace in 2005?

Barnhill: It is my impression, assuming things like income taxes and interest rates to be equal, that 2005 will continue to be a good time to acquire and sell. I hope interest rates will stabilize and the economy will run more smoothly.

Comiskey: I would like to see less development and rising occupancy rates. When you have new facilities with a 60 percent to 70 percent occupancy rate, you need to assess your supply-and-demand situation.

Raines: I dont anticipate any drastic changes in the self-storage marketplace in 2005. Id like to see the industry become more consistent at valuation techniques. In Tennessee, I hope buyers and sellers realize what a unique marketplace exists today. There are excellent opportunities for both.

Michael L. McCune has been actively involved in commercial real estate throughout the United States for more than 20 years. Since 1984, he has been owner and president of Argus Real Estate Inc., a real estate consulting, brokerage and development company based in Denver. In 1994, he created the Argus Self Storage Real Estate Network, now the nations largest network of independent commercial real estate brokers dedicated to buying and selling self-storage facilities. For more information, call 800.55.STORE or visit www.selfstorage.com.