With talk of a looming recession around every corner, it's enough to make any business owner start to worry. How do you prepare your business (and yourself) for a possible recession? What should you be doing—financially and operationally—to make sure your storage facility can weather the storm should a recession happen?
In this Gabfocus Spotlight, Magen Smith of Atomic Storage Group and Alex Erbs of Erbs Management Group give us their advice on how to be ready for a recession.
Question: "How can storage operators prepare for a recession?"
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 is king, baby.
I would have some reserves. You don't know where things are going to go up. As we kind of talked about. Gates, just lag times on different supplies. I would definitely have some cash on the ready.
If you're running really really thin on your cash. You bought recently, your property taxes went up, you're kind of running thin. Just be prepared. Get ahead of that.
If you haven't done rate increases in a long time, get them started now so they become regular like we all talked about. Just some preparation is always a good thing to get through anything."
—Magen Smith
"I think the other one that this happens a lot during recessions, have a good grasp on your delinquency in your facilities. Have good normalized processes when it comes to either auction processes or delinquency notices or follow up calls.
Because you might be used to running a really thin delinquency margin, but if there is a change in the market or a sudden shift, you might have a larger amount of customers that aren't able to pay.
So you have to be ready to combat that in different ways. Whether it be either working with customers more or being quicker. Whatever your policy or feeling is on that. Making sure you have a really good grasp on delinquency because that usually is the one that will take a little bit of a hit during a quick change in a market like this."
—Alex Erbs
"We had a store that we had an auction scheduled. We ended up getting a hurricane. So the auction was like three days after.
I'm like, do I cancel? Do I like— you know what, I'm keeping it because now we need 150 units because there was a massive disaster.
So the market changed like that. Had we not had it scheduled, we would have been sitting. You can't auction after a hurricane, so we would have been sitting for a really long time and just waiting and trying to play that game.
We've had fires at stores, things like that have happened.
So yeah, that's a great point, Alex, to be on top of every aspect of your business so that you're not caught like, oh gosh, I wish I would have had that handled."
—Magen Smith
