Self-storage is one of the most basic of all businesses. When people have extra items that they want to keep, but no room to store them, they’ll look to a commercial solution. A self-storage facility offers locked spaces that can protect personal effects until they are needed, can be sold, or can be used. In many communities, the need for storage units outweighs the amount of units that are available for rent. This means the self-storage business model is operating quite successfully.
There are certain lessons that every organization can learn from using this particular business model. In doing so, a more effective individualized business model can be developed.
1. Scarcity Will Always Be a Driving Factor.
Without scarcity, nothing happens. If someone feels like they can pick up the same product tomorrow that they could pick up today, then they’ll typically procrastinate on the purchase. In the self-storage industry, there is a clear shortage of availability in most communities. This means that when a storage unit becomes available, a customer is going to snatch it up as soon as they possibly can. The same principle works for products and services as well.
2. Market Segmentation Matters.
Self-storage facilities really aren’t useful for those households that are attempting to live on a minimized footprint. They are useful for people who have a large amount of personal possessions which are important to them in some way. Instead of marketing to the first customer segment, self-storage facilities target the second segment because it has the greatest chances for profit. Every business needs to do this with their business model because without segmentation, it is impossible to send out a relationship-building targeted message.
3. Separate Residential and Commercial Customers.
Residential customers have different needs than commercial customers. This is why there is a B2B and a B2C market. Although there are some similarities, the differences are so great that a generic focus can put a business on a course towards bankruptcy. In the self-storage business model, it is estimated that just 5% of the revenues in any given community will come from B2B opportunities. By determining the percentage of B2B and B2C revenues, the right amount of time to market to those consumers can also be developed.
For self-storage, this would mean 95% of the average time spend on marketing would be directed toward residential customers. For other businesses, maybe a 70/30 residential split happens. This would mean 30% of that marketing time should be spent toward commercial customers.
4. You’ve Got to Know What the Market Needs.
In order for a business to show that it has value, there must first be an evaluation into what the targeted customer segments in any given community actually need. If those needs are not being effectively met, then there won’t be a maximized level of profitability.
Knowing needs is just one step in this process. For the self-storage business model, there is an emphasis on simplifying those needs down into their basic components. Think about it: there are two points of emphasis in self-storage – security and extra space. These two basic components have created a stable business model. What are the two basic components of your business and how are they included in your business model?
5. Habits Are Important to Know.
In the last 50 years, the self-storage business model has double its presence every decade. This has happened because the business model looks at the core habits of the targeted customer segments involved. When households are required to be mobile and fast-moving, they are more likely to need a self-storage facility.
Every business can look at the lifestyle habits of their core customers to accomplish the same levels of growth. Just look at McDonald’s for the QSR industry. They are struggling right now, but they grew into a global business because they provided affordable food to people who are in a hurry.
6. Know the Competition.
What makes the self-storage business model rather unique is the fact that there are only a handful of companies that have a nation-wide footprint. Most companies are small businesses that are locally owned in this industry. This makes it critically important to know what the competition is doing.
If a competitor has better features than your business offers, then it is time to upgrade the product. If the competition can sell for a lower price, then it is important to find out way. Customers will gravitate toward the best value combination. By knowing what the competition is doing, it becomes easier to stay competitive.
The lessons learned from the self-storage business model can put any company back onto the right track. Incorporate them today and watch your business take off.