By Mike McCune

Great markets are wonderful, but we all know they will eventually end. What does that mean, in general, for self-storage owners?

First of all, it doesn't mean you should panic. After spending 27 years in the commercial real-estate business, I think I can safely say that self-storage remains one of the very best long-term real estate values. The relationship between the yields, level of investment and the relative risks makes self-storage a stellar real-estate investment. If you are holding a well-located self-storage facility for a long-term investment, I could not recommend selling the property, even though I might feel that we may be near the top of a real-estate cycle. Not only can't we find a better investment, it is difficult to overcome the tax impact of a profitable sale.

However, with all of that said, there are reasons to sell that are independent of the long-term investment virtues of self-storage. Some of those reasons may be retirement, estate planning, changes in your local market that could negatively and permanently impact your property, or possibly partnership objectives. In the event that you are considering a sale for one of these or other reasons, this may be the best time in the market cycle to attempt to achieve the best price on your self-storage property.

One of the best, but most often ignored rules in real estate is to sell when the news is good, not when the first bad news appears. As we have all seen in the Wall Street Journal and other publications, today's economic news is a politician's dream come true. Take our little test (see News O' Meter), and determine if you think the news is going to get much better over the next year (circle the appropriate numbers, and then add them up). While our list may not be entirely comprehensive, I think we have covered the large issues that will affect the real-estate market in the next year.

If you scored a negative number, and you are thinking about selling, it might be a good time to get ahead of the curve. There are some things that may impact the self-storage market more than they will the general market. For example, with Congress talking about capital-gains tax reduction, there will be many self-storage owners wanting to sell. The good news is that they may save some taxes, but they may also put a lot of property on the market just as the cycle turns. A little analysis would suggest that being the first to sell is going to be better than being the last to sell.

As we all know, self-storage is not the investment secret that it once was. This great investment has attracted not only new builders, but the experienced old hands as well. Many areas are beginning to show some rate pressure and more-than-seasonal vacancies because of additional projects competing for the same customer. While the effects are not yet serious in most cases, the full effects of the building boom are just becoming evident in many areas. While we shouldn't expect a return to the 1980s, it is likely that the rate and vacancy pressures will continue for some time and may well accelerate. Obviously, this is a trend that isn't helpful to an owner with a short- or intermediate-term objective of selling.

In summary, if you are a long-term owner, you may want to sharpen your management and marketing skills for the next phase of the cycle, but you need not (and should not) run for the exit. On the other hand, if you are thinking about selling in the near future, I think the old saying, "the sooner the better," has some real significance.

Mike McCune is president of Argus Real Estate Inc., located at 82117 St., Suite 300, Denver, CO 80202; (800) 55-STORE; fax: (303) 299-8821.

By Cecile Blaine

Designing a self-storage facility requires an eye toward security, traffic flow, durability and making the most efficient and profitable use of the land available. Those considerations are added to other criteria determined in advance by the building codes, the site influences, owner requirements and design criteria. For that reason, designing a facility needs to be a slow, careful process with lots of reflection.

"One of the things that I keep emphasizing is that development is not something you jump into," says Herman Menze, owner of Menze Building in Tempe, Ariz., who has designed facilities for U-Haul, Pegasus and Central Self-Storage, among others.

A common mistake some builders are guilty of, says Dan Curtis, president of Doors and Building Components of Douglasville, Ga., is trying to re-invent the wheel. "A lot of people feel like they have to invent something, and actually there are plenty of good vendors in all phases of the business who can give people correct answers," says Curtis.

Building Codes

Before pencil ever hits paper or that CAD program is even warmed up, building codes need to be researched and studied thoroughly, because codes will dictate a number of criteria that affect the design of the facility. Some of those items include setbacks, water-retention methods, landscape, parking, fire-truck minimums, septic systems, easements and flood plains. Once those items mandated by the code are identified, then the facility can be designed with more certainty.

Maximum Coverage and Convenience

The design of a facility must take into consideration the size and shape of the land it will be built on, and it must utilize that land in the most efficient way, creating as much income as possible. In other words, it must maximize the building-to-land coverage, which many builders say is optimal at 38 percent--38 percent building to 62 percent land. The more expensive the land, the more efficient the design must be. At the same time, the design needs to be convenient for customers, because that's what sells units.

During the life of the self-storage industry, architects, designers and builders have vastly improved facility design, creating many industry standards. Nothing should be created, however, without a feasibility or market study of the area where the facility is planned. Only then can a designer know what the unit mix should be, what the security needs are and other elements of the market.

Layout/Traffic Flow

The shape of the parcel of land is probably the most important criteria in determining the layout of the facility. With few exceptions, a mini-storage building can be constructed on just about any piece of real estate, attests John Wilson, chief operating officer with American International Construction Inc. of Houston. "There's really nowhere you can't put one," he says. With the proper design and traffic flow, nothing is impossible, Wilson adds.

Clearly, one of the most popular configurations for a facility is the fortress layout, in which the outer walls of the buildings serve another purpose--that of a boundary for the facility. Not only is this layout thought to be safer, but it also helps make the best use of the land, as it eliminates the need for a fence around the outer portion of the facility, reduces the size of the footing and generally allows the builder to go beyond the height limit on the outer wall, says Menze.

Rows of units are often laid out parallel to the longest side of the parcel. If security is an issue--and where isn't it an issue--laying out the rows perpendicular to the office gives the manager a view of every unit just by walking one side of the property.

The larger the project, the more the layout will affect the flow of traffic. Most designers recommend one entrance and exit combination. While it creates more congestion than having a second exit, the security benefits outweigh the drawbacks.

In a one-story facility, larger units should be located toward the rear of the facility or at least toward the end of the sidewalls, says Mike Wimble, construction manager with Pioneer International Steel of Austin, Texas. "You want to keep the big traffic in the back of the project," he reminds. "You don't want to have U-Hauls backed up."

For the same reasons, driveways usually range from 20 feet to 35 feet wide, with the price of land often determining the width of the lanes. "For the most part, when somebody builds a skinny driveway, it's so they can get more square footage out of their property," notes Wimble. "Square footage is money, and money is the name of the game."

But Wilson says scrimping on the lane width to get a few more rentable square feet is one of the egregious flaws a property can have. "The worst thing is not to make the lanes wide enough," says Wilson. Facilities need an intersection of at least 25-by-30 for trucks and larger vehicles to get around easily, he maintains.

Building Design/Hallways

Great temptation awaits those developers designing hallways on a long, narrow piece of property to create very long rows--and hallways--without breaks. Menze suggests creating unbroken hallways no longer than 150 feet long. "I like to see an exit every 150 feet," he points out.

Others have more conservative criteria for hallways. Danny Clemons, president of American International Construction, likes to see units a maximum of 70 feet from an exit. Marking hallways with arrows, written directions or central focal points are other design elements that can help orient people and keep them from getting lost, he adds.

Cooled storage buildings are no longer a novelty, but a standard. When designing a new facility, most builders suggest incorporating climate control into 20 to 40 percent of the units. Those units should be located on interior hallways and upper floors of multistory buildings in units with swing doors, which have better seals to keep the air conditioning inside the unit.

Multistory facilities allow for a greater number of units and, therefore, revenue on a small or expensive piece of land. But buildings with more than one level also have different design criteria that apply. For example, any facility that is more than one story is required to have a lift or an elevator, according to the Americans With Disabilities code, and typically has more stringent fire-code requirements than a single-level facility.

Designing the Perfect Unit

Unit sizes should reflect the industry standards, which are divisible by five: 5-by-5, 5-by-10, 10-by-10, 10-by-15, 10-by-20, etc. In other words, there is no need to create odd-sized units, such as an 8-by-12, just to be different. Again, there's no need to re-invent what works well already.

In the unit design, builders must address one of the most common ways goods are damaged: flooding. Sloping the floors of the units or installing what is called a weather ledge helps get rid of moisture or water that builds up, according to Menze. "If I pour a floor flat and water spills in there, it can go over to the other unit," he says.

Steps, rather than slopes, are designed into pre-engineered buildings, according to Pioneer International Steel's Wimble. "An inch-and-a-half step will stop a ton of water from getting in," he says.

Separate But Equal

Moveable partition systems have become a popular design element in facilities over the years, because they enable a manager to change the unit mix with little effort. Galvanized systems, which are dark gray and show fingerprints and corrosion, have given way to Galvalume(r), a combination of zinc and aluminum. "It will not fingerprint and stain, and it'll stay bright and shiny for a long time," says Curtis.

Those opposed to the idea of moveable partition systems say it reflects more of a marketing problem than a unit-mix problem. "It is my opinion, after being in the business forever, that you should change your marketing, not your units," maintains Clemons. "I think you should do a good job in designing your facility to start with."

Security

Security systems need to be incorporated into the whole facility design at the very beginning in order to cut down on large, unplanned expenses down the road. For example, individual door alarms need to be included in the initial design before construction begins, as retrofitting a facility can be an expensive nightmare. And when they are installed, Curtis recommends placing them at the top of the door, which make it more difficult for them to be damaged in an accident or vandalized.

When installing a keypad for entry into the facility, the placement of it on the driveway should allow for three cars lined up bumper to bumper in the driveway. Otherwise, traffic problems arise. Also, the keypad needs to be close enough to the car so that it's convenient for the customer. "A lot of people put their keypads for entry into the gate where people have to get out of their cars to walk up and punch in their codes and get back in the car," says Clemons. "Well, if it is raining, snowing or really hot or really cold, it's very inconvenient for the customer."

Driveways and Parking Lots

Driveways and lanes need to be wide enough to accommodate customers' cars and trucks--especially fire trucks--but not so wide that customers are tempted to turn around and ultimately bang into the building, warns Curtis. "I believe in having narrow driveways and, if possible, making them one-way," he says. "So, if you have it a little narrower, they say, 'Well, it's not worth trying. I'll just drive down to the end, turn and get out of here.'" Twenty feet or 25 feet is fine, while 30 feet or 35 feet is too wide, he maintains.

Buildings that taper off at the ends also help create a wider turning radius for traffic to get through. For example, a building containing 10-by-10s could have two 5-by-10s at the end in order to round off the building and create an easier turn for vehicles. Menze says a good design should have a turning radius that is 28 feet wide on the inside of the turn, 48 feet on the outside, but 35-by-55 is better to ensure that fire trucks can get through.

Due to the many misconceptions about the self-storage industry, building codes often don't adequately reflect the low parking needs of a facility. "The parking lots will have way too many (spaces)," Curtis says of most designs. Self-storage is a "quiet, passive use of real estate. There are only eight people per every 100 units per day that will enter a self-storage facility." Building codes that dictate more than that should be challenged, he argues.

Menze has been a soldier in the war of the self-storage parking lot, as well. "It seems like every time I go into a new area I fight that battle," he says. "For a 50,000-square-foot facility, you only need five to six parking spaces."

Lighting

When talking about interior lighting, Menze believes variety is the key. "Too much light is just as bad as not enough," he says. Instead, he prefers to have one very bright light--what he calls prison lighting--and then lower watt lights around the rest of the facility.

Outside, the Tempe designer suggests focused rather than scattered light. "You want your lights to hug the ground and not shine over into the other people's property," he adds.

Roofing

Many older facilities were designed with built-up roofs, whereas today the standard is the standing seam roof. Menze has seen plenty of good wood truss and asphalt shingle roofs, but he is particularly opposed to built-up roofs. "Those built-up roofs cause a lot of problems, because they are good for a while and then they start to leak, then you patch them and work with them.," Menze pointed out.

With all the hoopla over the standing seam roof, Pioneer International Steel's Wimble says he doesn't see a lot of advantages in the standing seam over other types of metal roofs--especially the screw-down system or R-panel, as it is called. "Everybody has their opinions," he says. "I think both systems are very functional. A screw-down system is cheaper generally and just as functional, if installed correctly."

The Apartment/Office Equation

Self-storage facilities are increasingly being designed without managers' residences, as the face of the industry changes. Shurgard doesn't hire on-site managers, and U-Haul is moving in that direction. Therefore, they don't have to build manager residences at their facilities. "Twelve years ago, when we first started the company and we were building, just about every project had an apartment," says Clemons. "Today, probably one in 10 has an apartment." It's part of a trend among some management companies to hire younger, more marketing-oriented managers.

"You wouldn't want to live where you work, neither would anyone else," he adds.

When a residence is included in the facility design, it is usually attached to the office, either on the same floor or with an upstairs component. The jury is still out on whether the managers' residence should be attached to the office or not. The advantages of attaching it are straight forward: convenience, time savings, etc. Disadvantages include having the customer exposed to cooking fumes, grandchildren or other family matters.

DBCI's Curtis says separating it offers some other advantages, as well. "Usually, when it is separated, the (manager) isn't tempted to go in and sit down in the easy chair and watch TV," he says.

Less room for residences means more square footage and more money for the self-storage office and, according to Clemons, "It is getting bigger." Some of his clients spend between $50,000 to $100,000 on their office spaces, signaling a maturing of the industry in general, he says.

"This business has grown up," Clemons points out. "It's not a second-rate business anymore. It's a retail business. My customers are starting to see that and starting to design much better facilities--much more customer-oriented businesses."

Finally, the design phase of building a self-storage facility is the period in which all the pre-determined elements must be meshed with the optional design elements to create a facility that blends with the land, is convenient for the customer, reflects the needs of the market and meets the budget of the owner.

DO Study the Building Code Carefully Take Advantage of Examples of Existing Good Design Maximize Building-to-Land Coverage (Without Jeopardizing Convenience) Design One Entry/Exit Combination Build in Phases Locate Climate-Controlled Units on Interior Hallways with Swing Doors Locate Larger Units Toward Ends of Buildings, Toward Back of Facility

DON'T Use Wood Construction--Metal is Standard Try to Re-invent the Wheel Rush the Project Scrimp on Lanes to Get More Square Footage Create Odd-sized Units as a Marketing Gimmick Overbuild Parking Lots

I'm Going to Explode!
Dear Waldmans: My storage facility has been in operation for a little more than a year. We are still trying to decide why we need to do this, or how we need to do that. I have a wonderful manager, but it seems the busier we get, the more we lose things. In the beginning, I didn't think this was a problem, just an oversight. But each day I seem to lose valuable information: "What was the name of the tenant that was coming by?" Or, "When did you call the past-due tenant?" Or, "Which day was the maintenance man going to spray the units for pests?" Last week my manager tells me, "Oh, I forget to tell you that I have a dentist appointment this afternoon." Meekly, I thought, "This really has to get under control. I won't make it another year without some control over my lost information." Do you have any suggestions, before I really lose my temper?
--Losing It in Sanford, Fla.

Dear Losing It: It does become very perplexing when you can't find what you're looking for, or you can't remember calling the past-due tenant. You may have a great manager, but if there is no organization things can get really out of whack. We have found all sorts of ways to get organized.

A really simple way to get started in becoming organized is to purchase a large calendar for the office wall. Make sure you have four different colors of markers--black, red, green, yellow. What color you use is up to you; just use each color consistently. Okay, let's say black represents appointments made by the staff. Red could be used for any maintenance duties, such as spraying the units or cutting the grass. Green could be used to remind managers to call on delinquent tenants. You might use the last name and always the color green. Yellow may show the need to check the units for debris or any repairs.

First, instruct all personnel to write everything down. Anyone that answers the telephone must take a complete message. Use telephone message pads and make sure everyone understands the urgent need for a name, time, reason and what the call was about. It is always a good idea to purchase the message pads that have a carbon copy. If any messages are misplaced, you always have a copy.

Another good practice to get into is placing notes concerning any tenant inside his individual file, such as why the call came in or why you made the call to the tenant, the name of the individual you talked to, and the results of the phone call. You can never take a message that is too long. When it comes to covering all the bases, you may be surprised that you have all the necessary information right in front of you. Stress the importance of the rules and make sure everyone understands the specific reasons for all this writing. Notes are good for everyone. Lists are great to remember what it is you need to do. It may help to write a list of things to do for the next day. This list should be placed in a convenient location, place, as it does no good if you can't remember where you placed it. Another tip is to have a list for any supplies you need to order and hang it in an obvious spot. Hint: don't wait until you run out of an item before placing it on the list. Make a list for the maintenance person to follow, so that he knows when to check on certain chores. It makes life easier for everyone if they know what needs to be done and when.

A father-daughter team, Stanley and Jill Waldman are self-storage owners/operators and attorneys. In addition, Ms. Waldman holds a master's degree in labor and employment law from Georgetown University. Together they have co-authored a number of books on self-storage operations, including Getting Started in the Self-Storage Business, Self-Storage Business Management Forms, The Policy & Procedure Manual for the Self-Storage Business, Selling Your Self-Storage Business and The South Carolina Tools Manual for Self-Storage Operators. Comments and questions may be sent to: Ask The Waldmans, P.O. Box 21416, Charleston, SC 29413; or via their Web site: www.askthewaldmans.com. Editor's Note: Views and opinions on legal matters are those of the authors. Professional counsel should be obtained before any determination or positive action is taken.

When Your Ad Goes Wrong

By D. Carlos Kaslow

Over the past year, several storage operators have called us concerning problems with their Yellow Pages advertisement. Either the ad did not appear, or it contained an error, such as the wrong phone number or wrong address. A mistake like this can be a problem for a mature self-storage facility and a disaster for one just opening.

For most storage facilities, the Yellow Pages ad is the number-one source of new business. The Self Storage Association has recently published Self-Storage Usage: A Study, which reports more than 70 percent of customers would consult the Yellow Pages to find a self-storage facility, and more than 30 percent found the facility where they stored their goods through the directory.

Deck Stacked Against Advertiser

What legal rights does a storage operator have when the Yellow Pages makes a mistake? A review of current law and past disputes indicates that the deck is stacked heavily in favor of the phone company. In most cases, an advertiser will not only have his or her business injured, but he finds little relief from the directory or the courts.

Yellow Pages providers use a number of contractual devices to protect themselves from liability for mistakes. The two most common contract provisions are 1.) making acceptance of the advertisement conditional on publication and 2.) limiting liability for mistakes to the amount charged for the advertisement. The courts in most jurisdictions enforce such provisions.

Acceptance of Application: It is mutually understood and agreed that the publication of the advertising requested in the telephone directory shall constitute acceptance of this application by the telephone company. Otherwise, this application is not binding on either of the parties.

This provision simply says that a binding placement contract does not exist until the ad appears in the Yellow Pages directory. If the company fails to include the ordered advertisement, no binding contract exists, and no breach of contract has occurred. This is a powerful defense to customer claims for breach of contract. The Yellow Pages publisher's defense is that no contract existed. Not including the ad is an effective rejection of the advertiser's proposed contract.

The limitation of liability, which is common in such contracts, will be more familiar to most self-storage operators. It is similar to the limitation of liability contained in your rental agreement. The following is an example of such a limitation from a BellSouth Yellow Pages contract:

In most cases, an advertiser will not only have his or her business injured, but he finds little relief from the directory or the courts.

BellSouth Advertising & Publishing Corporation's liability and the telephone company's liability (if any) on account of omission or errors in such advertising shall, in no event, exceed the amount of charges for the advertising which was omitted or in which the error occurred in the current directory issue and such liability shall be discharged by abatement of the charges for the particular listing or advertisement in which the omission or error occurs.

In only three states--Alabama, Michigan and Wisconsin--have courts allowed advertisers to collect damages from a Yellow Pages publisher...

This type of provision effectively says that the Yellow Pages publisher has no liability if it does not publish or incorrectly publishes an advertisement. If the publisher makes an error, the advertiser is relieved of paying for the omitted or incorrect advertisement. This may seem like little relief to a storage operator whose advertisement contains an incorrect phone number or does not appear at all, given the devastating effect this can have on his or her business. It can take six months to a year for a Yellow Pages advertisement to be corrected.

Courts in more than 26 states, including California, Florida, New York and Texas, will generally enforce liability limitations provisions. In only three states- Alabama, Michigan and Wisconsin- have courts allowed advertisers to collect damages from a Yellow Pages publisher who either left out or incorrectly published an ad. The courts held that the contractual limitations were either contrary to public policy or unconscionable and, therefore, unenforceable.

Judicial Attitudes May Be Changing

A Florida case indicates that even in states that uphold Yellow Pages liability limitations, a publisher may not be completely immune to the consequences of its errors. For example, a Florida Yellow Pages advertiser found that his advertisement contained an incorrect telephone number. He immediately contacted the publisher and reported the mistake. While upset, he apparently wasn't in a mood to sue. His attitude changed when the next year's directory came out with the same error.

The Florida Court of Appeal upheld the publisher's contractual liability limitation for the erroneous advertisement that ran in the first directory. However, the court concluded that while the first error might have been a mistake, to make the same error in the second year was more than mere negligence, and the advertiser could sue for damages.

Any self-storage operator who is the victim of Yellow Pages publisher negligence will have a difficult time collecting damages. The Yellow Pages-publishers have contractual defenses that are usually effective, and in most jurisdictions the suit will be dismissed without a trial. However, some recent cases indicate that the courts are becoming more willing to consider such suits and hold the Yellow Pages publishers liable for their errors.

The following article was excerpted from The Self Storage Legal Review, a bimonthly newsletter on legal issues pertaining to the self-storage industry. For more information or to obtain a subscription, contact Carlos Kaslow at 2203 Los Angeles Ave., Berkeley, CA 94707; (510) 528-0630.

Opinions on legal matters are those of the editor and others; professional counsel should be sought before any action based on this material is taken.

To Good to Be True?

By Alice Cravens

It helps you even if no one buys it.

It helps you to serve your customer while clarifying responsibilities.

It helps you to reassure customers if a catastrophe strikes.

It costs you little...or nothing.

Does this sound too good to be true? Can you believe that this is a form of insurance? Customer storage insurance programs can do all of this for a storage manager. While this type of insurance has been around for decades, today's programs have brought us into a new era of improved coverages and services that help to make them more attractive to customers. This article will give you a comprehensive update on this important service, from covering the basics to tips on how to incorporate this service into your daily leasing activities.

THE BASICS

What is Customer Storage Insurance?

When customers store their belongings at your facility, they may be concerned about what would happen in case of fire, burglary or other catastrophes. A customer storage insurance policy commonly offers protection against several different types of damage to the customer's property, including fire, windstorms, burglary, and water damage due to roof leak and collision. It is usually offered right at the facility, the most natural place to obtain this small and often short-term policy.

Depending on the program, available coverage limits can range from $2,000 to $30,000, with policy terms ranging from one month to one year. The facility can also choose, in many cases, between offering a program where the customer mails the insurance application and premium payment directly to the insurance provider, or one in which the customer pays the insurance premium to the storage facility along with the rent for the storage space. When customers pay for the insurance with their rent, coverage starts automatically when they move into their storage units. The manager forwards the collected premiums to the insurance company at the end of every month.

Why include this service with everything else you do? Customer service insurance helps you to serve your customers' needs and offer reassurance. Documentation enables you to keep a written record showing that you reminded customers of their responsibility for their stored belongings in a service-oriented way. Catastrophe assistance eases the burden of telling your customers that they have been affected by a catastrophe when you can refer them to an insurance provider. Offering a program at your facility: Most of the insurance carriers specializing in the self-storage industry offer a variety of customer storage insurance programs. No two programs are exactly alike in coverage and administration, so compare them and see which best suits your needs and your customers' needs. Coverage differences, limits, costs and payment terms can affect your customers' buying decision. The program materials that you will need in order to make this insurance available to your customers are usually supplied to you at no charge. However, some companies may charge shipping fees. Most insurance companies limit the availability of their programs because they must manage costs and catastrophe exposure and comply with the applicable insurance regulations in each state. You may want to find out which laws apply in your area and what qualifications or limitations are imposed by the programs that interest you.

How did Customer Storage Insurance develop?

Customer storage insurance developed out of the needs experienced by both the storage facility operator and the customer. Managers found that customers often confused the self-storage business with the moving and storage business. A moving and storage company acts as a bailee, and usually takes charge of the property. It may, therefore, be responsible for the safety of the property. A typical self-storage facility does not usually have any control over the stored property. It leases space to tenants just as a commercial building owner does. Managers needed a way to actively show the customer that the facility was not responsible for stored property.

At the same time, customers needed a way to get insurance for their stored belongings easily and inexpensively. Some homeowners policies may provide coverage for property in storage facilities, however, many provide limited or no coverage. When insurance is available right at the facility's counter, customers can be asked to sign a form: 1) documenting that the facility offered this extra service; 2) reminding the customer of his or her own responsibility for the stored property; and 3) allowing the customer to easily obtain insurance coverage.

Many storage managers offer some kind of customer storage insurance, because it allows them to clearly show the customer in a service-oriented way that the facility is not responsible for stored property. It is also offered because it enables managers to keep a written record that they took this extra step to assist their customers. This extra documentation is often contained in the materials supplied by the insurance provider. Here is an example of the wording you might see that walks the customer through these important concepts:

Tenants Store Property at Their Own Risk I understand that this self-storage facility and/or its management: 1) is a landlord renting space, is not a warehouseman, and does not take custody of my property; 2) is not responsible for loss or damage to my property; 3) does not provide insurance on my property for me; and 4) requires that I provide my own insurance coverage or personally assume risk of loss or damage. Tenants Choice of Insurance Options I have been given a brochure that explains the customer storage insurance available here. As initialed below, I agree to obtain insurance coverage on property in my storage space for its actual cash value or personally assume risk of loss or damage. ________Please initial only one: ________Customer storage insurance policy ________From my own insurance agent ________Personally assume risk of loss or damage Tenant's Signature_________________________

What kind of storage situations is customer storage insurance designed for?

Most customer storage insurance programs are designed to cover property stored in enclosed locked spaces. Many of these programs were originally created to insure household goods. Look for policy limitations on business property if you have many business clients. Most policies exclude or severely limit coverage for property stored in the open because of the increased exposure. Check your insurance program to see how it treats property stored in outside storage spaces, and suggest to your customers who store boats or cars that they consult with a local auto or water-craft insurance agent because of these restrictions.

Customer storage insurance programs may also not fit other less traditional selfstorage situations. A good example is when a majority of a storage facility's business is in active business records storage. Because the goods move in and out of the facility more frequently, the responsibility for these records can shift - you are no longer in the traditional "tenant leasing storage space" situation. These records are often not covered by the standard customer storage insurance policy because of the number of records and the difficulty of placing a value on them. This situation is often handled by a special agreement between the management and the customer.

In the last few years, storage facilities have also provided additional services. These may include the use of a moving truck or pick-up and transportation of the customers' belongings. Customer storage insurance policies usually do not take effect until the belongings are in the selected storage space, so the current customer insurance programs may still be offered. Keep in mind that your responsibilities may change when you provide additional services. It is important to check with your insurance providers and your attorney about any special agreements needed whenever your services differ from traditional self storage.

The newest service in the storage industry is one that (for lack of an official term) we'll call "portable self-storage." The self-storage company delivers specialized containers to the customer and then picks them up after the customer packs them. This presents a new challenge to customer storage insurance providers. While there is increased protection from water and crime for these belongings, they also move about under the facility's care, creating a new type of risk for "space-based" customer storage insurance policies. This type of service can affect other parts of the business, because it pushes it closer to the moving and storage industry with another world of laws, responsibilities and liabilities. This can affect a storage facility's ability to offer a separate customer storage insurance program for portable self-storage situations. Perhaps new customer storage insurance products and services can be created if the portable self-storage concept grows and manages to remain free of the laws that regulate the moving and storage industry.

Why offer such a program?

Customer storage insurance programs offer benefits for you and for your customers. They provide you with the opportunity to explain that your facility is not responsible for customers' property and to document that explanation. At the same time, you are able to offer the customers a low cost way to protect their stored belongings. Even if no one chooses to purchase the insurance, the written documentation becomes an important part of your business records if a question arises at a later date.

It is clearly to your customers' benefit to be able to purchase this type of protection for their stored property. In the unfortunate event of a catastrophe, such as a fire or a hurricane, the presence of a customer storage insurance program helps you, as well. Imagine how it would ease the burden of telling your customers about a major disaster if you could also reassure them by referring them to an insurance provider. Your ability to provide caring customer service is enhanced by these programs.

THE OFFER

Now that you have a program, how and when do you offer it to your customers?

Insurance Phobia - we all have it. Few managers are eager to talk about insurance, unless they have seen first-hand how it can benefit customers when a catastrophe strikes. Your managers want to emphasize the benefits of storing property at your facility and might shy away from suggesting that something bad could happen to their stored belongings. But customers will value your foresight and concern, especially when your facility offers a service that can help them if an unfortunate event happens. Here are some tips to help you showcase this service:

1) All insurance providers emphasize service to you and your customer. They provide toll-free numbers and support materials to answer questions about coverage, administration and claims. Make sure that your new manager becomes familiar with the program you provide.

2) Let your customer know that your facility took the time to find a program so that you could offer this additional service to them.

3) While you manage your facility carefully, situations like hurricanes, earthquakes, and even fires and targeted burglary are beyond your control.

4) If customers say that their homeowner's policy covers property stored elsewhere, that's great. They may want to double check with their insurance agent to make sure that there are no limitations on coverage.

5) Your customers are spending a great deal of effort to care for their property by storing it at your facility. Making sure that their property is protected from catastrophes rounds out this care.

THE FUTURE

Customer storage insurance programs are changing for a variety of reasons, thanks mostly to improvements in technology. Facilities are also being built stronger and safer, and this reduces the insurance risk. For example, improvements in security have motivated insurers to offer better crime coverages. Burglary coverage used to exist only as a partial coverage, usually only 50 percent of the total limit chosen. A customer might now be able to purchase full burglary coverage or even theft coverage, where forcible signs of entry are not required to demonstrate a covered loss. Computerization has also helped with payment options and it assists the insurance providers in determining coverage and handling catastrophe losses efficiently. And as for portable self-storage, insurance providers always enjoy a new challenge.

While these improvements are welcome, it will be a long time in many states before insurance can be purchased as quickly as locks or storage materials. Customer storage insurance is a different animal from other ancillary services, primarily because it is regulated by each state with its own specific preferences. In fact, many states rely on regulations based on how insurance was transacted generations ago before fax machines, readily available computers or even telephones and regulators face the daunting challenge of questioning what is truly necessary and what if anything needs to change.

Still, the need for customer storage insurance remains. There are no alternatives in the traditional insurance market, and that is unlikely to change. The future of customer storage insurance as an enhancement to service for the manager and customer will continue to brighten.

Alice Cravens manages a variety of customer service programs for Deans and Homer, an underwriting manager in business since 1856. Deans and Homer is one of the founding insurance providers for the self-storage industry, and offers comprehensive insurance coverage for facilities as well as a variety of customer storage insurance programs. Ms. Cravens may be reached at (800) 548-1616, or email: www.deans-homer.com.

With Stanley and Jill Waldman

Hiring A Teen-ager

Dear Waldmans: Lately, I have seen advertisements on television about hiring teen-agers. After thinking about employing a teen-ager at my storage facility, I have decided it would be a good idea. After all, it would give a teen-ager a chance to make money and gain good experience during the summer. Have you ever employed a teen, and if so, what is important in the hiring process? I am sure there are advantages and disadvantages.

--Employing Teens in Vicksburg, Miss.

Dear Employing Teens: I give you a lot of credit for wanting to employ a teen-ager for the summer. So many teens want to work, and either they cannot find a job, or people are just too afraid to hire them. After all, teens need an opportunity to make their own money and learn what work is all about. It not only gives them a chance to learn and grow, but the experience will be endearing for you, as well.

My first experience employing a teen-ager was quite unusual. He wanted to work (or he thought he wanted to work), but he had not figured out what real work involved. It was also my first experience working with a teen, so I had to learn right along with him. I had him cleaning, painting (that was the fun part), spraying for bugs and pulling weeds. After a while, I noticed he needed to take a little break after each chore. It was too hot, or he was just too exhausted for all that manual labor.

In the beginning, it seemed I had to baby-sit him in order for the jobs to get completed. At one point, I felt I could do them a lot faster, rather than following him around the facility. That was my fault. I realized that he needed some guidance. On the other hand, I needed more patience. So, we had a long discussion about how we were going to handle this entire employer/employee situation, and then we came up with a plan.

Here are some suggestions you might want to implement in your own plan to hire a teen-ager:

• Check with the state and federal law requirements before hiring a teen-ager.
• Make sure the teen-ager is at least 16. Get some written proof, such as a birth certificate and a Social Security card. Make copies of both for the file.
• Give detailed instructions on what he is supposed to do on the job and how you expect the teen to carry that out. Most teen-agers that are first-time employees are just as nervous as you are about the job. The experience can be very encouraging for a teen-ager- especially one without any prior job experience. We need to remember that teens must be given a chance to work before they can gain real job experience.
• Go over the work schedule and determine the best hours.
• Don't let the teen-ager operate any machinery that may endanger him.
• Explain how the tax forms work and what he can expect to receive with his first paycheck. Many teen-agers are shocked when they get that first check; they don't realize how much the government takes out. That is why this is such a good way to teach them how the "real world" works. It not only helps them, but makes them realize the importance of money. Hopefully, by putting all that work into a job, he will learn how to save some of the earnings.

Several of my teen-agers have come back years later and told me how much they appreciated me giving them a job. That made me feel good, because I questioned whether they really liked me during their employment. Young adults grow through their experiences, and experience is only gained by doing. I give you a lot of credit for traveling into the world unknown. You will not regret giving a teen-ager a chance to learn and grow.

A father-daughter team, Stanley and Jill Waldman are self-storage owners/operators and attorneys. In addition, Ms. Waldman holds a master's degree in labor and employment law from Georgetown University. Together they have co-authored a number of books on self-storage operations, including Getting Started in the Self-Storage Business, Self-Storage Business Management Forms, The Policy & Procedure Manual for the Self-Storage Business, Selling Your Self-Storage Business and The South Carolina Tools Manual for Self-Storage Operators. Comments and questions may be sent to: Ask The Waldmans, P.O. Box 21416, Charleston, SC 29413; or via their Web site: www.askthewaldmans.com. Editor's Note: Views and opinions on legal matters are those of the authors. Professional counsel should be obtained before any determination or positive action is taken.

By Pamela Alton

As most of us are aware, the Yellow Pages ad is where most tenants first learn about a storage facility. It is probably the largest advertising expense a facility owner has, so it should be made to count.

In some areas, a good Yellow Pages ad could cost as little as $500 or as much as $1,800 or more per month. The larger the ad, the more visible a facility will be, especially when it's in a saturated area. Statistics indicate that typically, a prospective tenant will call four ads before they choose the site they want to rent at; therefore, does a self-storage business need to be the first in storage section of the Yellow Pages? Probably not. However, an owner shouldn't scrimp on the size of his ad, as most placements in the book are based on the size and length of advertising. An owner with a new facility should budget for the largest ad possible. You can't expect a new facility to be full in six months when you have an eighth of a page ad on the last page of the storage section. It just won't happen.

There are several companies that offer telephone books in most cities: GTE, AT&T, PacBell and their subsidiaries, and local directories such as the Donnelly Directory. Prices of ads will vary, depending upon which book you go into and its distribution. In larger cities, it can be very costly if you try to advertise in all books. An owner should just concentrate on his local area, since most tenants will not drive more than five miles from their home or business to store their goods. Of course, these companies will try to talk you into their directory, saying they are the best to advertise in. It's important to keep in mind that it's the salesperson's job to sell space and get owners competing with each other's facilities. An owner should stand firm and choose the directory that is within his budget, the one distributed where most potential residents will come from.

When designing an ad, use good-quality graphics or photos. Allow a picture or graphic to speak 1,000 words for you. Some software programs, such as Microsoft Publisher or Front Page, have several Yellow Pages templates for your convenience, plus they usually have an extensive graphics package. Start planning next year's ad right now, even if it's not due for several months. Don't wait until two days before the Yellow Pages closes its ad space. If not enough time is spent on the design of an ad, you could end up with something you aren't happy with, but stuck with for a whole year. Allow yourself plenty of time so you will be pleased with the outcome of your ad. Make a list of all of the items you want to put in your ad, design it, then be critical. Is it too wordy and busy looking? Is it too plain?

Evaluate other ads in the same book, not just self-storage ads. What draws you to one ad over another? Use the other ads to give you design ideas. You may want to consider having a professional design company design your ad for you if you don't have the time or the artistic talents. A large map indicating the location of your facility is a must in any Yellow Pages ad. Once a person has decided they need storage, they pick up the book and begin cruising the ads. After the first couple, they typically zero in on maps to find a facility close to their home or place of business. If you have more than one location, you may want to consider a consolidation ad that consists of maps of your various locations.

The word storage should be in the largest print type in your ad. You may be proud of the fact that you named your facility after you, your children or the street corner it is located on, but a tenant couldn't care less if they store at Thompson's Self-Storage or not. Storage is what you are selling, so make that stand out in your ad.

Now, I know some of you have the dreaded "s" word--security--in your facility name; however, avoid the use of that word when describing the features of your site. Instead of "security gate," use electronic gate; instead of "security alarm," use individual door alarm; instead of "security cameras," use video cameras, etc. If you have rental trucks or accept charge cards or have extended access hours, state that in your ad.

Personally, I don't think you should waste your money on red or blue print, or white background. Spend the extra money to enlarge the size of your ad. When placing your ad, you may want to contact a national Yellow Pages advertiser that groups several ads together to receive a discount.

One thing about storage: You usually don't have to sell the person calling you from your ad on storage. They have already decided to store their goods--that's why they called you. However, you must compete with the other storage facilities in your area. That is why being competitively priced and having effective telephone closing techniques are so important. The cost to advertise may break down to $5 to $15 per call, just to make the telephone ring. Remember: Great closing techniques will go hand in hand with an effective Yellow Pages ad, so make each call count.

Pamela Alton is the owner of Mini-Management^®, the largest nationwide manager-placement service serving the self-storage industry. Mini-Management also offers full-service and operations-only property management, policy and procedures manuals, sales and marketing training manuals, inspections and audits, consulting and training seminars nationwide. For more information on the various services offered by Mini-Management, call (800) 646-4648.

DCAL Computer Systems has acquired all rights, assets and product offerings of Acorn Management Systems, including UNItroller management and UNIkey access control products, and has established the "Acorn Products Division" to market and support the Acorn Products.

DCAL has been serving customers in the dry cleaning and laundry business as well as other markets for more than 12 years. One of the primary commitments of DCAL is customer support. DCAL professionals stay in touch with customers and provide them an 800- number to use should they any information or support services.

In an offering to show goodwill, the company is also currently honoring all paid service-support agreements for Acorn Management Systems Inc. customers. Simply send a copy of your paid agreement to our office, and service will be honored at no additional charge to the customer for the remainder of the agreement period. The support agreements from Acorn Products Division begin when the previous agreements expire.

Acorn Products have been serving the computerized management and access-control needs of the self-storage industry for more than a decade. Acorn Products have contributed to the growth of the industry and have been enhanced to meet increasing demands for more secure facilities. Today, Acorn Products are poised to meet new challenges and to expand their influences in the self-storage industry as well as new markets.

Products:

Acorn's primary products for the self-storage industry include, but are not limited to the following:

UNItroller--Self-Storage Management Software

UNIkey--Access Control Software System

Unique Vertical Lift Gate--and other types of automated gates.

UNItroller

Acorn offers various levels of UNItroller software to accommodate individual needs. The most current version is UNItroller IV, which includes the Custom Reporting Module that allows the user unlimited reporting capabilities. In addition to Acorn's Daily Maintenance and Inspection (DMI) report, the UNItroller IV now offers the HOT DMI and Facility Maintenance report, providing the user with an even more efficient way to keep an eye on what is going on at the facility. The following are the current versions of Acorn's management software.

• UNItroller 300 (Handles up to 320 units)
• UNItroller 3000 (Accommodates unlimited number of units)
• UNImax (Processes multiple data sets from various sites)
• UNIcentral (Communications software that allows the central office to receive data from multiple sites by modem)

The management software generates a DMI report that furnishes the manager with the necessary information to track each unit. Any unit not meeting all of the standards defined by the software will automatically appear on the DMI report. These units are checked off during the physical inspections, so if something happens to one of the units there will be an evident time frame for the occurrence. Acorn suggests two daily physical checks of the facility using the DMI report. This action narrows the window for occurrences, so stay in control of your facility no matter the size.

UNIkey

• Acorn's access-control system includes UNIkey access control IBM-compatible software and a 24-volt power supply, which receives a four-wire, 18-gauge shielded cable that is run to each keypad outside. A typical UNIkey package includes the software, power supply, two electronic talking keypads with enclosures, two gooseneck stands and a 250-foot spool of the shielded cable to hook the keypads back to the power supply. The software checks the keypads 24 hours a day to make sure they are functioning properly. The software has audit-trail capabilities to tell you who has entered your facility, how long they were there and when they left.

Goals

Acorn is enthused about the opportunities in the self-storage industry and beyond. The company is checking into ways to advance its software products in other markets such as apartment complexes, private parking for corporations, marinas, corporate storage areas, and almost any place where access control is needed.

Acorn Products Division of DCAL Computer Systems meets the need for self-storage security products through the sale of vertical lift gates and UNIkey access control systems. But it also responds to the need for management software that provides self-storage owners and managers with accounting data, ratios and percentages to help them evaluate their operations.

For more information on DCAL Computer Systems and Acorn Products Division, contact Darrell Potts or Gary Trook at 4100 Adams Road, P.O. Box 3936, Bartlesville, OK 74006; (800) 328-DCAL; fax (918) 335-0240; e-mail [email protected].

As we approach the new year, it is time to think about New Year's resolutions...once again. We have all made personal New Year's resolutions in the past...

"This is the year I will stop smoking."

"This year, I will eat healthier."

"I will commit to an exercise routine."

"I promise to invest more in my retirement fund."

"This year, I will give more to charity."

"I resolve to be a kinder person."

"This is the year that I will learn to control my temper."

Sound familiar? We've all made numerous resolutions to improve our personal health and happiness, but what about New Year's resolutions to improve the livelihood of your self-storage facility?

No matter if you are an owner or an on-site manager, now is the time to take a few minutes, grab a pencil and piece of paper, and write down some thoughts about how you will improve your facility, work habits or personal business growth for the new year. Just keep in mind that you need to be flexible; work to achieve your goals, but don't be discouraged if you can't keep all of your New Year's resolutions.

Resolutions for Owners

If you haven't already sat down with your on-site manager and designed your annual budget, now is the time to think about it and make sure your manager has some input on the budget. Try not to set goals that are so lofty they could never achieve them, but be reasonable and flexible. Without a road map, how can you know where you are going, or when you have arrived at your destination?

Plan your 1998 audit and inspection schedule. Try to go to your site at least once a month to inspect the books and the physical plant of your facility. Take that time to communicate with your manager and discuss your goals and their achievements. If you don't have the time or expertise to conduct an audit and inspection, contact an outside company and schedule your audits with them.

On another front: This could be the year that you decide to invest in the training and certification of your on-site manager, another worthy resolution. By certifying your manager, you can give him self-worth that you might never be able to replace with a dollar figure. Perhaps the knowledge he will acquire will make your operations more professional, and from a legal aspect, it could keep you out of hot water when it comes to lien sales, collection techniques or customer service.

Maybe you need to communicate with your on-site managers more frequently, offering them a pat on the back for a job well done. Or perhaps you should visit more often as a means to motivate them, letting them know what job responsibilities they complete well, as well as those that might require some improvement.

Give your managers the tools to run the office efficiently: A pleasant working environment makes a happy, productive manager.

On the other hand, maybe 1998 is the year that you seriously consider replacing your manager if he is not producing the income that you expect. Is your manager going against the grain, refusing to abide by your standards? Have you given him plenty of training opportunities to learn the appropriate systems and functions for carrying out procedures? Does he have a bad attitude? If you answer "yes" to any of the above, don't let another year pass you by without making a management change.

Perhaps you should also resolve to attend seminars and expos to brush up on your ownership/management skills, learn about what other operators do, what works, what doesn't, etc. Coming up in February, as every year, is the Inside Self-Storage Expo, which is tagged as the biggest annual self-storage show. (If you have attended the expos in the past, perhaps this year's resolution could be to actually attend the various seminars-----instead of spending most of your time at the slot machines or gaming tables!)

Another brilliant idea: Send your managers to an expo, so that they can mingle with peers, vendors and experts in the storage industry. If they learn only one or two new sales, marketing or management techniques, then it will be money well spent. Even if you cannot afford to send several managers, consider sending one key person who can take notes and share valuable information with the rest of your employees upon his return.

Maintenance might also be in your game plan for 1998. This might be the year that you replace your roofs, install that electronic gate, upgrade the software and hardware in your office, or remodel the office or manager's apartment. If so, have your manager gather bids for these services, so that you can make an informed decision when choosing the contractor or software program.

Make sure your manager always has the tools to do his maintenance job effectively at your facility. List maintenance duties that need to be addressed daily, weekly and monthly, and include them in your manager's responsibilities. And, as always, train him as to the proper methods for completing these tasks.

Some Resolution Ideas for Managers

Is 1998 the year that you want to make changes in your employment or self-storage education? If you feel that you need more training, then sit down with your owner and discuss your options. Will your owner be amenable to sending you through a manager certification program? How about the possibility of attending trade shows, conventions or other various manager seminars?

No one is too old or too experienced to learn something or to better themselves. By investing in your self-storage education, you could make yourself more valuable to the facility's owner and its outcome.

How are your sales skills and your telephone techniques? How about your customer-service or maintenance skills? Could you do better, or will you do better in 1998? What training or incentives do you need to do so? Discuss these with the owner.

Is this the year to design a more effective marketing plan for your site? Has there been more competition in 1997, making you feel slightly inadequate? How can you position your facility so that it attracts more attention, more tenants? Perhaps you need to re-evaluate your skills and improve upon your marketing or telephone techniques. In addition, think about redesigning your Yellow Pages ads, brochures and direct-mail pieces. Maybe a new look with more punch will bring in more business.

What about maintenance of the facility? Now is the time to sit down with the owner, gather bids for planned improvements, and design a maintenance program that will save the owner money in the long run and make your facility the best that it can be.

Summing It Up

Just remember: Not all New Year's Resolutions will be kept. That is just a fact of life. However, with some perseverance and a long-range business plan, you can achieve some of those resolutions and have a prosperous 1998­both professionally and personally.

Best of luck to you. Let's make 1998 the best year yet in the self-storage industry.

Pam Alton is the owner of Mini-Management, one of the industry's largest nationwide manager services, based in Santa Barbara, Calif. Mini-Management also offers policy and procedures manuals, sales and marketing training manuals, inspections and audits, consulting services, telephone shopping and training seminars. For more information, call (800) 646-4648.

By Michael Zervas

Recent changes in the Yellow Pages industry have left advertisers with a bewildering array of choices. Currently there are more than 7,000 directories available to advertisers. There are now more than 200 publishers, and the average directory has more than 2,500 headings to choose from. Yellow Pages advertising has grown so much that in 1990 revenue topped $8.9 billion, making it the fourth largest advertising medium behind newspapers, television and direct mail. Understanding consumer attitudes toward the Yellow Pages and what they expect from them will help you to develop an effective campaign. Also, capturing a demographic profile will help to determine if this is a good medium to use in your advertising mix. In 1996, Mediamark Research Inc. compared the profile of adult media users of Yellow Pages, newspaper, radio, magazine, outdoor and TV. Yellow Pages users are better-educated, more affluent professionals who move more and, therefore, are less familiar with services and products offered in their area. Similarly, a 1996 industry usage study conducted by Statistical Research Inc. shows several useful statistics. (See sidebar.) A review of the Yellow Pages industry coupled with this information will give you a good start on developing an effective Yellow Pages campaign.

Publishers

Although there are numerous Yellow Pages publishers, they all fall into one of two categories. Utility publishers produce directories directly for telephone service providers. US West, PAC Bell, Bell Atlantic and BellSouth are examples. Independent publishers produce directories that are not associated with a specific telephone provider. Many of these independent directories publish books that are geared to a specific geographic area or target market.

Directories

There are several different types of directories. Utility or core directories are published by the area telephone company for their specific service area. Suburban or neighborhood directories serve a smaller, more centralized area already covered by a larger directory. Conversely, an area-wide or overlay directory encompasses a larger area made up of multiple smaller directories. Either the neighborhood or overlay directories can be published by utility or independent publishers. Finally, there are the business-to-business directories that target the buying needs of business consumers. This is in contrast to consumer directories that target the residential buyer. Adding further to this confusion are the companies that send out solicitations designed to look like bills. Many of these solicitations sport the "walking fingers" and are construed by the recipient as a bill for directory advertising. However, in most cases, these directories are never published or are distributed to areas well outside the pull of a particular self-storage facility.

Buying Ad Space

Prior to meeting with your Yellow Pages representative, do some research on your own customers. Customers use Yellow Pages at two different points in their buying decision: first, when they call you to check on prices, availability, hours, etc.; second, they may never call, but they may take down the address printed in the ad and just show up. In either case, you should ask your customers how they heard about you. On the phone, ask them which ad they responded to, and in which book. Track these results to get a better idea of which of your ads is drawing the most response. Next, do a zip-code survey of your existing customer base. Chart on a zip-code map (available at map specialty stores) which areas provide most of your customers. Compare this analysis to the directories available in your marketplace, making sure you spend your money in the book that reaches your market area. Consider, though, where your competition exists and if there are not quality competitors in parts of the market you'd like to attract, then consider advertising in directories that serve those specific markets.

There are several questions you should ask any publisher before committing to a space purchase. First, ask where the directory is distributed. It will do you no good to buy advertising in a directory that is charging you to reach people outside the area from which you can pull customers. Remember, most people are looking in the Yellow Pages because they want a convenient, cost-competitive place to frequent. How many copies of the directory are distributed and to whom? Determining the number of people you reach with a directory will allow you to derive the cost of reaching those people. This number is now an objective tool to measure and compare against other directories in the area. Understanding who you will be reaching--large populations of college students, primarily businesses, older resident, etc.--will help in determining the work of the book. It will also help later in designing your ad. Ask about the availability of discount and special pricing programs. Initially, a directory may not appear to be a great buy, but if you are able to negotiate a better price, it may have more value. Specifically, there are several programs you should ask about, including step-up programs, heading-based discount programs, and first-time buyer incentives. Step-up programs offer a certain ad size and charge for the next smaller size. Heading-based discounts periodically have special pricing for specific headings. These and other programs are often available, but sometimes aren't brought up by the local representative. Review the heading of the book in question to determine what your main competition is doing. This will help determine what size ad to buy. Yellow Pages ads are placed front to back from largest to smallest. If, for example, there are a lot of half-page ads, but none of them are near your business, perhaps you can buy a smaller ad and still be listed ahead of your main geographic competitors. Also, in reviewing the headings, you may uncover different headings on which your competition is not capitalizing.

1996 YPPA Industry Usage Study Nine out of 10 adults used the Yellow Pages in 1996. 63 percent of references were to display ads. The average display user looked at 5.1 ads. 87 percent of users purchase or intend to purchase a product/service from a business in the Yellow Pages. 44 percent of users who contacted a business in the Yellow Pages were new customers.

Designing Your Ad

There are two goals to always achieve in designing your ad. One is to make your ad draw attention away from the competition. You can do this by the creative use of design elements. The second is to tell the prospective customer the information he wants to know. Remember, the majority of people who are using the Yellow Pages have made a decision to buy. They are only trying to decide where. First, let's discuss the key sales elements successful Yellow Pages ads should have.

The Basic RASCIL Factors

Reliability. Show years in business, association with a well-known company, trade association memberships, etc.

Authorized Sales Service. List brands that customers will recognize and trust.

Safety and Protection. Mention licensed, bonded, insured or similar protection factors.

Completeness of Information. Assure the customer you can supply what he needs. Describe special facilities or kinds of customers served.

Illustration. Help tell your story with artwork. Add to the attractiveness of the ad. Catch the customer's eye with art.

Location. Tell where you are located, how to get there and what areas you serve.

SPECIAL Factors for Retail Stores

Size of Ad. As ad size increases, attention and choice behavior increases.

Phone Numbers. List additional telephone numbers that will help indicate close proximity or size of operation.

Expertness. Show the length of years in business, professional titles, individual expertise, personalities, firm size, major clients, etc.

Clarity of Presentation. Achieve the right balance between the amount of information and the size of the ad.

Individual Product Types. List the number of different types of products carried.

Amount of Information. Show as much different information as possible within the confines of the ad. The more topics of information the better.

Location by Area Description. Give specific information to help customers find you i.e., a map, district or region, proximity to public transportation, or a well-known landmark. When you have decided on the sales elements to be contained in your ad, the next step is to consider the actual design of the ad. As mentioned earlier, the goal is to have your ad jump off the page. The following are a few ways to accomplish this:

• Banner: Utilize this element to reinforce your name or to draw the reader into the ad. Do not repeat the heading of the directory in the banner of the ad. Too often, ads will have a heading as their banner. The reader (who has turned to this section) knows what they are looking for. They are trying to decide where to buy. Use a short headline that promotes some aspect of your business that is unique.
• Illustration: It is proven that an illustration or photograph will draw the reader's eye. Incorporating an illustration or photograph can only help your ad stand out in contrast to ads that only utilize black type on yellow paper. Remember to have your artwork created professionally, and to keep it simple. Complex artwork usually does not reproduce very well and may end up making your ad less appealing.
• Copy: Earlier, we talked about the sales elements that your copy should discuss. Now is when you should address how the copy should work from a design standpoint. Keep your copy points succinct and easy to read. If the customer cannot find the information easily and quickly, he will turn toward your competition. Remember, this is the only form of advertising where your competition is right next to you. Also, position the copy so that the reader's eye is pulled down on the page to the phone number. And make sure that the phone number is large and easy to read. Finally, limit the number of type styles used in the ad. Too many styles can make the ad appear jumbled and more difficult to read.
• Miscellaneous: Other techniques for creating an attention-getting ad are utilizing reverses (the design is yellow type on a black background instead of black on yellow), drop shadows (whereby the object in question is given a background shadow to simulate the effects of depth and dimension) and starbursts.

Does Red Get Read?

In designing your ad, many publishers will offer the use of an additional color (usually red, but sometimes blue or green) to add contrast to your ad. However, there is a premium for this color, usually in the neighborhood of 35 percent to 50 percent of the total cost of the ad. In most cases, the money is better spent on purchasing a larger ad. Independent studies have shown that color in an ad does not increase the likelihood of a business getting a call. In some cases, it actually decreases that chance. And when you consider that most directories are organized from largest to smallest, it is better to spend money on a larger ad (therefore moving to the front of the heading) instead of buying a smaller ad with color in the back of the section. Your goal is to get your ad seen before your competition's.

Results

Monitoring the results of your Yellow Pages placement is vitally important. By knowing where your customers are coming from, you will be able to objectively measure the return on your Yellow Pages investment. As the years progress, you will be able to use this tracking information to measure changes and improvements in your ad design. New directories may be tested and compared with other forms of media. Tracking can be as simple as asking the customer how he heard about your site, or as sophisticated as a dedicated line whose number only appears in one directory being used to track all incoming Yellow Pages calls. Regardless of the method employed, the only thing you can do wrong in tracking is not to do it.

Michael Zervas is a partner at American Ad Management, a national ad agency specializing in Yellow Pages, recruitment and Internet advertising programs. He can be reached at (800) 423-6468 or [email protected].

Five Vital Statistics 81 percent of consumers agreed they start at the beginning of a heading when they do not have a firm in mind. 70 percent of consumers agreed they usually look at the larger ads in the Yellow Pages when they are not sure where to make the purchase. 66 percent of all consumers viewed businesses with large ads as having an established reputation. 76 percent of consumers said the Yellow Pages often influenced them to contact a business they had not considered before looking in the Yellow Pages. 83 percent of advertisers agreed that Yellow Pages reach customers not reached by other media for people already in the market to buy.