March 1, 1998

5 Min Read
Storage and Retrieval

By Cary F. McGovern

Abstract: To be successful in any business you musthave a plan. Records management is a "horse of a differentcolor." The typical business concerns are a bit different inthis business than in other enterprises. It has been said thatthe records-storage business is financially similar to anannuity. They grow annually from existing accounts at a rate of15 percent to 20 percent or more. This requires a plan that looksat the need for capital and facilities on an ongoing basis.

This month, we will discuss only the paper records-managementcomponents of your business plan. In subsequent issues, we willdeal with both microform and electronic records and theircomponents. For paper records there are a number of primarycomponents to consider: storage, retrieval, delivery, indexingservices and future growth. Each of these has both financial andoperational implications.

Storage and Retrieval

Rule # 1: You must maximize your storage space andaccess capabilities in order to maximize profitability.

1. Ceiling Height. When considering real-estate properties ordrawing up the blueprints for a new business, remember that youare always better off with high ceilings for a records-storagebusiness.

The name of the game is to maximize the number of cubic feetper square foot. For example, if you have 10,000 square feet ofwarehouse space with eight-foot ceilings, you have 80,000 cubicfeet within your walls. But with 20-foot ceilings, you will have160,000 cubic feet. Using the rule of thumb for actual"usable" storage space within a warehouse, multiply thenumber of cubic feet by 65 percent. The result of this comparisonin the first example generates 52,000 cubic space of storagewhile the second higher-ceiling example generates 104,000 cubicfeet of revenue generating space. This represents almost threetimes the rentable storage space in the same amount of squarefootage.

2. Selection of Racking. High-rise pallet racking is alwaysthe best choice for ceiling height above 15 feet. Used palletracking is widely available throughout the world. I haveconcluded that the best configuration for storage on pallet racksis two cartons high and three boxes deep for standardletter/legal 1-cubic-foot cartons. In my experience, thisconfiguration provides the best access and space utilization,while maintaining optimum retrieval efficiency.

3. Ladders vs. Catwalks. In the beginning stages of business,the number of retrievals are relatively low. As storage volumeincreases, so does the number of daily retrievals. The use ofladders in an active retrieval warehouse greatly hinders theretrieval productivity. It is always best to prepare for theeventual use of catwalks in your warehouse.

Growth

Rule # 2: Your business plan must prepare for theinevitable growth and its accompanying financial dilemma.

Would you believe that growth could cause the biggest problemfor your new start-up, commercial records-storage operation?Believe it. You can estimate that with an aggressive sales effortduring the first year you can bring in a significant number ofcartons. What you may not expect is the annual growth fromexisting accounts as you move into year two and three ofoperation. It is not uncommon to anticipate 15 percent to 20percent new growth from existing accounts on an annual basis.This rate of increase may require new facilities, additionalracking and more employees. Regardless, be prepared for the factthat your revenue may not grow as fast as your capital expensesduring the first few years.

Services Can Offset Costs

Rule # 3: Selecting the right revenue-generatingservices can help offset some of the early demands on capital.

Indexing services can provide high profit to your newrecords-management business with relatively low cost. Indexing isalso the most needed service you can provide to your customersand the one customers will want most. Indexing is also one of theeasiest services to sell. It allows the customer to know exactlywhat is within each box. You can provide indexing services for arelatively low operating cost. In order to provide the serviceefficiently, though, you will require software (a database), oneor more PCs and an indexing room.

The best way to provide indexing services is with aself-contained, portable indexing hut. These huts typically canbe constructed with two or three indexing workstations. They canbe moved to different areas of the facility as expansion occurs,which allows you to keep them close to the receiving area for newcartons coming into storage. A hut can be constructed to includeconveyors for moving cartons easily and allowing access toindexing clerks. Staffing your indexing service can utilizeflexible manpower by working with a temporary clerical servicethat provides personnel on demand as the work levels fluctuate.

Location, Location, Location

Rule # 4: Choosing the right location is the mostimportant part of your business plan.

Those who are already in the self-storage business understandthe need to be in a location that has access to the community.This need changes for those in the commercial-records business.Although access remains important, it is no longer as importantfor the customer as it is for you. The customer rarely comes intothe commercial records center. If they do come in, it's typicallybecause of an audit or litigation. Instead, they will call or faxorders for retrievals and delivery. So, closeness to the primarybusiness of your customers' operations and access to majorhighways can improve profitability.

Delivery Services

Rule # 5: Find the right balance between deliveryvehicles and commercial couriers.

You will need to plan ahead to offer retrieval and deliveryservices from the very first day of operating yourrecords-storage center. The vehicle and driver will beresponsible for delivery of requested files and for picking upnew accounts, which sometimes can add up to thousands of boxes.There are a number of possible solutions to this problem.

I recommend that you begin with a medium-size step van. Thiswill allow you to maneuver through the downtown streets easilyand have enough space for small pickups and moderate deliveries.You can rent vans from commercial sources for large pickups.Arrange a regular rate from Hertz, Ryder, U-Haul or otherproviders. Local couriers can also accommodate deliveries. Youshould have two or more local courier services on call foremergency or overflow deliveries or pickups.

A Final Note

Planning your business will allow you to discover costalternatives that can save you a great deal of anguish in thefuture. Take time to plan wisely and your businesses will blessyou with profits.

Regular columnist Cary F. McGovern is a certified recordsmanager and owner of File Managers Inc., a records-managementconsulting firm that also provides outsourcing services,file-room management and litigation support services for thelegal industry. For more information about records management,contact Mr. McGovern at File Managers Inc., P.O. Box 1178, AbitaSprings, LA 70420; phone (504) 871-0092; fax (504) 893-1751;email [email protected]; Web site http://www.fileman.com.

Subscribe to Our Weekly Newsletter
ISS is the most comprehensive source for self-storage news, feature stories, videos and more.

You May Also Like