One of my employees, Mark, recently illustrated why salespeople should never assume they have the same buying behaviors as their customers. Mark and I visited the owner of a self-storage company to discuss the merchandising of his facilities. After our presentation, the owner was excited to move forward with a retail program; but his manager was not as enthusiastic. I cant sell these new products! he exclaimed. All I ever get are requests for locks and boxes. No one ever asks for other items. Mark then shared with the manager one of his personal experiences and explained why he believes managers have difficulty building their retail sales.

More than 30 years ago, Mark worked at a store that sold two types of wing-tip shoes: Worthmores and Royal Imperials. Because the Worthmores were only $60, he was more comfortable trying to sell them than the Royal Imperials, which cost $120. From his perspective as a 16-year-old, nobody could afford a $120 pair of shoes, even if they were beautiful and made of the finest leather. In other words, Mark applied his value judgment to every person who walked into the store.

One day, a gentleman asked him which wing-tip shoes he recommended and, like always, Mark brought out the Worthmores. The customer said, These are OK, but do you have anything nicer? Mark replied, Yes, we have Royal Imperials, but they are expensive. They cost around $120. The customer didnt seem bothered by the price, so Mark brought out the more expensive shoes. The customer was impressed and purchased two pairs!

Afterward, Mark realized what might not be affordable to him may be reasonable for others. From that day on, whenever somebody asked for wing-tip shoes, he would bring out both pairs and say, The Worthmores are respectable shoes; but if you want the classiest, highest-quality shoes, which will last you years, I highly recommend the Royal Imperials. The result was he sold more dollars in shoes than ever before60 percent of his sales were Royal Imperials.

The self-storage owner we had visited overheard this story and pulled Mark aside. He said, That was a great story, and youre right! I know these products can sell because I have other facilities with the same demographics where they sell quite well. Why cant this manager sell these products? What do you suggest? Mark replied, Let me work with your manager for the next hour and I assure you, he will be selling these retail products at least as well as your other facilities.

Mark spent the next hour working with the manager, teaching him the importance of cross-selling and that there is a demand for products other than boxes and locks. He said, Sell these products from the customers eyes, not yours. You might not see the value in certain ancillary items, just like I didnt see the value in a $120 pair of shoes. However, you have some customers spending $100 or more per month to store their valuables. Dont you think theyre willing to spend an extra $20 to $50 to protect them?

The manager understood his point: By recommending ancillary products, he was actually helping customers. When we left the facility, the managers attitude had drastically changed. Two months later, we called this manager to see how his sales were. He had done so well that he surpassed the other facilities in his district, selling $3,000 in retail supplies in the month of January alone.

I cant be there personally to show you how to sell retail products; but hopefully, you can take something away from this article. Step out from behind the counter and into your customers shoes. The results and increased sales will amaze you.  

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.

Do I Need a Budget? How Do I Create One?

Creating a budget for technology has the advantage of forcing you to plan; and your plan provides a road map to meet your long-term goals and a guide by which to measure performance. The costs associated with technology should never be a surprise. Budgeting saves you money in the long run. Lets say you decide it is necessary to upgrade your computer equipment for better speed or additional capabilities. Budgeting will help you determine the best time during the year to do so, based on cash flow and other purchases you have planned.

There are two keys to creating a budget. First, break your costs into categories; then divide each category into individual components until you can easily assign a cost to each. For example, it is difficult to estimate an overall budget for training, but it is easy to assign costs for something defined, such as sending two people to a software seminar and one person to a class on Windows. You can find out the costs of the seminars and classes and estimate travel or other expenses. Another key to creating an effective budget is to involve all the stakeholders. In self-storage, this includes managers, supervisors and owners.

The key to learning how to budget effectively is to measure your results. Each quarter, compare your actual against your budgeted expenses. Were you over or under? Was there an expense you did not anticipate? Are you under budget because you didnt spend the money? This can be a good thing (e.g., the printer is lasting longer than you anticipated), or it could mean you are failing to take the steps needed to realize your long-term goals.

Budgeting is not an exact science. It is unlikely you will ever spend precisely what the plan says you should. However, a budget that is wildly off the mark will do you no good. The key is to try to stay within a range that is reasonable, usually within 10 percent to 15 percent of projections.

The Self-Storage Technology Budget

The chart accompanying this article describes a typical budget for a self-storage facility. The key components are computer equipment, management software, training, consulting, technical support and Internet/website/e-mail services. The chart describes typical costs over a five-year period on an annual basis. When creating your budget, you should further break this information out by month or quarter.

click here to view chart

Computer Equipment

An important function of the budget is to provide you reasonable projections of the life expectancy of each type of equipment. You should always plan to replace aging equipment on a schedule never wait for things to break. For one, when you have to get something immediately, you will usually pay more for it than if you have a chance to shop around. Second, the disruption to your business caused by equipment failure can be great. Planning for change should allow you to replace the equipment seamlessly. It is useful to note that U.S. tax laws have changed to make it very easy to write off equipment.

Management Software and Tech Support

Management software is probably the biggest technology expense for a self-storage company. However, it is usually a one-time purchase that will last for many years. What makes this possible is the policy most software companies have to provide you a continuous stream of updates to your existing product, thereby keeping it up-to-date, fixing any problems, and adding new features and capabilities.

Technical support is usually provided on an annual agreement, which will allow you to contact the software company for assistance when necessary. While all facilities may need support from time to time, the frequency naturally increases with certain events: a change in managers, equipment failures, equipment updates, etc. A support agreement is essential because, in the event an operator has a problem with the software, you want him to ask for help rather than muddle through or make the situation worse by trying to fix things himself. Most software vendors provide agreements for technical support and regular updates. Often, they are included in the same agreement.

Training

Our industry has a lot of managers who have learned to use DOS-based management software, but DOS is becoming obsolete. The transition from DOS to Windows can be extremely difficult unless training is provided. A good source for this training is your community college.

The transition to Windows creates other challenges. While most Windows-based software is actually easier to use than DOS, it often interacts with many programs, such as your e-mail program, Internet browser, credit-card software, access-control software, etc. Getting all these programs to work together requires a greater understanding of each component. This is where training is essential to getting the maximum value from the technology in which you have invested.

Connectivity

This part of your budget includes costs of accessing the Internet and hosting and maintaining your website and e-mail. Internet access will be through a dial-up connection, which uses your phone line, or a broadband connection (cable or DSL). If you are on dialup, you will have to pay for access from an internet-service provider (ISP) such as MSN, AOL, Earthlink or a host of regional companies. Costs are typically around $20 per month. Broadband connections cost anywhere from $30 to $70 per month, but are 10 to 25 times faster.

Your website will usually be hosted by a company that specializes in this service. This company will store your website on one of its servers and take care of all of the details, such as registering your domain name and making daily backups. E-mail service is usually included. Web-hosting can cost as little as $10 per month. You will also need to pay someone to handle the initial setup and design of your website. Most operators want the sites look and feel to match their companys logo, brochures and signage.

I often hear storage operators say they dont want to provide Internet access at their sites because their staff will waste time on the Internet. My response is if someone is going to waste your time, they dont need the Internet to do it. Giving your staff e-mail and Internet access will allow them to better serve customers and attract business away from your less-tech-minded competitors.

Consulting Services

Ongoing or occasional consulting services can help you get the most from your technology investment. Examples include improving and automating home-office reporting and auditing procedures, consistently improving your website, and adding customer conveniences, such as the ability to rent a unit or make a payment online. Another valuable service is to use current, previous and prospective customer information to identify and make the most of marketing opportunities.

A Final Note

The budget discussed in this article does not include access-control technology. There are two reasons for this. One, it should actually be a part of your security budget; and two, the security needs of storage facilities vary greatly.

To summarize: A budget is a road map that describes the steps, timing and costs to realize your long-term goals. Create your budget by breaking expenses into their component parts so costs can be established for each. Compare actual results against your budget as a measure of performance and to improve your budgeting abilities. Do this regularly to meet changing realities and goals.

Michael Richards is the president of HI-Tech Smart Systems, maker of RentPlus® and Mini- StoragePlus® software for self-storage. Mr. Richards has been involved in the self-storage industry for more than 20 years, and has been a frequent speaker at industry events and a contributor to industry publications. He can be reached via e-mail at [email protected]; phone 800.551.8324; www.hitechsoftware.com.

A webinar is a web-based seminar that can incorporate live or archived audio and video streaming, slideshows and desktop sharing. All that is required is a computer and a phone line. The user can call, click or dial in from virtually anywhere, eliminating the need for costly and time-consuming travel.

How It Works

To conduct webinars, a company sets up an account with one of the hundreds of web-conferencing services available on the Internet. It then has a choice of various services, depending on the provider. If a phone line is the primary connection, the company is assigned a permanent phone number (usually toll-free) and an entry code to use every time a webinar takes place. All webinars are held through the service providers website, which can be accessed at any point via the assigned code.

When a company is ready to host a webinar event, its designated liaison sends out an e-mail invitation and schedule, complete with a link and instructions to access the providers website. At the scheduled time, the liaison accesses the providers system via the web or, in some instances, a telephone, to log in and initiate the virtual meeting.

Following suit, the attendees also log into the website. If streaming audio is not used, they will also call the assigned phone number, which will connect them with other attendees. Participants can then view step-by-step screen shots and video that corresponds with what the presenter is saying. At any time, they can jump in and ask questions. Those who cannot attend during the scheduled time can access the proceedings afterward via an online archive.

Why Use a Webinar?

There are several reasons to use web-conferencing services. To list a few, webinars:

• Streamline meeting, seminar and training processes.
• Help keep costs low, saving money.
• Only require a phone and computer.
• Can be accessed by anyone in the world at any time.
• Allow for increased customer and employee interaction.
• Are effective and reliable.
• Do not require the user to be web savvy.
• Are convenient.
• Allow small companies to offer a higher level of service to the consumer.

Everything is about merging. Being wireless and getting rid of unnecessary components is essential in maintaining a modern infrastructure. Integration is key. A harmony can be found in the webinar, which allows businesses to keep things simple while increasing customer and employee satisfaction, productivity, and profits.

Businesses around the world are catching on to this trend. Webinars allow people to know and do more without having to pull themselves in a thousand different directions. Any business can use and benefit from a webinar. They really work!

April Howard is part of EnGenius Technologies Inc., a manufacturer of long-range, industrial cordless phones and wireless land-area network products for multiple industries, including self-storage, warehousing, manufacturing, business enterprise, grocery and retail, assisted living and others. Its products mobility, flexibility, and ability to penetrate concrete and steel, have made them popular for self-storage applications. For more information, call 888.735.7888; visit www.engeniustech.com.  EnGenius uses Infinite Conferencing for all of its webinar needs. Visit www.infiniteconferencing.com.

Construction Corner is a Q&A column committed to answering reader-submitted questions regarding construction and development. Inquiries may be sent to [email protected]. 

Q: I am in the market to purchase a newgate and surveillance system, but I am concerned about rust due to the high humidity here in Hawaii. Is there any special treatment I should consider or anything particular I should ask forwhen considering equipment formy area?

Mike in Pearl City, Hawaii

A: Humidity can wreak havoc on metal, especially when it isnt well-protected. Ask the security vendor you are considering if it uses any protective coatings on its products or, better yet, painted aluminum or stainless steel. Some vendors take weather and lightning protection very seriously and offer separate product lines catering to high-risk areas such as yours.

Q: I am running all my own conduit for the low-voltage security system I am installing and would like to knowif there are any laws or codes that require me to use fire caulking on penetrations through walls.Thanks for your help!

Henry in Salem, Ore.

A: Fire caulking is usually only required when penetrating a firewall. A firewall is defined as any wall rated to prevent a fire from spreading. Most firewalls are rated in hours, meaning how many hours they will stand against a flame before being destroyed. Check with your local building department to find out what laws govern your area. However, it is a good idea to caulk all penetrations, especially exterior penetrations, if for no other reason than to keep out the elements and bugs.

Self-storage management software is more sophisticated than it was 10 years ago because the industry itself is more sophisticated. While you would love to have software you could learn in five minutes, you also want it to be robust enough to support and manage the new ideas and trends that grow and change in the industry every year.

When evaluating management software, make sure it will support your business rules and give you the type of reporting needed for your specific business requirements. If you include your manager or accountant in the evaluation, make sure they are aware of your longrange business plans and needs. Your management software should make you more productive and profitable. It is worth some study and training to use your software to its full potential so you can best organize your operations and maximize revenue.

Myth 2
If the software is expensive, it must be better.

The price you pay for your management software may or may not correlate to the quality of the product and service. When you select software to assist you in running your business, your initial investment may be a small part of the cost of the overall project, but will become a large part of your operation in organization, time and productivity.

Myth 3
Support fees are extortion.

Your software provider must keep up with the planned obsolescence of your computer operating environment. Self-storage management software interfaces with access-control technology, changing computer hardware and operating systems, payment processing, PDA software, point-of-sale software, the Internet and telecommunications technology. These interfaces constantly develop, and new ones are added every year. Your provider works to keep your software updated and gives you educational and technical assistance when you need it. Support fees are an insurance policy and business expense on which you collect many times over.

Myth 4
As the owner, I dont need to know how to use the software.

Why not just give your employees the keys and the checkbook? Your level of familiarity with your management software should include knowing how to perform day-to-day functions. You may or may not need to personally train managers to use the software, but you should know enough about it to supervise, conduct and/or review proper facility audits. Take adequate precautions against fraud by knowing how employees can cheat. Set up user passwords and user-appropriate profiles so employees only access functions necessary to their tasks and all transactions they enter are tracked with user identification.

Myth 5
My friend is good with computers, and he can create a database program to run my operation.

Reinventing the wheel is not necessary or cost-effective. Take advantage of the software packages designed specifically for selfstorage, which are ready to go right out of the box.

Myth 6
Any computer hardware will do.

Change is constant in the world of technology. Purchase computer hardware that provides you enough processing speed, memory and peripheral ports for interfaced hardwareaccess control, digital cameras, PDAs, magnetic credit-card and check readers, etc. Incorporate basic precautions such as antivirus and utility software, as well as safe data-backup procedures. Also include a capital expenditure plan for renovating and/or replacing computer hardware on a planned schedule. Have an emergency replacement plan in place in case your hardware goes down.

Myth 7
I can set up and install management software the day before my new facility opens.

As soon as you establish your business phone number, Yellow Pages ad and website, you should be prepared to accept inquiries on rentals, take contact information, and reserve units or unit-type preferences. Your business phone can temporarily roll over to another number where you can accept calls to market your facility before your office is open. Your management software should allow you to enter contact information for potential tenants who inquire about rentals. You can start collecting valuable demographic information on where your inquiries originate to best budget your advertising dollars and enhance your lease-up period.

Myth 8
Automating my business doesnt affect my professional image.

These days, most consumers are surprised to encounter a business that runs on a card system. They are also surprised to enter a modern looking facility, only to find a manager working with old computer hardware and software. Flat-screen monitors, wireless keyboards, a wireless mouse, and an under-the-counter, out of sight CPU communicates you have an up-to-date, with it operation. Many offices now have two or more networked workstations so employees can handle multiple transactions with customers simultaneously. Self-service kiosks and pay-at-the-gate systems further communicate an upbeat customer-service and convenience-business image.

Myth 9
My software does everything I need it to do.

Does your software really do everything you need it to do, or are your managers performing labor-intensive tasks that could be automated by software? If you dont periodically evaluate whether you need to upgrade or update your management software, you may be risking a lack of productivity you cant afford. Your managers could be working with updated and enhanced features that give them more time for marketing and renting units.

Take the time to investigate and comprehend the scope of features available in selfstorage management software. Make sure your software allows you to grow into features you may want to take advantage of later. There are many successful interfaces between management software and related technology. You may risk losing ground to your competition and leaving dollars on the table if you dont take advantage of what is available to your business.

Myth 10
Its the software, not the people.

The process of introducing or updating computer hardware and software for your business can be complex. The investment you make in hardware, software, people and training is much larger than your investment in management software. Some of the best features in software come from customer ideas and feedback. The quality of the relationship you build and maintain with your provider is essential to the successful operation of your business. A good management software tooland a responsive, knowledgeable, honest and helpful team behind itensures your long-term success.

Tom Garden is president and Alison Kiesa is the sales and marketing director of Syrasoft Management Software LLC, which has produced management-software solutions for the self-storage industry since 1991. For more information, call 800.817.7706; visit www.syrasoft.com.

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

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

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

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

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

Your Meal and Service Guaranteed

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

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

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

Customers Deliveries

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

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

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

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

Servicemembers Civil Relief Act

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

There are programs designed to cover the risks specific to the storage industry, including customers-goods legal liability and sale-and-disposal liability coverage's. However, many self-storage owners now use tenant insurance as a risk-management tool. Potential liabilities are reduced when problems are transferred to an insurance company for resolution. Court cases have establishedand continue to confirmlegal precedents reducing owners and operators liability where tenants have the ability to buy separate, optional insurance protection.

Another benefit to tenant insurance is it acts as tangible evidence to the customer that the storage site has a high level of security. An insurance company will not approve a facility for coverage unless certain minimum standards are met. These usually include, but are not limited to, a fence and gate, limited access, adequate drainage and security lighting.

A recent article reported that a typical self-storage facility spends as much on security as a bank branch. However, 26 percent of all self-storage facilities still reported at least one incident of theft in 2002. Statistics like this, coupled with standard coverage limitations in homeowners insurance, show the need for optional tenant insurance programs at self-storage facilities.

Why It Works

When the self-storage industry started in the 1970s, tenant insurance emerged from a need in the marketplace. Not only was it difficult for facilities to find insurance, but tenants often had trouble finding coverage for their goods in storage. Special insurance programs were eventually developed to plug this gap and provide an element of security to owners, operators and tenants.

While most tenants store goods for lack of home space, many need storage because they are between homes and dont have the limited protection of a homeowners policy on which to rely. Homeowners policies often restrict coverage for goods placed in storage, excluding burglary or water damage. Optional tenant-insurance programs offer a solution to this dilemma. When a covered customer has a property loss, he will go to his insurance company to resolve the issue rather than to the operator for reimbursement. He understands the insurance company will resolve the problem.

Tenants also feel more secure about the rental process when they know they can obtain insurance at a facility. They are leaving their property with an unknown third party and want to know it can be protected. Insurance attests to the facilitys desirability, as it must meet certain criteria before insurance can be made available at the site.

How It Works

The success of point-of-lease insurance programs depends on several critical issues: the commitment of the owner/operator, lease language, and the attitude of the manager. Without a firm commitment from upper management to make tenant insurance an integral part of the rental process, the program will not succeed. One of the keys for owner/operators is they are protecting themselves from a lawsuit for lost or damaged goods. The more tenants with coverage, the fewer times the operator has to pay out-of-pocket expenses or go to court to defend himself. If he faces a courtroom situation, a signed lease addendum regarding tenant insurance can help reduce his liability. In addition, when an unforeseen disaster strikes a facility, it is easier for a manager to call a tenant who has coverage on his property, as his losses are not as severe.

Your lease is an important tool that can provide a vehicle for discussing tenant insurance. If your rental agreement requires insurance, inform your managers that customers must comply. If your agreement does not include this requirement, be sure your managers offer insurance as a strongly recommended option for all moveins. A signed lease addendum acknowledging the need for insurance, whether or not the tenant purchases it, must be obtained from all tenants. This is especially true if insurance is declined.

Managers should understand the importance of tenant insurance and how they benefit. They must be committed to a tenant- insurance program. They also need to be aware of the added sense of security tenants feel when their property is protected. They must see the advantages for their customers and be able to communicate them. This is important because the manager is the key person in the relationship with the tenant.

One of the concerns managers have expressed is they do not want to sell insurance. Site managers should not explain policies to customersthat is an insurance agents job. State insurance regulations allow non-licensed personnel to perform only certain tasks: They can provide assistance in the insurance process by enrolling eligible tenants and collecting premiums. Their role is very similar to employers who offer group insurance plans to their employees. Any problems or questions should be referred to the insurance company.

Two Options

There are two program options for selfstorage operators offering tenant insurance: mail-order and pay-with-rent. Many companies offer mail-in programs in which a tenant is given a brochure for insurance when he signs his lease, and the tenant is responsible for filling it out and sending it in. These programs have very low participation, averaging a 1 percent return. Not many people like to buy insurance unless it is required or otherwise recommended. Not only that, but there may be a delay in obtaining coverage, as the policy only goes into effect when the insurance company receives the tenants premium.

Pay-with-rent programs are very successful. Coverage is offered during the leasing process and is usually effective as soon as the unit is rented. The tenant pays for the insurance each month with his rent. Software makes the accounting simple, providing month-end reports and up-to-date information about the payment history. Storage customers buy insurance through pay-with-rent programs because it is convenient and affordable.

Some operators achieve high participation rates with different approaches. One waives either the security deposit or administrative fee when insurance is purchased. Another includes the first months premium in the administrative fee until the tenant brings in evidence of alternative coverage through his homeowners policy. Since most homeowners policies do not have this coverage, the tenant insurance remains active.

Choosing a Provider

Choose your tenant-insurance provider with care. Insurance companies that offer pay-with-rent tenant coverage will provide training and supplies for managers. They should also have some form of instructional video and point-of-lease materials, such as posters, counter cards and brochures, that describe coverage and answer frequently asked questions. The purpose of these items is twofold: increasing customer awareness of insurance needs and reinforcing the managers comfort level with offering tenant insurance.

Your provider should be able to issue policies promptly and provide for settlement of claims. The latter is especially important, as it allows an operator to step back from an uncomfortable situation with a tenant. Another important factor to consider in choosing a provider is its experience and ability to work with the self-storage industry and the tenant-insurance product in particular. Most insurance companies will pay a referral fee to the owner/operator for his help in offering the program.

To be successful, you will need an insurance program specifically designed for your tenants, one that is affordable, and easy to implement and offer. You will need to be committed to making the program work, as well as managers who will offer the program in a positive manner. In the end, you will be rewarded with a high participation rate that reduces your liability and provides an ancillary source of income. With some supervision, encouragement and planning, a successful tenant-insurance program will pay dividends for everyoneyou, your managers and your customers.

Chuck Slagle works with self-storage owners and operators across the country to provide them Stored Property Insurance from Bob Bader Co. For more information, call 888.223.3726 or e-mail [email protected].

Last Sunday, while watching Andy Rooney, I chuckled to myself as I wondered: What would Andy have to say about stuff? How would he view this driving need in our society to accumulate and store things? Looking at Andys desk, as well as my desk, car, basement and garage, Id say there is no problem hereeverything has a place, and every place has a thing. A life of chaos and clutter is a good life, isnt it?

Im not quite sure how this happened, but sure enough, it did. Yesterday (or what seems like yesterday), I left the nurturing nest of my parents and flew the coop. As I remember it, I had my clothes, a razor and some other necessary gear (like 45- and 33-rpm records)just enough to fill a duffle bag. That was it! Life was simple then. But something in my obsessive-compulsive behavior and need to overachieve told me I needed more stuff. Stuff shows youve arrived. Remember those t-shirts that read, He who dies with the most toys wins? Between the effective advertising of really cool things and wanting to be competitive with my peers, I unknowingly began a life of accumulating stuff.

Here I sit, years later, looking at this vast collection of possessions, wondering: Where did it come from and why does it have me surrounded? I think part of the answer has to do with my parents. (They wont read this, so I think Im safe in saying that.) They were children of the Depression, raised in an era of great Puritanical beliefsyou know, like Eat your spinach, Remember the starving children in (pick your country), A penny saved is a penny earned, and so on.

My mother hadand still hasstuff handed down from several generations, all of which she was convinced shed use and Id need. She is so passionate about this, she has me convinced. Of course, Im not one to break with tradition and, therefore, my children hear the same tune. The garage is full of all the treasures Im going to pass down to them.

Now, normally, this recycling of vintage goodies would be a good thing. We all know there is a future for those old beanbags and lava lamps. That collection of 45s, some original Johnny Mathis LPs, and my bellbottoms will have value and add tremendously to my overall estate. Gosh, Id better decide who gets what in my will. Id hate to see the kids battle over my Motown records and tie-die t-shirts. And lets not forget, along the path from then to now, Ive also done a good job stimulating the economy by collecting my own new stuff.

While wondering how to manage this treasure trove, I discovered a great phenomenon: a wondrous TV show on which people take their stuff and have it inspected and valued by real appraisal professionals! Did you ever wonder what schools these folks attended to learn so much about the value of stuff? What kind of degree is itMaster of Stuff, or maybe just a BS? Well, in any case, Im sure somewhere in my stuff I have some really valuable goods. Maybe that old chest of my grandfathers holds the key to retirement.

In the meantime, while I figure out which of our five lucky kids gets what and how to create space so I dont have to sell my house and move into something bigger (i.e., more expensive), Id better find a way to keep my stuff safe and secure. I discovered another fantastic phenomenon: storage facilities, where, for a minimal fee, all my worldly treasures can be relocated and protected.

Now this is a marvelous invention. I have to think the originator of this idea was someone like myselfa collector of stuff. As a result of the discovery of this wonderful service, I have announced to my wife that the desk will be cleaned, those boxes of old tax stuff will be moved and, yes, we can now put the family car in the garage.

Now the question becomes: What other services can storage facilities provide to make my life simpler? Maybe something to help with out-of-town guests, like a bed-and-breakfast? As so much of the stuff Im storing once belonged to my in-laws and parents, maybe theyd be more comfortable sleeping next to it. This could be a whole new twist to the storage industry: sleep and store!

If anyone has interest in pioneering and using the concept, give me a call. Perhaps it is a bit far-fetched. Hmmmm. What a minute! What about a car wash?

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].