Real Deal #46
New Podcast:
This was as fun show with a family friend, Chase Burns. We dive deep into the car wash industry and growing a multi state business.
Quote I love: The difference between average results and exceptional ones is what you avoid. - Steve Jobs
Lessons From 2022
This is my favorite time of the year as I get a chance to reflect on the past and look forward to what may be around the corner. Last year proved to be a season of sturdy growth. We acquired 4 more stores, unified all eleven locations under one name, 1st Stop Storage, migrated to a new website, and new unified backend software. We continue asked ourselves “How do we become a world class self-storage company?”
Our first core value is 1% better every day. We are constantly looking to improve our processes and reporting metrics to remove the slack in our system. We hope to focus on the important drivers in our business which will help to give our team more time to think creatively and better serve our customers. In the 2nd quarter of 2023 will be begin implementing the EOS (entrepreneurial operating system) with a certified implementer. This is two-year process, but if we follow it, our organization will be a formidable foe.
We added four new members to the team on the operations side including a regional manager and a construction manager. I am very proud of our management team and property managers for embracing change and stepping up the challenge specifically during our software transition. Transferring 3,000+ customers including credit card information is no easy task. It proved to be an opportunity for us the grow together by learning together.
Somethings never change and these lessons rang true this year:
1. Trust: Business is nothing more than people dealing with people in trust. Without trust it all breaks down quickly.
2. Team: Wonderful things can happen when a team works together. I simply could not have done this alone. Thank you to Raven, Janie, Bobbie, Jean, Jean, Kevin, Wes, Jon, Dale, Ashley, Kim, and Alyce.
3. Fundamentals: The excitement in the market is now gone and people are acting defensively. If history is an indicator, there will be opportunities for those who are positioned right and act when others cannot. Napoleon said something along the lines of “The man who can do the average thing, when everyone else is losing their mind will win the battle.”
4. Patience: Things always take longer than expected. Give folks the space and grace needed.
We are preparing for interest rates to stabilize or slightly increase in 2023 with a hope to return to the low 6’s by Fall of 2024. This gives the economy 18-24 months to take a breath then hopefully the Fed will inject some life back into things. We are very happy with our portfolio and are prepared to wait. We will stay discipled and follow our 3 rules of value investing:
1. Buy below replacement cost
2. Leased to customers at or below market rents
3. Located in stabile or growing markets
Same, Same, but Different
We purchased two vacant furniture stores in the 4th quarter of 2022 in Mississippi which are being converted to 100% climate-controlled units. Our team has ten years of experience specifically converting vacant properties into climate controlled buildings. We are excited about adding this arrow into our quiver.
Speaking of acquisitions, we brought on a new acquisition’s analyst at Pearson Partners. He a Tulane student studying finance with a focus on computer science. He is helping us to understand what makes a great self-storage site. Where should we go next or who should we try to buy next?
Finally, we have our sights on expanding a few locations next year. This will help us to serve more customers who need climate-controlled space. Expansions offer a lower risk path to growth because we already understand the market and have operational efficiencies.
We are optimistic that we can continue to create value that others overlook because it is too complicated, too small, too large, or flat out too hard.
I am so thankful for the opportunity to lead this company, thank you all for joining in this journey.
Lagniappe:
It was short and sweet today. If you enjoyed this today, please forward it to another curious friend. I love your replies to The Real Deal. I read every single one, and I try to respond as often as I can.
www.pearsonpartnerspe.com