Storage Firm Should Develop Modest, Well-Defined Ad Plan
Q: I own a self-storage facility with 400 units in Indio. We compete with two similar storage yards. Currently, we run a full-page advertisement in the Yellow Pages, but we always have a certain amount of vacant rental spaces plus RV slots. Our resources are limited and we need to maximize the use of the dollars we must spend to gain tenants. Can you give me some suggestions for advertising that would yield the greatest cost-benefit?
--Aaron M. Heller, Encino
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A: An effective advertising program starts with defining market segments, then identifying various media to reach them. I don’t think your business has to be a big advertiser, but it should be a consistent advertiser. I suggest segmenting the residential market to ZIP Codes with higher home values, neighborhoods where retired people are likely to live--they’ve had more time to collect items--and also targeting mid- to high-priced condominiums, since they never have enough storage room. You should also pursue the business community, where there are off-site storage needs, perhaps for historic files, records or excess inventory. For the business target, you should hire a sales representative to call office and facilities managers.
Another idea might be to find some operational differences that would make your facility distinctive, especially with respect to the senior market, such as offering a pickup and delivery service or hiring an attendant at the facility who would handle materials for people who could not lift heavy items. These kinds of value-added services would add to your business and provide another revenue stream, driving up your profit margin and permitting you to spend more on advertising and promotion. Another idea might be to market a referral program to all your existing customers and offer them an incentive of free rent for every new client they refer.
In terms of media, the Yellow Pages is right on target. You should also consider advertising in the local newspaper, maybe twice a month with a minimum of a three-column-by-8-inch ad in the main news section, and running a small ad in every issue of a city magazine. An inexpensive way to have a radio presence is to sponsor a news segment on a local all-news or all-talk station. You should hire a local design firm or ad agency. The copy, visuals and theme need to border on the outrageous or controversial to attract attention and build awareness for your services. Budgeting for advertising is done based on a percentage of business revenue. Depending on profit margins, advertising budgets range from 2% to 20% of annual revenue.
--John Klein
Managing partner
Marketing services
KleinMickaelianPartners,
Century City
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Q: I am the owner of a small, growing business. Is there a traditional milepost (e.g., annual sales) for the move from sole proprietorship to incorporation?
--J.M., Valencia
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A: No. The reason you incorporate is to limit your personal liability if you are involved in a high-risk business, such as handling toxic waste. There are also some minor tax reasons for incorporation, such as some health-care benefits and some fringe benefits that only a corporation can take advantage of. Legal fees to incorporate typically cost anywhere from $500 to $2,500, plus you must pay about $1,000 in incorporation fees to the state of California.
--Harry Gordon Oliver II
Tax and business attorney
San Francisco
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Q: I am starting up a film production company and would like to know what steps I need to take before I can start seeking investors. Do I need to be incorporated or can I simply file a “doing business as” form? In either case, whom should I contact?
--John Otto, Los Angeles
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A: To seek equity investors, you must be incorporated. A corporation gives you shares, it has legal standing, it has recognition of its own and survives your death. In order to incorporate, you need a business attorney. The most important thing of all is to make sure that attorney is familiar with state law and has a background in incorporation. Don’t just call your brother-in-law who happens to be an attorney. If there’s real potential in your business, don’t fool around with it.
--Jon P. Goodman
Director, EC2
USC Annenberg Incubator Project
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Q: Why is it so expensive to incorporate in the state of California? Is a Nevada incorporation advantageous?
--D. Charles, Long Beach
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A: The fees you file to incorporate with the secretary of state are set by the Legislature. A lot of people think they can get away with not paying state taxes or following California rules by incorporating in Nevada or Delaware, a state whose rules favor corporate management. But that’s absolutely untrue. There’s a rule in California that says if most of your shareholders or your board of directors reside in California, you’re subject to the California rules whether you incorporate in Delaware or Timbuktu.
--Harry Gordon Oliver II
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If you have a question about how to start or operate a small business, please mail it to Karen E. Klein, care of the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016, or e-mail it to business@latimes.com. Include your name and address. The column is designed to answer questions of general interest. It should not be construed as legal advice.
