Published on 11/9/2017

Combatting Unpredictable Facility Costs

How to Combat Unpredictable Facility Costs
By Shaila Bringhurst

It's amazing how quickly unexpected costs wrack up when you are running a storage business.1 Just think how much you spend a year on repairs, maintenance, and property taxes alone. Offering ancillary products and services are an easy way to bring in some extra revenue and, at the same time, build rapport with your tenants.

What to Sell

When deciding what to sell, consider the needs of your community and your tenants. For instance, if your facility is for boat and RV storage, you might consider selling RV antifreeze, fifth-wheel locks, bug repellent, sunscreen, and cleaning supplies.2 If your facility has regular storage units, you might sell locks, boxes, tape, labels, permanent markers, mattress covers, and bubble wrap.3 Many storage facilities are located on the outskirts of towns. If your city has frequent tourists, you could provide maps, clean bathrooms, and water. 

Accommodating to Small or No Office Space

If you have a small office space, perhaps consider a portable wrack. The company Chateau sells a 5'x3' store on wheels that can fit in a small corner. The "store" includes basic storage packing supplies such as boxes, tape, locks, labels, and box cutters.4 If you don't have enough space for a cart, you can always create a slat wall—a fairly cheap wall board with hooks from which supplies hang. If you are really strapped for space, you can hang posters advertising products for sale while keeping the products in an empty unit and only pulling them out if someone is interested in buying. 

If you don't have a physical address, you can advertise additional services with posters. If you want to sell products, you can always keep them in an empty storage unit or even a truck. If selling products is not something you are interested in, or if you do not have an on-site manager, you could consider offering other services like truck rentals (see below).

How Much to Buy/Where to Buy

Too many choices can reduce sales,5 so limit your supply options. Ten box sizes, fifteen marker colors, and nine types of locks will only overwhelm your tenants. You might consider creating a generic combo package with boxes, tape, markers, and a lock for a set price. Whatever you sell, make sure to label the prices clearly, even just on a poster board. 

When it comes to purchasing supplies, don't start out with too much. Test the water first to see what people will actually buy (you might be surprised). That being said, if you are running low on a product, be sure to buy more! Your products should be high-quality. It may be more expensive for your customers, but they will appreciate a sturdy box over a flimsy one even if it costs a few extra dollars. By law, you have a right to sell something you previously purchased (which is why you can legally hold yard sales),6 but be sure you aren't violating any trademark laws by selling a brand product without the manufacturer's permission.  You can sell the product, but you can't sell a brand or logo without permission.7 To be safe, consider purchasing from retail suppliers, a few of which I'll list below.

Chateau Products Inc.
www.chateauproducts.com
sales@chateauproducts.com
800-833-9296

Boxes Boxes Boxes
www.boxescubed.com
marty@boxescubed.com
301-760-7805

Supply Side USA
www.supplysideusa.com
sales@supplysideusa.com
800-305-6110

For Other Suppliers: Click Here

How Much to Charge

On average, facilities mark up the price at least 100% (double the original price).5 It may seem expensive, but remember your customers will appreciate both quality and convenience. That being said, keep in mind the proximity of supercenters such as Walmart or Target. If you are charging $10 for a marker, but Walmart across the street offers it for $5, you won't have very many sells unless you drop your price within a competitive range. 

Other Services

There are myriad other services you can offer besides just retail: truck rentals, record storage, mailing/shipping, and wine storage. I'll cover just the first two below.

Truck Rentals8
Storage facilities and moving trucks marry quite well since most tenants need a truck to transport property to their units. Most facilities offer their trucks to new tenants free of charge under certain conditions. For example, you could charge for mileage over a certain distance, or you could charge an hourly rate beyond an allotted time frame. Many facilities include a fee if the customer forgot to fill the truck with gas, and others rent advertising space on the truck's back door, dividing it into four or six sections and charging $100 for each.

Another great way to earn extra cash with a truck is by partnering with assisted-living centers and senior-living communities. You could offer a mini-move program with an hourly rate of $100. If you are interested in truck rentals, On The Move Inc. offers a complete rental program which includes a vehicle, insurance/license, truck graphics, and all products. For more options, click here.

Record Storage
I highlight this section because record storage is a fantastic source of revenue. Despite this digital age, many businesses including hospitals, law offices, medical offices, hotels, auto dealers, and engineering firms still store physical records. You can split up a unit for record storage and charge either per meter or per box. You will be shocked at how many businesses need a place to store records, and the nice thing is it is a long-term contract with steady annuity.  Contact Cary F. McGovern for further advice if you have any questions about record storage. Cary has been in the business for about 40 years and offers free consultations: 504-669-0559 or fileman@fileman.com.

Is it Legal?

The US Supreme Court upholds what is called the "First Sale Doctrine" which means once a physical object is sold, the original owner no longer holds any rights over the item.6 So, if you buy something, you have the right to re-sell that product. That being said, here are a few caveats to keep in mind:

First: If the product you are selling has a trademark (logo), you need the manufacturer's permission to sell the product with their trademark. Without permission, you run the risk of a trademark infringement lawsuit.

Second: You need to be aware of sales tax laws and if your state requires them on retail items. If your state does require taxes, you may also need to get a reseller's permit.

Third: This goes without being said but any warranties you received when you bought the product will not extend to the new owner once you sell the item. If the product is faulty, the responsibility rests on your shoulders. 

References

1. Rick Beal. "Stifling the Flow of Facility Expenditures: A guide to tracking and cutting costs." Inside Self-Storage, February 2017, 18-19.

2. Jon Fesmire. "Exploring Ancillary Profit Centers: Opportunities to bring in more money." Inside Self-Storage, February 2017, 28.

3. Krista Diamond. "Cruising Toward Profit with Boat/RV Storage: Providing space as well as related amenities and products." Inside Self-Storage, February 2017, 36-37.

4. Chateau. "Instant Store on Wheels." Self Storage Association Foundation: Globe, August 2017, 21.

5. Amy Campbell. "Bringing in the Bucks with Retail Sales: How to massively accelerate your product flow and profit." Inside Self-Storage, February 2017, 30-32.\

6. Anita Campbell. "Supreme Court: You Bought It, You Own It, You Can Resell It." Small Business Trends. April 1, 2013. https://smallbiztrends.com/2013/03/resale-rights-you-bought-own.html.

7. Nina Kaufman. "Is It Legal to Buy and Resell Items?" Entrepreneur. April 19, 2013. https://www.entrepreneur.com/answer/226401#.

8. CJ Steen. "Driving Income with Truck Rental: Ideas to rev up your add-on revenue." Inside Self-Storage, February 2017, 34-35.

9. Cary F. McGovern. "Stacking Up Revenue with Records Storage: Ever-growing volume of documents creates an endless profit stream." Inside Self-Storage, February 2017, 41. 

Photo by Purple Slog: https://www.flickr.com/photos/purpleslog/3134323442/