People measure success in many different ways. That's true in life and in self storage. How do you know if your self storage facility is healthy and profitable? Without knowing this, how do you know if you need to make changes in your operations?
In this Gabfocus Spotlight, Magen Smith of Atomic Storage Group and Alex Erbs of Erbs Management Group talk to us about how to measure that profitability. See how they determine how healthy a storage business really is.
Question: "How do you measure the health and profitability of a storage facility?"
Check out the video clip below to hear their answers:
In this Gabfocus Session: Managing Your Finances, we invited Magen Smith (Atomic Storage Group) and Alex Erbs (Erbs Management Group) to talk with us about managing the finances for a self storage business. Our guests discussed a variety of important financial topics, such as unpredictable expenses and measuring the success of your business.
Check out the full Session to dive deeper!
Don't want to watch the clip? Here's what Magen and Alex had to say:
Cash collected is what I care about.
So I can play around a lot with economic occupancy. I can fake a lot of numbers and make it look however I want, right? But I can't fake cash in the bank. So what did at the end of the day?
And then delinquency is also a big number that we look at.
I want to see growth. I want to see positive trends. I do look at metrics of expense ratios to some extent.
We just run it as lean as we can and make smart choices. At the end of the day, it's NOI, it's cash in the bank. It's how much cash did I pay? How much cash was I able to stock away?
That's my main focus.
And then we want to see growth. So you should always, like, unit occupancy should do this, and economic should drop because we raise gross potential."
—Magen Smith
"Making sure when you're looking at your reports and your data and all this information, making sure you understand what time of the month it is that you're looking at this.
So some people look at it the 15th of the month, they're going, oh my God, my collections are way down. It's like, well, you're only halfway through the month. We still have more time. People are still going to pay their bills. They're still going to pay for it next month. We're not done yet. Sometimes they pay in advance.
And so I have an owner freaking out. I was supposed to bring in $30,000 a month, and we're at 15. And I'm like, that's actually the easiest explanation I had is, yeah, we're halfway through the month. I mean, that's a really easy one to explain. And we just transition.
So understanding when you're looking at the data and stuff, too, usually trying to make sure you're hitting that at the end of the month and seeing a month by month growth versus a daily growth. If you're looking that microscopic into a day by day, sometimes that's not completely necessary at your facility, and it'll actually make it worse because then that's where it makes sense.
And I'm going to pitch all of us here as third-party management. Having that third party perspective that somebody's overlooking your entire business there, too.
Because if you're the one that's looking at all the reports, being the property manager, being all this other stuff, how can you look at that big picture and the overall growth of your business if you're the one that's so entailed in your business?
So are you working on your business or in your business?
And that's a big difference of why third party management or just having a third party perspective or somebody else helping you with the business and looking at your reports so, so, so helpful going forward."
—Alex Erbs
