The parking industry has grown from only small cash-based businesses to include multi-national corporate enterprises.
No matter the size and scope of our operations today, owners and operators must recognize that success in parking requires the use of sophisticated business models.
Seek New Lines of Business
The foremost issues of any industry in the private sector are marketing and new business development.
A successful parking business always looks for ways to acquire new properties to manage; including new buildings or parking structures and undeveloped or underused properties.
Advantages Vary on Types of Agreements
The two types of primary accounts are lease and management agreements. Many companies enjoy lease agreements because they don’t have to answer to anyone.
Disadvantages to operators can include being vulnerable to market changes such as building closures, or rates that become competitive.
"A successful parking business always seeks to acquire new properties to manage; including new buildings or parking structures and undeveloped or underused properties."
In management agreements, operators can pass along all the costs, and there is less risk and lower returns.
Types of management agreements include guaranteed rent, percentage rent, triple net leases and reverse leases.
With triple net leases, operators pay all the expenses, including repairs and property taxes.
Try to avoid these leases, or any deals in which your company must pay the property taxes, because these taxes can be raised with little notice.
Reverse leases are risky should an unfortunate occurrence happen, such as an equipment failure.
It is up to your company and the owner to agree on who is responsible for paying for unexpected expenses.
Limit Liabilities and Focus on Relationships
In order to stay profitable, focus on existing relationships.
It takes more effort to find a new client versus keeping an existing client.
You must also control risks, so know what your risks are.
The most important risk is your liability. Sometimes controlling liability means saying no to some contracts, such as power washing garages, which can create liabilities.