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Independent Study

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Douglas Ganim

Independent Study

Dr. Mohan

March 30, 2016

Budget Storage: Profit Maximization Case Study

This past weekend, over the Easter holiday, I had the chance to sit down with the General Manager of Budget Storage, Mr. Bret Day, to discuss the unit rate data I had collected, including average occupancy rates. I was excited to share this data because I felt it confirmed that Budget Storage’s pricing was in-line with the key competitor facilities in the area. Of course, I felt this was a critical piece of information.
After I was done with my presentation the manager looked over at me and said “Look, I have been doing this for 25 years. I am intimately aware of the storage rates throughout Central Ohio and especially on the east side of town where we are located. I already know our rates our competitive. Since you are a college student in your senior year, I was hoping your case project could answer one simple question for me. How can we make more profit out of this place each month, each quarter, and each year? That is all I really care about!” Mr. Day exclaimed.
I walked out of the meeting and realized that Mr. Day was right. What good is data analysis if it does not tie in to a real strategy to yield the highest possible absolute profit? As I pondered this question it immediately led me back to the most important financial document of all, the Income Statement. With a new purpose I quickly realized that there are really only three ways to make more profit at Budget and that is to increase revenue, or cut expenses, or ideally both.
I started reviewing all the expense line items, starting with the largest percentage ones first. Mortgage payments and Property Tax were by far the two biggest items. Sadly, there was nothing that I could recommend on these two items especially after I checked the interest rate on the loan and

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