Hmmm...Hmmm... Records Management?

Deciding if it's a business for you

By Cary F. McGovern

Over the past few years, I have consulted with more than 200 self-storage operatorsconcerning records management, which has had broad appeal with this industry. I receive atleast a dozen phone calls each week from owners and operators interested in providingrecords-management services. In the course of our conversations, some issues have beenunearthed that may make your decision process easier, if you are considering offeringthese services at your facility.

1. Records management is not for everyone.

Of the more than 500 phone calls and e-mails I have received from interested owners andoperators in the self-storage industry, I would say only about half have resulted in amove forward to the next step. Records management is indeed a different business. It isoperated out of your self-storage facility but with some new components. There are manysimilarities and resources can be cross-utilized, but it is a separate operation.

2. Records management is compatible with self-storage operations.¹

If you own or operate a self-storage operation, you have many of the components of therecords-management business already in place: a facility, personnel, computers and a broadcustomer base. The cost for a self-storage operator to go into the records-managementbusiness is much less than a traditional start-up. It is possible to start up a small"test" operation with little or no risk and be profitable one unit at a time inless than 90 days.

3. Records management requires attention to detail and management.

Records management requires more labor and attention to detail than self- storage. Youprovide the services for your customer rather than the customer coming in to the facility.This requires developing a method for indexing, order-taking, retrieval, re-filing anddelivery.

4. Records-management services include indexing, retrieval and deliveryactivities.

Outsourcing these services partially or completely to a strategic partner can minimizethe labor required for these activities. Indexing can be done entirely by your customer orvia the Internet with some systems. Retrieval and delivery services can be outsourced tocourier services.²

5. Outsourcing requires management and control.

We are in the age of outsourcing. Companies such as the Gartner Group and otherresearch organizations have shown the dramatic savings businesses can reap from"strategic outsourcing." Outsourcing functions that are not central to yourbusiness is usually a good decision. However, you must manage the outsourcer. Managementincludes strong training and internal controls.

6. Records management generates three to five times more revenue for existingspace.³

In self-storage, you rent square footage. In records management, you rent cubicfootage. If you want to check out your own revenue potential, go to www.fileman.com andclick on the "Revenue Calculator." The site will walk you through a calculationthat will determine your potential revenue for any space allocation. There is nothing instorage that delivers better revenue per square foot than records management.

7. There are at least three models for records management in self-storage.

The most common model is what I call non-traditional or "boutique" recordsmanagement. This model allows for low cost and relatively slow growth without a great dealof change in your day-to-day operations. I recommend this model if you are unsure aboutthe business. The second model is a virtual records-management business⁴utilizing an operating partner to manage records in your facility. This model is low-costand low-risk and can be easily implemented. The third model is the traditional model thathas been used by commercial records centers for close to 50 years. It requires a newbuilding with high ceilings, high-rise racking, full-time personnel and a significantsales effort.

8. You must use bar-code records-management software.

One thing is certain: You cannot manage a records facility without bar codes andsoftware. This has traditionally been a major obstacle for the self-storage industry. Thecost of software has been relatively high for those who want to provide a modest start-up.There is Internet-based software available that provides a solution for new start-upssince it is metered rather than purchased. You pay only for what you use, it istransaction based and has no special requirements other than Microsoft Internet Explorerand Internet access--both of which are free. (Visit my website for more details.) Ofcourse, you may purchase software. The only two programs I recommend are the O'Neil andAndrews software systems.⁵

9. Marketing is the issue.

As my daddy used to say, "Nothing happens until the sale is made!"⁶If you want to be in the records-management business, there are three sales approaches youcan use: passive, active and Internet. A passive sales approach utilizes your currentcustomer base, some telemarketing solicitation and advertising. Expect slow growth withthis method. An active sales approach requires a salesperson and some sales cost sincerecords management is best sold face to face. The success of the Internet model has notyet been determined, but I am currently conducting some pilot tests with Internetmarketing.⁷ I expect somewhere between a 5 percent and 10 percent response. Ifyou are interested in becoming a "beta-test" participant for this method foreither records-management or self-storage sales, please contact me.

10. There has never been a better time to go into records management.

The records-management industry has grown to about 500 million cubic feet of storage inthe United States alone. I believe there are about 500 million cubic feet of records stilluncaptured by commercial records centers. Iron Mountain (now the world's largestrecords-management company) has bought Pierce-Lahey (the second largest) and has begun toexecute that merger--which is a fundamental task.

The metaphor I like best is the story about the giant anaconda in the Amazon whoslithers out of the river and eats a wild pig. It lies on the side of the river digestingfor a long time, unable to do anything else. Iron Mountain is trying to "digest"a huge entity. The company believes it will take as long as two to three years to mergePierce-Lahey completely into its operations. Norm Brodsky, a frequent speaker and acolumnist for Inc. magazine, owns and operates a commercial records center inBrooklyn, N.Y. He wrote in one article⁸ that the best thing that ever happenedto him was that Iron Mountain bought his competition. Now he has a real advantage over theguys in Boston.

If you are interested in offering records management at your self-storage facility,this is my recommendation to you: First, read all of my articles. There are about 30 ofthem now. They are available on my website (click on "Resources," then on"Articles") or on the web archive of this magazine (www.insideselfstorage.com).Second, call me with a list of all of your questions--I'll be happy to answer them. Third,decide the best route to take based on the model you prefer.

Offering records management is a choice you can make. Make a solid decision based onknowledge, and the outcome should be a positive and profitable one.