The increasingly popular business of storage rental units has a lot of advantages. It provides steady, passive income without leaky toilets and bad tenants (such as in real estate), and unlike stocks, it is usually recession proof as well. From 2009 to 2018, self-storage facilities averaged an annual ROI of 16.9% which was higher than almost any other form of real estate during that time- office, retail, or apartments.
There is also room to expand when it comes to storage rentals. Offering additional services such as transportation, tools for rent, and temperature controlled spaces will increase the company’s value and revenue. Even during the COVID-19 pandemic, storage units were very popular amidst all the uncertainty, as many people were moving or restructuring their home and needed short or long term rental space.
It is no surprise that anyone from giant real estate tycoons to individuals with extra cash on hand are looking to storage rentals as a good business solution. But even when storage units are at 100% capacity, there are many ways to create a far more efficient business process through forecasting, budgeting, and consolidating financial statements that can save companies time and help them make the best possible decisions.
One storage company, Montreal Mini Storage, manages to save between $300,000- $500,000 (CAD) each year by using an FP&A solution tool to improve efficiency. Quebec’s largest privately owned self storage company started using FP&A software solution Datarails and received almost instant ROI. Igor Bernadski, CFO of the company, recently explained all of the benefits that the FP&A solution offers his team and the organization.
The company was experiencing exponential growth year over year and needed something to be able to cater for that. One of the most important aspects that they wanted to improve on was automating manual financial work. After implementing Datarails, they started to save dozens of work hours per month.
“We reduced the amount of work that the operations team has to do,” Bernadski says. We’re talking about 6-10 people that are doing approximately 6, 7, or 8 hours less of work per week. You end up saving anywhere between $300,000 to $500,000.”
But it’s not just the sheer amount of work hours that is saving the company money. The winning formula is the combination of the operations and finance teams having more time to spend on analysis, as well as Datarails providing greater insights through dashboards and breaking down the data. This translates into more data-driven and confident decision making.
“We put all the budgets and all the forecasts in Datarails and we use it for consolidating financial statements,” Bernadski says. “It provides access and visibility to different people in the organization. We can see trends that otherwise will take hours and hours of work and we've improved our collections and delinquencies as a result of having proper dashboards.”
In 2020, the global self-storage market was valued at $48 billion and it is expected to grow tremendously by reaching a value of USD $64 billion by 2026. In addition, factors such as the changing real estate market from the pandemic, the switch to automated self storage, and threats of a recession are all contributing to changing forecasts and revenues among storage companies' financial teams. This makes FP&A tools and automation even more important for the industry.
In fact, Bernadski says that “the true ROI is the ability to drive decision making.” Properly segmented data that can be presented to different kinds of audiences is what makes a business truly profitable, he explains. The value of the decision making is almost infinite- especially for a company that is growing constantly.
“I know that our decisions are data driven now and we are generating more dollars and saving costs. [Datarails] is a turnkey solution for us.”