At the time of its inception, financial projections for Staffordshire, U.K.-based De/S/eM Lifts Ltd. indicated the going would be tough. But the company soon realized it had seriously underestimated response from its chosen market: self-storage. Our original £350,000 sales target for the first year was exceeded within the first trading quarter, says Mike Carp, sales manager. The companys revised target is £1 million for the fiscal year ending in May.

How did a company formed less than two years ago achieve such remarkable results? In May 2003, owners David and Louise Martin incorporated a lift manufacturer to serve the storage industry. Their philosophy comprised a strong belief in customer care. The companys first nine months were spent developing quality-control manuals and seeking approvals to design, manufacture, install and commission goods-passenger lifts. No start-up company had attempted to achieve these standards since the implementation of the Lift Directive in 1997, making De/S/eMs application the first.

Achieving ISO 9001 and the Notified Body approval was a considerable challenge, says David Martin. One approval depended on the other. But despite the difficulties of the process, the company succeeded in meeting all requirements, and approvals were in place just in time to install the first lift for Armadillo Self Storage in Liverpool.

Customers and contacts made during the Martins previous employment were very keen to get De/S/eM and the Lift-Master goods-passenger lifts in their new facilities, says Carp, who joined the company in March 2004. The his and hers lift-package concept has received tremendous support. It consists of two lifts in a twin-shaft steel structure. One lift has manual doorsproven to be more reliable over prolonged useand is used to move heavier items. The other has automatic doors and services lighter, domestic goods.

A Lift for Everyone

The Lift-Master packages are designed to minimize running, maintenance and compulsory testing costs, which buyers often overlook. The initial cost of most lifts is a major expense, and operating costs over the first 10 years can often match the purchase price. De/S/eM designed out as much as 70 percent of these ownership expenses by using direct-acting hydraulic rams, which eliminate the over-speed governor and its corresponding counterweight, as well as their monitoring devices and circuitry. Fewer components mean savings in annual, 5-year and 10-year tests in addition to maintenance and repairs.

The firms technical expertise is self-evident, particularly in projects that involve design innovation. For example, a facility may have to install a lift in a particularly tight space, or need a mansard in the roof directly over the lift shaft to create the necessary headroom for engineers. Clients often overlook this requirement or are reluctant to address it, especially where municipal consent is mandatory. By using alternative arrangements of the hydraulics, Lift-Masters use the minimum possible headroom. Another of De/S/eMs innovations is a top hat section that can be incorporated into the rear of a specially designed lift to accommodate long items that dont fit horizontally.

Close attention to detail and a willingness to experiment have allowed De/S/eM to expand its customer base. Recent contracts include several London hotel projects as well as some with a local engineering company. Orders for several goods-only, pitless lifting machines (which the company imports from Holland) have also started to flow in. Lift-service contracts are self-generating as projects are completed, and some clients even opt to purchase service contracts for their other lift stock.

New Digs

With business moving forward at a staggering pace, the Martins realized a new base for operations would be necessary. They converted a 2,000-square-foot brick warehousea former pottery factoryin Longport, Stoke-on-Trent, into new offices, a product-storage area and small manufacturing plant. Though it involved major time and effort to make the move while meeting project deadlines, it was necessary to decrease costs and lead times in the long term. Despite the long hours, our employees cooperation meant all lift-project targets were met, some ahead of schedule, Carp says.

This is a remarkable feat considering installation sites for the companys clients cover the breadth of the United Kingdom, from Dundee, Scotland, to Portsmouth on the U.K.s southern coast, to Belfast, Ireland. De/S/eMs central location is ideal, with the nearest new site in Derby, less than 40 miles away.

And a Cherry on Top

The companys phenomenal first year was topped off with an unsolicited nomination for a new enterprise of the year award, part of a regional industry-awards program. The business continues to grow at a rate surpassing expectations. De/S/eM is considering the manufacture of several new products without diverting attention away from the original concept of being a committed, self-storage supplier, David Martin says. Our aim is to become the preferred supplier of lifts to the industry, and current projections suggest this is readily achievable. For more information, visit www.desem.co.uk.

The terms marketing and sales have different connotations, and they are sometimes convoluted in peoples minds. The dictionary defines marketing as the business activity of presenting products or services to potential customers in such a way as to make them eager to buy. Sales is defined as the exchanging of goods or services for an agreed amount of money. To simplify our understanding of these concepts, marketing is everything you do to put your product or service in front of a customer, and sales is everything you do to close the deal.

In the end, it boils down to communication, which can be a big problem for businesses. Anytime you convey an idea or concept, the listener interprets it from his own perspective, which is colored by his cultural, linguistic, educational and social experience. The question is how to effectively communicate messages about your offering to make it enticing to the greatest pool of prospects.

I asked Dr. Frank Jaster, a professor of communications at Tulane Universitys A.B. Freeman School of Business, to describe communications as he would to his class of businesspeople in the schools MBA program. He said, Communications is the strategy, structure, substance and style you choose that enables a person to make a decision in your favor. To define the components:

• Strategy is your plan to understand a customers needs and expectations by asking yourself three key questions: What does this person know? What does he want to know? What does he need to know to make a good decision?
• Structure is the organization of the information you share.
• Substance is the facts, data and information meaningful to the decision-making process.
• Style is the manner and context in which you present the information.

Assuming you accept the above definitions of marketing, sales and communication, how do you, as a self-storage owner or manager, express the value of records storage to customers in terms of their needs and expectations? Lets answer that question based on Jasters four pillars.

Strategy

What do your customers know? They probably have little or no knowledge of the value of off-site storage and the outsourced management of their business records. Its usually the last thing on a small-business owners mind until theres a problem (i.e., an audit, litigation or employee theft).

What do your customers want to know? They want to know how the records-storage service can save them money, today and in the future. They also want to know it can save them hassle and offer protection from liability.

What do your customers need to know to make good decisions for their businesses? They need to know why records have real and tangible value and, most of all, that outsourcing records management is less expensive than managing the files themselves. They need to understand this is serious business, and many companies have not survived audits, litigation and embezzlement. They need to appreciate that sound record-keeping practices are simple and easy, but they require a method. You have what they need and can provide it at a lower cost than what they already spend on a regular basis.

Structure

The structure that communicates records storage must be simple, clearly stated and unambiguous. Generally, it requires a script, a pitch book and an IBS (initial benefit statement) crafted to get a customers attention.

Substance

The substance of your communication must be clear and meaningful yet simple. The IBS should hit customers square between the eyes. Use persuasive questions such as, Did you know we offer a service that could save your business 50 percent or more of its record-keeping costs? Once you have caught their attention, display the cost and benefit in a simple graphical form with a standardized cost-benefit analysis. Your small-business packages (discussed in detail in the September 2004 issue of this magazine) are designed to cost less than a self-storage unit but ensure very high profitability to the storage owner.

Style

Always be professional, competent and courteous, but never miss an opportunity for a sale. Never sound canned or scripted. Your salespeople or telemarketers must be well-trained and understand the value of the service for the prospect (saving money and time), the owner (long-term revenue) and themselves (a sales commission).

Everyday Communication

We all communicate every single day, but less than 20 percent of what we say is heard or understood by our listeners. If this is true, your approach to communicating your records-storage service must be thorough, well-rehearsed and directed at the heart of a clients pain. You must develop an easy, user-friendly communication method that does the magic of saving the client money while enhancing your revenue. Thats why more and more self-storage operators are attracted to this ancillary service. Its not magic, just the simple logic of renting cubic instead of square feet.

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

The U.S. self-storage market is more than 30 years old and comprises more than 37,000 properties, with an average occupancy of 84.6 percent. It has grown rapidly from 1992, when 19,500 properties experienced an average occupancy rate of 84.8 percent. The U.K. market, on the other hand, is in its early stages, with only 400 facilities. U.K. investors and financiers, encouraged by cross-cultural comparisons, are hopeful their immature self-storage market will follow the product growth enjoyed in the United States over the past few decades.

The U.K. storage market has two distinct characteristics: It is highly fragmented and growing extremely fast. Both are attractive to financiers, as consolidation and growth in any industry require money. The rapid expansion and earning potential of self-storage in the United Kingdom is driving consolidation at the top and bottom ends of the market. The bigger companies in the sector are using their tremendous buying power to seize market share and force operational efficiencies via information-technology systems.

A year ago, the four major U.K. self-storage players were quoted on the London Stock Exchange (LSE): Big Yellow, LoknStore, Mentmore and Safestore. These companies used their quoted status to raise capital through the equity markets. The strategy allowed them to avoid expensive debt and finance growth early in the establishment of businesses that, at the time, weren't generating cash, let alone profits.

The consolidation that has taken place in the United Kingdom over the past year is largely due to U.S. financial institutions that see the enormous potential for growth. U.S. private-equity business Bridgepoint bought Safestore in August 2003 and took it private. In 2004, following a bidding war against Guy Hands, another private-equity player, Safestoreagain backed by Bridgepointbought Mentmore. Mentmore was removed from the LSE and assimilated into the Safestore business. It's now the largest U.K. self-storage player, with 70 stores across the country.

Debt vs. Equity Financing

Top-end consolidation of the market is sensible because debt is a cheap way of financing growth in a period of sustained low interest rates. The cost of capital has decreased relative to equity finance, which is relatively expensive in a low-interest-rate environment.

In neither the equity nor debt-financed models are businesses run for dividend flow. It isn't yield that interests either set of investors at this early stage. They are looking at capital growth and gaining a strong market position for future expansion and dividends. At this point, all the U.K. players are driving for scale and site location, key tenets to a successful business going forward.

There are advantages to both financing models. Being quoted on the LSE allows businesses to issue paper to finance growth, and that motivates those involvedincluding board members, storage managers and sales teams. Lok'nStore aligned the interests of much of its staff with shareholders by issuing options and discounted shares. The move has yielded significant results, creating motivated team members focused on what they need to make good money for themselves and, therefore, shareholders.

Big Players and the LSE

After the sales of Safestore and Mentmore, the only other LSE quoted player is Big Yellow, which has 32 stores and has just been reclassified from the Support Services sector to the Real Estate sectoran interesting move. This has been done to encourage the City to valuethe businessnot on a discounted cash-flow basis, but in terms of its net asset value. Big Yellow accompanied its announcement with news the company will commission an external valuation of its property assets, all in an attempt to get a higher rating.

The U.K. industry expects Safestore to come back to the market and list on the LSE at some point as Bridgepoint looks for an exit. The move will come as the cost of debt increases in the future and the entire industry matures; all the players will generate not only significant cash, but profits to pay generous dividends to shareholders.

This move would be welcomed by LoknStore. A problem with having only two quoted self-storage companies listed on the LSE is the relative lack of comparative businesses. The more quoted players there are, the more interest broking houses will show. Also, it increases the following of sell-side analysts and attracts more investors in the sector, which, again, helps communicate the value of the business and drives liquidity. LoknStore's rating would likely improve if there were more listed self-storage companies.

The relatively green U.K. market is growing fast and already generating noteworthy amounts of cash. It is showing every sign that it will follow the United States in terms of growth, profitability and continued consolidation. An interesting and exciting few years lie ahead for the industry and its financiers as U.K. self-storage grows from adolescence to adulthood.

Andrew Jacobs is chief executive of Lok'nStore Group PLC, one of two self-storage companies quoted on the London Stock Exchange. For more information, visit www.loknstore.co.uk.

In the car-wash and self-storage businesses, were always seeking opportunities for extra income. Finding ventures that contribute to our existing operation with minimal expense or effort is difficult. Add to this the challenge of internal or external shrinkage, and you often end up wondering, Why bother? But over the years, a couple of unsung heroes have proven themselves worthy additions to car-wash sites.

Coin-Operated Vacuums

If you were to look at revenue per square foot vs. total investment, one of the best ventures is the inclusion of coin-operated vacuums, which come in various strengths and sizes. Pricing varies according to options, style and horsepower. For example, you can install vacuums that have fragrance dispensers or carpet shampooers. A basic machine will charge the customer about $1.50 for four minutes and earn about $50 per week. When you consider the average vacuum sells for about $2,000, the unit pays for itself within a year. Thats a pretty good return for a relatively small investment and use of minimal space.

Vacuums are normally installed on an island that allows vehicles to park on either side. The island, equipped with lights and trash containers, can house as many units as you wish. Most car-wash owners say you can never have enough vacuums, and additional units dont detract from the originals. So contact your local car-wash supplier and ask him to take a look at your site and make a proposal.

Vending Machines

There are some very cool coin-operated vending machines designed to sell items of various sizes and prices in a compact space. In many cases, these are rear-loaded machines, meaning they are mounted on a wall opening to a secure space, so taking inventory and collecting money is safe and easy. There have been significant breakthroughs in monitoring coin-operated machines. These days, its possible to tie the electro-mechanical coin mechanism into PC-based software so you have total control over sales.

Good for Storage Too

If you are strictly a storage facility, the addition of vending machines or vacuums can be a no-brainer for you, too. If you choose to add them to your site, it brings you one step closer to adding the ultimate ancillary service: a car wash. In previous columns, I have written a great deal about the car-wash opportunity, and many readers have requested more information. Over the past six months, I have spent a lot of time on the road and seen many storage facilities with car washes integrated into their sites. All of them seem to be doing well. Theres little doubt the addition of this service may be the ticket to up your monthly revenue and profit.

The goal of all these potential business opportunities is to make a profit. The more I visit businesses across the country and study real estate, the pressure to maximize returns is evident. With land and construction costs escalating, we must always keep in mind the mantra of highest and best use. Simply put, we have to ask ourselves with every venture whether it produces enough revenue to support the investmentin particular, the land on which the site sits. The more our land appreciates, the more we need to increase the net revenue, either by improving our core business or adding extra services.

During a recent visit to some top car washes, I was impressed by the number and variety of ancillary services they offer. Their owners are seeking and experimenting with different options. If there was one common thread among them (besides improvements in their net income), its outside the box initiative. These owners realize their customer base is site-specific.

For example, one full-service car wash is in a town of 40,000 people, the primary businesses of which are agriculture and high technology. The sites owner realized the customer base was more than 65 percent women, and there was a great opportunity to cater to this market with attractive, personal, non-car-related items. After conducting customer interviews, she realized there was also real opportunity to market local sports memorabilia. The result? Walls attractively lined with art, shelves stocked with candles and other gift items, and a waiting/sales area tastefully decorated to make people welcome and comfortable. This car wash produces well over $2 per car in ancillary incomeand this is prior to the addition of signed sports memorabilia.

Revenue opportunities vary, and it all comes down to understanding your customer base and knowing how much time and money you are prepared to commit. As the gurus say, there is no such thing as a poor plan, but there are countless examples of poor execution. Look at other successful retailers in your area, ask lots of questions, interview suppliers, make a decision, and go! Youll have lots of fun dreaming up ideas, planning and implementing. Let me know about the ancillary services you have used, for good or bad, and I will share your experience in a future column.

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

For any industry to remain strong, a core of dedicated individuals must be committed to its success. In June 1991, a group of pioneers launched the Self Storage Association of Australasia (SSAA) to lobby for important issues such as employment conditions, taxes and warehousing legislation, which had the potential to stifle self-storage growth. Nearly 15 years later, the association is a strong guiding force for a well-established industry in Australia and New Zealand.

In Australasia, self-storage has grown significantly since the early 90s. There are more than 500 SSAA members, representing almost 800 facilities, with another 60 provisional members and more than 50 service members. Membership grew by more than 100 last year alone. New facilities continue to open and existing facilities expand, increasing the presence of self-storage in the region.

Whos Who

Although the association is responsible for members across nearly 8 million square kilometers, the staff is remarkably small. Rennie Schafer has been executive officer since March 2004. He is supported by Claire Beattie, administrative officer, and Simone Hill, legal/special projects officer. The association board consists of members from each of the six regions, a service member and the past president. A permanent headquarters was established in Melbourne, Australia, in 2004.

Standards and Procedures

A number of initiatives have helped the association set the standard for local self-storage operators. One of the most notable is the Standard Self Storage Agreement and supporting Manual of Operation and Procedures. The agreement is used by nearly all storage businesses in the region and is an important legal document, given that the industry remains self-regulated.

While self-regulation means fewer legislative costs, it also means a lack of legal protection by statute, so the industry must be vigilant. The SSAA works at various government levels to minimize negative impact from changes in government policy. Rather than have legislators impose their rules, the association works closely with operators to ensure the development of appropriate codes of practice and standards. This gives operators great flexibility in their businesses and allows necessary changes to occur quickly, without the burden of parliamentary debate.

For example, the association recently developed a workplace-safety guideline that explains in detail how to keep a facility safe for employees and customers. It has quickly become the industry standard and is already recognized as a benchmark by regulatory authorities in the area. All SSAA members receive a copy of this booklet as well as a CD-ROM with the various documentation and measurement tools to help them adopt the system.

Delivering the Goods

Association members have access to numerous resources to help them manage their businesses, such as the standard storers agreement, workplace-safety manual, annual almanac and industry-service guide. The SSAA also has a number of group-buying programs for services such as electronic-funds transfer at point-of-sale and Yellow Pages advertising, which are particularly useful for smaller members that lack the purchasing power of larger operators.

SSAA staff is always on hand to answer general questions on all things self-storage, from industry trends to how to sell goods. A bimonthly magazine and monthly e-newsletter inform members of current news. Regular regional meetings allow members to discuss issues and listen to guest speakers.

The gala event for the Australasian industry is the associations annual convention and tradeshow, traditionally held at the end of September. This year, the event will be hosted in Auckland, New Zealand, Sept. 28-30. Continually receiving great attendance, this show provides a valuable source of information, networking and entertainment. The three days culminate in an awards dinner that recognizes industry achievers.

This year, the SSAA will launch the most comprehensive industry-based training offered to storage operators in Australasia. The first two components, legal and operational, will deal with many of the day-to-day issues facing facility managers and staff. It not only provides operators with the latest information, but allows networking with peers via practical exercises. Training in daily affairs helps association members prepare for the future.

Healthy Indicators

The Australasian industry as a whole is coming off a settled period in regard to economic return. Revenue rates were flat in 2003-2004, particularly in the Australian cites of Brisbane, Melbourne and Sydney. While there is still growth in the amount of storage space being let, growth in capacity has exceeded demand in many areas.

In some cases, this is a result of investors jumping on what they thought was a booming industry without conducting due diligence. Facilities were built on any available real estate without considering demographics, site exposure or the number of local competitors. Not surprisingly, this created oversupply in certain places. As the market grows, the surplus facilities are filling and the supply/demand mix is reaching equilibrium. But this kind of environment makes for strong competition, and discounting often occurs as a result.

The upside of oversupply is businesses are forced to focus on their marketing strategies, which increases the industrys profile and exposes its opportunities to more potential customers. Given that the Australasian industry is still young, there is a large untapped market without understanding of the self-storage product or what it provides.

Capacity in the Australian market has increased significantly. In the last two years, the amount of available storage in the countrys capital has increased roughly 20 percent, with a 30 percent-plus jump in Melbourne alone. While much of this growth resulted from new builds, numerous existing sites expanded, particularly in the suburban areas. This lowered the overall occupancy rate about 7 percent from the mid-90 percent range.

The New Zealand market is more buoyant than Australias, and supply has been better aligned with demand. This has resulted inretention of occupancy rates around 95 percent and a continuing increase in pricing. While there has been discounting in some areas, it is not as prevalent as in Australia.

Changes and Challenges

In response to changes in consumer need, the industry is targeting specialized markets. Wine storage is becoming increasingly popular, particularly in regions such as South Australia and the more affluent metropolitan areas. Many operators are converting existing units or building additional space with climate control to access this opportunity.

Commercial customers are also being actively pursued. Many operators are creating relationships with wholesalers and distributors, keeping stock on hand for their sales forces. Additional services such as use of an office or meeting rooms are becoming more common in storage facilities.

One of the most significant changes in the industry has been the increasing number of facilities traded. Up until a few years ago, hardly any self-storage businesses in Australasia had been sold. In the last couple of years, a number have come on the market. The most notable is the Millers chain, which sold to Homebush, New South Wales-based Kennards Self Storage, giving the company a total of 59 facilities in Australia and making it the largest single operator in the region.

Management groups are also becoming a significant part of the industry. Storage King is the early innovator in this area, with several other companies coming on board to offer the service in the last year.

While the industry has somewhat settled, its still new, and considerable growth is on the horizon. Occupancy rates of 85 percent to 90 percent and yields around 11 percent ensure a healthy profit and a good return on investment. More industry consolidation is likely, particularly as some of the smaller established businesses look at cashing up before the economy changes and interest rates rise.

The challenge for the industry is to manage self-storage supply and ensure the product retains its value. The SSAAs challenges are to keep the industry self-regulated during continued growth and increased recognition, and to maintain standards to ensure self-storage reaches its full development potential.

Rennie Schafer is the Self Storage Association of Australasias first full-time executive officer and has held the position since March 2004. Mr. Schafer, who holds an MBA, has a range of business qualifications and experiences and has been working with industry associations for more than six years. For more information, visit www.selfstorage.com.au.

As a business owner, its important to learn as much as you can from other industries. For instance, theres a huge home center in my neighborhood. Theres also a family-owned hardware store that continues to prosper despite its giant competitor. How it manages to stay viable is a lesson for all of us. This small business doesnt stock everything the bigger store offers, nor are its prices better. What it does have is a sales staff that is knowledgeable and helpful.

During a shopping excursion, I watched one of the stores employees help a customer who was looking to replace a wall switch. By asking a series of helpful questions, he sold the customer on a high-grade switch plus wire nuts, a wire stripper and electrical tape. When it was my turn to be served, I said, Nice cross-selling, referring to the practice of selling a customer the item he requests, plus other related items he requires but hadnt anticipated. (In self-storage, this might mean suggesting packing tape or bubble-wrap with the sale of boxes, for example.)

The salesperson didnt know what cross-selling was, but he smiled and said, I was just making sure the customer had everything he needed. This do the right thing mindset is the reason the store is still in business. People will even disregard a slightly higher price if theyre sure to get exactly what they need. The question is: How can you apply these cross-selling tactics to your self-storage business?

Retail Training

Self-storage facilities that have the most success with cross-selling have well-trained and motivated staff. Their employees know how to ask customers the right questions. Once they learn what project a customer is undertaking, they know their retail products well enough to make useful suggestions. You may not think your staff is prepared to handle this task; but learning takes many forms, and you can teach your employees to do this, even without formal training sessions. Heres how:

Use signage that helps the consumer and your team.

Ask your retail supplier to provide signage that lists all products useful for storing, shipping, moving and packing goods, such as tape, labels, boxes, protective materials, etc. These consumer posters are geared toward employees as much as they are the publicand they work. They are constant reminders to your staff of what items they should recommend to customers.

Group products into kits.

For example, display everything a customer might need for storage or shipping together as a package. Create special signage for these kits and consider discount pricing. Combining items in this manner helps train your staff to sell products in groups.

Motivate your staff with rewards.

Most people are creatures of habit. Sure, your employees will offer boxes to tenants, but to make the sale of other retail items a routine practice, it may help to provide a little incentive. And constantly raise the bar over time. For instance, if your average retail sale includes four items, reward employees who are able to sell six or more, and so on.

Base your inventory on your after training sales.

People cant buy what you dont have, so dont drop an item that doesnt sell until youre sure its being offered to customers by your employees. A change in staff or training can dramatically affect what is sold and in what quantities. Why pass up sales? Make sure you have the right mix of products, signage, displays and training. You may find your sales increase with employees eagerness to give every customer everything he needs.

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.

We are confronted with daily evidence that the world can be a dangerous place, yet self-storage owners across the globe make the sad mistake of failing to prepare for peril. In addition to the usual transgressions of theft and vandalism, our industry now faces the very real risk that facilities will be used in relation to terrorist activity. Crime and misfortune abound on the planet. How do you prevent your business from becoming a primary or secondary victim?

No matter how you spell or say the word—seguridad, sicurezza, sécurité or security—there are steps you can take to bring your potential liabilities under control. Today’s security suppliers offer the software, electronics and mechanical tools to manage and minimize your risks. This article addresses the benefits and basics of a risk-assessment process, which will assist you in choosing the best solutions for your needs. It also examines tips for choosing a security provider and some emerging trends in the field.

Assessment of Risk

The first step in minimizing your risk is a thorough assessment of your exposures. You need to identify the possibility and probability of danger to your site or business. Consider this: As a self-storage operator, you give control of portions of your property to third parties. You recognize that the more you know about your customers and what they store with you, the less risk they pose to your livelihood.

This may mean you have to gather more information from tenants than planned. Some data-collection, such as the verification of credit reports or criminal records, will require compliance with local and national regulations. Other bits of info will be simply for your own protection and convenience. For example, you may decide you need visual verification of people who access your site.

To determine the needs and vulnerabilities of your specific facility, you’ll need to ask yourself a series of risk-assessment questions. Site requirements will vary according to local conditions, such as demographics, as well as more expansive criteria, like culture and geography. While it would be difficult to summarize all areas of appraisal in an article of this scope, the following are some basic considerations:

• Are your customer-data procedures adequate? Can you quickly and reliably identify each customer?
• Do you have up-to-date contact information for each tenant?
• What are your exception-handling procedures?
• Do you know who is on your premises at any given time?
• Does your security solution take into account environmental factors? For example, are you on a coastal or other area that experiences extreme weather conditions, which could compromise your security?
• Do you have spare equipment on site for the event of an emergency—for example, a tenant damages a security camera, light fixture or access keypad with his moving truck? What is your downtime if you don’t have replacements available?
• What happens if a lightning strike or power surge damages your computer hard drive and security-system controller?
• What would happen if your software license expired on a Friday evening and your supplier was not available until regular business hours on Monday?
• Do you have a business-continuity plan to cope with potential disasters?
• Have you entered a crime-watch agreement or liaison with other businesses in your area?

Once you have answered these and other questions, the next step is to identify and minimize your risk. Match it against the technology and systems on the market. The complexity of ever-changing technical solutions and the sheer volume of security equipment and vendors may make your choice difficult. Your most cost-effective option may be to hire a professional to assist you.

Choosing a Security Provider

Decide on your security provider only after careful research, bearing in mind the cheapest option is not always the best. You are entering a long-term business relationship, so you want to choose wisely. Poor decision-making in this area could cost you—in more ways than one. Consider the following:

• Does the company’s sales package include important information you’ll need to make your choice?
• Is the supplier responsive to your questions and concerns?
• Are installation drawings and other documentation available?
• Does the supplier offer professional engineering and installation services, or does it hire third parties for these tasks?
• Is the proposed system too rigid, or is it flexible enough to allow the easy, cost-effective addition of updates and modifications?
• Do the supplier and its installers have a strong record of reliability and sound business practices?

Always get references from potential security providers, and make sure each candidate has appropriate qualifications and licenses for the proposed work. Not only will it give you peace of mind, it will ensure the company has followed necessary procedures. Many municipalities have strict guidelines regarding licensure to protect consumers. For example, in New South Wales, Australia, there is a state-administered licensing scheme with severe financial penalties for noncompliance. If your provider does not have a master license for work he has completed, you are not obligated to pay.

Emerging Trends

In addition to standard offerings available at most self-storage sites—access gates, keypads, video surveillance, unit alarms, etc.—several new technologies are coming on the security scene. Biometrics is a new option being used to replace magnetic stripe cards (i.e., bank cards) at some facilities. Due to growing demand for this technology, it is likely to become a cost-effective means of access control for storage facilities. In fact, some operators already use biometricdevices at a number of sites for wine storage and other high-security areas.

There are several competing biometric variations. The oldest and most established is a finger-scanning device. This can work using surface detection of fingerprint patterns or the subsurface detection of blood vessels. The newest biometric device is the iris scan, which is also the most reliable.

Another up-and-coming technology, used primarily by government agencies until recent years, is video motion detection. There are several layers of technology under this category. At the simplest level, it refers to a camera or digital video recorder that sounds an alarm when it senses changes in the grey levels (light pattern) of a video image. Moving up several levels of sophistication, you have systems that can recognize the presence or loss of very small elements, even in a busy image.

Motion-detection systems, while relatively expensive, are getting more affordable as the technology improves. These systems make image storing and archiving more manageable for storage operators, as they only record valid events.

The Big Picture

The purpose of security at any storage site, whether in London or San Francisco, is the minimization of risk for the facility owner and tenants. Therefore, risk assessment is a crucial part of your ongoing success. Evaluate hazards in terms of potential rather than immediate and obvious problems. Ask yourself a host of “what if” questions, anticipating security needs before they are imminent.

An important thing to keep in mind is there is no “one solution fits all” approach. Owners of multiple facilities should remember each site is unique, and what is adequate protection for one may not be effective at another. Fortunately, with today’s technology, the ability to monitor several properties from a single location is facilitated via the Internet and related options available as part of most security systems.

Finally, do not be afraid to research your options. Technologies change, and new products come on the market all the time. Don’t assume you have to stick with what you purchased at installation. A good security system should have the flexibility to change with the times and adapt to evolving demand.

No matter where you are in the global community, security has been statistically proven to be one of the best tools for marketing a storage facility as well as maximizing per-square-foot yield. Invest in a system that will reduce your risk and safeguard your self-storage business.

Steve Cooper is part of the marketing team at Digitech International Inc., which produces comprehensive security solutions for the self-storage industry. The company’s product line includes gates, access control, video surveillance, individual unit alarms, management site control and onsite marketing tools. For more information, call 800.523.9504; visit www.digitech-intl.com.  Martin Dugdale is the principal of Holdfast Security Pty. Ltd., the agent for Digitech products in Australia and New Zealand. He can be reached via e-mail at [email protected].

There are four steps to making the most of your self-storage business via the Internet. First, youve got to have a high-quality product or service to sell. The second step is to design a website that sells. In the storage business, this means having one that convinces people to call or visit your facility. Step three is to drive traffic to your website. Finally, you have to close on those prospects your website generates, creating rentals.

If you have a quality facility and treat people like gold when they rent from you, youve got steps one and four covered. This article will help you with two and three.

A Site That Sells

Before you start driving traffic to your website, youve got to design a site that sells. There are four major reasons self-storage websites dont work:

1. The site has a me orientation.

The site is primarily concerned with showing the visitor how big and important you and your facility are. Frankly, your potential customers couldnt care less. The only thing theyre interested in is their storage needs and how you can meet them, not the fact youve been in business for 23 years or have 21 facilities all over the county.

A better approach is to create a site focused on customers needs and wants. It should help potential renters see why your facility is the best choice when compared to competitors. Check every claim on your website. After each sentence, ask yourself, Who cares? If you dont have a good answer, remove it. Put yourself in the mind of your prospects to determine what they want to know. The information your website contains should assist customers, not cater to the owners ego.

2. The site uses the facility name as its headline.

Most self-storage websites use a facilitys name for a headline. Though this may seem like the logical choice, it does not advance the proposition youre presenting to potential customers. Few web surfers go further than a sites first page, so if you cant convince them to contact you there, youve lost the business.

The better approach here is to put your most critical information first, that which will convince customers to make an additional inquiryor a buying decision, if the site offers online rental options. Instead of your facility name, emphasize your biggest benefit, otherwise known as your unique selling proposition.

3. Failure to use the interactive nature of the media.

Some self-storage websites appear to have done little more than convert their facility brochures to a web format. But the Internet has an interactive nature that should be exploited to your benefit, so create opportunities to that end.

Encourage surfers to get answers to their questions by clicking certain links or buttons that will lead them to new areas of your site. People investigating self-storage want to know where your facility is located, so provide them a map. Using the web, you can even incorporate features that will allow them to get driving directions from their starting point. A final note: Do not list prices on your website. The purpose of the site is to get people to call or visit. You can discuss cost when you get them on the phone or face to face.

4. Failure to ask for action.

In addition to providing web surfers important information they need to make their self-storage decision, focus your website on the specific action you want them to take. A confused mind always says no, and the adage holds true when it comes to websites, too. You want people to call or visit your facility, so make that clear on your website and create a compelling reason for them to do so. For example, entice them to enter a contest or spin a virtual wheel to receive a prize. Make it fun to do business with you.

Drive Traffic to your Site

There is a plethora of ways to drive traffic to your site. Here are four of the most successful:

1. Your domain name.

This refers to your sites URL, not the name of your facility. And, no, these should not be the same. Your domain should be easy to remember, spell, and relate to your area and business. Your best choice is something that includes your city name and self-storage. For example, if you live in Oshkosh, use www.oshkoshselfstorage.com. This method for choosing domain names will allow you to benefit from type-in traffic. This includes visitors who assume a business will have a domain name that makes logical sense for the area in which they are searching.

2. Pay-per-click search engines.

It pays to drive traffic to your site in other ways, including the use of search engines such as google.com. Web surfers use search engines to find what they seek. The higher you can rank on an engines list, the faster customers will land on your website. Past columns have covered this topic in greater detail. Suffice it to say a competent webmaster should be able to walk you through the process.

3. Linking.

One of the ways to get ranked higher on a search engine is to get other websites to link to your own. Make an effort to get other self-storage companies to link to your site. You can also approach other businesses, such as realtors and moving companies in your area and the local chamber of commerce.

4. Blogging.

One of the most effective ways to get people to your website is to start a blog, a concept popularized by the political pundits of the world. Derived from web log, it refers to a journal available on the web. Its easily modified and will help search engines index your site more quickly. If you use a blog, consistently update it, filling it with key words that relate to your specific market and storage concerns in general.

You may have noticed I didnt mention search-engine optimization. Why? Its a moving target and often very expensive. At a minimum, youll need to make sure your key words appear in the appropriate places in your source code. If that sounds Greek to you, dont worryyour webmaster can handle this, too.

Your marketing efforts should include paying consistent attention and care to your website. You should already have an outstanding facility and offer great service. Now you want to concentrate on two things: designing a website that sells and driving traffic to the site. Its the best way to make the most of self-storage on the Internet.

Fred Gleeck is a profit-maximization consultant who helps self-storage owners/operators during all phases of the business, from the feasibility study to the creation of an ongoing marketing plan. He is the author of

Secrets of Self Storage Marketing SuccessRevealed!, available for purchase at www.selfstoragesuccess.com. He is also the producer of professional training videos on self-storage marketing. To receive his regular insights via e-mail, send a blank message to [email protected]. For more information, call 800. FGLEECK; e-mail [email protected]; visit www.fredgleeck.com.

When an independent, two-shop self-storage company wins its communitys top business awards, you know management must be doing something right. Extra Closet Self Storage of Plainfield and Warrenville, Ill., landed the chamber of commerces 2003 Small Business of the Year Award for service, and the Business Ledgers Excellence in Business Award in the small-company category. Established 28 years ago, Extra Closet continues to flourish in a tight market pool teeming with imported big fish.

Debra Bennett Lellback, owner, is the mastermind behind Extra Closets success. Shes one of those people who cant help striving for that next tier of excellence. Talk to her for just a few minutes, and its evident that being the best is a matter of personal integrity for her. She readily admits Extra Closet isnt doing anything groundbreaking. Like the experts say, its the little things that count. And Lellback is a master of the little things.

There are three niches we get into to let people know we are here to do whatever we can for them: community involvement through chambers and other organizations; support of nonprofits; and onsite management, says Lellback. I think there is a huge difference between an owner who is in a facility only a couple times a month, and an owner who is a driving force that sets standards for her managers.

Lellback inherited the company from her mentor and father, Omar Bennett, a self-storage pioneer in the 1970s. When Extra Closet expanded into the Plainville market more than a decade after opening its first facility, Bennett recognized the industrys new competitive landscape.

We really started to focus on differentiating ourselves as best we could from the non-local owners, says Lellback, who worked with her father until his death in 2001. We promoted our onsite management, and the fact we were family-owned and -operated and active in the community for years. People respond to that.

Human Touch

A lot of business owners talk about the importance of a caring corporate image. But when a company operates lean and meanLellback employs just three peopleits easier to pump life into policy. The Extra Closet website doesnt shy from making this bold statement: We offer a simple, human touch that large corporate facilities cant provide.

The Big Boys aim to employ very nice people, too, so how do Extra Closet facilities live up to their claim? First of all, I think we are very empathetic to people who come to us, Lellback says. They are going through some kind of stressful changetheyre moving, or getting a divorce or separation, or expanding their business. We try to be sensitive to that fact, and help them understand were not just a storage facility where they can dump their stuff. We are here to partner with them and offer them whatever assistance we can, whether its a referral, a soda or just listening to their story.

Phone Calls and Cards

If someone calls The Extra Closet, he likely will reach a persona live one, who actually works for the company. When we leave the office, the phone gets call-forwarded to my cell phone or the manager on call, Lellback says. Ninety-nine percent of the time, when someone calls us, he is not going to get a call center or a recording. If someone has a problem, we want to react to it. And, obviously, if its a customer wanting storage, we want to react to that, too.

The Extra Closet sends thank-you notes with survey cards to customers who move in or out. If the survey doesnt look right, Lellback calls them to follow up. She also calls every new tenant to check on their moving-in experience. I think that is our competitive edge, she says. It takes me maybe 30 minutes, twice a month. If I dont get them personally, I leave a message, and people appreciate it. Its basic stuff, but a lot of competitors dont do it.

As a free perk for customers who are small contractors or use storage for their homebased businesses, Extra Closet provides a conference room, copier, fax, phone and notary service at no charge. We also accept deliveries and put stuff in their units, Lellback says. Its not difficult, but its important to the small business guy.

The Right Thing to Do

Both Extra Closet locations are active chamber members. We dont just say its the right thing to dowe get involved. People know then that we are concerned about the community, Lellback says.

Following in the footsteps of her father, Lellback strongly believes in assisting charitable efforts. She favors those that help children and women. Extra Closet supports the American Association for University Women book drive, which provides scholarships. We store the books all year, and let [the organization] use our truck for pickups. We also promote the sale through our chamber connections, Lellback explains.

Among its numerous charitable activities, Extra Closet has hosted car-seat safety checks and garage sales, and it stores furniture for the Guardian Angels, a group that helps people in transition. Schools in need of storage for fundraising activities know they can count on Extra Storage to donate a unit as well. The facilities are perennial collection sites for Dress for Success, a clothing drive for low-income women trying to enter the workforce.

I allot 2.5 to 3 percent of my storage space for charity, Lellback says. Its the least I can do, and thats a commitment Ive made to myself. The other thing is it brings people into my facility who may not have come before. So there is a benefit besides helping peopleit gets us exposure, and we can reach people we wouldnt be able to reach any other way.

News Thats Fit to Print

Extra Closet promotes its charitable activities in its own newsletter, too. The publication, produced on an office computer, is mailed once a month to tenants and posted on the company website. The marketing tool strengthens the relationship between Extra Closet and its customers, Lellback says. Its amazing to me how many people will come to us and say I read that. It also helps our tenants get more familiar with people in the office. We do little blips about somebody new, and we recently featured each of my managers favorite, funny storage stories.

The newsletter includes seasonal tips for safe storage and a couple of unique offers. Lellback works with local businesses to donate a free lunch each month. A tenant is selected at random as a winner and is announced in the newsletter. Through her business-community networking, Lellback has also produced a coupon sheet for new tenants, presented at the time of rental. Local merchants donate a free loaf of bread, free cup of coffee, etc., just for Extra Closet customers.

The Staff Shall Comfort Me

The Extra Closet approach to hiring and training has evolved over the years. Lellback wants staff who will exercise caring and sensitivity toward customers. Two years ago, she started working with a corporate-strategies company to educate her in looking for the right people and training them in sales and management.

From the start, my managers know my expectations, she says. I cant be in three chambers, but they will be in one of them. At first its hard, but I teach them to network, to sell better in person and on the phone. Employees feel they are getting something out of the Extra Space experiencetheyre not just renting storage spaces, theyre acquiring valuable skills.

Rewardsemotional and financial are also part of the package. Last year on Employees Day, Lellback hired a massage company to give staff 45-minute massages. They were in heaven, she says. Its those kinds of things that, in a small group, make a huge difference.

Lellback employs a full-time manager at each location as well as a floating manager who works part time. In addition to regular daily duties, her managers are always working on marketing campaigns, the newsletter, package delivery, etc. We run a pretty tight ship, but the managers really like having the other projects because it gives them something to do in their downtime.

Never Satisfied

When a competitor comes to town and declines to join the chamber, Lellback admits she breathes a sight of relief, because maintaining an average occupancy rate of 85 percent isnt always easy. Those who perform the minimum may get away with a decent profit, but they arent going to steal Extra Closets customers. Lellback says shes not sure why other companies dont follow the textbook rules for self-storage excellence.

If I dont do it, it will affect our occupancy, she says. I think a lot of independent guys look for certain occupancy, and then they get there and go on autopilot. Maybe they didnt have mentoring, like I had from my father. Thats what he was like: He was involved with community groups, and he gave to nonprofits he felt passionate about. Its part of my nature to do that, too, and part of my vision as an entrepreneur. My attitude is: How much more can I do, and how much more can I improve?

As for larger companies, they may have more money, but a corporate message can get diffused as it filters down through layers of management. I dont spend a lot of money on marketing, but I do spend a lot of time, Lellback says. I dont think a lot of people commit the same time and energy I do.

Lellback and her husband are discussing the possibility of a third site, but theyre not decided yet. Establishing a new facility and getting known in a community is brutally hard work, she says. Sometimes you just want to enjoy what you have.

For more information, call 815.254.9099; visit www.theextracloset.com.

Beginning in the May issue of Inside Self-Storage, Mr. Federgreen will host a monthly Q&A column titled The Payment Advisor, to which readers can submit questions about card transaction systems, electronic funds transfer, check acceptance and processing, wireless transactions, international funds transfer, and other payment-related issues. To participate, e-mail questions to [email protected] . Also watch for quarterly installments of detailed editorials such as this one.

What are alternative payments, and why should self-storage operators care? Simply put, the types of payments your business accepts vary in cost, security and levels of risk. The processing fee on a $1,000 transaction can cost between 15 cents and $30; but a higher fee does not buy greater safety, relief from fraud or reduction in liabilityit simply costs more.

In December 2004, the Payment System Research Group of the Federal Reserve Bank of Kansas City published a working paper titled, A Puzzle of Card Payment Pricing: Why Are Merchants Still Accepting Card Payments? Its conclusion was: A card network that wants all merchants in a given industry to accept cards sets a lower merchant fee initially, and then gradually increases it to the highest possible level, which may be higher than the sum of the merchants transactional benefit and the merchants initial margin without cards.

When we talk about payments, were really talking about the form of payment deliveryin other words, the form in which currency is being presented: cash, check or some form of card. There are two guiding principles a merchant must employ to make the most of his payment-delivery options. The first is to always encourage some form of debit-card payment over a credit-card payment. The second is to always encourage an electronic-check payment over any form of card transaction.

Delivery of Funds

Excluding cash transactions, all forms of payment require electronic pathways. To maximize your payment options, you must understand the various processes in detail. There are three steps common to all payment transactions: authorization of payment, transit of financial electronic data interchange (FEDI), and receipt of payment.

It is at the point of receipt that we consider the delivery of funds complete. However, depending on the payment method and the specific rules involved, reversal of a payment may occur. This risk of reversibility is paid for through the cost of each specific transaction. The cost involved in payment processing is related to this risk of reversal and the number of intermediateries involved in the process of FEDI.

Traditional Credit Cards

Traditional credit-cards are the most expensive to process and, therefore, the riskiest form of payment to accept. In a traditional credit-card transaction, when a merchant receives authorization from the credit-card company, it simply means a series of steps have been accomplished that verify the authenticity of the card and the available balance to cover a specific payment, which allows the transaction to proceed. It does not mean payment is guaranteed, nor does it mean the transaction is not subject to reversal. In fact, it can be vulnerable for a period that can easily stretch to six months from the date of payment and, in some cases, much longer.

The reason for this is a traditional credit card represents an open line of credit granted by a financial institution to a cardholder. The majority of the processing cost goes toward covering the risk that the institution will be unable to collect on the debt. This burden is shared by the merchant each time he accepts a credit-card payment, which is why it is in his interest to explore other options.

There are several alternative delivery formats available in the United States, including Automated Clearing House (ACH, or electronic-check format), and debit cards. Additional formats used under very specific conditions include SWIFT (standard worldwide international funds transfer) and DCC (dynamic currency conversion).

ACH

Surveys conducted by The Federal Reserve revealed that electronic-payment transactions exceeded paper-check payments in the United States for the first time in 2003. Of the three forms of electronic paymentACH, debit cards and credit cardsACH represented 92 percent of all transactions by value. Why?

First, the cost of ACH is based on the number of transactions, not the size of each ticket. The cost averages between 20 cents and 30 cents per transaction, regardless if a ticket is worth $100 or $10,000. There are additional benefits, such as greater security and fraud control and reduced reversibility. Finally, ACH provides significant opportunity to share in the back-end revenue generated by electronic items that are returned or dishonored. In 2004, back-end penalty revenue was in the range of $30 billion.

When using ACH, you must determine which standard entrance class (SEC) to apply to each transaction. An SEC is a three-letter code that represents the transaction type. There are 23 primary SECs, most of which have modifiers that help describe a transaction in greater detail. Its important to apply the best SEC for the business needs and, in many cases, a combination of classes is necessary to achieve maximum results. Examples of SECs that apply in the storage industry are PPD (prearranged payment personal), CCD (cash concentration or disbursement corporate), ARC (accounts receivable entry), POP (point of purchase), WEB (Internet) and TEL (telephone).

Debit Cards

Debit cards are linked to a specific checking or savings account. Offline or signature-based debit cards work in the merchant environment the same as a credit card and are not required to be connected to the account balance. Online or PIN-based debit cards ride over the ATM network; they require a PIN and the ability to connect to the live balance of the account holder.

Debit vehicles also offer significant advantages. Since a debit transaction is tied to a specific account and does not require the financial institution to grant an open line of credit to the cardholder, the risk involved is dramatically reduced. With the online format, risk is further minimized due to the combined requirements of a PIN and a live connection to the cardholders account.

An off-line debit transactiondriven by the price of a ticketis 15 percent to 50 percent cheaper than a credit-card transaction, depending on the interchange for which it qualifies. Interchange represents more than 100 different base-price levels driven by multiple factors including risk, card type, type of merchant, submission of sales drafts and more. All levels of interchange are also based on three categories of performance: transaction minimums, maximum chargeback ratio and maximum fraud ratio.

Since online debit transactions involve less risk, their costs are lower. Total cost is not based on the ticket amount but on the number of transactionsthe greater the ticket price, the greater the relative savings. Per-transaction fees range from 40 cents to 65 cents. Within this fee structure is a very tiny interchange value. It is important to mention the difference between online and off-line debit costs is actually shrinking.

Storage-Based Comparison

Assuming the average self-storage ticket is approximately $115, the methods of payment you accept can have a significant impact on your bottom line. Lets take a look at what the various methods might cost you, the merchant, on a transaction of this size (depending on the network or financial institution):

• Credit card $2.07
• Off-line debit $1.56
• Online debit 55 cents
• ACH 20 cents

A detailed understanding of alternative payment-delivery systems can help you achieve a 90 percent reduction in costs, along with greater security, system compliance, liability reduction and fraud control. I strongly urge all self-storage operators to consider which payment method works best for their businesses, as direct cost reductions flow straight to the bottom line.

Ross Federgreen is a co-founder of CSRSI, which provides an integrated approach to the analysis, design, implementation, deployment and management of electronic transaction services and systems. Since 1999, the company has helped more than 350 public and private institutions reduce the cost of acquiring money and minimize the liability exposure related to payment transactions and customer data. For more information, call 866.462.7774, ext. 1; e-mail [email protected]; visit www.csrsi.com.