A How-To Guide to Records Storage: Ancillary Insight for Self-Storage Operators
Copyright 2014 by Virgo Publishing.
Posted on: 12/15/2011


By Cary McGovern

In the self-storage industry, records storage is considered an ancillary service, but it has the potential of being the most profitable of your non-core offerings. Some self-storage companies have done so well with the service that they've developed a traditional records-storage business separate from their traditional operation. Let’s explore the reasons records storage is such a powerful addition to a facility’s book of services and how you can get in on this good thing.

There are a number of encouraging reasons to offer records storage at your self-storage facility. Each should be considered carefully so you can weigh the benefits and costs and determine if this profit center is right for your business. Here are some things to consider:

Long contract term. The standard records-storage agreement term is from one to five years rather than a 30-day lease. It’s relatively easy to open with a one-year lease and close with a five-year lease. Contracts contain an “evergreen clause” that require positive action by the customer to end the agreement only at the end of the term. Penalties exist for early withdrawal. Even at the end of the contract, there are retrieval and delivery charges.

Renting air. Self-storage rents square feet while records storage rents cubic feet. This will generate two to three times the revenue of any space depending on where you are located.

Walk-in traffic. Commercial records centers have no walk-in traffic whereas self-storage facilities have prospects coming through the door every day. With about 25 percent of your customers being business customers and others likely to be owners or employees of businesses, everyone who walks through your door is a records-storage prospect.

Small-business packages. By using a service-bundling or package approach, you’ll save your customer 50 percent on his current records-storage costs and make at least twice what you already earn on storage. Your customer saves—and you make—more money. Packaging is flexible and pricing is guaranteed to cut costs. Here are some suggested packages:

  • Economy (Bronze): From one to 50 boxes, with minimal services built in. At 51 boxes, the contract automatically rolls to the Small Business (Silver) package
  • Small Business (Silver): From 51 to 100 boxes, with minimal services built in. At 101 boxes, the contract automatically rolls to the Professional (Gold) package.
  • Professional (Gold): From 101 to 200 boxes, with minimal services built in. At 201 boxes, the contract automatically rolls to the standard account package.
  • Standard Account: More than 201 boxes. The customer automatically becomes a standard customer account and remains in that status until the contract term is complete.

Quarterly credit card billing. The cost of billing can be a significant cost of operation for a small-business account. To reduce costs, use simplified automatic billing and electronic-funds transfer. This makes a time-consuming task easy.

Limited liability. All records-storage companies have limited liability. Much of your existing insurance will be sufficient for the records maintained under your management. An additional insurance for $2 per box addresses the loss of the boxes through fire, water damage, acts of God or other causes.

Equipment requirement incremental. Racking is a capital cost and can be purchased one unit at a time or leased depending on your financial issues. Shelving vendors already have pre-designed shelving for any storage-unit size. Most equipment can be made available to you in two weeks or less.

Just-In-Time Labor

Unlike traditional self-storage, records storage requires more labor. However, it’s possible to  outsource 100 percent of the work to resources in your community with a minimum of 50 percent margins. All outsourced labor sources must be trained by you and follow your rules, which you can outline in a strategic partnering agreement. Examples of just-in-time labor are:

  • Initial intake of records-storage boxes is outsourced to a small, local moving company. Local movers love regular work since most moves are a one-time event. You’ll provide a weekly event for them.
  • Indexing of initial intake is outsourced to individuals who have flexible schedules and can work when you need them. There’s an abundance of people available with these skills.
  • Indexing of files and boxes after the initial intake is outsourced to the customer by allowing him access to your online data base with security, confidentiality and passwords.
  • Courier services are provided by a local independent courier. Couriers are similar to cab drivers—they are constantly waiting for the next engagement. Outsourcing this function gives the courier a regular delivery route.
  • Retrievals and re-files are generally outsourced to students or individuals who can work after hours. Retrievals are on demand while re-files of boxes or files can be stacked in a temporary receiving area until the volume reaches a point that requires an hour or two of work.
  • Regular pick-ups happen after the initial intake of records is complete and reconciled with the client. Additional or returned boxes may be sent back, as well files that can be returned to their regular storage box. Since pick-ups are rarely an emergency, these can be regularly scheduled with a courier.  

Software and Training

Today’s record-storage software is inexpensive and can be easy to operate. The software products to manage your inventory all have small-business versions. They also have an Internet interface that enables the customer to access his records or indices from his desktop.

Records storage will require some operations and sales training. However, many companies now offer training on video, audio, MP3 and course workbooks. Your records-storage sales can be handled by employees, telemarketers, agents and others. The key is scripting, which is typically a part of a sales-training course package.

Many of the reasons self-storage operators were wary of records storage in the past have all fallen by the wayside. With outsourcing, just-in-time labor, training availability and technological leaps, it’s no longer difficult or unusual for a self-storage facility to introduce records storage as an ancillary service. When considering this profit center, do some research first to determine if your market is right for records storage.    

Cary F. McGovern has been in the commercial records-management industry for 34 years. He has assisted more than 500 companies in 23 countries enter and excel in this unique business. He is a member of ARMA International and PRISM International, and is a speaker at numerous industry tradeshows and conferences. To reach him, call 504.669.0559; e-mail fileman@fileman.com ; visit www.fileman.com .