Do you want to know the ongoing expenses of a self storage? If YES, here is an estimate of operating expenses of a storage business in 2023. According to The Self-Storage Expense Guidebook, operating costs for storage units average $3.78 per square foot.
The report also gives the range for operating expenses as about $2.75 to $3.25 per square foot, with the numbers varying due to salary costs in different markets. Operating costs will also increase if the units are climate-controlled.
However, controlling expenses should be the top priority for any self-storage operation. But before you can look for ways to cut costs, you must know the items on which your business spends money and understand the difference between the two types of facility expenditures. Notably, businesses have fixed (controllable) and variable (uncontrollable) expenses.
Note that by analyzing them all, you can create a budget against which to measure financial performance. You do this by regularly reviewing a monthly profit-and-loss statement. Knowing the company’s financial goals will help managers understand the importance of controlling costs.
Have it in mind that a self-storage facility has many expenses. Again, some are fixed, while others fluctuate. Staff payroll is an example of a fixed cost. It is more or less the same month-over-month, unless there’s a dramatic change to work regimen or a lot of overtime. This is why is very necessary to adhere to the schedule and eliminate unproductive hours.
Janitorial supplies and snow-plowing are examples of variable costs. Note that these expenses change over time based on a number of factors. To predict these expenses, look at the amounts paid for these line items in previous years and make an educated guess as to how they might vary in the year ahead.
What are the Ongoing Expenses for a Self Storage Business?
- Loan payments
- Property taxes
- Third-party management services
- Business insurance
- Credit card processing
- Building repair and maintenance
- Office supplies
- Retail product
- Pest control
Few tips to help you manage the ongoing expenses for a Self Storage Building include;
How to Track and Manage the Ongoing Expenses for a Self Storage Business
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Extensively Compare Vendors
In terms of managing your variable costs, is imperative to consider the vendors you employ and regularly assess their pricing and services. Even if you are entirely satisfied with the work the company provides, it is advisable that you look around for the best rates and make sure the provider is aware you are doing this.
Chances are, they may want to keep your business and may even offer a lower price to do so. In addition, has anything changed within your business? Has it grown into multiple facilities, thus offering you the scope of scale, a better negotiating position, and stronger buying power? These are additional considerations to be made when choosing which vendor best suits your needs from an operational and financial standpoint.
Strive to Reduce
Notably, cost reduction can be managed by comparing actual dollars spent vs. budgeted numbers. Even if you are under budget on an item, you may still be able to reduce. For instance, imagine you are well-established within your market, with a high-ranking online presence for self-storage searches in your city.
You buy Google ads to stay at the top. Chances are you can limit that expense and still maintain your high ranking, then use the extra money in other ways or let it drop to the bottom line. Most notably, consider looking at your utilities. Once you have confirmed you are receiving the best possible rates, look at how you are heating and cooling your buildings.
Consider also a preventive maintenance program, especially because it is vital when it comes to reducing expenses. Some items, such as sprinklers and elevators, require specific, time-sensitive inspections by state or local ordinance.
Other items like your HVAC system may not have these requirements, but you should still pay attention to them. Even when you have or must have established a proactive maintenance program, things can still go wrong. So, is imperative to keep a fund for emergencies or when you need to replace something.
Establish an Action Plan
Have it in mind that you will need an operational budget, as it is important when managing and reducing expenses. Once you realize an expense needs to be controlled or even cut, you should develop and implement a plan to accomplish the goal, with a timeline to ensure the process is followed and can be adjusted if necessary. Always remember that consistency is key. Create policies and procedures that make each employee responsible for using and saving the company money.
Consider the Impact of COVID-19
Even with all the planning, reviewing, and careful management, an unexpected event can still cause unforeseen expenses. As the world gradually works back from the coronavirus crisis, most self-storage operators are dealing with costs they never considered when heading into 2020 and 2022. These extra costs include;
- Face masks and gloves
- Hand sanitizer
- Disinfectant wipes
- Additional cleaning materials
- Plexiglass dividers or sneeze guards for the management office
- Social-distancing decals for the office floor
- New signage regarding facility protocols
- Technology to allow for contact-free rentals
Have it in mind that all these items are necessary to keep employees and customers safe. Some might be one-time purchases, while others will be ongoing as the world manages the pandemic.
When making your plans to start a storage unit business, seek to build facilities that meet and exceed industry standards. If you offer the best in quality, people will seek you out because they want their stored items safe, dry, and accessible. However, expense reduction doesn’t necessarily mean cost elimination, unless this is the optimal solution and wouldn’t negatively affect the bottom line.