The self storage business is a booming industry that is attracting increasing investor interest due to the solid returns and growing demand. How can you best take advantage of trends in order to grow your business? Here are some long- and short-term trends to track:
By keeping track of seasonal trends, you can better manage special offers, discounts, and promotions for your business. Does your occupancy usually peak in August as school is starting? Or do move-ins spike in May as the local college students leave school and put their belongings in storage? If you are considering expanding your business, take these seasonal trends into consideration. For example, movable storage units might be a more cost-effective solution in increasing your capacity during certain peak periods rather than building units that may remain empty for part of the year.
Keeping track of your finances is essential to the success of your self storage business, and keeping track of total revenue trends is the first step. Looking at your storage occupancy over the past year, you may notice that your business peaked when you offered discounts in the winter or summer months. Total revenue tracking will help you time marketing promotions for months when you want to boost occupancy. Tracking your total revenue dollars also helps you see which aspects of your business are the most profitable. Are smaller or larger units more effective? Do mobile storage units generate the most income? You can answer these questions when you track total revenue. You can also see which business practices actually produce optimal results.
Another trend to track is your total expenses. Consider your development costs and debt service along with operating expenses and vacancy rates. Your net operating income (NOI) is the balance of your self storage business’s income after your operating expenses have been paid. You want to maintain the highest possible NOI in order to keep your facilities present and future value intact. In fact, your NOI should be between 60-67 percent of your gross income.
Move-ins and Move-outs
Keeping track of your move-ins and move outs in your self storage business can help you evaluate if offering move-in specials and discounts encourages tenants to stay longer or not. You may want to consider using technology or management software to help you spot trends. Technology can also help you monitor security and access management software from any location. Tracking move-ins and move-outs and adding security can help you save money by preventing problems before they happen and eliminating crimes of opportunity.
Savvy self storage businesses track square-foot occupancy in order to be strategic with pricing strategy. Having optimal rates requires knowing your competitor’s street rates and specials. However, it is important to keep track of your square foot occupancy and rates compared to the competition in order to decide whether or not it would help you to expand by adding different sorts of services, state-of-the-art air conditioned units, or another hot trend like mobile self storage units for clients who prefer to load at their own location.
The Bottom Line
Luckily, self storage businesses are uniquely insulated from economic cycles since storage is often the solution for people faced with either upticks or downturns in the economy. Moreover, self-storage business remains a good industry for entrepreneurs and small business owners. Even so, it is important for self storage business owners to track seasonal trends as well as total revenue, total expenses, move-ins and move-outs, and square-foot occupancy in order to optimize their business.