Cutting Costs and Saving Cash: Controlling Operating Expenses in Self-Storage

Brought to you by:

[January 2012]

About the Author

Linnea Appleby has more than a decade of self-storage experience, with a background in finance and management. She’s the owner of Lime Tree Management, a self-storage management and consulting firm based in Sarasota, Fla. The company provides acquisition due diligence, site audits, full property management and consulting.

Linnea is a past president of the Florida Self Storage Association, and a frequent contributor to Inside Self-Storage magazine. She’s also a speaker at the Inside Self-Storage World Expo and an instructor for the Self-Storage Training Institute.

Linnea Appleby, Owner, Lime Tree Management

Cutting Costs and Saving Cash: Controlling Operating Expenses in Self-Storage

Self-storage is a business that can be operated frugally. It doesn’t require a lot of glitz and glimmer. However, the industry has evolved from a relatively unknown business found primarily in industrial areas to a mainstream retail service often found in convenient locations. This maturation has propelled what was once a simple concept of trading space for cash to a whole new level.

Self-storage operators today have access to business enhancers such as revenue-management tools, website-optimization tools, lead-generating services, call centers and high-tech security systems. These upgrades are often necessary to compete in today’s market, but most carry a price that can quickly eat into your income.

Cutting Costs and Saving Cash: Controlling Operating Expenses in Self-Storage

The Cost of Running a Self-Storage Business

Even as the cost of doing business is rising, maintaining a positive image is increasingly important. You need to save money wherever you can, but it's difficult to do so without it potentially having a negative impact on your self-storage facility. You don’t want your tenants to see or perceive a drop-off in quality or service.

That said, there are a lot of little things you can do in your self-storage operation to "tighten the belt" and minimize costs. Here are some ideas.

Minimizing Costs in Self-Storage

Cutting Costs and Saving Cash: Controlling Operating Expenses in Self-Storage

Electricity can be a large expense. Sometimes we forgot the “control” part of “climate control." Regularly monitor the temperature and effectiveness of your HVAC system. A unit that’s malfunctioning can eat up excess energy. Keep your eyes and ears open to potential problems and address them quickly.

While walking through your climate-controlled buildings, note the temperature. Is it too warm? Perhaps the HVAC system is working too hard to keep up with demand. This alone will increase your electric bill. Make sure your thermostats are locked so tenants can’t adjust them.

Spending a small amount on timers or motion detectors for lights in restrooms and common areas can also save big over time.

Electricity and Climate Control

Cutting Costs and Saving Cash: Controlling Operating Expenses in Self-Storage

It’s easy for the cost of office supplies to inch upward. Watch what you’re buying, from paper and toner to candy and holiday decorations. Budget what you’re going to purchase so you have a guideline for spending.

Before you shop for supplies, make a list. This will cut down on impulse buys and reduce the time spent on this chore. Better yet, order online. Don’t forget to look for coupons and promo codes for discounts.

Recycle office supplies whenever possible. Paper, paperclips, file folders—don’t be wasteful.

Office Supplies and Vendors

Cutting Costs and Saving Cash: Controlling Operating Expenses in Self-Storage

You paid the same for the last bit of toner as the first, so shake the cartridge when it’s low and get all you can. Have a backup on site at all times so you’re not at the mercy of an emergency office-supply run.

How many phone lines do you have, and do you still need them all? As technology changes, the services we use evolve. It’s good to do a regular review of services like the phone to make updates as needed. This can save a lot of money.

If you’ve always bought from the same vendor, it might be time to look around. Changes in the economy have caused adjustments in a lot of service sectors. Rebid your services to compare pricing and services to make sure you’re getting the best deal:

Lawn care

Security monitoring

Pest control

Office Supplies and Vendors

Cutting Costs and Saving Cash: Controlling Operating Expenses in Self-Storage

Plan maintenance tasks in advance to avoid greater costs down the road. Create a calendar and checklists for maintaining golf carts, unit doors, gates, HVAC filters, etc. Keeping things well-maintained is less expensive and frustrating than replacing equipment due to neglect.

Keep your supplies and tools in good order including your vacuum cleaner, leaf blower, Shop-Vac and weed trimmer. For example:

Regularly change the bag on the vacuum or empty the canister on bagless models.

Regularly charge the battery for the cordless drill.

This will not only ensure tools are ready when you need them, it will help them last longer.

Preventing Maintenance/Repair Costs

Cutting Costs and Saving Cash: Controlling Operating Expenses in Self-Storage

Keep the company maintenance unit or closet clean and organized, and keep track of company inventory at all times. Don’t leave the company unit open or items lying around so someone can “borrow” them. Lock it up!

Maintain a list of the items owned by the company, as well as:

The date it was purchased

Serial or model numbers

Cost

When looking to replace or repair items, it will be helpful to know what you have, how long it lasted and how much it costs. Clearly mark company-owned property using a stencil, magic marker or other marking device to maintain and assert ownership.

Company Tools and Inventory

Cutting Costs and Saving Cash: Controlling Operating Expenses in Self-Storage

A few dollars in supplies, a couple of gallons of paint and some time can add a fresh new look to a tired area.

A little paint and caulk can go a long way toward maintaining curb appeal and the overall value of the property. You can repaint the office or the bathroom in a weekend. Keep extra paint on hand for touch-ups.

Eliminate dirt, marks, scratches and stains wherever you can.

Re-caulk bathroom sinks.

Replace the rubber strip on the bottoms of unit doors.

Replace the rope on unit doors.

Curb Appeal on the Cheap

Cutting Costs and Saving Cash: Controlling Operating Expenses in Self-Storage

Conserving Energy

Replace the door sweeps and weather stripping on climate-control buildings to ensure doors shut tightly, reducing your energy use.

Things like this have a minimal cost, but you’ll reap the benefits in many ways.

Your tenants will see you’re focused on the facility’s quality, which creates good customer relations. Plus, many of these easy fixes will save you money over time and improve the facility’s value.

Cutting Costs and Saving Cash: Controlling Operating Expenses in Self-Storage

Investigate, evaluate, plan. If you’re considering a project like painting the office, plan it out in advance. Budget what you’ll spend and stick to it.

Look for good paint on sale by checking the newspaper or Internet for specials. This will help you do the best job for the least money.

Look for coupons or savings cards on things you frequently purchase like copy paper, toner, weed killer, etc.

Is it worth investing in a new digital reader board, door alarms, DVR or other technology? Technology you looked at several years ago may be quite advanced and more affordable now. Take a second look at new ideas.

Plan to Save

Cutting Costs and Saving Cash: Controlling Operating Expenses in Self-Storage

Get several quotes on large-ticket items. Contractors, handyman services, sealcoat companies and other service vendors are in tough times also and will work to earn your business.

Make sure they have the appropriate license and insurance.

Check references and ask them to quote the same scope of work so you can compare apples to apples.

Negotiate the best deal you can with them. If they won’t budge on price, ask for something additional in their service.

Contractor Quotes and References

Cutting Costs and Saving Cash: Controlling Operating Expenses in Self-Storage

Most lead-generating or search-engine optimization services offer reporting that shows how effective their efforts have been for you each month. Give the service an ample amount of time to provide a history, then evaluate your cost per lead and cost per tenant.

If you’re not getting the return you expected, reconsider that cost. Keep in mind that for some of these services, one or two new tenants can easily cover your costs.

Evaluating Marketing Costs

Cutting Costs and Saving Cash: Controlling Operating Expenses in Self-Storage

Employee Health Insurance

The Small Business Health Care Tax Credit, enacted in 2010, enables small-business owners to save money on employee health-insurance premiums. Marc Smith, president of Personal Mini Storage Management Co., which operates 31 facilities in Florida, saved about $56,000 in 2010 on his employees’ annual premiums. That meant he didn’t have to reduce employee health-insurance benefits in 2011.

Part of the Affordable Care Act, the tax credit is available to companies with fewer than 25 full-time employees who earn less than $50,000 annually. The company must pay at least 50 percent of the employees’ health-insurance premiums. The tax credit covers up to 35 percent of the employer’s cost for the premium. To learn more, visit the Small Business Health Care Tax Credit for Small Employees page at IRS.gov.

Source: Orlando Business Journal, “How small businesses can cut their tax bill,” Dec. 9, 2011

Cutting Costs and Saving Cash: Controlling Operating Expenses in Self-Storage

Small Costs, Big Impact

When it comes to cutting costs, don't simply focus on the high-dollar items. Look at the many small expenses that are a part of your business. Effectively managing these small costs can make a big difference. Making good choices with the dollars you spend will maximize the value of your image and asset.

Cutting Costs and Saving Cash: Controlling Operating Expenses in Self-Storage

Additional Resources

To learn more about ways to save money in your self-storage operation:

Learn from top experts in self-storage operation and management at the Inside Self-Storage World Expo, Las Vegas, March 14-16. Visit www.insideselfstorageworldexpo.com for details.

Read articles in the “Management” section of www.insideselfstorage.com.

Watch the free on-demand webinar “Strategies to Boost Income and Cut Costs: Taking a Page From the Playbook of Top Self-Storage Operators” at www.insideselfstorage.com/webinars.

Get cost-cutting ideas from fellow facility managers and owners at Self-Storage Talk, the industry’s largest online community. For expense-related threads and advice , check the Day-to-Day Management forum (www.selfstoragetalk.com/day-day-management).

Cutting Costs and Saving Cash: Controlling Operating Expenses in Self-Storage

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Brought to you by:

[January 2012]