At the center of the affected area is the former Fitzsimmons Army Hospital, which is now being developed into a multibillion-dollar medical campus. The Fitzsimmons boundary area extends several blocks into neighborhoods populated by small businesses, including a self-storage facility, a gas station, hotels and low-income mobile-home parks. The amortization ordinance gives theses businesses 10 years to comply with a 1999 zoning change or cease operation. But it does not take into account single-use businesses such as self- storage, gas stations or car washes. If these types of businesses cannot be converted to meet zoning, owners will probably have to sell for land value alone, depriving them of the value of the business or improvements.

Property owners do have some recourse. After the ordinance was endorsed by the city council earlier this year, property owners were given the option of collecting enough voter signatures to call for a referendum for a special election, allowing them to vote on the ordinance. The call will require 4,001 signatures, or 10 percent of the total voters in the last election. If the amortization is rejected through the referendum vote, the city will have to look at other options, including condemnation.

Legal, but Is It Ethical?

"Amortization would allow the city to get the property without paying the condemnation price. This is not parity," says Donna Muse-Marcy, vice president and chief operations officer for San Antonio-based Brundage Management Co. Inc. Brundage owns A-AAAKey Mini Storage, one of the businesses affected by the ordinance. "What are you going to convert a gas station to, what are you going to convert a mini-storage to?" she asks. "Our self-storage facility is the highest and best use of the land. Why would we bulldoze it and go into a different use?" She maintains her business stands to lose up to $2 million if forced to sell.

Brundage has formed a group of several businesses to obtain sufficient signatures for the referendum. "It really is in everybody's benefit to participate in this," Muse-Marcy says. Brundage indicates it is prepared to fight what it sees as a real threat to small businesses everywhere.

Jim Burling, principal attorney with the Pacific Legal Foundation Property Rights Section also has real concerns about the amortization ordinance. "It is very disturbing," he says. "Not only is the city establishing a very harsh amortization rule to evade its responsibility to allow the continuation of nonconforming uses that do not constitute a nuisance, but it has also established a very expensive and complex appeals procedure that seems designed to discourage landowners from asserting any challenges." Specifically, Burling is concerned that landowners must, within 180 days of notice of registration, file an appeal for $1,000 that contains very detailed and complex disclosure requirements--requirements that will be quite expensive and cumbersome for many small businesses to follow.

"What's more, the appeal process appears to be based on the notion that tax depreciation is the lodestar for determining the amortization period," Burling says. He has seen this approach used before with devastating consequences on landowners because tax depreciation simply has no practical relationship to the real world of business and real estate investment. There are many businesses that have fully depreciated real estate and capital-equipment inventories that have many years of useful life remaining.

The fact is, after 10 years, or even after a longer tax-depreciation period (in those cases where the depreciation is not yet fully realized), these businesses will more often than not remain viable businesses capable of returning significant capital to their owners for many years after the depreciation period, Burling states.

Burling encourages landowners in this area to vigorously challenge this ordinance while also acknowledging whatever administrative remedies are available. This will not necessarily be easy--with precedents in Colorado and the Tenth Circuit upholding amortization periods for signs and adult entertainment, some courts might be inclined to analyze the ordinance the same way. That is certainly what the drafters of this ordinance are hoping. However, the scope of this ordinance is extraordinary as it applies to a whole variety of existing businesses on an area-wide basis. Also, in those cases where a use prohibition might otherwise constitute a taking because the economic viability of the property is destroyed, the case for the unconstitutionality of the ordinance might be even stronger. In the event the landowners do decide to challenge this ordinance, Burling would like to know about it.

A Multibillion-Dollar Incentive

Charles Richardson, city attorney for Aurora, explains the amortization ordinance was the result of the move of the new development for the University of Colorado Health Science Center. "The University of Colorado's Health Science Center, medical school and hospital were constrained physically by their location in Denver," says Richardson. "Moving to the Fitzsimmons site was a wonderful opportunity to build a whole new complex on a large piece of property." In addition, one of the most important points in the consideration of the move was there is enough land to build the ancillary biomedical-research facility. Other medical facilities, including a state-of-the-art cancer center, are already built.

"This is a real exciting and vibrant project for a city of 300,000 that was previously a bedroom community," Richardson says. But, despite the availability of a large tract of land, there is a problem with the area that threatens Aurora's plans.

Because the Fitzsimmons base is located in a distressed part of the city, there was some resistance from the U of C staff and students who were not comfortable with the environment surrounding the new facility, Richardson says. "Our urban planners have a concomitant obligation to provide the businesses, mixed-use residential and support structure to surround this jewel in our crown." After weighing all the options, the end product was the amortization process in which most current uses were declared nonconforming and given 10 years to switch to a conforming business.

"The city council has gone an extra mile by having an appeal provision by hearing process if a business owner cannot recoup his investment in the 10 years," Richardson says. "An appointed independent hearing officer can provide for a longer amortization period."

Some businesses have come to the hearings to ask for a straight condemnation, thinking they will come out better, but Richardson has doubts that people should consider condemnation as the best answer. The city attorney's office uses outside attorneys who specialize in condemnation. "There is a simplistic view out there that condemnation is the answer," Richardson explains. "We've tried to explain you should look at the condemnation remedies, since sometimes you don't get what you expect. Basically, you're putting your property into the hands of citizens, or a jury. Either way, sometimes things don't turn out the way you hope."

"It's really a difficult dilemma," adds Kevin Hougen, president and CEO of the Aurora Chamber of Commerce. "Aurora and its leadership are looking at development outside the area the base used to be. The city stands to gain 38,000 new highly paid, highly skilled jobs with the development of this $5 billion complex."

Hougen says this came about too fast to give the chamber time to react. "Normally, the chamber would prefer condemnation proceedings rather than amortization," he says. "Despite having years, few of the landowners along the corridor have tried to improve their properties, so that is why the council is voting in favor of this." And, although the vote of council members was divided 6 to 4, the council member who represents that region voted for amortization, according to Hougen. The city council is hoping that by rezoning this area, the businesses that are not conforming may find a developer that will come out and buy them for a large amount.

Conclusion

"It's eminent domain on the cheap," says D. Carlos Kaslow, legal counsel for the Self Storage Association and author of The Self Storage Legal Review. "When you look at this, it comes down to Aurora has figured out a way to confiscate businesses they don't like in a particular area without condemning them." Kaslow says the SSA is opposed to this kind of forced government-taking of a self-storage facility. The community has concluded it no longer likes this type of business, but isn't prepared to compensate the owner for the true value of the company.

Kaslow maintains that giving someone 10 years to wind down a business doesn't change the fact the government is eliminating his pre-existing right to do business based on compliance to all prior all zoning and building regulations. If a business owner puts up a building that is properly zoned at the time, theoretically, municipalities can't change the rules halfway through the game, Kaslow says. "It's a slippery and dangerous slope for business owners. We're already seeing a similar situation in Pasadena, Calif., where a community enacted a moratorium on constructing certain kinds of buildings, including self-storage."

It often comes down to a revenue situation, Kaslow states. Self-storage is not a major generator of taxable revenue but, on the other hand, its facilities place limited demands on city services. "You put up a self-storage facility, and the cost to the city is extremely low compared to other kinds of businesses," he says. "City government often overlooks this."

"For people who have businesses there, it is a concern," says Charles LeClaire, president of the Colorado Self Storage Owners Group. "The city or the state is not willing to buy out the area." However, LeClaire doesn't think use of the amortization process to claim property poses much of a threat to real estate throughout the United States.

Jim Chiswell, owner of Chiswell & Associates LLC, disagrees. "This goes to the heart of the ownership of real property. The city of Aurora is attempting to take the properties of a number of small business people," he says. "Property ownership is a basic right, but the amortization ordinance represents a threat to all property owners. If Aurora officials are allowed to do this, it could sweep the country as communities look for ways to redirect their growth."

All of your marketing decisions need to be looked at in relation to their return on marketing dollars (ROMD). Your goal is to get the greatest number of renters while spending the least amount you possibly can on marketing. After repeat and referral customers, those who rent from you as a result of contact with one of your centers of influence are the least expensive.

Centers of influence (COIs) are those individuals and/or organizations in a position to recommend storage to potential tenants. Frankly, anyone can fall into this category, but there are a few obvious ones every storage operator seek to know on a regular basis. The reason you want to target these groups is the marketing efficiency you'll gain. If you get a few powerful people or companies to recommend people to you, it could become your single largest source of business--if you handle things correctly. Following are possible COIs and strategies for maximizing the number of referrals you receive from them.

Real Estate Brokers--Real estate brokers are your most obvious example of a COI. They are constantly being asked by people who are moving into or out of a neighborhood where they can find storage. If they have a good relationship with their clients, their reccomendation will be taken seriously and probably heeded.

RV-Park or Apartment Managers--People who live in RV parks and apartment complexes are ideal prospects for renting storage. The folks who manage these places are generally not well paid and will respond well to a referral fee for sending people your way.

Moving Companies--Many moving companies will provide full-service storage, but few provide self-storage. This is your opportunity to set up an alliance with them for those customers who want to store but don't want to pay the moving company to do it for them. Naturally, the moving company will try to earn the customer's business first, but you can give them a less expensive option for customers that will still make them a few bucks on the referral.

Truck-Rental Companies--These are a great source of referrals for obvious reasons. They should be vigorously courted, as the people they serve are the same people you are looking to attract.

Churches--When people move or think of moving, they often consult the churches in the area for referrals for services they need.

Schools--Some people who move will consult the schools where they enroll their children for information about many things, including storage. Make sure you are the one they recommend.

Chambers of Commerce--Join your local chamber! These are a fairly standard place to look for referral sources, but they shouldn't be neglected as a possible business sources either.

 Large Organizations/Corporations--Large companies are frequently transferring their employees in and out of different cities. Why not be the place they recommend people to store while waiting for their homes to be built or ready to occupy? Arrangements with organizations like this are often created as a result of a savvy operator having the gumption to walk in and ask for the business. Don't wait to find out your competition has beat you to the punch.

Initial Set-Up

There are three primary ways to approach your COIs. First, you can send them a letter. Second, you can send them an e-mail (if you can get the accurate contact information). Third, you can visit them in person. In this high-tech world, I suggest you use the "high-touch" approach. Walk in their front door and ask to spend a few minutes with the "head honcho" face to face. Depending on the size of operation, this may not always be possible. But you'll never know until you try.

If you're an owner, you may be tempted to send your manager to do this missionary work. I recommend against it. It's much more powerful if you, as the owner of the business, make the initial call. After that, you can have your manager maintain the relationship.

Before you walk in a business' door, you'll have to have three things prepared. First, you'll need to know your pitch. Second, you'll want to have promotional material to leave with the person you meet. Finally, you'll want to have some referral cards that will identify this business as the referral source. When you walk into the office, be prepared to speak to Mr. Big. He might be there, and you had better be prepared with what you're going to say. I suggest something along these lines:

Hi, my name is Joe Smith and I own ABC Self Storage down the road. Have you heard of us? (He answers). Great, I'd like to introduce myself and find a way to make sure that if you have any clients that need storage that you might send them our way. Do you get requests from your clients/customers for storage? (He responds.) Who are you currently suggesting they use? (He responds.)

No matter what he says, you should show him why you are the one to whom he should send referrals. Do this by asking him what he thinks would be important to his clients in a storage company. This will tell you what you need to highlight when you have a chance to respond. Just before you leave, hand him your promotional piece and the referral cards. (If you give him these items at the beginning, he'll be distracted looking at them.)

When you hand him your brochure, highlight some of the key elements and show him how easy it is to use the referral card. What should your brochure look like? It should like the standard brochure you would hand prospects if they walked into your storage facility directly--but with one major difference. This brochure should be coded in a way to let you know which of your COIs sent the referral.

What Will They Want in Return?

Your COIs will likely want two things of you before they agree to give you referrals. First, they want to know their clients will be going to a reputable company to store their belongings. Second, they will expect some expression of gratitude when they do send you people. They may not verbalize this second point, but trust me, it's equally or more important than the first.

Always call and thank them for a referral immediately. You can save whatever compensation you've agreed to for your monthly visit (unless they specifically request otherwise), but a thank you should follow quickly. Remember: Reinforcement, to be effective, must be immediate. Don't get lazy in this area. Even if you have to call every other day, thank them for everyone they refer. It's only right to do so.

What kind of referral fee or compensation should you provide your COIs? Ask them. I suggest you present two options--first, cash. It's easy. Everyone seems to like it and you don't have to figure out whether they will appreciate it. The second option would be to give them points they can accumulate and use to purchase items of their choice out of a catalog. These catalogs are available from a lot of incentive-premium companies. You can find them easily on the web by using the key words "incentive premium." Give people both options because some aren't allowed to accept cash. Some companies won't even allow employees to take gifts at all. If that's the case, a "thank you" will still go a long way.

Follow-Up

Don't do any of the above unless you are committed to following up. COIs need to be courted. Visit them once a month. Bring them pizza or some other small gift. Make sure what you give them isn't trite. How many more cups or customized pens do people need? The monthly visit should be done to remind them you're still very interested in their referrals and drop off any compensation you owe them.

COIs are a great way to build storage business with an extremely small investment of time and money. For every dollar you put into these efforts, you can make up to 20 or 30 times that amount. The nice thing is once the relationships are established, they are there forever and will pay you dividends long into the future--as long as they are maintained. Use this method of marketing and you'll be glad you did.

Fred Gleeck is a self-storage profit-maximization consultant who helps owners/operators during all phases of the business, from feasibility studies to creating an ongoing marketing plan. Mr. Gleeck is the author of Secrets of Self Storage Marketing Success--Revealed! as well as the producer of professional training videos on self-storage marketing. To receive a copy of his Seven-Day Self-Storage Marketing Course and storage marketing tips, send an e-mail to tips@selfstoragesuccess.com. For more information, call 800.FGLEECK; e-mail fgleeck@aol.com.

Your doctor recommends you have an annual check-up, and you know you should; but sometimes you are just too busy. If you have symptoms of an illness, however, you are likely to go to find out their cause.

The health of your self-storage facility is important to your business and deserves an annual check-up as well. But as with our own health, we are more likely to address the health of the operation when "symptoms" appear. Chances are, few owners have made the time or effort to take a hard look at their operations and the market to see how they are doing. Recent years have been quite favorable for self-storage and, generally, few symptoms have appeared to indicate a thorough check-up was necessary.

Are There Symptoms?

Many owners are beginning to have an uncomfortable feeling something is changing. Over the past several months, I have noticed trends suggesting the market is shifting throughout the country. More often than not, the symptoms in our business manifest as lower occupancies, fewer calls that turn into rentals, and difficulties in raising rates. With our own health, we might attribute the first phase of symptoms to passing aches and pains. Likewise, we find convenient ways to explain the first self-storage symptoms with passing causes, such as "it's just seasonal" or "it's residual effects of 9-11." One of the most common symptoms is passed over by saying, "That new project won't hurt my business."

The Symptoms Are Real

In many areas of the country, these symptoms are real. While we have always felt the self-storage business is somewhat immune to economic downturns, many owners are reporting their businesses are being affected by this "nonrecession." There is a lot more price-shopping happening as everyone looks for a deal. Some actual demand for storage disappears as some renters leave, saying things like, "I just lost my job, so I have to store this stuff with my in-laws now." However, what appears to be the most significant issue in many areas is overbuilding.

Overbuilding is particularly a problem in many metropolitan areas and even some more rural locations. For example, a recently built project in a major city has six projects within a three-mile radius. There's a total supply of 330,000 square feet and an average occupancy of about 85 percent, or a total actual demand of 280,000 square feet. There are four projects in the same radius currently nearing completion with a total of 270,000 square feet, and another being zoned! This is more than a symptom--it's the real thing. Of course, such overbuilding is not happening everywhere or on such a scale, but even some overbuilding can be very harmful to your facility's health.

The Check-Up

What you need for this check-up is an expert to diagnose the situation and a plan to proceed with the assessment. Since no one is as expert in a market as an owner, you are the best one for the job. However, you must be relentless in obtaining all the facts and impartial in evaluating the information. Many owners think they already know all there is about a market, but it is unusual an owner can go through a detailed evaluation and not learn something, if nothing more than a shift in perspective.

Now you need a plan to make your evaluation, not unlike the list of questions a doctor uses during an examination. I have developed a checklist that will be a useful guide to evaluating existing or future projects. While the list is printed in this article, you can also get blank forms from www.selfstorage.com/ argus/toolbox/checkup.htm. The purpose of the form is to make sure you address all the issues important to your property's health and accurately evaluate your operation against that of your current and potential competitors. You can, of course, add items you feel are important. But you should, at a minimum, get the basic information.

The first step is to define your trade area. Generally speaking, it is better to choose a larger area than you might originally think. This ensures you won't get "sandbagged" by a highly competitive property just outside your limits. I suggest a minimum of a five-mile radius. The next step is to stop by the local planning and building department to see if there are any new projects on the planning board and make sure they are on your list to evaluate. These folks are often very helpful and actually enjoy finding out your perspective on the market.

Next, of course, is to plot all of your existing competitors and put them on the list. Plan to spend an hour or so visiting each project or potential project. Don't be bashful about introducing yourself and chatting with the manager or owner. You will be surprised at what you learn. Immediately after visiting the site, make an evaluation of six critical items--location, visibility, access, signage, traffic and appearance--on a scale of 1 to 10. Be objective. Obtain the rates by calling the facility as a potential customer, as this is one area in which the manager or owner may not be straight with you. (It also allows you to get an idea of his salesmanship.) Following is what a sample evaluation might look like:

Last, but not least, perform the same evaluation of your own facility. It is sometimes very difficult to be objective; but it is most important in this case. Now, add up the scores and look at the various rental rates and see where you stand in relation to the market. Perhaps you will also find the new projects will significantly enlarge the market, and you must take some dramatic steps to remain competitive. Even if you have the best property in the best location in the market, you will know better how to sell against the competition and where the holes are in the pricing structure. If you are at a competitive disadvantage to some other projects, you will also know how and to what extent to compensate for these weaknesses in your property. Because you now know more than most of your competitors, you will be the leader in your market rather than the follower.

Michael L. McCune has been actively involved in commercial real estate throughout the United States for more than 20 years. Since 1984, he has been owner and president of Argus Real Estate Inc., a real estate consulting, brokerage and development company based in Denver. In January 1994, he created the Argus Self Storage Real Estate Network, now the nation's largest network of independent commercial real estate brokers dedicated to the buying and selling of self-storage facilities. For more information, call 800.55.STORE or visit www.selfstorage.com.

Six hectic and eventful years have passed since my arrival in England from Australia. Business takes me on regular "flying visits," where as soon as I am out of one office, I am in another airport lounge ready for take-off. This past summer, however, I piled my family into the car and headed off along the auto routes, autostrada and autobahns of Europe.

The first and lasting impression I had was of the continent's vastness. This may sound strange coming from someone raised in Australia's great open spaces. But in regard to Europe, I use "vastness" to describe the huge concentration of towns, cities, businesses, culture and activities across borders, rivers, mountains and plains. There is also a vast opportunity for the growth of the self-storage industry on this continent, indeed in the new "Euro-Zone."

An Industry in Its Infancy

The U.K./European self-storage industry is in its infancy. The first facilities were small, locally crafted affairs, cobbled together in a poor imitation of what their founders saw happening in the United States. In the past six years, the industry has been going through growing pains, adapting old warehouses. It has also adopted better standards of construction and fit-out, as manufacturers entered the market with up-to-date corridor, partitioning, door and access-control systems.

All the same, the heart of the industry in Europe is still focused on the main capital cities where, inevitably, the only sites available have been former industrial warehouses. These structures, due to planning restrictions, cannot be demolished, but need to be painstakingly converted to their new use.

The industry has found confidence as it is supported by significant investment from large corporations looking to diversify, overseas companies seeking to enter new markets, and a number of smaller operators involved in related activities such as storage and removals. This confidence has allowed operators to open new-build facilities on main routes on the outskirts of secondary towns and cities, much the same way business developed in mature markets in the United States and Australia.

On the Road, Again

Getting back to my summer travels, no sooner than driving off Le Shuttle—the railroad that hauls cars through the Channel Tunnel that joins England and France—I noticed the bustle of industry and commerce around the port of Calais, France, where there was not a self-storage facility in sight. What a difference from the roads leading out of many major U.S. or Australian towns, where you encounter facility after facility.

As I took the autoroute to the border town of Strasbourg, France—a significant city in the running of the ever-growing European union—I noticed things begin to change. There, I visited the ultra-modern Homebox operation, which has quickly become a 21st century standard-setter for the European self-storage sector. From there, it's a short hop across the border into Germany and the city of Freiburg. Although similar in size to Strasbourg, it has no self-storage facilities. Self-storage is a very new product to Germany, with only a couple of facilites in the whole country.

Next, we went to Austria via the 14-kilometer Arhlberg tunnel to the city of Innsbruck, the location of the 1964 and 1976 Winter Olympic Games. This city is famous for its winter sports and tourism. It has a university, a planetarium and a population of 140,000 that is mainly employed through these activities as well as some heavy industry. There is no self-storage here yet, but it is off to a successful start in other parts of Austria--four facilities now trade very successfully in Vienna and Gratz. I think Arhlberg also has the demographic requirements to work for the industry.

We spent the night above the city in the mountains and, in the morning, left via the famous Brenner Pass to Italy, which is about a 30-minute drive. This is some of the most breathtaking country in the world, as well as some of the most incredible motorway construction I have ever seen. We were now in a country with 58 million people, most of whom live in apartments and earn some of the highest salaries in Europe. At this time, there are about 12 facilities in Italy, and every one of them is filling fast. All are modern and well in excess of 30,000 square feet.

Next, we drove south to Lake Garda, past Bolzano and Trento, and on to the famous port city of Genoa. This city boasts its lack of space—even the tourist guides confirm this. With a population of 750,000, the city is more than a 1,000 years old. There is plenty of industrial and warehouse space, but the concept of self-storage has not arrived here yet. This is where I realized I needed to share my travel experience with the self-storage community. The opportunity is huge, as is the task of moving this market forward.

Europe's Opportunities

Get out there, check it out, and be amazed at the almost unlimited opportunities you will encounter in many European towns and countries. But you need to understand the subtle differences in market requirements from one region to another. To assist you in finding the best locations and meeting local partners—or local investors who, like yourself, are keen to see the self-storage sector succeed—contact people who are already working in the European self-storage market.

Self-storage is taking its time in its global progression. Perhaps this will benefit us all in the long run, as it allows those involved in the industry to adjust to the huge opportunity and prepare for their own roles in the expansion. I hope to see foreign and local investors entering the business in Europe—there certainly are promising sites waiting. Whichever way you look, there is a lot of history here, but no doubt a great future for self-storage as well.

Jonathan Perrin is co-founder of the Steel Storage Group, which has factories in Australia, France, New Zealand and the United Kingdom. For more information, visit www.steelstorage.co.uk.

Self-storage has evolved over the years. Not only does it offer space for personal or business storage, it has become a retail center that sells boxes, locks and packing supplies.

Some stores even offer personal mailboxes, faxing services, car washes, rental trucks and even UPS shipping. Your facility might not offer all of these services, but I can almost bet you do sell some retail product. If you don't, you are missing added revenue that could increase your profits by $200, $400 or more every month.

With the spring and the summer months approaching, now is a good time to take a serious look at the services and goods you offer. For most of you, this is probably a very active time at your facility with people moving in and out on a daily basis. These people need locks for their units, some boxes, a marker to label boxes, mattress pads, maybe some rope, box tape or more. You need to take stock of the items you currently have on hand, estimate inventory based on last year's sales, and place an order for the supplies you need. If you place an order now, it will give you plenty of time to receive and display these items.

When was the last time you took a really good look at your retail area? I bet it's been awhile, so do so now. Are price stickers items faded and old, or are items even priced at all? When was the last time you dusted your boxes? Are they old and tired looking? Is it time to put out new ones? If your office is big enough for a retail display but you don't have one, consider purchasing a professional display from one of the retail suppliers. These make it easy to showcase retail items in an appealing manner. Is it time to rearrange the items you do sell? Make the area "visible" again. Clean everything in and around your display. Make it attractive!

I have seen some facilities use very unique displays, including a lighted sign with a clear front bolted to the side of the building near the office door. This display included locks and one side of several different size boxes with prices. In facilities with very small offices, I have seen boxes bolted to a plywood cart with wheels that was pushed out every morning and placed near the door. Just keep an open mind and think of ways to display these items instead of how and why you can't. You can always find space to display them if you try.

Once you have cleaned and arranged retail items and ordered new inventory, how do you market them to the public? One option is to hang a banner outside the office that reads, "We Sell Moving Supplies." If you have a marquee-type sign, express a similar message on it. If you can't hang banners due to code restrictions in your area, get a sandwich-board type of display you can put in front of your facility daily. People driving by will often stop and purchase moving supplies even if they don't need storage. When they do need storage, they will come to you, of course, because you were helpful and offered them great customer service when they purchased their supplies.

What about your Yellow Pages ad? Does it tell people you offer packing and moving supplies or other ancillary services? What about any ads or fliers you distribute? Maybe you include a starburst on all advertising that reads, "We Sell Boxes," which draws attention to the fact you offer more than just storage.

How about your telephone presentation? Do you make it a habit to state in your telephone sales that you offer retail items to make the caller's move easier? You should. Does your phone-hold system play music or messages when a caller is placed on hold? Purchase a system that will allow you to make your own commercials in which you can state your office hours, gate hours and the fact that you offer moving and packing supplies. Do you have an intercom system for your interior hallways? If so, make a tape or CD with a commercial that plays every 15 to 30 minutes telling those tenants onsite you offer retail items for sale.

Don't forget to ask each new rental if he needs a lock or some boxes. This simple question can increase the retail sales at your facility. It is fairly customary in this industry to offer some type of move-in special to new tenants. But it doesn't always have to be free rent. Consider offering a free lock, or a moving-supplies package of three or four boxes and a roll of tape. You can also offer a moving-and-packing supplies shopping spree of $25 for each new move-in. Packages can be pre-made and displayed right in your entry with a sign that reads, "Each new move-in receives these items!"

Selling moving and packing supplies does not take nearly as much time or effort as offering rental trucks, mailboxes or faxing services. Every facility can find some space in its office to display retail items. Just remember, displaying them is only half the battle. Letting people know you have these items for sale by mentioning them in your ads and telephone sales will help sell these retail items and increase profits at your facility.

Pamela Alton is the owner of Mini-Management^®, a nationwide manager-placement service. Mini-Management also offers full-service and "operations only" facility management, training manuals, inspections and audits, feasibility studies, consulting and training seminars. For more information, call 800.646.4648.

I didn't attend a posh preparatory school like the Welton Academy featured in the 1989 film classic Dead Poets Society. And, granted, I graduated 30 years later than the film-set year 1959. Even still, who didn't feel inspired--and just a wee bit melancholy and maudlin--by this film about angst- and hormone-ridden teenage boys chasing girls, embracing literature and learning the thorny lessons of life. When teacher John Keating (Robin Williams) tells them, "Carpe diem, boys! Seize the day. Make your lives extraordinary!," I want to sell all my stuff, rent a villa in Tuscany, and spend my days reposing and writing reams of verse.

The best part is watching Charles "Charlie" Dalton, the ever-seditious class clown, transform into his bawdy beatnik alter-ego, Nuwanda. A midnight assembly of the DPS finds him in a tribal stomp, chanting, "Laughing, crying, tumbling, mumbling--gotta do more, gotta be more. Chaos screaming, chaos dreaming--gotta be more, gotta do more." And here we come to the moral of this month's little missive: We ALL "gotta do more, gotta be more" when it comes to succeeding in this business.

No one knows if or when the bottom will fall out on self-storage. Domestic development continues and expands to international terrain, but everywhere you here people whispering in corners about overbuilding. The grim reaper we call competition lurks in the stairwells. Ask not for whom the bells of "step up to the plate" toll--they toll for thee. As I write this, our country lies on the brink of war. Who knows what will have transpired when you hold this issue in your hands? How will you ensure your business fares, in spite of what demons may howl at your door?

Don't call me doom-and-gloom girl yet--all hope is not lost! There are real-world solutions to the challenges of economic distress, overbuilding and competition. While we cannot control the financial status of our consumers, nor the the actions of our rivals, what we can control is the philosophy and offerings of our own operations. In this issue, we've experimented with an "Ancillary Products and Services Extra," a special section devoted to highlighting ways to diversify the storage product, increase revenue and lure prospects. Experts in the fields of truck rental, wine storage, retail sales, cell towers, mobile storage and more contributed insight and advice to this segment.

Carpe felicitas, boys (and girls). Seize success. Make your business extraordinary!

Best wishes,

Teri L. Lanza
Editorial Director
tlanza@vpico.com

Benefits of Support

Call centers create value for self-storage properties by producing additional rentals. When potential tenants call a facility and hear an answering machine, busy signal or unanswered rings, they usually terminate the call and contact another operator. Phone centers answer property phones when the manager is unavailable, the property is closed, or the manager is not in position to do an effective sales presentation. The center capitalizes on a storage inquiry by creating a reservation for the caller. After two years of using a call-center service, some independent operators are experiencing a more than 800 percent return on investment from the additional rental income generated.

Properties supported by call centers produce a higher level of customer service. The level of professionalism in answering-machine greetings varies by message and equipment. Callers who speak to a professional customer-service agent receive the same sales presentation on every call. Furthermore, when existing tenants call a site seeking operational information, the agent can often answer the question and help the caller without involving the facility manager. At 9 p.m., when the facility is closed, an agent can provide the caller many details regarding office hours, access hours, and ancillary products and services.

How Call Centers Function

Phone centers operate differently depending on the vendor. A call center's effectiveness is predicated by the methods used and the execution of those systems. At least three vendors have evolved who offer call-center support. Two of the large operators offer their phone center to independents as part of a package of bundled services.

Most call centers answer calls that are transferred to the center after a specified number of rings at the self-storage property. Reservation agents have computers with information that reflects current availability and rates for the property in question. Operators keep this information current by updating the center. Agents access this information to find the type of storage, availability and rental rate to meet the needs of the customer. Large, multisite operators have the ability to provide agents information regarding several of the operator's properties in the prospective customers' area. Agents use this information to find tenants the optimum location, size and rates.

After the agent has determined the best alternative for a customer, he invites the caller to reserve a space. This is done by inputting caller name, address and telephone numbers, as well as other information into a database. The system a call-center agent works on is designed to assign a tracking or reservation number to the new customer record. This will allow the reservation to be tracked and verified as a rental. The reservation is then transmitted to the property, usually via fax or e-mail. On-site property managers are responsible for converting the customer into a storage rental. Skilled and motivated property managers who effectively follow up on reservations will always produce higher reservation conversion rates.

New Levels of Performance

In the past two years, call-center vendors have improved the systems to process calls, update inventories and report return on investment. One call center recently completed a direct link with a software vendor and can produce real-time inventory updates and reservation transmissions.

Call centers have also created a vendor category that did not exist two years ago: call-center consultant. This role helps operators maximize the return from their call-center vendor. The consultant reviews information from the call-center vendor, tracks move-ins, produces return calculations, motivates property managers to convert reservations, and advises clients regarding vendor selection.

Operators would not bear the costs of establishing or hiring a call center if positive returns were not available--that is, the service produces more revenue for clients than it costs. Call-center services are unlike other marketing programs in that returns from the cost of the call center are easily calculated. Each reservation has a potential value based on the actual monthly rent and an average length of stay. Operators can calculate return on their investment by multiplying the number of converted reservations by the potential value of the reservations and dividing by the monthly cost of the phone-center service.

One of the call-center vendors has modified the reservation sheet transmitted to the property to include a potential value amount. Identifying the potential value reminds property managers how important it is to focus on converting the reservation to a rental. In one instance, a call center booked a reservation for 11 10-by-10 units. Based on a monthly rent of more than $100 and a conservative eight-month length-of-stay estimate, that reservation had a potential value of nearly $9,000.

As with all areas of property operations, results will always improve with analysis and attention. The commitment to continual improvement on the part of the call-center vendors, clients and property managers can create new successes with this form of marketing.

In the last two years, some basic concepts were proven regarding self-storage call centers. Experience has taught us that sales presentations are more effective when agents follow a general outline or script. Furthermore, greeting the callers with a live agent is more productive than using an automated greeting. Automated greetings are used at some call centers to separate callers who are inquiring about storage rental and those calling for other reasons. Using an automated greeting produces fewer reservations, because many callers abandon (hang-up) when not greeted by a person. Finally, it has been demonstrated that fewer reservations are produced when a call center attempts to persuade callers to secure their reservations with a credit-card payment or deposit.

Focusing on improvement means higher returns and positive reinforcement for all involved. Every endeavor has the main ingredients of people and their efforts. Remember: Smiling faces rent more spaces.

Stan Colona is one of the founders of XPS Services LLC. He and his partner, Brad Boyd, have more than 20 years combined experience in the self-storage industry. For more information on the services their company provides, including call-center support, call 866.US.STORE; visit www.xpsservices.com.

I love change. I live for it. And I've always been at the front of the queue when it comes to embracing the opportunities created by the organism we call the World Wide Web.

I'm on the technology bandwagon in this issue. Three years ago, as a director of the Self Storage Association of the United Kingdom and Europe, I designed and implemented the association's current website, www.ssa-uk.com.

Although three years is a long time when it comes to technology, the current site has stood the test of time remarkably well. It is listed in the top 10 of most search engines when the search is confined to self-storage in the United Kingdom and Europe. This boils down to making the most of a limited budget; having good content listings; understanding search engines; using simple site architecture; and making the most of the marketing opportunity due to market research and a personal education campaign with regard to the World Wide Web.

Three years ago, I told anyone who would listen that the Internet and European self-storage were made for each other. Why? Because the web's best feature is its ease of use and searchability, and the biggest hurdle for self-storage in Europe is the consumer's lack of awareness of the product.

The Big Yellow Self-Storage Co. in the United Kingdom and Shurgard in Europe are, perhaps, the best examples of large operators capitalizing on the Internet. Every time I visit www.primelocation.com—in my endless quest to find my family's dream home—I see Big Yellow's flexible self-storage box educating the consumer and increasing the company's brand awareness. (But that's me delighting in double-edged marketing twists.)

After six months of hard work by myself and my ever-dedicated marketing professional, Julie Davies, we've finished a brand-new, ever-updating, self-storage website and information portal, www.askactive.com. This is the sixth site I've designed, and it has taken as much time and money as the other five put together. The reason it has taken so long and cost so much is because we have moved forward and adopted a self-design, with a self-maintained architectural framework and the latest web-design technology.

Like all such intergalactic adventures, preparation is the key. There's nearly 100 pages of self-storage information on the site, which have required hundreds of hours to put together. We improved on the first five designs, which were based upon simplistic models of facility address listings and online brochures, to a new market-driven information portal. In listening to our registered users from our previous portal, www.selfstorage.uk.net, we realized everyone wanted European self-storage information—the more of it the better!

The Europeans are starved for self-storage knowledge, so that is what we must deliver. Let's face it—there's no other reason a prospective fit-out customer would want to visit a supplier's website every week other than to learn something new. The timing and technology of this website is working in perfect harmony to fulfill an information-hungry audience that needs as much help as it can get.

Andrew Donaldson is the founder and chief executive of Active Supply & Design (CMD) Ltd. of Cheshire, England. He is also the founder of the Self Storage Sentinel newsletter, Rent-A-Space Limited (now a multi-site operator) and selfstorage.uk.net. For more information, e-mail andrew@askactive.com; visit www.askactive.com.

In the past, the storage industry may not have been viewed as glamorous or worthy of attention, but that perspective is quickly changing. Some of the world’s richest investors are seriously looking at the business. With legendary hedge-fund guru George Soros already trading a share in the market for £40 million, it must have value. And when a company like Mentmore PLC has 53 storage sites in Europe and the United Kingdom, it further illustrates the potential growth and stability of the industry.

The financial security attracting investors to the storage market runs parallel with the physical security operators are selling to customers—both are essential to the industry’s growth. Your facility’s security strategy involves meeting the requirements of your insurers.

Working from the outside inward, you start with fencing and window bars, then add items such as CCTV, police-linked alarm systems, etc. These are excellent for deterring intruders when the facility is closed. When you are open for business, it is the management team as well as individual unit padlocks that stop criminals cold.

Although a self-storage facility provides security for customers’ goods, it operates at a much lower security level than say a bank, particularly in regard to renters and unit control. Storage operators generally do not feel pressure to raise their level of security, and insurers are not demanding additional requirements. Following are some reasons greater security measures should be considered.

Card-Fraud Criminals

The self-storage industry was publicly identified as a target for criminals on Dec. 31, when the United Kingdom’s Daily Mail reported, “Armed officers raided a self-storage unit near Leeds city centre on Monday. They found a collection of homemade 9-mm ammunition along with a machine designed to manufacture bullets.” A news item from the paper’s Jan. 15 edition reported a murderer used a self-storage facility to store his victim’s body for 35 days in a southcoast U.K. town.

The chance these were the only criminal activities in all the selfstorage units in Europe and the United Kingdom in the recent past is unlikely. As these instances come to light, the credibility of self-storage will be seriously dented. The population growth in any given market makes self-storage a leading place to store goods with ease; unfortunately, criminal activity is likely to grow as a result.

The simplest way to open an account at a self-storage facility is with a credit card. It is worth mentioning that last year in the United Kingdom, credit-card fraud totaled £425 million, which quantifies the massive number of fraudulent cards in use. The Association for Payment Clearing Services (www.epolitix.com) is coordinating the “chip and PIN” program to be nationally installed by 2005. But it believes this new system will only cut counterfeiting and stolen card fraud by about 60 percent. Therefore, criminals could still walk through your front door and rent a unit from you with a stolen card.

For those storage operators who want to improve their ability to spot fraudulent credit cards, the Spot & Stop Card Fraud Pack is a free, self-help, card-fraud prevention program. The pack is produced by Card Watch, an organization of the U.K. banking industry that works with police, retailers and organizations like Crimestoppers to fight card crime. The website, www.cardwatch.org.uk, offers a selection of downloadable PDF files to complement existing card-acceptance training materials for retailers, bankers and all front-line staff.

Simply Lock ‘Em Out

The final link in your security chain is the padlock. “Most operators opt for lumping locks with boxes, tape and other retail products to sell for a profit. Locks are not an ancillary product,” says Frank Minnella, president of Lock America Inc. “Security is a necessity, and you cannot market or provide it without a high-security lock system. Lock systems are not a choice to leave with the renter, any more than the option for a door alarm or security camera. The ‘your lock, your key’ school of selfstorage security is like a hotel asking you to provide your own room lock and key,” he says.

A cheap padlock, whether you sell it or the renter provides it, signals to everyone at your facility that you are not serious about security. Fortunately, there are inexpensive but effective alternatives, such as genuine masterkey lock-and-latch systems, tubular key locks, locks with a built-in overlock, and padlocks with additional key schemes.

The majority of locks used in the industry can be best described as low-level security. The world-famous MIT Guide to Lock Picking, by Theodore T. Tool, identifies how vulnerable they are in its first three sentences. “The big secret of lock-picking is that it’s easy. Anyone can learn how to pick locks. The theory of lock-picking is the theory of exploiting mechanical defects.” The cheaper the lock, the more mechanical defects there are to exploit.

And if a written guide weren’t enough, there are lock-picking tools available for purchase. For example, it is no great step for criminals to buy the following padlock opener advertised on the Internet:

This famous SNAP GUN was originally designed for law-enforcement agencies and police officers who were not skilled in the art of lock-picking to open locks with minimal instruction. Rather than opening locks by the traditional raking techniques, a snap gun uses a primary law of physics—the transfer of energy—to compromise locks. It comes with stainless-steel picking needles, tension tool and instructions. Price: £65.

Confidence in the security of self-storage facilities currently runs high, with considerable reliance on CCTV and alarm systems. However, as Lock America’s vice president of sales, Christopher Shope, points out, “The United States used to be lax when it came to storage security until criminals realized the potential.” European and U.K. criminals are no less intelligent.

The message you need to send potential customers, whether legitimate or criminal, is you are in charge of security. Show it with the security systems you employ. You cannot risk criminals being smarter than you and allowing the press to tell your customers—and your investors—they have duped you. Get smart and seek advice from self-storage security professionals.

Brian Bevis, with a wealth of experience in customer service and a background in engineering, is leading the entry of Lock America Inc. (d/b/a L.A.I. Group) to the European market. L.A.I. manufactures a full line of high-security locks, latches, cylinder locking systems and many other custom security products for the self-storage industry. Mr. Bevis can be reached at (0)1202 479 030; e-mail uklai@laigroup.com.

While the primary element of ancillary-product profitability is attitude, it does require a bit more. Consider this: I remember introducing climate-controlled space at a store run by a lovely management couple. They were as honest as the day is long, but they had never used or been exposed to climate-controlled space. They told me, "it will never rent." Truer words were never spoken. They said they could not rent it, and they were right--they couldn't. I replaced that management team with another manager who also had never heard of climate-control. She had no opinion about it whatsoever; but she studied, asked questions, visited competitors, then filled up 18,000 square feet in record time. She had no self-fulfilling prophecy about success or failure. While attitude alone will not sell the product, it is a crucial element to success. It takes planning, budgeting, training and evaluation for a new offering to become a success.

Failure to Plan Is a Plan for Failure

Wal-Mart recently pulled a new product off its shelves: a crib toy that emits soothing sounds to assist a child in falling asleep. Customers listened to the toy and the message "I hate you" was heard in the background. Wal-Mart purchasing agents verified they had listened to the toy during product demos at the time of purchase, but had heard no such thing. When the shipments of 125,000 units were delivered to stores, they were indeed different from the ordered item, but no one had checked the shipment before selling toys to consumers.

While nothing quite so dramatic is likely to happen in our self-storage universe, it reminds us things can go wrong. You should use the goods you sell. If you sell tape, use the product. You will find there are different grades of tape quality. I recently moved and purchased tape from a local self-storage store. I had also ordered tape from Office Depot. The self-storage tape was the worst. It gummed up the tape gun and did not adhere well. While the Office Depot tape was more expensive and less convenient to purchase, the quality spoke for itself. The next time I was in the self-storage store, I asked the manager if different grades of tape were available. He assured me they were, but he only carried "the cheapest." Enough said?

The Only Stupid Question Is the One Not Asked

I bet there are a few questions you may have about the addition of ancillary services or products to your facility. For this reason, the services of a consultant or vendor can be of immense help in executing an ancillary-product sales strategy. Some questions you should ask are:

Deciding What to Offer

• What products should I carry?
• Where should I purchase the inventory?
• How much should I stock?
• What grade (quality) should I carry?
• Should I carry more than one grade?
• Is private labeling appropriate?
• What are the liabilities associated with private labels?
• Should I buy from more than one supplier?
• How do I handle defective merchandise?

Displays and Promotions

• What will I need to properly merchandise the products?
• How much floor space will I need?
• What kind of display hardware works best?
• Who is my market?
• Do I feature the product on my website? Do I post prices?
• Do I include the products in my Yellow Pages ad?
• Do I advertise in other mediums?
• Do I include the products on my sign?
• Is there a commercial-sales application? How do I reach those customers?

Pricing

• How do I price the merchandise? What is a fair mark-up?
• Where else can my customers buy this product, and what will it cost there?
• What quantities will get price breaks?
• When else do I give discounts?
• What is a "loss leader"?
• Do I take credit cards?
• How do I handle returns?

Sales Training

• Has my staff used these products?
• What is their attitude about selling?
• How do I teach my staff to suggestive sell? * What kind of training do they need?
• How do I measure my team's sales success?
• How and what incentives are necessary?

Business Matters and Profits

• What is a reasonable return on investment?
• How do I evaluate the success of the plan?
• How will my software treat the sales?
• Do I have the proper licensing to sell these products?
• How much sales tax do I collect?
• Can the products be drop-shipped?
• Is there an e-commerce strategy for selling the products?

The Only Good Idea Is One That Works

And how do you know an idea worked? Even a broken clock is right twice a day. I remember a seminar presented by industry expert Anne Ballard. She was discussing the success of retail sales in her stores. Armed with facts and figures (she has more charts than Ross Perot), she proceeded to tell us how she measured her sales success.

I always knew retailers measured sales on a per-square-foot basis, but Anne took it to a higher level of sophistication. She tracked the sales per staff member and per store. She evaluated sales per new customer (lease). She measured sales against total units. She knew who on her team knew how to sell and who did not. She measured sales growth weekly and monthly. I think she even know what time of the day the most merchandise was sold. More important, she took the sales data and turned it into meaningful management data. She knew which products sold better than others. She knew if and when it worked. She had facts and figures, not assumptions and guesses.

There Is More Than One Way to Skin a Cat

Let's talk about a regional storage company with seven stores. We'll call it ABC Storage for the sake of anonymity. ABC decided it was going to sell merchandise at its facilities. After talking to a couple of self-storage suppliers, it decided to contact an outside provider and was able to negotiate a 4 percent savings on the merchandise. The out-of-industry salesman also suggested the company carry a few other solid-selling items that were popular in other industries.

While in an ABC store the other day, I noticed there was no more of the "odd" merchandise around and only industry-recognized brands for sale. The nonindustry merchandise suggested by the salesperson did not sell, and ABC eventually had to lower the prices so far below cost it was losing about 20 percent on each sale. I think the company learned its lesson, and it was an expensive one. The moral of the story is, "Go with what you know."

Plan Your Work and Work Your Plan

When developing your ancillary-product sales strategy, start with a budget, sales goals and a time frame. Think carefully about what will sell. I remember what I will call the "flower fiasco." One manager thought it would be a good idea to sell flowers in his store. And he sold flowers--but not many. While the mark-up was great, the thing about flowers is they die. And they die quickly. There is no market for nearly dead flowers or even those a that are a little ill. Not to mention the display cases are large and require lots of electricity to cool the dying flowers.

Even some likely sales ideas do not work particularly well. When one store was pitched on the idea of car rentals, it seemed feasible. The store already rented trucks; if you can rent trucks, surely you can rent cars, right? Wrong. There was no logical reason anyone would look to a self-storage facility to rent a car, and they didn't. In fact, it did not even bring in good traffic for the self-storage side of the business, because the traffic was all headed somewhere else!

Finally, set realistic time frames for sales training and product familiarity for your staff. Make sure they have solutions for all manner of on-site challenges. I recently had a problem with a disk lock that had rusted shut internally from lack of use. I drilled and drilled with no success. Finally, I had to grind off the lock, and it cost me a grinder and two wheels. The self-storage facility where I stored had no solution for me--no bolt cutters, no lock picks. I respected the manager's reasoning for not having lock-cutting tools on site, but I sure did not like it. Train your staff to offer--and sell--ancillary products and services to meet a wide range of customer wants and needs.

RK Kliebenstein is president of Coast-To-Coast Storage, a consultancy firm available to guide self-storage owners through the process of setting up an ancillary-sales program. He can be reached 877.622.5508, ext. 81; e-mail rk@askrk.com.