Having been in the self-storage industry for over 26 years, spanning through multiple economic cycles, I have seen this industry grow with each cycle. While many think of self-storage as “recession proof,” that doesn’t mean we escape each cycle unscathed. Large consolidations, dramatic increases in lending rates, and an upcoming credit shortage are sure to affect investors and operators who are not sure-footed. How are you ensuring your success?
As with previous cycles, the current economy is draining on our customers. Money doesn’t go as far, so they are cutting unnecessary expenses. Sometimes, this looks like downsizing, which actually benefits storage operators, but sometimes it is getting rid of unnecessary items and the extra expense of their storage unit.
Everyone is trimming the fat, and while none of us wants to cut too deep, it is important that we are making the smartest decisions that will sustain us now while preparing us for a huge advancement when the economy improves.
How a storage operator can help ensure success
Audit your operations with a fine-tooth comb and make sure you understand where your dollars are spent and what return you are getting. Consider where you can cut expenses without negatively affecting your customers. Add services or products that will increase your revenue. All of these changes will increase the value of your business when the cycle starts improving.
Look into new technologies that outweigh your current operating models. While there is a cost to implementing new technologies, there can be long-term cost savings that will pay dividends in the long term. In fact, investing in technology that makes your customer experience better will help you differentiate yourself from your competition.
Don’t neglect maintenance. Ongoing maintenance of your facilities is critical for long-term asset management. You must take care of your assets not only to increase their lifespan but to decrease liability. Now may not be the time to start on large capital projects, but it is a great time to complete smaller projects. Projects that improve curb appeal will help bring in new customers and keep your current customers. Making sure that your facilities look clean and safe is the No. 1 way to attract and keep customers. This does not have to be expensive to be very effective.
Don’t bow to pressure of constant offers or rental discounts unless absolutely necessary. By implementing the above solutions you should be able to differentiate your business from the REITs and competition, making your business stronger in the long term.
In a positive light, it’s important to note that economic cycles are not permanent and recovery is always around the corner. When the economy turns around, you want to be ready and not have deferred maintenance to tackle. It is crucial for self-storage operators to remain vigilant, adaptable, and forward-thinking to leverage the upcoming economic recovery and stay ahead of the competition.