5 Things to Consider when Budgeting for 2021

Jody Burks

Can you believe October is here? Most of us are just beginning to think about fall, pumpkins and Halloween, but me? I’m thinking, “Oh dear, it is already the fourth quarter, and it’s time to start budgeting for next year!”

When you begin the planning process for preparing your 2021 self storage budgets, put together a list of topics, goals, achievements and challenges you need to discuss, and then review and reflect on 2020. Knowing where you will end up this year means better projections for next year.

As you build your 2021 budgets, be sure to glean data from your Property Management Software and your StorTrack Optimize account.
Here are three ways Scott McLaughlin, EVP of Sentry Self Storage Management, uses Optimize when gearing up for budget season:

1. Identify any new or proposed storage construction or expansion efforts in your area that may have an impact in the coming year, so when the time comes you can be sure that data appears in your StorTrack account.
2. Review the “Current Advertised Rate History” information in StorTrack for your most popular sizes to get an idea of how pricing has been trending. You can review this information using several filters, i.e. a six-month or one-year trend. The “Average” trendline will give you a good idea for what you might expect to see rates do as we enter 2021, particularly if you’re budgeting a stabilized store with no new product coming to market around the target property.
3. Review “Pricing Volatility” for your most common sizes over the past 12 months to see how volatility may impact certain months of the coming year, from a rental income budgeting perspective. Granted COVID-19 is skewing this data from what prior years’ spring seasons may look like, but you’ll still see important trends that will impact how you budget each month of the coming year.

Now, review your current 2020 budgets — are you on plan/target, ahead or behind? Take a good look at your budget/plan for Q4, then estimate income and expenses and review your PMS for Occupancy, Monthly Rentals, Vacates and Net Rentals. Managers can also provide important input and feedback in the budgeting process.

5 things to consider when Budgeting for 2021

1. Review 2020 Monthly Activity & Conversions Reports and set Goals for 2021

Monthly rentals, vacates, net rentals. Total activity & conversions, walk- ins, telephone, web.

2. Estimate Unit demand by month – Input units rented, occupancy, # of students, etc.�

This should be the best estimate in absolute demand, but the primary purpose for the estimates is to develop a distribution by month for 2021 to capture the seasonality of demand.

3. Estimate Expenses – do a thorough review of all operating expenses and look for ways to reduce costs

Consider extra marketing dollars for your Online Digital footprint. (COVID habits have shown more shopping online, and prospects have more time to research more options and competitors than ever. Also plan to budget for — and leverage, technology advances — and use outside vendor partners to improve operating efficiency. They can save you time, money and resources.

4. Set Revenue & Rate Management Goals

Revenue Management – How many planned Tennant Rate Increases – Avg. % Increase & Avg. # of tenants to raise per month.

Rate Management – Set price/rates goals – Avg. annual % Increase & Avg. # Rentals per month. (when changing or establishing rates, take a look at your current rates and that of your competitors to see where you make adjustments).

5. Review the Competition

It is important to study and really know your competition, particularly if the demand for your store is affected by your competitors’ prices/rates.

In summary, now is the perfect time to plan your budget for next year, and the information in this article can help you determine the best way to move forward. Always feel free to reach out if you have questions about Optimize or how StorTrack’s data can make your life easier.