By Anne Sommi Edmonson

The following is a sequel to the article titled Records Storage for Dummies, published in the October 2003 issue of Inside Self-Storage. To access this article, visit the magazines online archive at www.insideselfstorage.com.

The most common error people make when purchasing records-storage software is buying features vs. a strong foundation. When you buy a records-storage software package, you should look for a solid core product. Without it, you are forgoing long-term stability and success. Its easy to get lost in impressive feature names and abilities; yet in the end, its all about the basics.

Imagine this: You need to get somewhere, and you have the choice of buying a bicycle or a car. Both will get you where you want to go at the moment, so you buy the bike. Whats the problem? It only offers a short-term solution. It can do the job, but it wont take you where the car could. You bought a feature: the ability to get from point A to point B. Now that you understand the cars value, you go out and buy it also. Youve spent more money and invested more time than necessary.

The same analogy applies to records-storage software. You can make several purchases over time or buy your last system first, keeping in mind the importance of business rules. Business rules are what tie together all the pieces of a software product and give you the parameters you need to avoid costly errors. They are, essentially, the guts of the software. They ensure the accuracy and control of your operation. Here is a simple example of how business rules are used to set up locations in a records center and the results they provide:

Business Rule:

Every object (box, file or tape) goes into a location.

Result:

You know where everything is.

Business Rule:

You define the object type and size in the system.

Result:

The system automatically bills the customer for the appropriate item.

Business Rule:

You determine how many items each location holds.

Result:

If you exceed capacity because of an open space, you know a box was taken out without being scanned. This is essential for checks and balances.

Business Rule:

You have the choice of assigning an account to a specific location.

Result:

The system will provide an error message if a box is found out of location. If you do not sign locations to accounts, the system will mix accounts to maximize capacity to 110 percent.

Business rules give you control of your business, ensuring 100 percent accuracy, complete tracking, correct invoicing and storage totals, space maximization and more. They give you the ability to run reports, view your centers capacity and know where open locations exist. Business rules flow through a software product from scanning to billing. They provide the checks and balances you need to avoid costly errors. At first, you may think each step is insignificant or even laborious. However, if you skip a step, eventually youll understand why it was important.

Business rules also provide flexibility and complete automation. You can set up your records-storage facility in many different ways. You can store various kinds of objects, tie together several buildings, and even speak different languages. For those in self-storage, these benefits allow the little guy to have the same advantage as the big guy. They also allow him to become a big player without making any changes to his business. When you buy your last system first, you never have to changejust grow.

Billing

Lets take a look at the role business rules play in billing. Billing requires combining several functions of the software to create an invoice. This includes rates, box sizes, service totals, storage totals, material sales, special services and more. If you work within the business rules of the system, you have the flexibility to provide customers invoices the way they want them, and you have the accuracy to ensure you are getting paid for everything you do. For example, lets say you have four customers who want to be billed different ways:

• Account A wants to be billed with one main invoice per account and have it broken down by department and cost center.
• Account B wants to be billed not by box but by cubic foot.
• Account C wants one bill per quarter.
• Account D wants to pay for storage for the year in advance at a discounted rate and be billed monthly for additions.

You have the flexibility to fulfill the needs of all four accounts and many more. Here are the business rules to handle the situation: First, set up rates for each account, or even different rates per department and cost center within the account. Next, select your invoice type. Finally, hit start on your invoices when your billing cycle begins. The system pulls the information for each accountrates, service totals, storage totals and materials salesand calculates a sum according to the invoice type you selected. The result is each piece of the software works together, and each portion of your operation works within its business rules to ensure accuracy. You get paid for everything you do.

Adding Features

Once you have your basic software package, you can add other features, such as scanning, web access or portable printing. The key is to make sure everything works with the core product. A feature can produce different results based on the strength of the foundation package.

For example, lets look at what happens when you add scanning and receipt printing to two different products. With Package A, you can scan boxes for pick-up at a location and print a receipt for the customer of what you scanned. With Package B, you can do the same. However, you can also:

• Confirm you are picking up or delivering the right boxes.
• Communicate with the central system to post the date and time items were picked up.
• Identify who completed the work.

The same feature added to either product provides scanning and receipt-printing capabilities, yet the results for your business are completely different.

Searching for records-storage software can be confusing. Dont get lost in fancy features and buzz words. Take a look at the package as an entity. You want everything to work together. You want experience and a long-term solution. You want automation. You dont want to upload and download programsyou want one congruent piece of software.

Ask questions and dont get lost in the lingo. When you do make your purchase, learn how to use the program correctly from the start. Armed with the right foundation and the knowhow to do it right, you can create a business model that ensures operational success. You just bought results.

Anne Sommi Edmonson is the director of marketing for ONeil Software Inc., which provides records-storage software and full-featured, commercial and corporate record-center tools, including the companys newest software product, RS-SQL. ONeil supplies barcodes, laser scanners, printers, industry education and more. For more information, e-mail [email protected]; visit www.oneilsoft.com.

The same is true in the self-storage industry. Because of the diversity in products and services, there are companies everywhere willing to give you leads and information. Three years ago, when we subscribed to this magazine, the helpful salesperson gave us the name of a gate company that might possibly integrate its access-control system with our software. This is when we first realized how tight-knit the self-storage community is.

A common goal in our company is to give customers what they want or, at the very least, help them find it, even if you have to direct them elsewhere. We think our software is great, but other products on the market have features ours does not. Evaluating software is not what most people consider fun; and many dont have the time to assess 10 or more packages to find the one with the features they need. If our product doesnt have a specific ability, chances are we know which software does and can point customers in the right direction. We may lose some sales that way, but a sale is not worthwhile if a customer isnt happy with what he purchased.

Following Intuition

You may be wondering, Why would a company want to introduce a new product to a competitive, established industry? The short answer is the industry should offer the best products possible. Although there are several high-quality packages available on the market, there is always room for improvement.

We originally developed our product in 1999 for a local storage facility. After several years of enhancements and versions, we released it to the public. The program went through various changes to make it specific to self-storage. One of the challenges we faced was the diversity of how facilities do business. Applications have become cluttered with options difficult for users to understand. To mitigate this problem, we employ a philosophy common to the software-development community. It is best described by Joel Spolsky, a renowned developer and author. The following excerpt can be found on his website, www.joelonsoftware.com:

In designing a user interface for anything, the very first question you always want to ask is: Who is the user? Specifically, is this a casual, occasional user, or one who will be spending all of his time using your program? For a casual user, learnability and simplicity are more important than usability and power. By learnability, I mean the ability for novices to figure out how to get tasks done rapidly. By usability, I mean only the ability to do tasks in a convenient, ergonomic way without making mistakes and needing to do repetitive tasks. A data-entry system that minimizes keystrokes by prefilling fields and automatically jumps from field to field is more usable for experienced users, but its harder for a novice to learn because it behaves unexpectedly.

It sounds simple and makes plenty of sense, but many products on the market werent developed with this type of mind set and are difficult to use. Of course, functionality is one of the most important things to look for in a self-storage software package, but an application that is intuitive is much easier to understand.

Once Upon a Time

As the competitive nature of business would have it, companies with similar products would like you to stay away from the new kid. Software companies and products come and go all the time. They are attracted to what they believe is a lucrative industry, but soon realize its not as easy to conquer as it looks. That may be true of several companies that have failed in selfstorage. But even experienced software companies were new, once upon a time.

Experience makes for a great product, but imagination, ideas and ingenuity make for a healthy industry. What a new product brings to the table is a fresh view of what management software could be. It keeps the experienced companies on their toes, pushing them to keep up with technology. Its a good situation all around. Just imagine what it would be like if new products were always shunned and excluded. Youd be forced to purchase software that was potentially outdated. Bright ideas coupled with the latest technology create a win-win situation for everyone. You get the best the industry can offer, even if its not from the new guy in town.

Those of you who have taken a chance on a new product should pat yourself on the back. Youve paved the way for others to follow and given this industry a boost in the right direction. The developers of new products are usually very flexible with pricing and support. They make that extra effort to satisfy you. They know every customer makes a difference. These companies will often be responsive to making changes to their product to suit you. Sure, every company needs to make money to survive, but smaller companies can survive on less revenue.

The bottom line is: When you decide to evaluate management software, give all the available packages a chance. The functionality should speak for itself. If the software does not have what you need, move on to the next option. If a newer product has the features you want, give it a try. You may be pleasantly surprised.

James Boyd is the president and CEO of AndraTech Software Corp., a provider of self-storage software and a new kid on the block. For more information, call 703.766.2700; e-mail [email protected]; visit www.selfstoragepro.com.

All these tools contribute to one goal: Increasing customer service while reducing operating costs. We all love the convenience and speed these services provide, and self-storage now employs similar solutions. Like banks, storage facilities have a high volume of customers serviced by limited employee resources. New and innovative products have brought banking-style services to your storage business. To understand whats possible, well compare the old-school and new-school technology.

Off-Site Management

A self-storage owner appreciates the ability to remotely review business activity at his storage site, especially when he owns more than one facility.

Old School.

You manually dial into your sites computer-modem phone number and use a remote software product, like Symantecs PC-Anywhere, to take control of your management computer. Your site employees can do absolutely nothing with the computer until you are finished with your remote connection. Rather than sitting around being bored, the manager watches everything you do and reads the financial reports you generate.

You, or another employee, must then individually request each report desired for your off-site files. Maintaining a safety backup of your data requires an even longer transmission session. This is a process that must be repeated every day for every storage location you operate. When time is worth money, this is an extraordinary business expense.

New School.

Integrated remote-management software automatically stores a complete data backup at your facility and offsite office. Business reports are automatically emailed to the designated people on the desired schedule. You can instantly connect to any of your storage locations, and no one else can monitor what you are doing. Most important, there is no interruption to your managers normal work, and everyone remains synchronized with the current financial records.

Sophisticated security settings provide complete control over every employee and monitor what was done at each site. If an employee drives to a sister site, his usage rights can be remotely defined in seconds. You can access every aspect of a tenants account or view up-to-the-minute site collections at any time. The entire process is automated, and you never need to pay a monthly fee to any outside company to maintain your data.

Reporting Abilities

As your business grows, you will require tools to compare aggregate performance and identify under-performing properties.

Old School.

Each site manager generates a set of reports and faxes them to a corporate office. Another employee collects the transmitted reports, verifies their readability, and summarizes specific values into several consolidated reports for management. One report may analyze income efficiency, while another compares marketing productivity. The required man-hours accumulate into a significant expenditure and the results are prone to human error.

New School.

Consolidated reporting software automatically compiles and analyzes each of your facilities. The reports identify why a location is underperforming. You can instantly determine which managers need help selling inventory and which units are overdue for a rate change. The entire process is automated without requiring any actions by your staff. The labor savings are so significant you may easily save an entire employee salary.

Afterhours Services

No remote solution would be complete without the ability to manage reservations and delinquencies from an offsite location.

Old School.

A tenant calls your storage facility after hours. That call is forwarded to an off-site employee who keeps later hours and handwrites the reservation request. That request is faxed to the intended site, where a second employee must enter the same information into the management software. If the desired unit is no longer available, the facility manager must contact the tenant and try to sell him a substitute unit. If your staff is unavailable to answer the customers call, a reservation call center can provide the labor for $3,000 to $6,000 annually. However, you have no guarantee you will recoup that expenditure through extra rental income.

New School.

A tenant calls your storage facility after hours. That call is forwarded offsite to an employee who, using integrated remote software, enters the reservation directly into the intended sites data. The manager can only rent what is actually available and the entire transaction, including the credit-card payment, is performed as if the manager was sitting at the remote site. All work by the off-site employee is transparent and unobtrusive to anyone who may be simultaneously using the facilitys management computer.

If your staff is unavailable to answer the customers phone call, your phone message directs that caller to your website, as do your business cards and advertising. Your management- software company should create or enhance your website to provide convenient real-time reservations, payments and account information. The entire e-commerce service must be completely secure, include all webhosting fees and be economical. Labor-free after-hours solutions have allowed banks to compete, and they will do the same for you.

Absent Management

There will also be times when a prospective customer or delinquent tenant arrives on site while your manager is out of the office. How will you handle these clients?

Old School.

The customer honks his horn or uses a paging intercom/telephone, and waits for assistance. Anyone driving behind him also waits for this process to be complete.

New School.

The delinquent customer inserts his credit card into your pay-at-the-gate drive-up keypad. The walk-up and prospective tenant uses your ATM-style kiosk. Both provide instant, labor-free, anytime customer service. Modern kiosks are pay stations designed to operate outdoors in all types of weather. Quality kiosks sell for less than $6,000 and have the option to accept cash as well as most major credit cards. Both systems can be added to almost every site. Providing affordable, 24/7 customer service makes good business sense.

Consider what you want your customers to experience along with the operational costs to deliver certain services. If, over a five-year period, you are paying more than a few thousand dollars per site for management software, enterprise tools, e-commerce or kiosk solutions, you may be lining someone elses pockets with your hard-earned income.

Doug Carner is a former member of Self Storage Associations Western-region board of directors. He is also the vice president of QuikStor Security & Software, a California based company specializing in access control, management software, digital video surveillance, kiosk and corporate products for the self-storage industry. For more information, call 800.321.1987; e-mail [email protected]; visit www.quikstor.com.

In a little more than four years, Big Yellow Group PLC, a publicly listed company that develops, owns and operates modern self-storage centers for personal, business and recreational use, has grown into a leading U.K. storage developer. The company, founded by Nicolas Vetch, Philip Burks and James Gibson, opened its first store in May 1999 and now employs 140 people. It has 29 stores in the United Kingdom—16 in Greater London—with nine more sites in development. The company’s main expansion focus is London and Southeast England, with an immediate goal of opening 50 stores in the next three years.

Big Yellow went public on the London Stock Exchange in May 2000 and is capitalized at approximately £130 million. A major milestone was reached last September when the company reported its first profit. At the time of this writing, company officials expected to meet a March yearend profit target of £1.2 million.

Big Yellow has a broad customer base comprising 20,000 customers. Private individuals account for 80 percent of these, more than half of which are those moving from one home to another. Business customers account for the remaining 20 percent. Approximately 55 percent of customers are male, although there is a growing female market. The majority of customers is between 25 and 50 years old and, typically, lives within three to five miles of their stores.

By pioneering the development of the latest generation of facilities, Big Yellow has become one of the most recognized self-storage brands in the U.K. market. Its stores are known for state-of-the-art technology and high-profile, main-road locations. As part of the company’s strategy to penetrate local markets, stores tend to be considerably larger than those of competitors (60,000 net-rentable square feet vs. the U.K. facility average of 35,000). The stores provide approximately 25 different unit sizes, from 10 up to 500 square feet.

A Pioneer

Before Big Yellow entered the industry, the self-storage market was fragmented, with no recognized brand or market leader. The principal strategic change has been the acknowledgement that self-storage is a retail rather than property business. By incorporating the principles of retailing into its market strategy—strong branding, excellent customer service, visible and accessible locations, and clean, attractive store environments—Big Yellow differentiated itself from the rest of the industry.

Specific developments pioneered by Big Yellow include:

• The provision of consistently high standards of customer service through the recruitment and in-house training of highly motivated staff with customer-facing experience. All new recruits participate in a three-month training program.
• Locating stores in highly visible and accessible main-road locations.
• Large, dominant “category killer” stores providing an average of 60,000 square feet of net storage, resulting in lower operational costs and economies of scale.
• Instantly recognizable, well-signed, purpose-built, yellow buildings offering clean, dry, modern storage. No Big Yellow store is more than four years old, and the majority is built by the company’s in-house construction team.
• High-quality security features including individual room alarms, remote monitoring, digital CCTV and personal access-code entry.
• Convenient access, seven days a week, 24 hours a day.
• A 1,000-square-foot dedicated packing-materials shop. Merchandise, insurance and other sales make up approximately 15 percent of Big Yellow’s turnover.
• An in-house call center.
• The creation of a premium brand.
• Consistent and innovative marketing including television, online and radio advertising.

Mainstream Marketing

Last year, Big Yellow initiated U.K. television advertising to efficiently reach a large, untapped domestic market. The company’s first TV advertising campaign (also the first of the U.K. industry) launched in March 2003. This was quickly followed by a three-month summer campaign.

Market research concluded the U.K. consumer had little or no understanding of self-storage; and if he did, his impression was the industry was cold and intimidating. Big Yellow wanted to change that image by injecting fun, personality and humor and providing a more human touch. The TV commercial, therefore, featured one of Big Yellow’s stores and used a quirky, light-hearted storyline.

The TV campaign has successfully enabled the company to reach a large, untapped market and generate significant new business. Its fun message educates consumers of the benefits of self-storage. At the same time, the advertisement helped differentiate the company from its competitors and propelled the brand into the No. 1 position in the industry. The next TV campaign, planned for this spring, will spread the word not only about the company’s services, but the general benefits of self-storage.

Big Yellow’s focus on the location and visibility of buildings coupled with excellent customer service has helped to create one of the most recognized brand names in the storage industry.

Stephen Homer is director of sales and marketing for Big Yellow Group PLC, responsible for conceiving and implementing all areas of the company’s sales and marketing strategy. Formally a senior executive at Edge Properties PLC, Homer joined Big Yellow in January 1999, and is a member of the PLC board. For more information, visit www.bigyellow.co.uk.

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Self-Storage Growth Factors

It is estimated that the U.K. self-storage market increased by more than 10 percent last year and, based on a number of underlying fundamentals, its growth is expected to continue. The United States has approximately 32,000 stores compared to about 270 in the United Kingdom. This equates to around 4.8 square feet of self-storage per capita vs. 0.2. Even if the U.K. market achieved just a quarter of the U.S. penetration, it would eventually contain more than 1,500 stores.

A number of factors will stimulate demand for U.K. selfstorage over the next few years:

• Public awareness of self-storage as a service.
• Significant pressure on available housing stock in South England and London as a result of central government initiatives and town planning policy, which encouraged housing development on brownfield urban sites.
• A shift toward living in small, high-density housing developments with very little storage space.
• Increased population mobility.
• Rising disposable incomes.
• The expense of entering and trading in residential and commercial property markets.
• Growing leisure-storage needs (skis, windsurfers, bikes, etc).
• A high level of small-business formation.
• High commercial-property occupancy costs.

Thankfully, those days are gone for most facility owners; but there are still thousands of sites that use manual systems. Some owners argue that with older staff members and the technical nature of computers, a manual system is easier. But this does not take into account the time involved to keep records up-to-date manually. It can take up to 75 percent more time to maintain the same records by hand than electronically. And the more spaces your facility has, the longer it takes.

Current software packages automate the daily grind of running a storage site. Move-ins, move-outs, payments and rent increases are automatically handled using predefined rules, making easy work of most tasks. Detailed statistical information is just a click away. The key is what you do with it.

Should You Take the Plunge?

Should you take the plunge and update from DOS to Windows? Computers are cheaper and easier to use than ever before, and they all rely on an operating system. Microsoft, the maker of Windows, and the hardware manufacturers control versions of these systems, which dictate what software and devices will work with a computer. Support for some DOS based systems is no longer available. For example, the Windows XP system many people use today has very poor support for DOS, and many new computers will not even run DOS programs.

Dont wait until your system failsas it eventually willto upgrade. Many storage owners wait for a complete failure of their old software before buying a new product. Most software companies have conversion routines that can translate data from old packages to new software, but most require that the old system be operational. While not all data is convertible, it is important for sites considering an upgrade to ensure their existing records are as up-to-date and accurate as possible.

Sites that convert from DOS to Windows systems will go through a sort of technology shock. This is normal, and good software companies will help you deal with this changeover period. Buy from a company that offers trainingthis will minimize the pain involved. Upgrading to more complex software will only provide benefits if you are committed to an education process. You have to understand how the software works and how to apply its many features.

Windows-based software packages have been on the market for close to 10 years, and many have matured into outstanding products with lots of features and flexibility. Products range from basic transactional packages that sell for less than $1,000 to detailed, professional packages that cost much more. In search of software nirvana, some larger operators have attempted to develop their own packages. In reality, they could have easily approached one of the leading software suppliers and asked for a company- specific version, which would be a lot cheaper.

A late trend in the industry is software geared toward larger companies or multi site groups, which can be complex without a complete understanding of the features it offers. Gains in productivity can outweigh costs many times over, as software reports realtime activity and information from branch sites to head offices, providing a basis for immediate action. These days, the right software can increase income and aid in important decision making.

The size of your storage site does not matterthe process of managing it is no different if you have 25 or 2,000 spaces. Customers have the same needs. Good Windows-based software will save you timethe bigger your business, the bigger the savings.

Dallas Dogger is the CEO of StorMan Software, an international self-storage software company with offices in Aukland, New Zealand; Boston; and Brisbane, Australia. It offers single and multiuser software as well as professional replicating software for larger operators. For more information, e-mail [email protected]; visit www.storman.com.

If a live frog is dropped into boiling water, he immediately leaps out of the pot. But if you put the frog in cold water and gradually heat it to the boiling point, he never thinks to jump. This experiment could be used as a metaphor for our failure to see how extraordinary the current times are in terms of interest rates and their impact on real estate values and returns.

There seems to be a general feeling that the interest-rate pot will never again boil and the prices of self-storage facilities have gone up just because they should. While Im not certain if interest rates will rise (and even less sure when they might), I thought I would explore some of the history and evidence to see if we should join our amphibian friend and take some action before were cooked!

Laws of Physics

The effects of low and declining interest rates have had a dramatic impact on selfstorage investments over the last few years. As in physics, there are usually two equal and opposite reactions to all such changes. The most obvious result is owners get to keep a larger share of their hard-earned income by paying less to lenders. While this is a welcome and happy circumstance, it has had a subtle, opposite effect on the intermediate-term outlook for the industry: Developers see the cash-on-cash rates of return from self-storage and decide to build more projects.

For example, a project with a loan at 8.5 percent will produce a cash-on-cash return of about 9 percent to 10 percent; with a 6 percent loan, the same project will produce a return of about 15 percent to 16 percent. This increase will cause visions of sugarplums to dance in the heads of potential developers and likewise strike fear in the hearts of competing owners.

While the problem of overbuilding is not universal, there are some catastrophic results emerging. For example, one market I recently reviewed had had an average occupancy rate of 88 percent, but experienced an increase of 97 percent in supply in less than 18 months. In February, one operator told me that in a market in which he is active, the rate on a 10-by-10, climate-controlled space had declined from $145 to $89 a month, plus a free month, because of new competitors.

The other noticeable impact has been on the pricing of storage facilities in relation to their incomes. For each dollar of income a project produces, the amount a buyer is willing to pay increases. This is, of course, because the buyer will be able finance at lower rates and achieve higher returns. Using typical market rates (cap rates) for computing this increase in value, an average project would go up about 15 percent even without increased operating income largely because of the value created by falling interest rates.

The crowning glory is borrowers can get a larger loan because of this double whammy (lower interest rates and higher values). Low interest rates provide an almost perfect environment for anyone thinking of buying, selling or refinancing. While this sounds like a broker talking, lets see if you agree:

• A buyer can purchase a great property and achieve a cash-on-cash return not seen in many years because of low interest rates. Looking back to our example, he can get a 50 percent increase in return compared to just three years ago.
• Sellers, on the other hand, can get the highest price per dollar of income in the entire history of self-storage.
• If an owner does not refinance and lock in a low interest rate for as long as he can, he needs more help than a new loan.

When to Make the Leap

If you are considering buying, selling or refinancing, the question is when to jump into action. Since we know the dramatic impact of interest rates, it might be useful to look at their recent history. The following chart is not a digital view of the Rocky Mountains but a look at the 40-year history of 10-year Treasury bonds.

Rates on the Treasury bond, plus a spread, are most often used to set pricing on self-storage loans. In the last 10 years, the spread has ranged from an additional 4 percent to the current all-time low of 1.5 percent. However, if youre hoping for even lower interest rates, the following facts may demonstrate the risks of inaction:

1. The Federal Reserve has indicated rates may go up in the future.
2. The economy is growing, and interest rates increase in times of growth.
3. Current rates are at their lowest in 43 years.
4. There have been only four times in the last 40 years when rates fell between 2 percent and 4 percent: 1963, 2002, 2003 and this year.
5. Over the last 40 years, rates were 3.5 times as likely to be in the 6 percent to 8 percent range as today, and equally likely to be in the 12 percent to 14 percent range.
6. Overbuilding is a factor in many local markets.
7. In a normal loan, each 2 percent increase in the interest rate has the same impact on cash flow after debt service as raising your operating costs 37 percent.

If you are contemplating buying, selling or refinancing, now is a great time to make the jump. The water may be about to warm up!

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

When Trachte Building Systems entered the self-storage industry in 1974, it was backed by 75 years of expertise in manufacturing metal products. Today, the Sun Prairie, Wis.-based company manufactures a full-line of self-storage buildings, partition/corridor systems and roll-up doors.

Founded in 1901 by George and Arthur Trachte, who named the business Trachte Brothers Co., the company evolved from a manufacturer of livestock water tanks, steel garages and cotton gins to a builder of fastfood restaurants and self-storage facilities. Its attention was brought to the storage industry when a prospective customer asked if it could build a mini-warehouse. We said, Sure! By the way, what is a mini-warehouse building? jokes Jamie Lindau, Trachtes sales manager.

We are a complete manufacturer of building products, which is rare in this industry, Lindau says. Because we have complete control of the products we provide, we are able to design high-quality building parts that are specific to a customers needs.

Trachte keeps its customers in mind by providing an easy-to-install, attractive and durable system. Buildings are bolted together for easy installation, and are sturdy and eyecatching due to their 18-gauge, prefinished, flush door jambs. Trachte was the first company to use these jambs, which give buildings a unique look. Many competitors now copy our designs, which I view as a compliment, Lindau says.

Since many communities are developing strict regulations requiring excellent curb appeal, more than 30 percent of Trachtes buildings are designed with a roof pitch larger than the industry standard. The companys inhouse engineering department devises all its pitch designs, and a new canopy design will be offered to the market later this year. The roof system is also engineered to minimize or eliminate the number of roof penetrations.

Throughout its history, Trachte has reinvented itself and its product lines to accommodate an evolving, demanding industry. The company continues to advance its products and manufacturing process to improve efficiency. Every year, it purchases new equipment to increase the capacity of its plant, shorten delivery times and lower costs. These efficiencies are passed on to customers in the form of cost savings. If we want to keep growing, we will have to invest in our people and plant so we can help our customers in the ever-changing selfstorage market, says Lindau.

Branding Through Education

A company does not become a strong presence in a market without creating brand awareness. As part of its ongoing marketing program, Trachte offers a free, one-day seminar to educate owners as well as newcomers considering the self-storage business. The seminar, titled The Building Blocks of Self- Storage Development, is held year-round throughout the United States and Canada. Its focus is on practical self-storage business applications and overcoming the hurdles that may impede development.

Our seminar can help prospective owners avoid wasting time and money, says Lindau. We also help customers determine if a site is financially feasible. Trachtes philosophy is based on building strong relationships and loyalty by helping customers successfully meet their occupancy goals and, consequently, develop more facilities. A large percentage of our business is repeat customers, so we understand that if a customer is successful, we will be successful.

Trachtes regional managers travel throughout the United States and Canada meeting existing and prospective storage owners. They work with each client, formulating a plan to determine which product will work best in his market. We supply the building plans they need to obtain necessary permits, and then schedule a ship date for the building, Lindau says. Once the building is delivered, we make sure the project is completed and the customer is ready to rent. Clients range from do-ityourself, small operators who build their own sites to large investors who want their projects built on time.

Looking Ahead

Lindau sees two challenges facing the storage industry. One is increasing regulations imposed by city authorities. It is harder than ever to get facilities built because many communities are opposed to increased self-storage development. In addition, markets that are easy to get into may become saturated. If the barriers to entry are too easy, overbuilding is inevitable. The problem is finding a good site that will rent in the present and sustain profitably in the future. This is our customers biggest battle, Lindau says.

As part of Trachtes goal to continue its growth, the company has targeted Canada as a market and now has facilities in almost all provinces. We want to continue to grow in the self-storage market by offering the best product at the best price with the best service, Lindau concludes. For more information, visit www.trachte.com. 

The sudden rise in steel pricesand the impending shortagehas rocked many industries, including self-storage. In the past year, steel prices have jumped 60 percent or more. Some steel companies are also adding surcharges to offset the increased costs.

In March, Inside Self-Storage spoke with Kelly Ginn, president of MBCI (Metal Building Components LP), and Wayne Dickinson, the companys executive vice president of sales, about the escalating cost of steel, what it means to the storage industry, and when prices might stabilize.

What factors have led to the increase in steel prices?

Dickinson: There are many factors contributing to these steel increases but, basically, it boils down to supply and demand. Contributing to these increases are worldwide shortages of raw materials (coke and iron); the weakness of the dollar, which makes it unattractive for foreign steel producers to bring product into the United States; the demand for steel in China, and what it will pay for steel and raw materials; U.S. and foreign mills operating at capacity levels; and surging ocean freight costs to get foreign steel into this country.

China has been somewhat of a vacuum of the worlds steel supply. It is continuing the strong expansion mode in which it has been for several years. China outbids everyone else on raw materials and finished steel because it wants to keep the supply coming into the country. That has driven much of the increase.

When the steel-import tariffs were imposed a couple of years ago, foreign steel was pretty restricted in the United States. China, being in this incredible expansion, was purchasing all the steel it wanted. In December, when talk about lifting the U.S. import tariffs began, most people thought that would bring U.S. steel prices down. In fact, thats not the case at all. China is still a more attractive market. The value of the U.S. dollar is weak, making us a less attractive market.

How much have prices gone up?

Ginn:

Since October 2003, some products have increased as much as 110 percent. Some are in the 70 percent to 80 percent range. The value-added products are lower, in the 30 percent to 50 percent range. Its been an unprecedented increase.

How has MBCI and its subsidiaries been affected?

Ginn:

MBCI and its subsidiaries are concerned with the short notice from the mills. We are trying to be empathetic to our loyal customers and work with them through these unprecedented times. Because of the instability of prices and the mills not giving us much notice before new prices are in effect, it has been extremely difficult to bid projects or to hold customer pricing through delayed or long-range projects. The demand for hotrolled material has made it impossible to build inventory. In other words, the mills order books are filled.

How is the company addressing price increases and material shortage?

Dickinson:

We are counseling our customers on the state of the steel industry. Additionally, we are suggesting to our customers that they find ways of protecting themselves in their contract language. Weve had to pass substantial increases on faster than we would have liked. Weve had to work closely with customers and suppliers to save projects where the end user just refused to pay an upcharge. Weve had a lot of these customers for 20 years or more, and our customer relationships are truly important to us. They know they can depend on us.

How can the self-storage industry address the issue?

Dickinson:

Unfortunately, the answer to this question is not a pretty one. It can take as long as three to four months to quote, contract, design, detail, permit, order and deliver a mini-warehouse project. With the mills adding surcharges and price increases when they want to and the extent to which they dictate (i.e., prices becoming effective at the date of shipment), it is impossible to project costs that far out. Going forward, contractual language needs to give developers the opportunity to raise prices. The American Institute of Steel Construction recently endorsed escalation clauses in contracts. Without the clause, a developer could end up losing money with these kinds of increases. This could really change the way contracts are written.

Will there be a problem meeting demand in the near future?

Dickinson:

In the short term, I would say yes. Until the mills get more capacity or the demand slows down, we can expect material shortages, particularly for hot-rolled products. We feel our position is strong. For years, MBCI has been the fourth largest customer of most of the domestic mills, behind Ford, GM and Chrysler. The mills recognize the product needs in the construction industry, but they have declared and predicted more shortages within the next 60 days. There will definitely be some availability issues.

How will the increase affect self-storage development?

Ginn:

Most of the feedback Im getting from customers is it really hasnt slowed development. That could change in the next 60 days. Interest rates could be a big factor. As cheap as money is right now, the increased costs in the overall project really gets diluted to single digits, especially when you add in concrete, security systems, the land and everything else. One of our fears as a manufacturer of steel products is that until steel prices stabilize, end users will seek alternative methods of construction.

How long do you predict this situation will last? What do you see for the future of steel?

Dickinson:

Its hard to predict. Until the mills either increase capacity or the demand slows down, and some of the other factors mentioned earlier are reversed, we can expect it to continue. The top people at the domestic steel mills have given sound reasons why nothing should really change this year. Hopefully, there will be some stabilization in prices in the next 90 days; but as far as a downward trend, they dont see that happening this year.

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SSA Weighs In on Steel Crisis
A statement from the Self Storage Association

The Self Storage Association is aware of an industry-wide crisis involving the decline in the availability of steel in the United States and, as a result, a staggering increase in steel prices for metal-building components. We have a deep concern for selfstorage properties currently under construction, for our industry suppliers of property and metal-construction components, and for the potential economic fallout that will certainly occur in all of the build communities and their secondary markets if an immediate resolution is not found to this critical situation.

Inasmuch, the SSA is reaching out to multiple industries and trade organizations to seek discourse and an active resolution. As of further note to all SSA members and industry professionals, please understand that this crisisand the resulting increase in priceshas not been brought on by metal-building companies that have long supplied this industry well and faithfully. The root of the crisis is coming from the absolutely overwhelming increase in demand from international markets that have cornered U.S. steel inventories. In these challenging times, be assured the SSA is doing what it can to keep its members informed. We will be posting more information in the coming days and promise to bring you the latest information on this issue as it progresses.

This past February, I had the honor and pleasure of participating in the Inside Self-Storage Expo in Las Vegas as a seminar speaker. I met some interesting and exciting people, and got to experience the storage industry up-close and personal. After a couple of long and busy days at the show, I was so excited about the possibilities for the car-wash industry and storage that I became a sponge for information. One thing I learned was how parallel the two industries are.

Two of the critical areas of success in the car-wash business are time and labor management, and revenue maximization. Both industries are in the business of selling a service for a length of time. The question is: How do we manage our assets and collect the fees due for the time used?

The Role of Technology

In the car-wash business, the ability to obtain accurate and timely information relating to revenues, expenses, labor, customer use and abuse (especially in unattended sites), marketing and inventory of expendables has been next to impossible. Even though its revenues can be in the billions, the business has been too small for any developer of technological tools to noticeuntil now. With the incredible rise and fall of the dotcoms has come some pretty neat fallout for other industries. Fortunately for the car-wash business, it is one of the beneficiaries.

Thanks to technology, there are ways to quickly and inexpensively retrieve, view, diagnose and manage our businesses from a telephone or high-speed Internet connection. I was recently on a cruise, speaking to a representative of a company that markets hardware and software for this purpose. I asked for a live demonstration of his system and, in seconds, we were online looking at a carwash business. I saw customers enter the site, select the services they wanted, pay and conduct the physical transaction. I was also able to see the history of the siteindividual transactions that occurred yesterday, last month, etc.since the system was installed.

Now, I was impressed with the technology, but I was not blown away. Being naturally curious and not too sophisticated in the ways of the dot-com phenomenon, I wanted to see more. In the car-wash business, getting your message out to new customers and letting people know about your business is not easy. The traditional methods of advertising are expensive and difficult to track. Because of the cost-benefit ratio of various media, most car washes rely on word-of-mouth or coupons. The challenge becomes narrowing your focus and selecting the avenue that delivers the biggest bang for the buck.

The fastest way to reach customers seems to be the Internet. The web offers lighting-fast communications at low cost. The demonstration I saw ship-board went one step further. This particular system actually markets unattended sites without any on-site staff.

Here is how it works: The software and hardware are able to recognize various classes of customers. In the car-wash business, for example, one type of customer may be the operator of a local truck fleet. He purchases a fleet card to use on site, which can act as a debit card, pre-pay card or account card that allows monthly billing. So far, this is nothing new. All that is required is a card reader that recognizes the card-holder and captures the transaction electronically.

Community Service

What is revolutionary about the system I witnessed is it allows you to provide community or charity car-wash services. As the owner of a site with this technology, you could canvas local organizations, offering to rebate them a percentage of your revenue every time one of their members uses your site. The head of an organization tells his membership you will donate a certain percentage of every transaction back to the group and distributes a group code. Every time a member uses the code, the computer tracks the use and, at the end of an agreed period, a check is issued to the organization.

What just happened? You got the leader of a local organization to tell his membership yours is the only place to wash their cars. Members, knowing a portion of their purchases is coming back to the group, wont be disloyal. Your outlay is minimal and the marketing benefit is tremendous. The cost to capture a new market will probably be less than all the old, traditional formats. Couple this with the fact you can access your business via the web at any time to retrieve all operating information, and you have a slam dunk.

Beside operations and marketing, there is an additional benefit: you, your customers and your employees know that your business and every transaction is being digitally recorded by camera 24/7. The peace of mind is well worth the price of admission. Thank goodness there are all those bright minds and new technology enabling us to be better and safer business owners.

Fred Grauer is the vice president of corporate accounts for MarkVII, a car-wash equipment manufacturer located 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 example, ease of use lets a manager get through his day more efficiently, allowing him to focus on other moneymaking activities, such as marketing, networking with other businesses, and training new employees. Better performance tracking, on the other hand, creates the immediate benefit of identifying areas for progress.  Whether you have been using a Windows program for a while or are debating when to upgrade your system, here are a few program benefits to consider.

Ease of Use

I often compare a software program to a well laid-out house: a good floorplan draws you in and pulls you from one room to the next. Similarly, there is no substitute for a smart layout, organized screens and inviting buttons in a Windows program. When getting the feel for a program, a video can help break the ice. Some packages include video clips that offer an annotated tour of their main features.

As with most Windows-based software, few operators use all the features available to them. Many valuable tools remain untouched. Don't be afraid to ask your vendor for help. While most operators rely on technical support to overcome problems, few simply call for guidance in blending the program with their operations. Dont let your list of questions go postponed or ignoredyou may forget important details or a specific context when you do finally talk with your provider. Instead, call as soon as questions arise; get your answers, and be on your way.

As programs become simpler to use, operators spend less time training employees. That makes it easier to hire new staff and feel confident when you have to be out of the office. Whether you work the counter every day or remain hands-off, it helps to have software that is user-friendly.

Reports

The reports produced by your software should not shower you with information but summarize and correlate data in understandable ways. Reports help uncover inefficiencies in your operation. They can also show how well your promotions and marketing dollars work, plot where your clients live on a street map, or tell you what percentage of your business comes from referrals.

Look for reports that measure collections by category, such as rent, late fees and merchandise, and compare them to giveaways (i.e., forgiven late fees and other waived charges). All too often, concessions are not itemized by type, leaving you without a measure of how much in fees you waived. As the saying goes, What gets measured well gets done better.

Also look for ways to monitor how your economic and physical occupancies compare each month. Economic occupancy divides the rental income of actual occupied units by your potential revenue at 100 percent. It should closely track the percentage of rented square footage; otherwise, you are renting some units for too little or leaving too high a sticker price on vacancies. Older programs and even paper systems can measure these activities; but your Windows program should show several ratios side by side, as well as filter, sort and summarize by time period for better analysis.

Yield Management

Airlines have practiced yield management for years, and you should, too. Windows programs can let you set smart thresholds to adjust rent for vacant and occupied units every time you meet the criteria. While revenue management is unbelievably hard to implement with older programs or paper systems, having the right settings in a Windows program makes it a cinch.

Demand can vary by geography and time of year, and programs can show how to set your pricing accordingly. If you offer coupons or concessions, consider doing so by unit size, and check the length of stay and occupancy by unit size and type.

Merchandise

Programs can let you offer an ever-expanding list of goods to your customers. Merchandise, or point-of-sale (POS) items, can quickly snowball. Once you have success selling a limited list, you will quickly find other goods to pitch. Some operators even bundle several items, selling them at a slightly discounted price, yet raising their gross income.

What are the nuts and bolts of handling POS? Your software will account for additions to inventory (complete with purchase orders or invoices), transfers between stores, promotions, returns, shrinkage and damaged goods. To handle returns, programs can recreate sales receipts and match them to client copies. Generating return receipts for refunds helps complete the audit trail.

Printed Communication and Marketing

A word-processor is often included in your management program, and merge fields allow for quick, easy adjustments to your written correspondence. Receipts and invoices are a great marketing toolyou can use them to communicate messages to customers. For example, you can add a message to your monthly invoice announcing promotions, changes in operations, gate hours, etc. Repetition is the key to good marketing. This feature allows you to create awareness at no additional cost as you make better use of unused real estate on the bottom half of a document.

E-mail is another inexpensive way to communicate with tenants and prospects. The cost of e-mail is fixed; monthly charges are the same no matter how many invoices you send. With the rise of spam filters, email has lost some of its luster; but the ease of reaching customers makes it a good supplement to printed communication.

Other users still find postcards an attractive communication tool. With the popularity of dot-matrix printers in the DOS world, postcards were a staple; but they lost their appeal, as few Windows-based programs process them. Some Windows programs do still generate reminders, invoices or auction- date notices on postcards, helping you communicate with customers for 23 cents in postage.

Features at a Glance

There are many ways to get more use out of your software program. While you may not use all the features a program offers, it helps to focus on at least a few. Heres a quick list of important considerations:

1. Training and Usability

Look for ways the software can facilitate training for new users. User-friendly programs make for happy operators. The more popular the program, the easier it will be to find employees familiar with your software.

2. Reports

The right reports limit honest errors and opportunities for theft as well as track trends. Look for itemizations of fees waived, not just total concessions. Compare economic to physical occupancy. Look at year-over-year changes in revenue, occupancy and other tell-tale factors.

3. Performance Tracking

Your program should measure items such as payments accepted, leases signed, and phone calls to and from the store. Numbers of walk-ins and calls converted to rentals are important parts of your stores bill of health, while logs of hourly traffic will tell you how to staff and set operating hours.

4. Yield Management

Look for criteria in your program to adjust rental rates for vacant and occupied units. Such thresholds vary for different occupancy levels, locations and times of year.

5. Merchandise

Use your program to boost your bottom line through merchandise sales. Software can turn your office into a retail operation by recording returns, shipments, transfers, shrinkage and damaged items for complete audit trails and performance tracking.

6. Collections

Windows programs can be smarter about which tenants are late and why. From one menu, software can filter delinquents by the number of days late, organize ledgers and phone numbers for reminder calls, keep a log of conversations, and let you set prompts for additional follow-up.

7. Speed

Look for Windows programs to complete multiple tasks from one menu with fewer screens and clicks. This will put information at your fingertips to accomplish tasks more quickly.

8. Marketing

Learn who your customers are by plotting their addresses on a street map, asking how they found out about your store, and learning why they are storing. Then target prospects through mailings and personal visits. With the time you save using the features of your Windows program, you have a whole new set of opportunities to bring prospects to your store.

9. Backups

Upgrade your backup system from floppy disks to other media, such as zip disks, CDs or flash memory sticks for USB ports. At a minimum, store a copy of your backup off-site, or ask your vendor about off-site options and procedures.

Markus Hecker is director of marketing for SMD Software Inc. out of Wake Forest, N.C. SMD provides management software for the self-storage industry. For more information, call 919.562.6711 or visit www.smdsoftware.com.