One minute of planning saves 10 minutes of doing. In a time of short-term profits and a desire for immediate results, we struggle with this notion. If you have begun a records-storage business or are on the cusp of launching one, consider a facilitated focus retreat.

In the development of any project, we should step back from time to time to see if it is indeed what we intended. Although most experienced business executives develop a business plan and create a pro forma for their new ventures, few develop benchmarks and reassessment points to determine if they are on course.

In general, business owners have discovered the importance of reality checking. Nothing ever goes exactly as planned, particularly when it comes to start-ups. In last months column, I discussed the concept and use of the road map, which guides the process or business plan through to its completion. Lets say, for example, we decide to go on a trip. Well call this plan The Road to California.

We need to understand several things before we set out. Why we are going? How can we get there? What is our budget? What is our timeline? And what do we want to achieve? Once we know these things, we can set our plan in motion.

Lets say, during the course of executing this plan, we are driving west and forget to refer to the road map. We make a wrong turn at Albuquerque and end up off our course. But we like New Mexico, stay for a while and get distracted. Now we are late and off the original mark, but mesmerized by the process. Eventually, we find six months has passed!

We have a couple of options now. We can go back to my original plan, or we can continue down this other path. We know what lies ahead in California, because we already have a plan. We do not know the outcome of staying in New Mexico, an unscheduled and unplanned detour. Perhaps there are other roads of which we do not yet know. What do we do?

Facilitated Focus Retreat

Business owners and corporate executives have discovered a process that works. The story about being distracted in New Mexico is an analogy representing a common problem for all businesses. Staying on course is important, but knowing when you are off course is more so. It is only then you can begin to correct the problem.

I have found the single largest problem faced by new start-ups in commercial records management is being driven off course and not recognizing it. Many have invested significant capital and resources in the development of their new businesses but get mired in the details. They may be heads-down and busy but are moving in circles rather than to a destination. The problem is, they have lost sight of what the destination is. Confusion reigns, operations and sales are disjointed, and owners are unfocused.

How do we recognize and fix the problem? One approach that has worked for decades is a retreat, defined in the dictionary as, a period of group withdrawal for meditation, study and instruction under a director. Lets look at this description a little more closely:

• A period of group withdrawalA brief time taken away from mundane day-to-day activities for a group of people who have similar goals.
• For meditation, study and instructionThis is a thoughtful time, where thinking is important, a method of study is employed and some instruction is performed.
• Under a directorIt requires an outside facilitator to cut through the garbage and keep the group on track.

The retreat begins with understanding where we are in the business nownot where we think we are, but where we really are. Next, we move on to understanding what we want, followed by where we want to bein what time frame and at what cost. The next step is setting realistic short-term goals and understanding what resources we need to achieve them (capital, people, processes, technology, management, etc.). Finally, we agree on our focus, business approach, operating plan and selling strategy.

These retreat sessions should be attended by records-management investors, general managers, operations managers and sales staff. Most find the exercise to be profound. It is best done either immediately before the initial planning process or six months into the project. Some mature records centers host retreats annually. They are usually held over a Friday and Saturday, and the results are astounding. Confusion and ambiguity becomes concise and focused plans.

Oblio and Arrow

Harry Nilsson, a popular singer from the 1970s, wrote and performed a song called Me and My Arrow. That song was later made into an award-winning feature film narrated by Ringo Starr. The film tells the story of a man named Oblio, which goes like this:

Oblio lives in the Land of Point with his family and his dog, Arrow. He is different than everyone else because he has a round head; everyone elses head is pointed. Oblios family is embarrassed and the leaders of the land banish him. His first adventure is to go through the pointed forest. When he arrives on the other side, the first person he encounters is the pointed man, who is covered in arrows that point in every direction. Oblio and Arrow agree, this makes the man pointless!

I show people this scene in my training sessions. The point is, if we have too many focuses, we are actually unclear. The pointed man is the embodiment of the company that wants to be all things to all people. He is doomed to failure. In records management, a facilitated focus retreat can help us stick to our plan and reach our projected goals.

Regular columnist Cary McGovern, CRM, is the principal of FileMan Records Management, which offers full-service records-management assistance for commercial records storage startups, marketing assistance, and sales training in commercial records-management operations. For assistance in feasibility determination, operational implementation or marketing support, call 877.FILEMAN; e-mail [email protected]; www.fileman.com.

If youre college boundor have someone in your family who isyou dont want to miss this opportunity. Inside Self- Storage has reinstated its educational scholarship program. Five worthy recipients will each be given $2,000 toward tuition at the college or university of their choice. The scholarships arent just for youngsters heading off to college for the first time, either. ISS encourages interested parties of all ages to apply.

When ISS first hosted the scholarship program in 2000, it received hundreds of applications. The scholarship board narrowed the applicant pool to six candidates ranging from age 18 to 44. The winners, all somehow affiliated with the self-storage industry, came from all walks of life. Three of the six were recent high-school graduates. One was a young mother in her early twenties continuing her education. The other two awardees were self-storage employees looking to enhance their careers. Their goals were equally varied. One winners objective was to become a doctor; another woman planned to become an engineer.

To Apply

ISS

expects the pool of contenders to be bigger than ever this year, as the self-storage industry continues to grow and prosper. The application process is very simple. To qualify, applicants must be at least 17 years of age; show proof of at least one-year affiliation with the self-storage industry; and plan to attend a college or university in 2005. Only one entry per family will be accepted. Employees and families of Virgo Publishing Inc., Universal Insurance Facilities Ltd. and Taurus Publishing are not eligible.

Applications must be received no later than Sept. 1. They may be submitted via fax to 480.281.6038; by e-mail to [email protected]; or by mail to Inside Self-Storage Scholarship Program, P.O. Box 40079, Phoenix, AZ 85067-0079. All submissions should be typed or very clearly printed. Proof of a minimum one-year affiliation with the storage industry must be submitted with the application. This could come in the form of a pay stub from a storage company, a W-2 form, or a signed letter from an employer on company letterhead (no originals please, as documents will not be returned).

The scholarship committee will select winners by Dec. 31. All recipients will be notified in writing by Jan. 30, 2005. A formal announcement will be made at the Inside Self-Storage Conference and Expo in Las Vegas, Feb. 23-25, 2005.

Best of luck to all candidates!

Although the implementation or management of a retail-supply business at your self-storage facility may seem like unfamiliar territory, if you put on your real estate-investor hat, many of the same measurement formulas would apply. Just as real estate has a language rich with formulae and definitions for calculating value, so does retail. In fact, the languages are similar. Personally, I found trade talk about cap rates or NOI daunting until I learned the lingo. This article will show you how using your own real estate language can provide the necessary skills to evaluate retail-supply opportunities.

Every storage operator with whom I have spoken is aware of the rentable square footage and occupancy rate at his property; and they all strive to maximize return on investment (ROI). Common sense would frown on an operator who ignored vacancies or reduced rental rates without good reason. The formulae of finance elegantly demonstrate that to earn a certain cap rate, you must generate a certain amount of revenue over a certain period of time.

If we were to look at the office area of a self-storage facility, what could be said if we applied the language of real estate, which judges things from the perspective of whether an asset generates a reasonable rate of return? We would look at the amount of square footage in the office area and the revenue generated. You might say that since a storage facility needs an office, the allocated space is already justified.

However, just as you are aware of market conditions and business opportunities in the industry, you should be aware of supply opportunities, too. Only then can you determine if you are maximizing your ROI. To this end, you should be aware the sales of moving/ packaging supplies made by truckrental firms, office-product superstores, parcel-service centers as well the selfstorage industry is fast approaching $750 millionthats three-quarters of a billon dollars! And there is nothing particularly unique about where these products are purchased except they are available where a customer needs them.

Having this information allows us to make comparisons. Many average-size self-storage facilities that implement retail-supply programs report selling anywhere from $12,000 to $24,000 annually in an 8-by-6-foot area, or 48 square feet of wall space. It should be noted the display area only has a footprint of less than 16 square feet. This translates into $250 to $500 of sales per square foot of wall space and represents $125 to $250 of profit.

These figures are based on an initial investment of $1,000. This means an ROI from 600 percent to 1,200 percentthats pretty good in terms of asset allocation. So, real estate people, should you allow this spacea potential source of revenueto stay vacant or underutilized?

Roy Katz is president of Supply Side, which distributes packaging as well as moving and storage supplies. The company has developed merchandising programs for many leading companies including Storage USA, the U.S. Postal Service, Kinkos and Mail Boxes Etc. For more information, call 800.284.7357 or 216.738.1200.

Lightning is a great threat to self-storage facilities, especially since storage owners are becoming more reliant on electronic communication and security. Losses from lightning strikes can damage a facilitys structure, grounds, computers, security systems, electronic gates and even cash registers. To prepare for these disasters, owners can use a variety of methods to protect their facilities. The use of lightning monitors to draw your attention to approaching storms, proper use of surge protectors, and insurance coverage should soften the blow if lightning strikes.

Lightning is an electrical discharge that rebalances the differences between positive and negative charges within a cloud, between two clouds, or between a cloud and the ground. Property damage and injuries result from cloud-to-ground strikes. When lightning strikes people and objects, it is because the negative charge at the clouds base is attracted to the positive charge at the earths surface. The strike sends large voltages, allowing it to destroy what it touches.

Damage

Lightning can cause many types of damage, some more obvious than others:

• Fire is a common result of lightning strikes, because of the heat and voltage they create.
• Lightning currents that hit a building may dislodge some of its components, such as bricks or roofing. This poses a risk for greater property damage and even injuries.
• Lightning may damage roof-mounted equipment, such as air-conditioners. If you run a climate-controlled facility, this could pose a problem for tenants stored items.
• Lightning can cause objects, such as trees or telephone poles, to collapse onto surrounding structures.
• Lightning can cause explosions if it strikes an area that houses gaseous materials, such as cleaning and maintenance products. Take precautions against the storage of flammable goods. Tenants may not realize items such as tires and cleaning materials are a fire hazard. Make it clear that storing hazardous or toxic materials is not allowed, and reinforce the policy by including it in the lease agreement. Remind existing tenants of this policy by posting signs in the rental office and around the facility.
• Lightning causes power surges and damage to desktop computers and electronic equipment, such as security systems and electronic gates. The voltage from a strike can penetrate buildings and travel inside on the lines and through buried cables. Damage to security and gate systems can pose additional risks if left unattended. If a surge knocks out your security cameras or alarm, the threat of theft or vandalism heightens. If your gate system is damaged, the risk of injuries and security breaches are increased.

There are preventive measures you can take to control damage caused from lightning. Consider using a lightning monitor if your facility is in an area prone to storms. These devices continuously listen to radio signals and draw your attention to an approaching storm. To prepare your facility, take down antennas, unplug computer equipment, and double-check surge protectors. To reduce the risk of brush fires, periodically have trees and bushes trimmed, and rid foliage on and around your property. Always keep your property well-maintained and repaired to avoid intensive lightning damage.

Despite the use of monitors, surge protectors and preventive maintenance, lightning continues to be a major cause of damage to electronic equipment and buildings. If the worst should happen to your facility, you want to be adequately insured. Lightning-strike losses are considered a covered peril in most insurance policies, which could provide coverage for your building and any business personal property, such as computer equipment, if damaged during a lightning storm.

Having proper coverage will minimize repair and replacement costs. Secure a policy that includes coverage if you have to shut down your facility to repair a damaged security system. Business income insurance could cover financial losses that occur throughout the time of repair.

Universal Insurance Facilities Ltd. offers a comprehensive 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; call 800.844.2101; fax 480.970.6240; e-mail [email protected]; visit www.vpico.com/universal.

United States

Site Selection
Sites are becoming very hard to find, says Rick Dodge, vice president of sales and operations for Rib Roof Metals Inc., which provides metal buildings to the self-storage industry in Europe and the United States. Not only are the big developers like Public Storage, Shurgard and Storage USA fighting for quality sites in the major markets, the same thing is happening in smaller, secondary markets.

As storage sites become high-profile and facilities offer extra amenities, projects become more complex. This can increase the cost of developing a project. Planning boards are becoming ever more stringent when assessing a project, and what the developer wants to add or give up will ultimately affect the costs, Dodge says.

Zoning/Permitting
Many permitting departments are unfamiliar with light-gauge steel construction and unaware structures can be built with lighter materials. This ignorance can result in lengthier permitting processes, especially in the major markets, Dodge notes. Although zoning authorities are more knowledgeable about self-storage today than they were 10 years ago, industry professionals must be committed to educating building officials and engineering firms.

Building codes are ludicrous at times, Dodge says. For example, many codes require an abundance of fire-separation walls in buildings, including storage. But compare the stringent fire codes applied to a storage facility to those required for a Wal-Mart or Target store, which is basically a huge storage warehouse with 20 times more people in the building plus inventorythese facilities have no firewalls dividing any of the building.

The U.S. storage industry needs to develop a strong group to lobby for good, sound codes for this industry and educate those responsible for the inspections of these building types, says Dodge. Our associations and industry groups have failed at dealing with these issues, which add considerably to project costs.

The impact of fire codes is of considerable concern to Harold Leslie, president of Leslie Industries Inc., which offers design-build, general contracting and construction management. As all of us experienced in selfstorage know, fire codes have been extremely unfair to the industry despite its remarkably safe record regarding fires, he says.

We have no objection to requiring sprinkler systems in any self-storage building with two levels or more, Leslie adds. But regulations requiring fire-rated assemblies and fire doors every 3,000 square feet in addition to sprinklers are not only unfair, they pose a hazard. People having to pass through a series of doors to escape during a fire could be injured or killed, he concludes. (For more information, see the accompanying sidebar.)

Materials
With many facility components being constructed of steel, a chief concern is the recent increase in its price. Several factors are impacting steel costs, Dodge says. These include:

1. The value of the U.S. dollar vs. the euro, British pound and major Asian currencies has fallen far below the value of the tariffs. When foreign steel producers sell steel in the United States, they lose money on the currency conversion. Steel is being sold instead to Europe or Asia. This also means U.S. producers have a strong economic incentive to export their steel.
2. China is consuming, by some estimates, more than 20 percent of the worlds steel supply, driving global steel prices upward.
3. A coke shortage is impacting domestic mills ability to produce at current levels. Consequently, some are citing force majeure on part of their order books and curtailing some production.
4. Steel production is an energy-intensive industry, and the cost of energy has gone up significantly.
5. Fueled by strong housing demand, appliance producers are consuming large quantities of steel gauges similar to those used in the construction industry.
6. Automotive demand, which requires steel, still remains quite strong in the United States.

Europe/United Kingdom

Site Selection/Zoning
The bottom line on site selection is location, location, location, says Andrew Donaldson, founder and chief executive of Active Supply & Design (CMD) Ltd., a U.K. fit-out company specializing in self-storage. The ideal site is situated on a busy main road with excellent prominence, good curb appeal and surrounded by a built-up conurbation, or chimney pots as the English say. Being close to a city center full of retailers and offices is a further bonus. In a nutshell, the denser an areas surrounding population, the more demand there is for the self-storage offering.

Zoning and planning are interesting challenges in Europe, as there is no specific selfstorage use or category, Donaldson says. However, a good proportion of sites or conversions can open under the buildings existing planning consents of warehousing and distribution. For a new build or change-of-use, things are more challenging, as the local planning officer is rarely familiar with the concept of self-storage.

Ten years ago, self-storage worked anywhere, regardless of the position or quality of the facility, says Philip Kirk, proprietor of Steelclad Systems, a builder of self-storage in the United Kingdom and Europe. Now, through increased competition among operators, location hasas predicted by the U.S. experiencebecome the most important factor when selecting a site.

Fast fill-up rates are more or less guaranteed for facilities close to shopping areas where drive-by traffic is high and there is plenty of opportunity for signage, Kirk says. Ideally, facilities should be established on the edge of industrial estates, either opposite retail areas or on busy roads, to take advantage of lower rents or purchase costs but still be at a prominent marketing location. Zoning does not generally present a problem because the majority of facilities are in converted buildings that are already zoned for storage, he concludes.

Conversions vs. Purpose-Built Facilities
The majority of U.K. and European selfstorage facilities are conversions of existing buildings, whether they be warehouses, distribution sheds or older multistory buildings that have limited alternative uses, Donaldson says. The European definition of purposebuilt is somewhat different than in the States. The high cost of suitable European and U.K. real estate combined with the immaturity of self-storage financing limits the opportunities for purpose-built development.

Generally, a purpose-built building in Europe is a tall, portal-framed warehouse building fitted out internally with free-standing mezzanine floors. This design allows a future alternative use for the developer if the self-storage operator fails. Modified single-or two-story, garage-style developments are almost unheard of due to high land values. However, some of these independent storage units are built on the existing yard of some conversions where space allows, Donaldson says.

Because of difficulty in obtaining planning permission/zoning for new builds, the majority of European storage facilities are conversions of existing buildings, Kirk says. This is not just a problem for self-storage but for any type of development. The United Kingdom is small and planning policy now makes it nearly impossible to build anything on greenfield sites. Vacant sites that have previously been built on (brownfield) are prohibitively expensive for self-storage, he says.

Materials
Donaldson describes a warehouse conversion as generally involving the addition of single-or multi-tier mezzanine floors to double or triple the available floor space. In most cases, this is necessary, otherwise the financials of the project just dont work, he says. The mezzanines are fire-protected and fitted out with demountable partition systems, with or without mesh roofs. Drive-up units are few and far between, and generally only appear around the ground-floor perimeter of the building, where roller-shutter doors are punched through the external building cladding. A custom-made reception/counter area is created with a full electrical fit-out, including CCTV and access control and a 2,000-kilogram goods/passenger lift.

According to Kirk, new builds are constructed mainly from steel and some masonry and concrete. Construction and materials tend to be more robust than in the United States because facility trafficmoveins/ move-outs and the number of customer visits per stayis much higher in the United Kingdom. Knocks and general wear and tear are greater.

Labor
Every European country has completely different employment legislation. So bewarethis aspect is a minefield and specialist, local advice should be sought, Donaldson says.

The biggest problem is getting enough trained people to work for you, says Kirk. Apprentice schemes stopped many years ago, and the whole of the U.K. construction industry relies heavily on self-employed subcontractors. There is always a problem of getting different trades to a site when required to meet a construction schedule. Employment laws and the uncertainty of forward orders make it too expensive to employ trades people directly.

In Europe, Rib Roof encountered labor difficulties on some of its projects. Labor was difficult for us because of the various labor laws and the variations between countries, Dodge says. There are very specific hours to work, more holidays and no weekend work. Also, there was the challenge of different languages. Of course, in the United Kingdom, this was not a big problem.

Insurance
We are following the United States by becoming an ever more litigious society, Kirk notes. Public and employer liability insurance has become a big problem for contractors. Employer liability insurance is required by law in the United Kingdom, but premiums have increased by four or five times during the last three years. Stories are common of European and U.K. contractors trading illegally without insurance or just shutting up shop because they cannot afford the premiums.

Insurance, however, can be profitable for facility owners. Insurance sales for customers goods are a great earner for the European marketplace, Donaldson says. For example, a facility can buy a £1 million blanket cover policy, then sell segments of it to individual customers at a huge premium of three or four times the cost. Aggressive sale of insurance, coupled with the sale of boxes, locks and tape, can account for more than a 10 percent turnover, he concludes.

Conclusion

Although the markets may seem inherently different, the construction of self-storage in Europe, the United Kingdom and the United States involves similar challenges. Shared knowledge and information on finding sites, dealing with municipalities, construction processes, labor, insurance concerns and materials can result in a stronger, more vital industry on both sides of the Atlantic.

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Fire Codes Unfair to Storage

By Harold C. Leslie

The impact of fire codes on the storage industry is of considerable concern to facility developers and owners. Codes developed for storage sites seem far more stringent and costly than those applied to huge, retail facilities that are visited by hundreds of people daily.

There are numerous communities around the country that have designated themselves as special fire districts, which means they make their own fire rules regardless of national regulations. A trend has developed in these districts in which fire-code writers decided self-storage no longer comprises buildings that are nontenant occupied. The change in status means, depending on the location, storage facilities have had to put in one-hour fire assemblies for every 3,000 square feet of building space. A fire-rated door is also required for each 3,000 square feet of area, at each fire wall that has a corridor.

Recently, my company was involved in the construction of storage in a two-level building. The local fire marshal wanted each 3,000-square-foot area to be divided by one-hour fire-rated assemblies. However, the building inspector mandated the assemblies had to be in place for every 1,500 square feet of area above and below, since it was a two level building.

Now imagine being a person in a selfstorage building on the second or third level when a fire breaks out. The corridors are filling with smoke, and the person may have to pass through as many as four closed fire doors (they are required by law to be closed at all times) to get out of the building. This seems to be against the sprit of the intent of the fire codes or lifesafety laws.

Recently, I visited several large facilities in Tallahassee, Fla., including a Super Wal-Mart, Lowes home-improvement store, Home Depot, and a large shopping mall, each of which probably have in excess of 100,000 square feet. The aisles in the home-improvement store are probably 6-feet wide, but are constricted to 3 feet of access due to merchandise stacked on the floor. Some of the merchandise consists of hazardous, combustible materials. What was even more surprising was there were no one-hour fire assemblies anywhere to be found. Floridas reason for this is the buildings have sprinkler systems. The shopping mall has some assemblies, but they certainly were dividing areas larger than 3,000 square feet.

I have brought the storage industrys dilemma to the attention of the International Code Council in Birmingham, Ala., but the agency feels the requirements are fair. In light of these discoveries, it is apparent the self-storage industry is being singled out for grossly unfair discrimination.

Its worthy to mention that self-storage has a remarkably safe record regarding fires. For many years, facilities have been built of masonry and steel, which are noncombustible. Only facilities constructed of wood should have one-hour fire assemblies. Fire-safety codes should be changed for buildings constructed of noncombustible material.

We have no objection to requiring sprinkler systems in any self-storage building with two levels or more. What we do object to is that fire marshals are requiring the installation of fire-rated assemblies and doors every 3,000 square feet in addition to sprinklers. We feel this is a hazard and would cause possible confusion, injury or death to persons having to pass through a series of doors to escape.

For more information, visit the International Code Council at www.sbcci.org.

Harold Leslie has been involved in the selfstorage industry for more than 28 years. He currently serves as president of Leslie Industries Inc., a design and engineering firm that has completed more than 50 million square feet of self-storage projects to date. Leslie Industries European affiliate has completed more than 5 million square feet of building conversions to self-storage in the United Kingdom and continental Europe. Mr. Leslie is also is the owner of five self-storage facilities in the United States. For more information, call 850.422.0099, or visit www.leslieindustries.com.

Can you really increase your storage rentals by providing better customer service? Is it possible to turn customers into raving fans of how they are treated at your facility? If this were possible, would it make your referral and previous- customer programs more effective? Absolutely! In fact, not only can you increase your sales, you can decrease your marketing and advertising budget at the same time.

To start, you must know what level of customer service you currently provide and what level you ultimately want to achieve. Ask yourself a few key questions. First, how are you treating prospects when they first call your store? This is the initial impression customers have of your facility, and it will determine if they want to visit you.

Second, how is the prospect treated once he visits your store? This has a tremendous impact on the customers perception of how you address his needs. Finally, once a customer rents a unit, what level of service are you providing? This might determine the length of time he stays with you and, when he eventually moves out, whether he will come back to you with a future need or refer you to others. If you address these questions and develop an effective customer-service program, you can take your self-storage operation to a new level of success.

Develop Your Program

To develop an effective customer-service program, you must determine the best way of taking care of customers. Create systems that will ensure every customer is receiving the highest level of service possible. For instance, implement a phone-sales presentation that will educate, build trust and show the customer the value of what he is receiving when renting a unit with your company. If done properly, this will provide him all the advantages of storing with you. It will also give you the opportunity to build a rapport and set yourself apart from the competition.

Tell each customer about the features and benefits of your facility that will create the highest impact. Do not provide the exact same information to each customer, as it should vary slightly depending on his particular needs. However, it is vital to provide a consistent level of sales performance; to this end, supply ongoing training to each employee involved in the selling effort. This will help develop reliability as well as ensure each customer is being treated with the highest level of service. Over time, this will improve your ability to set appointments, create customer visits and, ultimately, increase rentals at your store.

When a customer visits your store, welcome and treat him in person with the same level of respect, warmth and enthusiasm you provide over the phone. This will raise the standard and expectation of how customers are treated by everyone involved in the operation of your store. It will also confirm to the customer your commitment to providing him an excellent storage experience.

Unfortunately, this level of customer service is the exception and not the rule in most self-storage operations. However, where it does exist, referrals are generally more frequent, because customers are more excited to tell their friends and family about how great the facility is. As a rule, for every great experience a customer has with a company, he will tell two to three people. For every bad experience he has, he will tell eight to 10. Minimize the bad experiences and maximize the great ones your customers have with you through impeccable service.

If you are not careful, it is easy to forget about the customer once he rents a unit. It happens frequently in this industry. But what if you were the exception and carried through with your commitment? In other words, not only do your customers receive great service on the phone and when they sign their rental agreements, but during their entire storage experience. Would this level of consistency allow you to create raving fans?

Measure how many customers come to you as referrals and how many former customers come back to rent, and you will learn pretty quickly how effective this approach is. In fact, over time, you will probably find your percentage of referrals and previous customers will outpace almost every other form of marketing. Customer service can help lower your advertising budget while increasing the rates you can charge.

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

Reasonable estimates of the amount of insurance they need, together with stories of personal loss following catastrophes, lead most people to focus on their property-insurance limits in an attempt to protect them from an uninsured or underinsured loss. While consideration of property-insurance coverage is important for self-storage operators, perhaps the biggest threat of underinsurance facing them is claims from customers for the loss, damage or wrongful sale of stored property.

While the self-storage industry has worked hard to separate itself from and defend against responsibility for loss or damage to customers stored property, legal insulation is not always foolproof. If a customer believes your negligence contributed to the loss or damage to his property, you may be held legally liable for its value. If you make a mistake in the legal process of conducting a lien sale, you may be held liable for the value of the property that was sold.

Your liability for customers property loss under these two circumstances is not provided for by the general or business-liability coverage of your insurance. But it is often offered to self-storage operations under separate coverages called customers-goods legal liability and sale-and-disposal legal liability. Such types of insurance are unique to self-storage and found in the property and liability insurance policies sold by companies that have tailored their programs for your business.

The Right Coverage Limits

In todays litigious environment, where even a slip-and-fall injury can lead to a high award in a courtroom, most operators are very conscious of their business-liability coverage limits. Even owners of what might be considered a small self-storage operation routinely request limits of $500,000 or $1 million. However, customers goods legalliability coverage and sale-and-disposal legal-liability coverage are subject to their own policy limits. The basic coverage for the first starts at $25,000, while coverage for the latter usually starts at $10,000.

Your self-storage policy may only provide the basic limits for these specialty coverages; or coverage for these legal-liability exposures may only be provided by your election for an additional premium. Perhaps because these unique coverages are subject to separate limits, their purpose is misunderstood. Or perhaps because the potential size of a legal-liability claim has not been considered or has been underestimated, the policy limits for these types of losses are often left at a low level, if they are, indeed, purchased at all. This can be a very expensive mistake.

If a claim is made against you by one customer whose property is damaged because of a deferred maintenance problem, such as a worn roof that allows rain to damage the contents of his unit, a policy limit of $25,000 would likely be adequate. But if claims from many tenants are brought against you because of a serious loss, such as a fire caused by defectively installed or incorrectly repaired wiring, $25,000 will probably not be sufficient.

If you are found responsible through some negligence that contributes to or causes the destruction of property of many customers simultaneously, you need enough insurance to settle their claims against you. If you are held responsible for a fire that destroyed 100 storage units, and the average claim per unit was $2,500, you would want your customers-goods legal-liability coverage limit to be at least $250,000.

The estimated loss due to your liability from an improper sale or disposal of customers stored property is very different from the loss you might give to your customers-goods legal-liability exposure. If your tenant believes you did not follow the letter of the law as required by the self-storage statute or lien law in your state, you can be held responsible for the value of the property that has been wrongfully sold or destroyed; attorneys fees the customer incurs in pursuing his claim; and even damages for emotional distress.

The value of stored property involved in a legal dispute as determined by a court or jury often bears little resemblance to the proceeds of an auction sale of that same property. A tenants legal fees can exceed the value of the property loss. And for a real wake-up call, you might want to consider that, in 1997, $500,000 for emotional distress in addition to $80,000 in property value was awarded to a self-storage tenant in California for conversion of his stored property (Gonzales v. Personal Storage Inc., 56 Cal. App. 4th 464). While a sale-and-disposal claim may involve only one or a few units, the cost to settle that claim can easily exceed the basic limit for sale-and-disposal legal-liability coverage of $10,000 offered by most companies that specialize in self-storage insurance.

Do the Math

The result of underinsuring your legal-liability exposures is very much like discovering your property-insurance coverage limits are too low to replace your personal property. The difference comes out of your pocket. However, unlike property insurance, the cost to increase your liability coverage does not increase in direct proportion to your limits.

While the premium to insure your storage buildings would increase twofold if you were to double the property-insurance limit, the incremental rate for each thousand dollars of liability insurance decreases with higher limits of coverage. The basic coverage limits of $25,000 for customers- goods legal liability and $10,000 for sale-and-disposal legal liability can be increased by a factor of 10 to $250,000 and $100,000 respectively, while the premium for these coverages would increase by a factor of about two.

Considering the potential for a large legal-liability claim and the relatively low cost to make substantial increases to your insurance protection, the cost of underinsuring your legal-liability exposure is quite high. Even if your insurance coverage is not up for review and renewal right now, you may want to take a look at this area of protection. If you think you may be underinsured or uninsured for these risks, speak with your agent or insurance company about pricing of higher limits and your peace of mind.

Scott Lancaster started his insurance career in 1976 as a licensed insurance agent and broker in California. He is now the regulatory compliance officer for Deans & Homer, where he joined as a commercial lines property and casualty underwriter in 1985 and has worked in the self-storage division since 1993. Deans & Homer has been providing insurance products designed to respond to the unique risks of the self-storage industry since 1974. For more information, call 800.847.9999 or visit www.self-storage-insurance.com.

The challenge of every self-storage owner is to demonstrate to potential renters that his facility is different from the competition. Why? Because the average renter thinks all facilities are basically the same. In the minds of the general public, storage is a commodity. Whats true about commodity products? The only way they differentiate themselves is by how much they cost.

If you dont have at least one particular feature or benefit that makes your facility distinct from othersa unique selling position, or USPthe only item on which you can compete is price. Thats a losing game! Lets talk about some of the ways you can make your facility different and help to make the issue of price irrelevant.

Before You Build

If your facility is not yet up and running, youve got a great opportunity to examine your competition and do something that will make your self-storage project unique. Whatever you do to make your facility special will probably increase your construction costs; but it is almost always well worth it.

I have never heard an owner sayafter adding a feature such as climate-controlled units, for examplethat he should have saved money and not included it. I have heard owners say they regret not having spent some additional dollars up front for features that would have given them a substantial edge in their market. The lesson? If you can afford it, incorporate additional attractions that will make you stand out in your marketplace.

Why Have a USP?

If your facility includes special benefits or characteristics, it will be easier for you to charge more money for your units than the competition. Why? You are comparing apples to oranges. You are no longer selling a commodity, youre selling a unique product none of your rival facilities offer. Youre not just selling storage, youre selling that indispensable feature only you provide.

What are some possible USPs? Following are some options.

There are many others, but these will give you some ideas to get started:

• SecurityIf you are the only person in your area with video surveillance or individual door alarms, this is a valid USP. Security is not perceived as a soft, or unnecessary, itemthese days, it is paramount.
• Units for $9.95Although I dont want you to use price as a selling point, this idea works. In previous articles, Ive discussed the virtue of getting some inexpensive, small lockers and offering them to people at below $10 a month just to bring them in the door. Having units that start below $10 or $20 is definitely a USP. Once you get a prospect to visit you, you can upsell him to a larger unit.
• Climate ControlIn areas with extremes of heat and/or cold, this USP is a good one.
• On-Site Manager Having a resident manager is a USP that highlights security and convenience. This is a great selling point, particularly if your competitors dont have a manager living on their premises.
• "X Different Unit SizesThis is a light USP. Having a lot of different sizes is a claim many storage operators can make. The key to using this one is to offer more unit sizes and configurations than your competitors. If you dont have a USP other than this one, consider some of the others listed here. The number of possible USPs you can create and/or provide is limitless.

Your USP will help you convince prospects to rent with you once they visit your facility; but its also an ideal tool to convince them to visit you. Every manager should be taught the value of explaining USPs over the phone. If youre the one on the call, before you hang up, say something like, If youre looking around, just make sure to ask every manager you talk to whether his facility has (insert USPs here). This will significantly increase your number of visitors. You should never get off the phone with a prospect without reminding him of your facilitys unique offerings.

Finally, remember the rule of feature and benefit: Always pair your USP, which is a feature, with a benefit. For example, if you say, All of our units have individual door alarms, never forget to add, so we know if an unauthorized person enters your unit. First present the feature, then explain why it is an advantage. We sometimes forget to connect these two items when talking with people. But prospects, most of whom are learning about storage for the first time, need to be shown the valuable benefits of your assorted attributes.

What Is Not a USP?

When I conduct marketing seminars with storage owners and managers, I ask participants to tell me what is unique about each of their facilities. Many quickly say, Our service! They may be right, but this does not work as a qualified USP. Why? Because service is an intangible item.

Besides, customers hear countless businesses proclaim their superior service every day. How many ads do you see on TV or hear on the radio in which the vendor is touting You, the customer, are No. 1? Weve seen and heard this line so often, we respond internally with Yeah, right! Nobody believes this anymore. The key to an effective USP is it should evoke a positive response in prospects, not one of cynicism or incredulity.

As I mentioned earlier, there are certain items owners and managers consider to be USPs, but they dont really qualify. If any of your potential customers yawn and say, So what? when you highlight your USP, youve got one that doesnt work. Here are some examples:

• LocationThis is not a valid USP. You are where you aregreat. But you cant rely on this to identify your facility as extraordinary from all others.
• ServiceYour service may be stellar, but potential renters have heard this line before and are very skeptical.
• New FacilityIts great that you have a new facility. But the value of its novelty to a prospect is minimal, particularly before hes visited you.

Your Competition

If the facilities that compete with you are smart, they will start trying to copy some of your USPs. In most cases, however, they will be months or even years behind you. This means your goal is to continue to add USPs to your facility to make it stand out in the marketplace. Always keep an edge on your competition by coming up with more items to make your facility unique.

To effectively market your storage facility you must have a USP, preferably more than one. If youre facility is in the beginning stages, spend some money to create one or several unique selling positions. If youre a veteran, find as many unique elements you can to persuade customers to visit and rent from you.

Fred Gleeck is a self-storage profit-maximization consultant who helps owners/operators during all phases of the business, from feasibility studies to creating an ongoing marketing plan. He is the author of Secrets of Self Storage Marketing Success Revealed! (available for purchase at www.selfstoragesuccess.com) as well as the producer of professional training videos on self-storage marketing. To receive a copy of his Seven-Day Self-Storage Marketing Course and storage marketing tips, send an e-mail to [email protected]. For more information, call 800.FGLEECK; email [email protected].

By the time you read this, who knows what will have happened in the U.K. self-storage market? The last quarter of 2003 and the first month of 2004 was all "go, go, go" with the industry’s publicly listed companies.

It started last year with a buyout offer for Safestore PLC, which led to a £40 million management buyout backed by private equity provider Bridgepoint. This was quickly followed by an approach for Lok’n Store. Although the offer of £1.15 a share was considered a good premium to the company’s recent share price, it was turned down by the controlling management team.

The third pitch occurred when Guy Hands, a respected dealmaker, was rumored on the front page of The Sunday Times to be bidding for Mentmore PLC. The storage company recently consolidated by disposing of its Imex managed workshop division and had just announced the sale of its 50 percent stake in Iron Mountain, the file-storage company.

What’s so exciting about this progress is the appetite for all of these deals, as each one had at least three serious bidders at the table. And rumors from the U.S. side of the water indicate U.S. investors are supposedly pitching for Mentmore, with Public Storage and Shurgard Storage Centers Inc. apparently having one foot in the door. One thing’s for sure: I bet the Mentmore deal is done and dusted by the time you read this; although I predict if it is taken over, it will be by a U.K. or European player and not a U.S. operator. (Was I right?)

To all indications, after years of self-storage stock falling to all-time lows as the large players rolled out their loss-making chains, there is now light at the end of the tunnel. A year ago, I predicted that if the big companies could start making money, the industry would be seen in a positive light. And at last, that’s happening, with Mentmore and Big Yellow shares recovering well from their lows.

I’m half way into my article and that’s the first mention of Big Yellow, the darling of the industry that has still not put a foot wrong. These guys keep delivering with their quarterly trading figures, even during the quiet winter season. And if a major U.S. player is going to enter the U.K. market with significant force, it will be via a takeover of Big Yellow and no one else.

If you take my advice, you’ll acquire some of the company’s stock sooner than later. Why, you ask? Because Big Yellow only owns third-generation facilities that are already future-proofed and move quickly past breakeven. The company has established a solid presence in the industry and a brand image that will no doubt maintain its premium rating and make it a very attractive target.

It looks like consolidation is going to be the watch word of 2004, certainly in the United Kingdom and perhaps in Europe. There are so few medium-sized operators that they may be in a position to make an impact, as there just aren’t enough multisite operators available via acquisition. Mid-sized operators, like Space Maker Self Storage and Keepsafe Self-Storage Ltd., are at the top of the consolidation list; although there may be the odd single- or twosite operators that can also make an impact in the marketplace.

The U.K. market is starting to mature, and the public is realizing what self-storage is all about. Momentum is building, thanks to the Big Yellows of the world; and the offering is spreading from Southeast England throughout the counties.

Funding is becoming more available, especially if geared against the freehold of a building, and more new entrants are coming to the market. The existing single-site operators are branching out to two or three sites.

It’s all positive news and, this year, everyone will feel the benefits. We haven’t reached the U.S. level of steady growth and reliable occupancy, but we have certainly gotten past the point of “build it, and they won’t know what it is!”

Andrew Donaldson is the founder and chief executive of Active Supply & Design (CDM) Ltd., a European fit-out contractor. He has set up and sold out a multi-site chain of facilities in the United Kingdom under the name Rent-A-Space Ltd. His most recent facility, Storage World, in Manchester, England, has more than 100,000 square feet of rentable space. Mr. Donaldson is also the founder of the Self- Storage Sentinel newsletter and www.askactive.com. For more information, e-mail [email protected].

As I travel across the country, I see hundreds of selfstorage stores and thousands of units. I have lost count of the number of times a manager has opened a unit door to show me a vacant space, only to find the floor dirty or populated with miscellaneous junk. In almost every case, the manager says, Oh, I didnt know that stuff was still in here, or Dont worrywell have that cleaned up before anyone moves in. I see this problem from one side of the country to the other. Managers should know, if a unit is not clean, it is not ready to rent or be shown.

Back in the If you build it, they will come days, a store could get away with this type of customer-sales presentation and the negative image it creates. Those days are long over. After watching the changes in our industry over the past 19 years, I have made one simple conclusion: Either your management is committed to every aspect of producing a positive customer-service experience, from the initial lease to the move out, or you should be planning your exit strategy from the business.

We all must adopt the philosophy that vacant units must be rental-ready to be shown to potential customers. I know there are times when our store staff is very busy, but it is a matter of making it a top priority. Not having vacant units ready to rent is a little like the old poem that goes, For the lack of a nail, the shoe fell off; for the lack of the shoe, the horse fell down; for the lack of the horse... You get the idea.

Making this a top goal for everyone on the management team keeps the focus on customer service and the importance of a customers impression of the business. You can even make it a mystery-shopping incentive or bonus item. If the owner can walk in unannounced and open five or six vacant units and they are ready to rent, he buys lunch, or there is a cash bonus to everyone on the team. I know several owners who have their managers place a colorful card on vacant units that say Ready for You. These can be simply made out of outdoor tag stock or laminated paper.

Dont take this issue for granted. It can and will make a difference in your rental closing ratios. I guarantee that when you know the vacant unit behind the door will always be totally clean, your confidence will increase. And by the way, making sure the unit is clean also means the door operates properly. The worst of all sales demonstrations is the one that starts with the manager not being able to easily open the door. Clean units will help everyone achieve increased rental activity and improved bottom-line results.

Your Meal and Service Guaranteed

During a recent road trip, my wife and I decided to try the Steak and Ale restaurant for dinner. This chain, started in 1966, has more than 60 locations nationwide. As it was not crowded on a Wednesday night, we were quickly taken to our table.

The very first thing our waiter, Brian, did was introduce himself. As he was presenting our menus, he started to explain the Steak and Ale meal guarantee as well as his service promise. The message was simple: Steak and Ale guaranteed our entire dining experience would be enjoyed completely or the meal would be free.

But Brian not only gave us a verbal commitment, he placed a business card on the table with his name clearly printed on it. It was the Steak and Ales written guarantee. I have seen restaurants make all types of claims on their menus, but this was the first time I was given a personal promise. It really got me thinking about what types of promises we make to our self-storage customers. Are any of us willing to make a commitment that the customers storage experience will meet or exceed their expectations and put it in writing?

Customers Deliveries

During two recent management-consulting engagements, I evaluated five established stores. Both owners had authorized their managers to accept shipments for their customers. In one case, packages were being delivered by FedEx, UPS and Airborne Express directly to the office. Routinely, the managers would sign to accept the shipments and simply place them on the floor. In the other situation, the managers turned over the key to the customers unit, and the driver would put the delivery directly into the space.

What surprised me the most is neither company had taken any steps to limit their liability for these actions. There is a great deal of debate about whether accepting shipments is worth the business risks assumed. Yet many of us know that unless we are willing to accept deliveries, we have no chance of renting to many commercial customers.

One of the best articles on this subject was written by Jeffrey Greenberger in the November 2002 issue of Inside Self-Storage. (To access it, simply visit the ISS online article archive at www.insideselfstorage.com. Enter the authors name into the search field or open the November 2002 issue.) Jeff clearly lays out the liability issues involved with accepting deliveries on behalf of customers and supplies a sample addendum for your consideration.

Both owners mentioned above thought accepting deliveries was something everyone did. They had never considered the potential liability involved. If you have not attempted to protect yourself, act today. You may want to set up an appointment with your attorney to discuss the issue and fully consider your options.

Servicemembers Civil Relief Act

In case you missed it, on Dec.19, President Bush signed into law the first complete revision of the 1940 Soldiers and Sailors Civil Relief Act. The new law, called the Servicemembers Civil Relief Act, will have a direct impact on all self-storage owners across the country, as Section 307(a)(1) specifically references Enforcement of Storage Liens. It states:

LIMITATION ON FORECLOSURE OR ENFORCEMENTA person holding a lien on the property or effects of a servicemember may not, during any period of military service of the servicemember and for 90 days thereafter, foreclose or enforce any lien on such property or effects without a court order granted before foreclosure or enforcement.

In the January/February issue of the Texas Mini News, Larry Niemann, legal counsel for the Texas Mini Storage Association (TMSA), informed all readers that as a result of the new law, some changes would need to be made to the TMSA rental agreement. A special addendum to the current agreement was prepared for members to use until the next official printing. I anticipate similar changes to be made to the various model agreements by other state associations.

In light of this law, I urge every owner and manager who has not reviewed the language of his current rental agreement to do so immediately. While I have always encouraged restraint in conducting auctions of known servicemembers rental units, this new law makes it clear that Congress and the President are willing to protect our men and women in uniform from enforcement of our storage liens.

Jim Chiswell is the owner of Chiswell & Associates LLC. Since 1990, his firm has provided feasibility studies, acquisition due diligence and customized manager training for the self-storage industry. In addition to being a member of the Inside Self-Storage Editorial Advisory Board, he contributes regularly to the magazine and is a frequent speaker at ISS Expos and various national and state association meetings. He recently introduced the new LockCheck inventory data-collection system to the self-storage industry (www.lockcheck.com). He can be reached at 434.589.4446; visit www.selfstorageconsulting.com.