Why Your Self-Storage Track Record Matters

Operating a self-storage facility may appear straightforward, as it involves relatively few complexities. However, achieving success in this business requires fundamental business knowledge and an eagerness to understand the nuances of this particular asset class. Although failures in the self-storage sector are rare, they do occur.

Investors and bankers, who provide the capital necessary for your operations, rely on your expertise and ability to fulfill the promised returns outlined in your offering memorandum. Trust is established primarily through your ability to effectively communicate your general business knowledge and your comprehensive understanding of the industry. When seeking financial contributions from bankers or investors, you are essentially asking them to have faith in both the project itself and your capability to generate returns.

General Business Knowledge

To operate a self-storage facility successfully, you must possess, at a minimum, the following skills:

·      Accurate bookkeeping: Maintaining meticulous records of financial transactions.

·      Accounts receivable management: Effectively managing and collecting payments from customers.

·      Accounts payable management: Handling outgoing payments to vendors and suppliers.

·      Effective communication: Establishing clear and concise communication channels with customers, employees, vendors, and the local community.

·      Effective marketing: Implementing strategies to attract and retain customers.

·      Project management: Overseeing various aspects of the facility, including construction, expansion, or renovation projects.

·      Process management: Efficiently managing move-in, move-out, and delinquency procedures.

·      Financial planning: Creating and executing plans to optimize financial performance.

·      Compliance with tax obligations: Ensuring the proper payment of federal, state, property, and sales taxes.

An operator lacking proficiency in these business skills may encounter difficulties in achieving their desired financial objectives.

Industry Knowledge

The self-storage industry has a national organization called the Self-Storage Association. This association focuses on enhancing industry-specific knowledge for owners and operators nationwide. They offer a certification known as the Certified Self-Storage Manager (CSSM) certification, which requires a comprehensive study of industry fundamentals and successful completion of relevant tests.

Standard practices govern various aspects of the self-storage business, ranging from customer communications to rent increases. Additionally, many operational aspects are subject to legal regulations. These laws cover accessibility requirements, procedures for reclaiming units from lien status, handling units of deceased renters, and other common scenarios. It's crucial to note that these laws differ from state to state.

Technology within the self-storage industry is rapidly evolving. Operators who maintain strong connections within the industry are more likely to stay updated on the latest software, hardware, and service advancements that can benefit their facility's operations.

Trust

Demonstrating your experience and competence in effectively running a storage facility is pivotal in persuading funding partners, be they banking lenders or equity investors, to provide capital for your project. They seek reassurance that you possess the skills necessary to safeguard their investment and deliver the promised returns.

Consider the following aspects of your personal track record when aiming to establish trust with potential investors:

·      CSSM Certification: This industry certification signifies your knowledge and expertise in self-storage management.

·      Previous or current self-storage ownership: Demonstrating prior experience or current ownership of another facility indicates a familiarity with the industry.

·      Related business ownership or management experience: Experience in similar fields demonstrates transferable skills and knowledge.

·      Attendance at self-storage conferences: Participation in industry events showcases your commitment to staying informed about industry developments.

·      Membership in the National Self-Storage Association: Membership in this national association further illustrates your dedication to the industry.

·      State association membership: Joining a state association demonstrates involvement at the local level and familiarity with state-specific regulations.

Each of these elements contributes to building a trusting relationship between you and potential investors. They collectively reinforce the belief that you possess the personal abilities required to deliver the expected returns on investment.

* If you enjoyed this article about Why Your Self-Storage Track Record Matters, you might also enjoy reading Understanding Accredited Investors: Qualifications and Significance and Why You Can Trust StorageTrader.