By Cary F. McGovern
Over the past few years, I have consulted with more than 200 self-storage operators concerning records management, which has had broad appeal with this industry. I receive at least a dozen phone calls each week from owners and operators interested in providing records-management services. In the course of our conversations, some issues have been unearthed that may make your decision process easier, if you are considering offering these 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 and operators in the self-storage industry, I would say only about half have resulted in a move forward to the next step. Records management is indeed a different business. It is operated out of your self-storage facility but with some new components. There are many similarities 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 the records-management business already in place: a facility, personnel, computers and a broad customer base. The cost for a self-storage operator to go into the records-management business 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 in less than 90 days.
3. Records management requires attention to detail and management.
Records management requires more labor and attention to detail than self- storage. You provide 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 and delivery.
4. Records-management services include indexing, retrieval and delivery activities.
Outsourcing these services partially or completely to a strategic partner can minimize the labor required for these activities. Indexing can be done entirely by your customer or via the Internet with some systems. Retrieval and delivery services can be outsourced to courier services.2
5. Outsourcing requires management and control.
We are in the age of outsourcing. Companies such as the Gartner Group and other research organizations have shown the dramatic savings businesses can reap from "strategic outsourcing." Outsourcing functions that are not central to your business is usually a good decision. However, you must manage the outsourcer. Management includes strong training and internal controls.
6. Records management generates three to five times more revenue for existing space.3
In self-storage, you rent square footage. In records management, you rent cubic footage. If you want to check out your own revenue potential, go to www.fileman.com and click on the "Revenue Calculator." The site will walk you through a calculation that will determine your potential revenue for any space allocation. There is nothing in storage 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" records management. This model allows for low cost and relatively slow growth without a great deal of change in your day-to-day operations. I recommend this model if you are unsure about the business. The second model is a virtual records-management business4 utilizing an operating partner to manage records in your facility. This model is low-cost and low-risk and can be easily implemented. The third model is the traditional model that has been used by commercial records centers for close to 50 years. It requires a new building with high ceilings, high-rise racking, full-time personnel and a significant sales effort.
8. You must use bar-code records-management software.
One thing is certain: You cannot manage a records facility without bar codes and software. This has traditionally been a major obstacle for the self-storage industry. The cost 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-ups since it is metered rather than purchased. You pay only for what you use, it is transaction based and has no special requirements other than Microsoft Internet Explorer and Internet access--both of which are free. (Visit my website for more details.) Of course, you may purchase software. The only two programs I recommend are the O'Neil and Andrews software systems.5
9. Marketing is the issue.
As my daddy used to say, "Nothing happens until the sale is made!"6 If you want to be in the records-management business, there are three sales approaches you can use: passive, active and Internet. A passive sales approach utilizes your current customer base, some telemarketing solicitation and advertising. Expect slow growth with this method. An active sales approach requires a salesperson and some sales cost since records management is best sold face to face. The success of the Internet model has not yet been determined, but I am currently conducting some pilot tests with Internet marketing.7 I expect somewhere between a 5 percent and 10 percent response. If you are interested in becoming a "beta-test" participant for this method for either 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 in the United States alone. I believe there are about 500 million cubic feet of records still uncaptured by commercial records centers. Iron Mountain (now the world's largest records-management company) has bought Pierce-Lahey (the second largest) and has begun to execute that merger--which is a fundamental task.
The metaphor I like best is the story about the giant anaconda in the Amazon who slithers out of the river and eats a wild pig. It lies on the side of the river digesting for 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 merge Pierce-Lahey completely into its operations. Norm Brodsky, a frequent speaker and a columnist for Inc. magazine, owns and operates a commercial records center in Brooklyn, N.Y. He wrote in one article8 that the best thing that ever happened to him was that Iron Mountain bought his competition. Now he has a real advantage over the guys 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 of them 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 on knowledge, and the outcome should be a positive and profitable one.
|1 McGovern, C., "Dispelling Old Myths," Inside
Self-Storage, December 1998
2 McGovern, C., "Courier Services," Inside Self-Storage, January 1999
3 McGovern, C., "Improve Your Cash Flow in 90 Days," Inside Self-Storage, February 1999
4 McGovern, C., "Virtual Records Management," Inside Self-Storage, March 2000
5 O'Neil Software (949) 458-1234; Andrews Software (800) 807-2093; FileMan FIRMS Software (877) FILEMAN
6 McGovern, C., "Selling Records Storage and Management," Inside Self-Storage, May 1999
7 McGovern, C., "Using the Internet to Sell Records Management," Inside Self-Storage, September 2000
8 Brodsky, N., "Size Matters," Inc., September 1998