"It's March," she said languidly with a sigh, resting her chin in the palm of her right hand. She gazed from her high-rise window over the sticky smog that hovered on the Phoenix horizon. "Nothing interesting ever happens in March."

All right, so perhaps I'm being a tad dramatic, but in a sense, it's true. Between Super Bowl and Memorial Day lies a veritable wasteland of insipidity. If you were fortunate enough to dodge the commercialism of February's horrific lovefest, you can now wait on St. Patrick's Day. But if you celebrate the holiday in due form, you likely won't remember much of it except the cabbage that repeats on you for several days afterward and, somewhere along the line, singing an Irish bar tune with people whose names have escaped you. If you observe, Easter could be noteworthy--eating lots of chocolate and marshmallow bunnies and popping the buttons on our pants. Now that's excitement.

In light of this scarcity, we should all be grateful the SSA chose an excellent site for its Spring Conference and Tradeshow this month--a city with some real intrigue and character. New Orleans! Being an ardent Anne Rice fan, I'm particularly thrilled at the opportunity to tour the landmarks illustrated in her novels: Lafayette Cemetery, Café du Monde, the house on First Street and Chesnut. I've heard, too, about a positively spellbinding Voodoo tour, guided by a true-to-life Voodoo priestess and culminating at the grave of Marie Laveau.

I've said nothing, yet, of this month's issue. This is for no lack of enthusiasm, I assure you, but sometimes you just have to stray from the path. Frequently, in this missive, I talk about profit-building and innovation, industry trends and tactics. I could easily continue that course, as the following articles address all those things. But the overall point--of this rambling and this issue--is simply this: Do something different. Do something new in your business this year. Maybe you'll add truck rentals to your list of offerings or launch a phone center to answer incoming calls. Perhaps you'll start a self-storage hotline or direct-mail program. Whatever it is, do it soon and be smart about it. You'll find plenty of great ideas right here in these pages.

Life's too short for us to be bored--or boring for that matter. Here's hoping your March is anything but.

Wishing you whimsy,

Teri L. Lanza
Editor
[email protected]

For a complete list of references click here

Dennis Hall, executive vice president for Payment Service Network Inc. (PSN), is a former elected official and former chief lobbyist for several cities in Wisconsin, where he worked on tobacco-settlement funding. He was one of the first civilians to re-enter Kuwait after its liberation from Iraqi forces in the 1991 Persian Gulf War, and his work there landed him on the front page of The Wall Street Journal. He was recruited by Madison, Wis.-based PSN soon after its January 2000 launch to handle all external operations for the company, including its RentToPay.com online rent-payment service. Inside Self-Storage recently met with Mr. Hall to reflect on the benefits of online services to self-storage businesses...

How did the idea for RentToPay.com come about?

The idea actually started because the founder, Norman Ehiorobo, didn't have time to spend writing out checks and going to the post office. His background is programming, and he got the idea about a year and a half ago to make it easier for himself to pay bills online. Necessity was the mother of invention in this case, and it was fortuitous because that's the direction the economy is going.

Your product seems to be applicable to any number of different industries. Are you taking a particular market approach toward self-storage?

The storage industry is our primary discipline. At this point, we're exhibiting at tradeshows and doing some print advertising. News of us is also traveling by word-of-mouth. Certainly, tradeshows are working very well--it's that personal, one-on-one contact that we like, and it really solidifies our position. We've received a number of calls from our magazine advertising as well.

Exactly what services are provided to self- storage operators and customers who utilize RentToPay.com?

The features for property managers are really unique in the industry across the board. Not only do we provide the mechanism for them to receive payments seamlessly by credit card or check, but it also provides an archived history of each renter, and managers can manipulate that information however they like. If they want to find out what payments have been made within a certain span of time--whether it's a week, a month or a quarter--they can easily go in and find that information. They can determine who paid by credit card, who paid by check, and how long they've been paying. It's very convenient for them to do that. And, typically, in this industry it costs between 80 cents and $1.40 to mail out a bill, so this is much more convenient.

On the renter side, the convenience is that it allows them--whether they're at work or at home--to avoid going to the mailbox or post office. Because I, myself, rent storage space, I know that it's really inconvenient to drive over to where the storage unit is and drop off my check, because I'm continually late and I hate to do mailings. This service was a blessing. It's very convenient for me, because I don't have to do anything extra. I'm already at work, and I can formulate my bill and send it in about a minute, and it's paid--I don't have to worry about it. For me, personally, it works well, and it's working very well for customers across the country. The renter also has an archive of payments, and has the ability to download a receipt. So he's got all of that justification at his fingertips. Wherever he's at in the world, he can pay his rent.

How do you assure users of your online system that their transactions are secure?

Security was Norman's biggest focus. Everyone who offers online credit-card transactions uses a security system called socket-layer technology. The difference in ours is that we've taken an extra step and double-encrypted our system. Even if some hacker wanted to penetrate that socket-layer system, the only thing he would get is random letters and numbers. He wouldn't be able to decipher any credit-card numbers, names, regions or anything else. We're extremely confident in our system.

Where do you envision RentTo Pay.com being positioned, say, five years from now?

Our ultimate goal is that the service be free to all users, that eventually there won't be a convenience fee for anybody. The more operator users we have on board, the more we can scale back the convenience fee for the consumer. We're probably going to see the first reduction of that fee coming in the next month.

We're constantly refining our site; in fact, we now have a brand-new site online, so users will see a new, updated version that will be even simpler to use.

For more information, visit www.renttopay.com or www.paymentservicenetwork.com.

By Kirk Nash

Talk to any entrepreneur in the business. Ask them where they want their business to be in the future. Chances are their answer will depend on where they are currently. If it's a new business, they might say, "I want my business to grow, expand and become the best and biggest it can be. I want to take it to the top." If their business is established and doing well, they might say, "Business is good. I'm making money. I'm happy and content." These are average answers from average people.

The insightful, creative, far-thinking, concerned entrepreneur would answer this question in a much different way. His answer would be, "I want to become the competition." This person wants to be considered by all in his field as the competition. He knows that if he is considered to be the competition, he must be doing a lot of things right. His product must be quality, his prices must be fair and, most importantly, his customer service must be complete, ongoing, fresh and acute. His business acumen tells him that he must continue to do all the things that have helped get his business to the pinnacle and constantly offer innovative marketing and customer-service ideas and implementations.

Ralph Waldo Emerson said, "A man comes to measure his greatness by the regrets, envies and hatreds of his competitors." I don't know about you, but I want to become the competition.

The Other Pieces

Occupancy
I've met hundreds of storage-facility owners. Their number-one concern is occupancy, and rightly so. The more space you have rented, the more profitable you are. If you are 70 percent occupied, you have a problem. You need to fill your space. If you're 100 percent occupied, you have a different problem. You either need to build more space, raise your prices or both.

Price: Doing Things the Easy Way
Storage-facility owners seem to fall into one of four categories:

• I've just completed construction of my facility.
• I've just purchased an existing facility.
• I'm expanding my facility.
• It seems new facilities are sprouting up all over my market.

Regardless of which category you might place yourself in, your key concern is increasing occupancy. This is a constant battle because people move out each and every month. Your task is to replace those leaving each month and add more. Now, many operators/managers choose to take the easy way out by discounting storage rates or offering a free month's rent. Why? Mainly because managers often think your customers are shopping and making their decisions based on price. Take any market in the storage industry and I assure you the facility with the cheapest rates will not be the facility with the highest occupancy.

If you are one of the owners who believe cheap rates are the key to higher occupancy, you are wrong. All you are accomplishing is the cheapening of your business. You are bringing the net worth of your business down. You are literally compromising your storage facility for higher occupancy. This can catch up with you. You must become more creative in your marketing and customer service. Remember: You want to become the competition.

Advertising
Derby Brown once said, "The business that considers itself immune to the necessity of advertising sooner or later finds itself immune to the business." Is there a storage facility in the world that isn't in the Yellow Pages? Probably not. Advertising is a necessity for storage facilities. Let's face it, storage is not an impulse purchase. People either need storage or they don't. How do they choose where to store their goods? Convenience, location, familiarity, availability, service and price. However, they cannot choose you if they don't know you exist. It is your task to make them knowledgeable of your existence.

Many facilities are built on major thoroughfares; they have a great location. Some facilities have a large, can't-miss sign and have established familiarity. Some facilities have large, color ads in the Yellow Pages to make potential customers aware of their presence. But, is there more that you can do? There is if you strive to become the competition.

Staff
Most storage-facility owners are keenly aware of the importance of a knowledgeable, courteous and well-trained staff. The first inquiry from a potential customer is possibly your only opportunity to sell that individual. How does your staff answer the phone? What information do they accumulate and assimilate from that prospect? I have found that most managers are well-versed and do an excellent job acquiring enough information to accurately ascertain the size unit the prospect needs. They also do an adequate job quoting the price of the unit, availability and any specials they may be running. But are they doing enough? Not if you want to become the competition.

Rental Trucks
Let's assume your occupancy is 85 percent, your location is excellent, you have a great sign and an attractive Yellow Pages ad, your prices are higher than average, you don't give away a free month's rent and you have an impeccable staff. Have you become the competition? Probably not. Why? Your occupancy rate is too low. You're missing something. What is it that keeps you from becoming the competition? Perhaps, rental trucks.

Yes, rental trucks. Are rental trucks the number-one ancillary product in the storage industry? No, locks are. Rental trucks are the difference between you and the competition. Let's look at some of the major players in the self-storage industry. If you examine the top 10 to 20 self-storage operators in the country, you will find that nearly half of them offer rental trucks. The others will soon offer them. Why? Because that's how they attract their prospects. Most started in the storage business and added rental trucks. One started in the rental-truck business and added storage.

Pay attention to the people moving into your facility over the next month. What means of transportation are they using to move in? Trucks. Pay attention to people moving out of your facility over the next month. What means of transportation are they using? Trucks. Very few move in or out in anything other than a truck. U-Haul, Ryder, Budget, Penske, On the Move, cousin Bill's pick-up--they're all trucks. If you don't currently offer rental trucks, you will.

One-Stop Shopping
Bill Smith needed a 10-by-20 storage unit for six months. He called ABC Storage and XYZ Storage. Both facilities had the size he needed at the exact same price. Both facilities are exactly three miles from him. Both facilities offered locks and packing supplies for sale as ancillary products. ABC Storage offered rental trucks and XYZ did not, but Bill needed a truck to move his goods into the facility. If he leased space from ABC Storage, he could also rent his truck from the same place. If he leased space from XYZ Storage, he would have to go elsewhere to rent a truck. Where did Bill sign his lease for the 10-by-20 unit? You guessed it--ABC Storage. Mr. Smith liked the idea of one-stop shopping, and ABC Storage had become the competition.

Add Profit
Storage facilities with rental trucks have a higher occupancy rate than equal facilities without trucks. Higher occupancy rates translate into more profit. But let's take it a step further: You will make additional income from rental trucks. Whether you use a large rental-truck company that pays you a commission for truck rentals or you add your own truck, they will generate additional income. Am I suggesting that you allow truck rentals to usurp your storage business? No. I am, however, telling you that the number-one ancillary product to storage should be rental trucks.

And, for those of you who have taken the easy way out by comping one month's rent, why not comp the rental truck? It is far less expensive to comp the truck than the space. When you appraise your business, it will show lost revenue from comped space, thus deteriorating your bottom line and, consequently, lowering your net worth. A comped rental truck will not show as a negative, but rather as credit on your balance sheet, because you have the rental of trucks to those moving out of your facility to make up for those giveaways to those moving in. So, if you insist on a giveaway, give the truck, not the space.

Newly Armed Staff
When Mr. Smith called ABC Storage, the staff answered the phone with "ABC Storage and truck rental, how may I help you?" The manager of ABC Storage then asked Mr. Smith how he planned to move into the facility. Mr. Smith informed the manager he would be renting a truck, and the manager proceeded to reserve one for him. All of his needs were met. ABC Storage had a completely satisfied customer. If Mr. Smith ever needs storage in the future, he will surely go to ABC Storage. And if anyone Mr. Smith knows asks him about storage, he will surely refer them to ABC Storage, because remember: ABC Storage has become the competition.

New Marketing/Advertising
Imagine a truck--your truck--driving throughout your market area advertising your business, a moving billboard advertising facility. Everywhere the truck goes, your logo, advertising your facility, will be seen by thousands of prospective customers. Every time you comp the truck to someone moving in or rent the truck to someone moving out, you are advertising your facility wherever that truck goes.

If the truck isn't being used on a given day, park it in a high-traffic area. Let local charities know the truck is available for their use free of charge. Let the high school use it to pull a float in the homecoming parade. Advertising your business on your truck will enhance the familiarity of your storage facility immensely. And for those of you who are truly sophisticated, you can market advertising to others on the sides of your truck--local realtors, title companies, restaurants and auto dealers are always looking for innovative ways to advertise their businesses. For a small monthly fee, you can advertise their business--in addition to your facility--on the side of your truck. You are now on your way to becoming the competition.

Rental trucks are the wave of the future in the self-storage industry. In another five to 10 years, you will be hard-pressed to find a storage facility without them. Zoning and architectural standards are becoming more and more stringent for self-storage facilities. The consumer is getting more sophisticated and demanding. Record storage, wine storage, cold storage, climate-controlled storage were, at one time, a rarity. Now they are commonplace. Your choice is to lead or follow. Self-storage customers are seeking one-stop shopping for their storage, packing and moving needs. Rental trucks can fulfill that need.

The Proof
George H. Henshaw, owner of Lincoln Service Corp. in Salem, Ohio, wrote me a letter that exemplifies what I've been discussing. "We purchased our own rental truck, and over the last three months, the truck has returned $2,325 over all costs, including personnel, interest, maintenance, insurance and depreciation," he says. "Coupled with this, we have an immense traveling billboard advertising our business all over town. What's even better: We were able to secure several storage rentals by discounting our truck $10 one time, rather than discounting our storage fee forever."

Doug Hunt, owner of Access Self Storage in Dallas, was talking to one of his competitors in the storage business not long ago. His competitor asked him how his rental trucks were working for him. Hunt responded, "I started with one truck more than three years ago and now have 20 trucks. It's working very well." Hunt comps his trucks to those moving in for a couple of hours, then charges an hourly rate thereafter. He is both serving his customers and making money.

Henshaw and Hunt have become the competition in their markets. They are on the leading edge of customer service. They know that a business either increases or decreases, and that businesses rarely stand still at zero growth.

If you have recently built or purchased a storage facility, expanded your existing facility or think your market is shrinking due to expansion by others in your area, it is time for you to consider adding rental trucks to your marketing and customer-service plan. Do this, and perhaps you, too, will become the competition.

Kirk W. Nash, together with Maury Westerdale, is co-founder of On The Move Inc., which was founded in 1991 to help supply rental trucks and insurance to the self-storage industry. The company has since branched out to cover the rental, apartment and realty industry. Mr. Nash serves as vice president and chief operating officer of On The Move. For more information call (800) 645-9949.

How to Acquire Rental Trucks Now that you've decided to become the competition, you may have questions as to how you start. Your options are many, and there are numerous people in the rental-truck business you can contact. If you are looking for a national one-way and local truck-rental company, you can contact companies such as: U-Haul (888) 637-8121 Ryder (800) 467-9337 Penske (800) 222-0277 Budget (800) 848-8005 If you are looking for your own truck, companies such as On The Move, Ryder, Hertz and Budget, among others, all have truck-leasing programs you may want to investigate. There are also numerous self-storage owners who currently rent and comp rental trucks who would be happy to share their experiences with you.

By Harley Rolfe

Self-storage owners tell me they are increasingly vexed by competition, and they think marketing will help. So, I tell them about step one in creating a sound marketing program: Study your tenant base. At this point, their eyes glaze over. They have a real problem, and they are willing to pay for help, but they want something fast and easy. They want a set of marketing "tricks" that will wipe out the competition. But nothing is that simple.

How do you conduct a "hard-nosed" marketing program? Easy. Know more about what users are looking for than your competition. Create a unique solution to their problems and get the word out. Note that step one is gaining knowledge. For example, successful athletes or sports teams study their opponents to antipate how they will behave during a game. Similarly, a good politician researches the issues and figures out a program to meet voter preferences.

Marketing is no different. You already have a head start--you have a facility full of tenants who have already "voted" in your favor. You have the advantage of being able to ask and find out from paying customers what they want and need. And there's another benefit: After you speak with your customers, you now have a repertoire of interesting stories and endorsements to illustrate and reinforce your marketing claims.

A marketing program is no better than its underlying research. That's your foundation, and it will vary segment by segment. Until you identify your prospective tenants and determine their specific needs, you're flying blind.

Self-Storage: A Complex Market?

Some see the simplicity of the self-storage product and assume the self-storage market is equally uncomplicated. But keeping in mind that markets or segments really represent different uses of the product, they are more varied and, therefore, complex. There are personal and business uses, with dozens of applications in each. You really don't know your market until you know all the uses to which your facility is being put. You must know what need or use each prospect has, and target your appeal to that. A "come one, come all" philosophy doesn't work in an aggressive market.

Divide and Conquer

In determining the right marketing approach, you must first survey your current and vacated tenant base. Compose a questionnaire to determine how those tenants came to you. The main question is, what caused each tenant to need and obtain a storage unit? You need to learn how to be there when a need for your service arises. Don't always wait for tenants to come to you.

For example, when someone purchases a new home, there is an immediate possibility that he will need storage. Aim your marketing at that crucial moment. But first, there is some basic information you will need:

• Learn the instance of the need. What happened in the tenant's life to create his need for your product? Maybe he bought a new home or had a job transfer. This will form the basis for your initial appeal. It relates to the prospect's life and his unique circumstances.
• Determine the segment or general market area. You will need to generate a set of classifications for the different uses of your product. If you're breaking down a commercial segment, you're in good shape because of the availability of Standard Industrial Codes. But if you're creating categories of personal use, frankly, you're on your own. You'll need to create categories that help you aggregate similar tenant activities.
• Find out which particular self-storage application was used. Any one segment could generate several applications. It is the specific application that sells within a segment.

These are some of the insights that begin to guide your approach. We know there are two major classes of users: personal and commercial. We also know the occupancy term for each is quite different. Why? Changes or events in a person's life generate personal uses--a new home, divorce, job transfer, etc. These are transient occurrences. The use of the facility ends when the occasion ends, so it's only temporary. Business applications are likely to be more permanent if woven into the operations of the enterprise. These differences should be recognized in the way we plan, price and offer our services.

Self-Storage Marketers Lament

I continue to be disappointed that the Self Storage Association has not studied and established definitions for the basic market segments. The SSA seems all too willing to encourage developers to build new facilities, but devotes little effort to reducing the woe this added capacity causes existing sites. There should be a catalog available to identify the various market segments (and there are probably hundreds). Operators could then match up their own market patterns with the master list, permitting them to draw comparisons between and within geographical areas. Current operators shouldn't be faced with doing this groundwork.

Because of the lack of shared market definitions, facilities inevitably create a mish-mash of data. That data is useful to the individual facility, but is not comparable to anything else. The SSA should help increase the size of the self-storage "pie," making room for added unit capacity. Many associations are right in there pitching for their members. But the SSA has been passive toward marketing needs, and many of today's operators cannot sit tight. The market won't wait. I urge you to press the SSA to help you meet your marketing challenges by at least categorizing the possible uses and characteristics of self-storage.

Is This Trip Really Necessary?

There are some who doubt the need to do all this basic homework. But the efficacy of any marketing effort is a function of the underlying research you have done. It's the foundation of your program. Without it, you are just guessing about who is using your facility and why. Once you've collected that initial data, keep in mind that it will get dated, so you should ask each new tenant about his particular application. This will keep your database fresh and create opportunities to uncover trends and niches.

Many owners got into the self-storage industry because it didn't seem to require sophisticated management. After site selection, financing and construction, it seemed the owner need only take an ad in the Yellow Pages and perform the housekeeping duties and good things would happen. But competition changes things. When marketplace combat breaks out, detailed knowledge of your tenant based is more than necessary knowledge--it's your ammunition.

Missed some previous issues? Check the web at www.hardnosed.com.

Harley Rolfe is a semi-retired marketing specialist whose career includes executive-level marketing positions with General Electric and AT&T. He also owned lodging and office facilities for more than 20 years. Mr. Rolfe holds a bachelor's degree in economics from Wabash College and a master's degree in business administration from the University of Indiana. He can be reached at his home in Nampa, Idaho, at 208.463.9039. Further information can also be found in Mr. Harley's book, Hard-Nosed Marketing for Self-Storage.

By Mike Iacoboni

Editor's Note: This month's Market Profile is out of the ordinary. Rather than detailing the self- storage climate of a specific U.S. market, this article tells the story of a couple who have tackled a "virgin," foreign territory, the challenges they have faced and their ongoing success.

How often have you said to yourself, "If I only knew then what I know now"? What would you do differently if you could? What pioneering steps or risks would you take, fortified with a clear vision of the future? Outcomes are determined by a lot more than knowledge, so success is never a sure thing. It requires desire, persistence, effort--and a fair amount of capital.

My wife, Jane, and I have taken the opportunity to be the very first people to introduce the concept of self-storage to Nicaragua. It takes a lot of educating and patience to bring a new service to a virgin market and convince potential customers that secure, weatherproof, accessible self-storage is preferable to the corner of the yard or a friend's field.

Nicaragua is located in the middle of Central America. It enjoys a semitropical climate and is a land of verdant beauty. There are hundreds of miles of empty beaches on its Pacific Coast. Nicaragua has an emerging economy similar to that of the United States in the 1950s (or 1850s in some cases), with an appetite for all things American and a growing means to afford it. Managua, its capital, is a short hop from Miami or Houston, making for an easy business commute. The Nicaraguan government is offering generous tax breaks for foreign investment, while the international community is discovering what a bargain travel and real estate are in that country. Consequently, warm-weather second homes and expatriate businesses are springing up everywhere.

It is a time of vigorous dynamic growth in Nicaragua's economy and infrastructure; and wherever you find dynamic transitions, you find a need for self-storage. Nicaragua has provided us the opportunity to apply what we know now in a land of then.

At First...

When we first posed our idea to others we were greeted with loud guffaws. "The Nicas don't have anything to store" was a common refrain. True enough, but as you would in the United States, we were targeting a specific market sector. Jane and I were comforted by an often-quoted phrase from Albert Einstein: "If at first an idea does not seem absurd then there is no hope for it." We also took heart when people would stop us on the street and ask us how soon before they could rent a unit. We knew we had to build a small development.

Obviously, you want to start any new concept/service business in a major population center. For Nicaragua, this would mean Managua, a big, not-very-pretty city. We considered quality-of-life factors as well as quantitative elements in our deliberations and settled on San Juan del Sur, a sleepy fishing community nestled in a cove on the Pacific. This town gets a major share of national vacationers (seasonal rental for water toys) and is now host to international cruise lines that began calling in January 2000. The little town with a population of 5,000 is gentrifying, with new hotels being added, and vacation and retirement homes springing up everywhere.

To our delight, we discovered a complete absence of zoning or building-code requirements or other outside forces to distract the project. We have found, though, that this freedom is a double-edged sword. To our dismay, we discovered a complete absence of borrowing opportunity--this being a cash economy. This raises the stakes of the game and means we cannot enjoy the benefits of leverage, the ninth wonder of the world (with compound interest being the eighth, according to Einstein).

The Project

For our entry project, we chose an existing 11,000-square-foot warehouse and set about transforming it into a world-class self-storage demonstration project. The primary language here is Spanish. We were faced with the challenge of locating an English-speaking contractor who can accomodate North American time tables, contracting practices and level of quality. I would do all the architectural and take-out renderings.

After several failed interviews, we were at an impasse. We could not find all the necessary qualities in one builder. Then a chance encounter brought us into contact with Nelson Estrada, owner of GENSA, a contracting firm in Managua. He earned an MBA from Harvard, is fluent in English, and understands quality building techniques and practices. As an added bonus, his wife, Martha, is a strong equal partner in the firm and lends valuable support.

As this project was unique in Nicaragua, we had to iron out a few wrinkles along the way; but we were able to handle them. We have a mix of units, including 17 12-by-25-by-20-foot units that are climate controlled with roll-up doors; 11 10-by-12-by-12-foot units with hinged doors; and two 20-by-25-foot office suites. The center driving aisle is 28 feet wide. There is some open storage space as well. The final numbers for the project came in at $3.73 per square foot for acquisition and $4.64 for build-out and completion.

A Market Challenge

More of a challenge than the construction was the marketing. We knew what we wanted to say; our challenge was to deliver our message to others in a language we did not yet speak. Communicating the benefits of an unknown service was a major task. It's like e-commerce, which five or 10 years ago was untested and untrusted. Today, it's an accepted fact of ordinary life. We are climbing that same hill now. After much consideration, we chose the name Sano y Salvo to represent our company, which, loosely translated, means "safe and sound." We think it has a nice ring to it, but we do get ribbing from our Spanish-literate friends for our poetic license.

Getting a placement in the local Yellow Pages presented another marketing challenge. The publishing company simply did not understand what our service provided. They had no fields in the computer to accomodate us and were somewhat inflexible about meeting our needs. After several meetings with ever higher levels of management and using pictures from Inside Self-Storage magazine as a teaching aid, we finally got our placement.

We officially began operations on Oct. 1 and are at 60 percent occupancy in our large units and 10 percent occupancy in our smaller units. Our most popular storage items are actually vehicles, as we have a large expatriate community that spends a few months here during the year.

We aggressively handed out leaflets in town during the holidays to educate our potential clients and create demand. The Yellow Pages directory with our ad is not yet in general circulation, but the telephone plays a minimal role in our business. In this country of 4 million people, there are only 40,000 phones, including cell phones and pagers! Word of mouth and direct referral has proved to be the major driver of our business.

So far, Jane and I have been energized and challenged by our little project. History will be the judge of how well we applied our know-how to the land of "then." For the moment, though, we have chosen to mark our entry ramp with our handprints and the letters WWTT: What Were They Thinking?

Mike Iacoboni and his wife, Jane, are the proud owners of Sano y Salvo Self Storage in San Juan del Sur, Nicaragua.

By Kirk Nash

If you talk to any entrepreneur in self-storage and ask him where he wants to see his business in the future, his answer will depend on his level of current success. If he is just starting out, he might say, "I want my business to grow and become the best and biggest it can be. I want to take it to the top." But if he's more established and doing well, he might say, "Business is good. I'm making money. I'd like to see more of the same." These are average answers from average people.

The insightful, creative, far-thinking entrepreneur would answer this question in a much different way. His answer would be, "I want to become the competition." This person wants to be considered by all in his field as a worthy rival. And he knows that if he is to be considered "the competition," he must be doing a lot of things right. He must raise the standard with a quality product, his prices must be fair and, most important, his customer service must be complete, ongoing, fresh and acute. His business acumen tells him he must continue to do all the things that have helped get his business to the pinnacle, and constantly offer innovative marketing and customer-service ideas and implementations.

I don't know about you, but I want to become the competition.

The Other Pieces

Occupancy
Occupancy is the No. 1 concern of self-storage entrepreneurs, and rightly so. The more space you have rented, the more profitable you are. If you are 70 percent occupied, you have a problem. You need to fill your space. On the other hand, if you're 100 percent occupied, you have a different problem. You either need to build more space, raise your prices or both.

Price: Doing Things the Easy Way
Storage-facility owners seem to fall into one of four categories: 1) they have just completed construction of a facility; 2) they have just purchased an existing facility; 3) they are expanding a facility; 4) they own one of several new facilities sprouting up all over the market. Regardless of the category you fall into, increasing occupancy is your main concern. And it is a constant battle due to the transient nature of the business.

Your task is to replace those tenants that leave each month and add more. Now, many operators/managers choose to take the easy way out by discounting storage rates or offering a free month's rent. Why? Because it is the consensus that when shopping, customers are only concerned about price. Look at any facility in the storage industry, and it's almost a guarantee the facility with the cheapest rates will not be the facility with the highest occupancy.

If you are the entrepreneur who believes cheap rates are the key to higher occupancy, you are wrong. The only thing you are truly accomplishing is the undersale of your product and the depreciation of your business. You are compromising your storage facility for higher occupancy, and bringing the net worth of your business down. This will catch up with you. You must become more creative in your marketing and customer service. Remember: You want to become the competition.

Advertising
Derby Brown once said, "The business that considers itself immune to the necessity of advertising sooner or later finds itself immune to the business." Is there a storage facility in the world that isn't in the Yellow Pages? Probably not. Advertising is a necessity for storage facilities. Storage is not an impulse purchase. People either need it or they don't. How do they choose where to store their goods? Convenience, location, familiarity, availability, service and price. They cannot, however, choose you if they don't know you exist. Your task is to make them knowledgeable of your existence.

Many facilities are built on major thoroughfares; they have a great location. Some facilities have a large, can't-miss sign and have established familiarity. Other facilities have large, color ads in the Yellow Pages to make potential customers aware of their presence. If you're already doing all of those things, is there still more you can do? There is if you strive to become the competition.

Staff
Most storage-facility owners are keenly aware of the importance of a knowledgeable, courteous and well-trained staff. The first inquiry may be the only opportunity to sell that individual. How does your staff answer the phone? What information do they accumulate and assimilate from that prospect? Most managers are well-versed and do an excellent job acquiring enough information to accurately determine the size unit the prospect needs. They also do an adequate job quoting the price of the unit, availability and any specials they may be running. But are they doing enough? Not if you want to become the competition.

Rental Trucks
Assume your occupancy is 85 percent, your location is excellent, you have a great sign and an attractive Yellow Pages ad, your prices are higher than average, you don't give away a free month's rent, and you have an impeccable staff. Have you become the competition? Probably not. Why? Your occupancy rate is too low. You're missing something. What is it that keeps you from becoming the competition? Perhaps, rental trucks.

Yes, rental trucks. Are rental trucks the most important ancillary products in the storage industry? No, locks are. Rental trucks are the difference between you and the competition. Let's look at some of the major players in the self-storage industry. If you examine the top 10 to 20 self-storage operators in the country, you will find nearly half of them offer rental trucks. The others will soon offer them. Why? Because that's how they attract their prospects. Most started in the storage business and added rental trucks. One started in the rental-truck business and added storage.

Pay attention to people moving out of your facility over the next month. What means of transportation are they using? Trucks. Very few move in or out in anything other than a truck. U-Haul, Ryder, Budget, Penske, On the Move, cousin Bill's pick-up--they're all trucks. If you don't currently offer rental trucks, you will.

One-Stop Shopping
Bill Smith needed a 10-by-20 storage unit for six months. He called ABC Storage and XYZ Storage. Both facilities had the size he needed at the exact same price. Both facilities are exactly three miles from him. Both facilities offered locks and packing supplies for sale as ancillary products. ABC Storage offered rental trucks and XYZ did not.

Bill needed a truck to move his goods into the facility. If he leased space from ABC Storage, he could also rent his truck from the same place. If he leased space from XYZ Storage, he would have to go elsewhere to rent a truck. Where did Bill sign his lease? You guessed it--ABC Storage. Bill liked the idea of one-stop shopping, and ABC Storage had become the competition.

Add Profit
Storage facilities with rental trucks have a higher occupancy rate than equal facilities without trucks. Higher occupancy rates translate into more profit. But let's take it a step further: You will make additional income from rental trucks. Whether you use a large rental-truck company that pays you a commission for truck rentals or you add your own truck, it will generate additional income. The No. 1 ancillary product to storage should be rental trucks.

And, for those of you who have taken the easy way out by comping one month's rent, why not comp the rental truck? It is far less expensive to comp the truck than the space. When you appraise your business, it will show lost revenue from comped space, thus deteriorating your bottom line and, consequently, lowering your net worth. A comped rental truck will not show as a negative, but rather as credit on your balance sheet, because you have the rental of trucks to those moving out of your facility to make up for those giveaways to those moving in. So, if you insist on a giveaway, give the truck, not the space. Become the competition.

Newly Armed Staff
When Bill called ABC Storage, the staff answered the phone with "ABC Storage and truck rental, how may I help you?" The manager of ABC Storage then asked Bill how he planned to move into the facility. He informed the manager he would be renting a truck, and the manager proceeded to reserve one for him. All of his needs were met. ABC Storage had a completely satisfied customer. If Bill ever needs storage in the future, he will surely go to ABC Storage. And if anyone he knows asks him about storage, he will surely refer that person to ABC Storage, because remember: ABC Storage has become the competition.

New Marketing/Advertising
Imagine a truck--your truck--driving throughout your market area advertising your business, a moving billboard advertising your facility. Everywhere the truck goes, your logo, advertising your facility, will be seen by thousands of prospective customers. Every time you comp the truck to someone moving in or rent the truck to someone moving out, you are advertising your facility wherever that truck goes.

If the truck isn't being used on a given day, park it in a high-traffic area. Let local charities know the truck is available for their use free of charge. Let the high school use it to pull a float in the homecoming parade. Advertising your business on your truck will enhance the familiarity of your storage facility immensely. And for those of you who are truly sophisticated, you can market advertising to others on the sides of your truck--local realtors, title companies, restaurants and auto dealers are always looking for innovative ways to advertise their businesses. For a small monthly fee, you can advertise their business--in addition to your facility--on the side of your truck. You are now on your way to becoming the competition.

Rental trucks are the wave of the future in the self-storage industry. In another five to 10 years, you will be hard-pressed to find a storage facility without them. Zoning and architectural standards are becoming more and more stringent for self-storage facilities. The consumer is getting more sophisticated and demanding. Record storage, wine storage, cold storage, climate-controlled storage were, at one time, a rarity. Now they are commonplace. Your choice is to lead or follow. Self-storage customers are seeking one-stop shopping for their storage, packing and moving needs. Rental trucks can fulfill that need.

If you have recently built or purchased a storage facility, expanded your existing facility or think your market is shrinking due to expansion by others in your area, it is time for you to consider adding rental trucks to your marketing and customer-service plan. Do this, and perhaps you, too, will become the competition.

Kirk Nash is vice president and CEO of Boerne, Texas-based On the Move Inc. On the Move offers a rental-truck program to self-storage and other industries that includes trucks, insurance, rental forms, handtrucks and furniture pads. For more information, call 800.645.9949 or visit www.onthemovetrucks.com. 

When he made the decision in 1988 to convert a mill building in downtown Manchester, N.H., into one of the state's first heated self-storage facilities, Bennett Chandler was surprised to find no one in the Northeast who could do the job. Chandler, then the developer of RatPack Self Storage, had been in the real-estate development and construction industry for 10 years. Undaunted, he decided to take on the task himself. He assembled his own crew to build the facility and called his new construction company Storage Inc. Being that interior conversions were new to the New England market, the facility drew the attention of other owners and developers, who wanted to know how it was done.

Over the next couple of years, Storage Inc. was mobilized to build several facilities in New England and New York markets, ultimately building for such venerable operators as Public Storage and Manhattan Mini-Storage. While the real-estate market was crashing and burning in the early '90s, Storage Inc. found there was a niche of property owners who had empty buildings and cash, looking for unique ways to make their underutilized properties profitable. Conversion to self-storage was a viable answer.

Present-Day Operations

Today, Storage Inc. employs 25 people including project managers, field supervisors and in-house engineering and design professionals. Having developed a full line of high-quality, pre-engineered products for the self-storage industry, the company supplies and installs single- and multistory buildings, modular buildings, deck systems and conversions.

"When we looked at the competition, we found many suppliers could provide products--I call them mail-order buildings. Though their products are generally good, delivering the building is the easy part. The hardest part of constructing a great facility is designing it and erecting it correctly," says Chandler. "Quality products backed by excellent in-field service is what we have strived to provide. There are few things more disappointing than buying a quality building, deck or conversion system, only to have it devalued by sloppy or poorly supervised installation." By controlling this critical part of the process, Storage Inc. believes it provides higher-quality finished products than most.

Storage Inc. strives for expediency, unlike much of its competition, which can take a surprisingly long time to deliver Chandler says. "We're talking major portions of a year here--eight, 10, even 12 weeks for some companies. As we put together our supply chain, we've insisted on manufacturers who could deliver finished product in three to four weeks."

Storage Inc. has its own in-house crews, as well as a select group of subcontractors who have been performing their work for years. All projects are visited on a weekly basis by the company's field-supervision personnel to ensure schedules are met and the quality of workmanship is up to snuff.

Important, too, is a company's ability to provide quick and accurate design and engineering services to backup the sales and project management departments. "We've found that when a customer calls, he wants to see something quickly," says Chandler. "Oftentimes, we'll even go into the field and measure the customer's premises. Typically, we can generate very complete professional CAD drawings and unit mixes within a week of the first contact."

Deck Systems

Lightweight structural deck systems have been a particularly popular product for Storage Inc. As real-estate in Northeastern suburban and urban markets has become scarce and expensive, many developers have been looking for ways to maximize the potential of existing commercial and industrial properties. Storage Inc.'s deck system has proven to be a very cost-effective way of achieving this.

For example, an existing high-bay building (15 feet or greater) with a footprint of 35,000 square feet can be converted into a completed facility with 55,000 square feet of rentable space. There are many benefits to building this way, such as significantly lower per-square-foot construction costs and abbreviated permitting times. "We have gone from the customer's closing to grand opening in as little as three months," claims Chandler. "The savvy developer understands and appreciates this ability to get into a market and open quickly. One can swiftly grab market share, while discouraging competition."

Unlike the point-load mezzanine systems out there, Storage Inc.'s design spreads much of the structural load across large portions of the floor, thereby eliminating the need to modify the existing structure in most cases. At the same time, a comparison will show the company's typical deck system will cost several dollars less per square foot, and will go in faster than other types of decks.

Keep IT Original

Unique projects are another trademark of Storage Inc's work. "From the construction of high-end art storage or the conversion of parking garages and bomb factories--we've seen it all. Our latest unique project is purportedly the largest wine-storage facility in New England," Chandler says. The company's flexibility, coupled with its tight control over installation services, allows it to take on unusual projects. "Most suppliers just want to sell you vanilla, chocolate or strawberry. We can do that and do it well, but where we shine is taking the odd property and turning it into a well-designed, well-utilized facility with the least amount of hassle."

For more information, call 800.445.8775; visit www.storageinc.com.

By Fred Gleeck

In working with more than 1,000 self-storage owners and operators, I have found a consistent pattern behind what marketing efforts do and do not work for this industry. There are seven tried-and-true marketing methods that work best.

The vast majority of storage owners concentrate their marketing efforts in one area: their Yellow Pages ad. But this is a misguided approach. There are six other marketing methods that yield a higher ROMD (return on marketing dollars). ROMD is a simple concept. You first determine how much you paid for a given marketing effort, then compare it against the amount of money that method generates in revenue. It's the concept of leverage--the greater the leverage of a marketing method, the more effective it is.

If you pay $1,000 for a marketing campaign and get $3,000 in return revenue, you have a ROMD of 1:3. The higher the second number, the better it is, and the greater the leverage of your marketing efforts. Here are the top seven marketing concepts in order of their ROMD, beginning with the highest:

#1: Repeat Customers

A repeat customer has the highest ROMD. It doesn't take a lot of money to get a customer to come back and rent from you again--although it does take a system and a concerted effort. Most operators don't pay enough attention to this highest ROMD item.

How do you increase your repeat business? First, you need to treat people incredibly well when they are renting from you. Don't just provide "good" customer service; give them great customer service. How exactly do you do this? One way is to keep close at hand the typical "emergency" items everyone tends to need in the kind of crises they might have while at your facility--i.e., jumper cables, a few assorted tools, and any other inexpensive items you can think of. Loan these out to people in need.

Another way to provide great service is to give people a gift when they first move in. It doesn't have to be expensive. Simply give them a small item that has a high perceived value to the customer but low cost to you. An example would be something like a few boxes of various sizes. In addition to being a valuable and timely gift, it will encourage them to buy more boxes from you when they need them.

In addition to providing excellent service, you need to keep your name front and center in people's minds, even after they are no longer renting from you. Once a renter moves out, you should continue to send him a postcard every three months or so. This is easy and inexpensive to do. Make sure the postcard contains a valuable tip of some kind that will make people really want to read it. Offer a discount to anyone who presents the card at your facility. Not only will this encourage previous customers to return, it will have a pass-along effect--people who get the postcard will give it to a friend of relative who needs storage. Postcarding previous customers increases both repeat and referral business.

#2: Referral Customers

For most self-storage operators, referrals are an afterthought. Not smart! Referrals generate the second highest ROMD. They should be given a much higher priority than most storage operators and managers give them. It takes very little money to generate referrals, and the returns are substantial.

The most important component of encouraging referrals is free: ask for them. To maximize the number of referrals you get, ask at three points in time. First, ask a customer when he first signs a rental agreement. He has just made a decision in your favor, and it's easy to get a referral out of someone who has newly decided to rent from you. Ask again whenever you or your manager does something for an existing renter where they are grateful and thank you. Finally, ask him again when he moves out. Assuming all went well, this is another time when he will be very willing to help.

Another successful technique to stimulate referrals is to give people a discount on their rent if they send you someone who becomes a customer. A referral flier or postcard can be used for this purpose. Put postcards up on the counters in your office and slip an occasional flier under all of the units at your facility. This small amount of money spent will produce great returns, even if only a few additional people are referred.

#3: Storage Hotline

This is an idea I originated. A hotline is a separate phone line that gives people a detailed recorded message. The reason why the ROMD for this technique is so high is that it costs very little money to implement, but it is incredibly effective. To properly provide a hotline, you need to set up a completely separate phone line--you cannot "attach" it to an existing one. The basic idea is that people are less reluctant to call a number when they are sure no one will be on the other end of the line trying to sell them something.

To make this concept work, you must advertise it as a 24-hour, free recorded message. The number you set up should be either a local or an 800 number. If you are located right near a state border, go with an 800 number.

Clients ask me how long this message should be. I always tell them it can never be too long, only too boring. The message should be recorded to sound informational, not like a sales pitch. I normally counsel people to title their hotline something like, "The Seven Things You Need to Know Before You Rent a Unit." Each item should be along the lines of, "Only rent from a facility that has individual door alarms... ," etc.

Your hotline message should start by listing features unique to your facility. You can list other features and benefits you find important, but start with those that only you have. Your goal is to make your unique features sound indispensable. After listening to your hotline, when potential renters call your competition, they will often ask if they offer those unique features--and your competition will have to say "no." If you made a convincing argument as to how important those features are, they will come back and rent from you.

In most places in the country, the cost of an additional phone line and a voicemail system is minimal. There is no one I know who uses the hotline system correctly who isn't delighted with the results. A major benefit to using a hotline is that when people call your regular phone number, the amount of time you have to spend on the phone with them is dramatically reduced. Most of the basic questions are answered on the hotline message. A manager doesn't have to spend his time answering the same repetitive questions. Your hotline serves as an electronic salesperson. It works 24/7, and all it wants as compensation is that you pay your phone bill.

#4: Centers of Influence

Centers of influence are people who can persuade your prospective customers in their decision of where to rent a storage unit. They include apartment-complex managers, truck-rental personnel, managers of local real-estate offices, housing-community managers, clergy, shopkeepers, etc.

When I first moved to New York City after graduate school, I met a recent dental-school graduate while apartment hunting. I started going to him for my dental work and referring him to everyone I knew. Ten years later, he told me that nearly 20 percent of his business was a result of my referrals. That's what one "loudmouth" who loves you can do for your business; and this applies to any industry, including self-storage.

The key to generating business from centers of influence revolves around consistency of contact. Other so-called marketing experts recommend bringing potential allies cups of candy and occasionally returning to refill them. But, first of all, few people ever bother to go back and refill them. Second, bribing people with sweets is a trite and overused concept. It is a sign of lazy marketing and low levels of creativity. It's something that has been done for the last 20 years in this business, but it's time to move into the 21st century. Rather than giving people candy, give them something of real value with very little cost to you.

I like the idea of preparing a short report on storage--something between 15 and 20 pages. This can be reproduced quickly and inexpensively. At the back of each report, include a coupon for $10 off the first month's rent. When you approach your various centers of influence, rather than offering them candy, leave them copies of an informational report they can give people who ask them about storage. The person who gives out the reports will look good, and business will inevitably come your way.

Make sure you go back to these individuals every month to check in and give them more reports if they need them. When you print up these reports, be sure to put a price on the front cover. Even though you don't charge your centers of influence or customers who ask for them, it increases the perception of value.

#5: Public Relations

Public relations is much more effective than any advertising you can do. I put it in position No. 5 in terms of ROMD. When you do get press coverage (and you will if you're persistent), it is well worth the investment of time--and it costs you very little money.

Press coverage is so effective because it is perceived as unbiased. Articles written about your facility will generate a significant number of new renters. If you were to purchase an ad roughly the same size as an article that gets written about you, it wouldn't have the same effect. People often perceive advertising as sales puff. They don't believe most of it. An article, on the other hand, is perceived as unbiased information.

What's the secret to getting coverage? You have to put in a regular and consistent effort. Send press releases out weekly. If you take just 20 minutes every week to send out press releases to your local media outlets, you will eventually get covered. Each week, try to tie the need for storage into a local current event. Write up the press release and send it out to each of your major press outlets. If you need help in writing press releases, there are many good books on the topic available at amazon.com or your local bookstore.

The key to getting coverage is persistence. If you do this every week, you will get coverage. The question is not if , but when, so start doing this immediately.

#6: Direct Mail

Properly used, direct mail can be very effective for self-storage operators. The biggest mistake I see being made by those who use it is that mailings are often general and unfocused. There are two primary kinds of direct mail self-storage owners use. First are mailers they send out independently. Second are those included in a co-op effort, such as Val Pak or the Money Mailer. Both can be effective if used correctly. In the case of either, there are five basic rules that apply:

1. You must have a powerful headline. You've got to get people to read your direct-mail piece before you can expect them to do something, so your headline is the single most important item on it. The headline should combine your greatest benefit with your customers' greatest need. An example would be: "How to Reduce Your Rent by 17 Percent." This will get your ad read if you are dealing with a lawyer, or any other businessperson, who is paying big bucks for office space. They want to cut costs, and freeing up space could save them a lot of money.

2. Think benefits. Most people with limited marketing knowledge tend to only list the features of their product or service. Make sure to include the benefits of the features as well. If you say, "All of our units are climate-controlled," be sure to add, "so your things will be protected from the extremes of heat and cold."

In a business like self-storage, it's easy to forget to add benefits to your features. They seem so obvious, but people don't necessarily make the leap to complete your thoughts. When you're in the storage industry and you hear someone say, "All of our doors are individually alarmed," we mentally add "so the manager knows when an an unauthorized person has entered a unit." But this missing piece doesn't exist for those who aren't in the industry. You have to put it out there for them.

3. Give people a reason to respond now. In any direct-mail piece, you want people to act immediately after they open it. If you can't get them to do it then, chances are slim to none they will do it at all. Make them a time-sensitive offer that is tough to refuse.

Consider an inexpensive gift of some sort. A small expense is nothing compared to what a new storage customer is worth. You want to make a very powerful offer to entice potential customers to call or come in and visit your facility. If nothing else, you at least want them to call your hotline. This will at least give you a chance to sell them on your facility.

4. Send out a series of mailers, not just one. It's better to pick a smaller group and mail to them two or three times than to increase the scope and size of your mailing. If you find a group worth targeting, they are worth mailing to more than once. The rule of thumb is that if you get a 5 percent response from your first mailer, then your second and third mailers should also give you a 5 percent response. I recommend you mail them a series. Have the second and third mailer refer to those pieces which preceded them.

5. Customize your piece to your market. A direct-mail piece to all business people will get very little response. Pick out a specific group and write to them. If you decide on lawyers, then write specifically to lawyers. Write the piece in their language and target their greatest needs. If you don't know how they speak, find a group of them and ask. Make sure you put yourself in their shoes before you start writing. If you don't, your piece will not be worth mailing.

#7: Yellow Pages

Yellow Pages are where most storage operators put the bulk of their marketing efforts. This is misguided. It isn't that advertising in the Yellow Pages isn't necessary, but in terms of ROMD, it ranks as the seventh most effective means of marketing.

I have a client who, when he first opened his self-storage business, put a full-page ad in his local Yellow Pages. Over the next five years, he was able to reduce his ad size until he now has just a line listing and nothing else. If you properly use all of the other marketing systems mentioned above, you can dramatically reduce your reliance on Yellow Pages advertising. Do it correctly and you can cut your Yellow Pages budget by a minimum of 50 percent. And, if you design your ads effectively, you can get the same level of response from an ad half the size of the one you're using now.

The most important part of any ad is the headline, but more than 95 percent of owners get this one wrong. They put the name of their facility at the top of their ad. This is absurd. The headline is the "ad for your ad." By putting the name of your facility at the top, you're saying the primary reason people should rent from you is because of your name. But no one will read through your ad just because of something so trivial.

The second biggest mistake owners make in their Yellow Pages ad is listing a facility's features without explaining their benefits. Research tells us that nearly 80 percent of renters will be first-timers, so keep this in mind. When you list the feature "climate control," you cannot expect people to understand the benefit implicitly. You need to also explain the feature's benefit. Finally, if you offer a hotline, make sure to direct people to it in your ad.

Follow these steps and your Yellow Pages ad response will skyrocket. Even though Yellow Pages are the seventh on the list of important marketing techniques, you still want to have one. Using this advice has doubled or tripled the response to some of my clients' ads.

In Conclusion

In order to maximize your marketing effectiveness, you have to leverage your marketing efforts. Sure, you'll probably need a Yellow Pages ad, but making it the bulk of your marketing efforts is no longer sufficient. Prioritize your marketing efforts based on ROMD. Make sure to use the other six marketing techniques we've discussed here as well.

If you follow these suggestions, you'll find your budget for marketing can actually decrease over time without hurting your occupancy rates--which may actually go up. How much money would that save you? How much more money will you be able to put in your pocket? Stick to a sound marketing plan, and your ROMD will be substantial.

Fred Gleeck is a self-storage profit- maximization consultant. He helps storage owners before and after they get into the business. He is the author of Secrets of Self Storage Marketing Success--Revealed! and numerous other training items for self-storage operators. To get regular tips on self-storage, send him an e-mail at [email protected]; call 800.345.3325.

By Cary McGovern

In my last two columns, I discussed the reasons why you may want to consider offering records-management services in your existing facility as well as the permanent nature of records storage. This article discusses the important components that should be addressed by operators who store and retrieve business documents for their customers.

If you have decided to inquire further into this dynamic aspect of the storage business, there are several issues for you to consider.

Education

Any business requires that you study the nature of its processes, financial requirements, operational idiosyncrasies and marketing strategies. Each week, several operators call or e-mail me regarding records-management start-up services. My first response is to ask them, "How much do you know about the records- management business?" Depending on their answer, I generally recommend some basic level of training, which typically includes:

• Read all of the articles you can find on the topic, including ones I have written for Inside Self-Storage. They can be found at either www.insideselfstorage.com in the archive search, or at www.fileman.com. Over the past four years, I have poured more than 25 years of document and information-management knowledge into these articles. Reading these will certainly generate more questions.
• Call for clarification. I will answer your questions directly in a free, comprehensive discussion of the topic. A full 30 percent of my phone requests end up in the inquirer's decision to not consider the records-management business. It is not for everyone.
• Call PRISM International (formerly the Association of Commercial Records Centers) and speak to Executive Director Jim Booth. Have him send you a PRISM start-up packet and ask about the industry growth over the last few years. He can be reached at 800.336.9793.
• You can also visit the association's website at www.prismintl.org and click on the "Member Mall." On that page, you can peruse and check out different PRISM members' websites. There are many that will give you a keen understanding of the marketing tactics used throughout the world.
• Iron Mountain, a leader in the records-management field, is a publicly traded company that discusses financial issues very carefully. Its discussions about the financial nature of the business and the seemingly "permanent nature of storage revenue" is quite amazing, to say the least. Log on to the Iron Mountain website at www.ironmountain.com and read all of the press releases issued during the last two years (you will find their link at the bottom of the Iron Mountain home page). Particular attention should be given to press releases for the period of October 1999 through the acquisition of Pierce-Leahy in February 2000.

Business Processes

Although there are many considerations to be made--for those considering the records-management business--the most important are a sound contract form, security and confidentiality. The industry has settled on a standard contract form available from PRISM, which has been consistently used throughout the United States and Canada. It covers issues of liability by limiting it to only the cost of the storage box, usually about $2. This practice has been well established for years.

The cost of reconstructing a business record could run in the millions of dollars. Many commercial records centers offer extended valuation insurance or recommend the client acquire coverage through his own insurance carrier. The issue of security is of great importance to most customers, who want their records to be maintained in a sound environment. Simple security systems such as keypad entry and surveillance cameras--which are typically already in place at many self-storage operations--are great selling points. One of a client's most frequently asked questions is, "How do you deal with the confidential nature of my records?" This is usually accomplished with a confidentiality statement, signed by your employees, and then bonding coverage.

Financial Requirements

If you are in the self-storage, moving and storage, or courier business, you already have many of the financial requirements covered. Buildings are always the highest cost item. If you already own a facility, you can use a simple transition method to convert one unit at a time to records management.

Racking costs are the next issue that must be considered. If you convert one unit at a time, the rental revenue from that unit's records-storage boxes usually covers the cost of racking within the first 90 days. Racking can also be leased, if you don't want to buy outright.

Personnel costs do not increase if you already have a site manager in place, but I recommend outsourcing many of the labor requirements. Hardware and software costs can be limited by using a metered software product that can be paid for on a per-transaction basis. This will, however, require two barcode readers--one a portable unit and one a direct- connect "wedge" unit.

Operational Idiosyncrasies

This business is filled with idiosyncrasies. First of all, records management is a very low priority in most businesses--until something goes wrong. Records are mostly maintained out of fear of an audit or litigation. Consequently, when there is a problem, it comes in the form of a lawsuit or tax audit. Then, records management jumps from the basement to the executive suite overnight.

Records-management programs have been downsized in businesses and are a perfect candidate for outsourcing. Most businesses don't want to worry about their records. They want to outsource them to a secure, confidential, service-oriented facility. If you are to enter this business, you need to understand the importance of this.

Marketing Strategy

There is no question that marketing is the name of this game. The industry is market-centric, and "nothing happens until the sale is made." There is no more important component in commercial records-center operations than marketing. There are several time-tested models for marketing records-management services, and I have covered several of them at length in previous articles.

Needless to say, there's a lot to consider when entering this business. Find out for yourself if records management fits your operating style by following the steps listed above.

Cary F. McGovern is a certified records manager and the principal of File Managers Inc., a records-management consulting firm that specializes in implementation assistance and training for new commercial records-center start-ups, as well as marketing support for existing records centers. For more information write P.O. Box 1178, Abita Springs, LA 70420; call 504.871.0092 or 877.FILE.MAN; fax 504.893.1751; e-mail [email protected]; visit www.fileman.com.

 

By David Wilhite

The self-storage industry has undergone a series of tremendous changes over the past two decades, evolving from a core group of small, mom-and-pop facilities to a large, powerful organization of professional business people. The rapid growth of the industry has further created a variety of challenging new issues with which we must now come to terms.

When the self-storage industry was young, so were its buildings. Facility owners had secure new roofs that did not leak, factory-fresh doors that properly sealed their units, and a much lower incidence of crime than today. This environment was very attractive to insurance companies, several of which developed products specifically for the industry. These specialty insurers provided better coverage than what was generally available at the time, and many offered significantly reduced premiums for substantial savings.

During the '80s, when the self-storage industry was reaching a new level of activity, so to were its insurance exposures. Due to various challenges we were experiencing at the time--primarily the recession--building maintenance and repair was deferred in many facilities, increasing the potential for damage to customers' stored goods. In addition, the criminal element discovered that self-storage facilities were ideal places to conduct their activities. These developments caused insurance-claims activity to increase dramatically in certain areas, and helped give rise to specialized insurance coverages, such as customers' goods legal liability, to help facility owners protect themselves.

Customers' goods legal liability is a very important coverage unique to our industry. The basic premise of self-storage is that we act as landlords, not warehousemen; we never take possession of our tenants' goods. Therefore, we are not responsible for those goods since we are simply renting space. However, there are certain situations that can create legal liability on your part for damage to your customers' goods. For example, by providing a building to store goods, we represent protection against the elements. If a customers' goods are damaged by water or fire, he may feel you were somehow negligent in honoring that representation.

If you are found legally liable for damage to tenants' property, your customers' goods legal liability insurance coverage will probably pay the claim. Just as important, it provides defense costs even if a claim is found to be groundless, false or fraudulent. It also includes coverage for damage done to customers' goods stored in the open, should you be found legally liable for that damage. This coverage is not normally available in the standard insurance market and cannot normally be added to the standard business-owner's package policy. It is available only through specialty markets for self-storage insurance.

With the recession well behind us, most facility owners have gotten their deferred maintenance schedules under control. This new emphasis on routine maintenance is helping to contain losses in the area of our customers' goods. Aside from a complete re-roofing of your facility, there are many new products available for sealing aging roofs. There are also companies that sell maintenance products, such as unit door threshold seals, that provide cost-effective alternatives to more expensive repairs. And facility operators have kept busy implementing new ideas of their own to help contain losses, such as providing pallets in each storage locker. The pallets keep their customers' belongings a few inches off the floor, helping to keep them dry in the event of surface-water accumulation.

Security is also a major concern, and a tremendous number of vendors are in the business of providing various types of security equipment. A growing number of facilities today are equipped with door alarms, computer-controlled entry gates and high-tech surveillance equipment. These products, accompanied by a good resident manager, help control crime.

Sad to say, the days are long gone when we can rent a unit to new customers and turn our back on their activities in our facilities. Many operators routinely photograph customers and some even obtain their fingerprints. This may seem a little drastic, but it has become a necessary practice in some areas. Some operators argue this type of intrusion will chase off customers; however, if it is done in a manner that expresses concern for their property, very few honest people will mind the extra care taken for their security. The customer it does chase off just might be a criminal, and lost revenue on a criminal is really money in the bank.

New construction and proper maintenance of our buildings, combined with hands-on management and attention to security are creating safer and more secure places for customers to store their goods--good news indeed for those of us who wish to keep our insurance costs at an affordable level.

In addition to loss-of-income and extra-expense coverages, Universal Insurance Facilities Ltd. offers a complete package of coverages specifically designed to meet the needs of the self-storage industry. For more information, or to get a quick, no-obligation quote, write P.O. Box 40079, Phoenix, AZ 85067-0079; phone 800.844.2101; fax 480.970.6240; e-mail [email protected]; www.vpico.com/universal.