Management • Section 6
control of the daily operations an owner is willing to turn over to the third-party management company, the better the chances for success. Obviously, the owner is making a major investment in the self-storage operation, so he or she still needs to have a voice in significant strategic decisions and must be kept up to date on operations. Some owners want to be fully engaged in their operations,
including making decisions on rates, personnel, signage, and even maintenance. In these cases, hiring a third-party manage- ment company may not be the best fit. It would be like a patient who chooses to take only some of the medicine a doctor pre- scribes for an ailment, but not all of it. A third-party management company with a track record for
success employs processes, systems, and strategies designed to make a facility competitive in a given market. The manage- ment company needs the flexibility to implement the programs designed to achieve the owner’s goals. If the owner is unwilling to yield significant control to the third-party management com- pany, the success of the relationship may be impacted. Owners should expect to be kept in the loop, however, on
the performance of the business they are invested in. Make sure you understand what level of communication and reporting you will get from a third-party management company and that it meets your expectations. Will you have the freedom to visit the site or staff any time you want? Will you receive daily reports provided by email or other vehicles? Will you always have the ability to know exactly how your stores performed the previ- ous day? These things will be negotiated with the management company, and frequent reporting may involve extra fees. Third-party management services generally provide stan- dard operating procedures for:
• Delinquency management • Revenue management of both rental rate structures, new incoming standard rates based on occupancy by unit type, and customer rates managed by the number of days since last increase for recurring frequency and managing the reduction of discounts previously given
• Sales, marketing and advertising • Websites and mobile websites and apps • Financials, P&L, cash flow statements, debt servicing, bank accounts and their reconciliations
• Bill paying • Human resources, staffing, benefits • Maintenance • IT services and technology deployment • Education • Call centers and kiosks • Audits • Operating software and credit card processing • Fees, minimums, percentage • Travel costs • Startups* • Rehabs* • Disaster recovery*
• Annual budget preparation and monthly monitoring, upcoming capital expenditures, or maintenance reserve needed
• Regular analysis of performance * May involve additional fees or agreements.
You may find a wide variety of services that are inclusive, while other companies may charge separate fees for these same services. Such intricacies could include invoicing of customers monthly via email for a fee paid by the customer, by the onsite manager, via USPS, or by outside contractors. About half of man- agement companies conduct auctions/lien sales in house while the other half use a combination of in-house and auctioneers conducting sales. When contracting with a third-party management compa-
ny, owners should expect that most will take fiduciary respon- sibility of running all aspects of the self-storage business. This includes hiring and training new staff members, establishing business processes, unifying computer systems and negotiating expenses such as credit card fees, marketing costs, healthcare premiums, and customer storage insurance rates. In short, they generally take over budgetary responsibility
for everything at the site except for the financing of the prop- erty. However, many companies have relationships with lenders and can provide expertise and guidance on the best times to refinance the property. Today’s more sophisticated third-party management com-
panies also offer the advantage of continuous process improve- ment. Attorneys legitimize lease agreements and procedures are devised for managers to have guidelines. To keep up with industry changes, some management com-
panies are now data mining to track trends while optimizing rental rates and occupancy numbers. Using sales and customer information, sophisticated software programs search company data for connections and correlations. As the role of management companies has evolved over
time, the duties preformed have become increasingly high- skilled. Tasks such as putting together a solid marketing plan
Chart 6.4 – Space Audit Frequency
Annually 4% Quarterly 11% Monthly 16% Weekly 47% Daily 22%
Source: 2014 Mini-Storage Messenger Management Survey
2015 Self-Storage Almanac 77
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