Considering the Records-Management Business

By Cary McGovern

In my last two columns, Idiscussed the reasons why you may want to consider offering records-managementservices in your existing facility as well as the permanent nature of recordsstorage. This article discusses the important components that should beaddressed by operators who store and retrieve business documents for theircustomers.

If you have decided to inquire further into this dynamic aspect of thestorage business, there are several issues for you to consider.

Education

Any business requires that you study the nature of its processes, financialrequirements, operational idiosyncrasies and marketing strategies. Each week,several operators call or e-mail me regarding records-management start-upservices. My first response is to ask them, "How much do you know about therecords- management business?" Depending on their answer, I generallyrecommend some basic level of training, which typically includes:

Business Processes

Although there are many considerations to be made--for those considering therecords-management business--the most important are a sound contract form,security and confidentiality. The industry has settled on a standard contractform available from PRISM, which has been consistently used throughout theUnited States and Canada. It covers issues of liability by limiting it to onlythe cost of the storage box, usually about $2. This practice has been wellestablished for years.

The cost of reconstructing a business record could run in the millions ofdollars. Many commercial records centers offer extended valuation insurance orrecommend the client acquire coverage through his own insurance carrier. Theissue of security is of great importance to most customers, who want theirrecords to be maintained in a sound environment. Simple security systems such askeypad entry and surveillance cameras--which are typically already in place atmany self-storage operations--are great selling points. One of a client's mostfrequently asked questions is, "How do you deal with the confidentialnature of my records?" This is usually accomplished with a confidentialitystatement, signed by your employees, and then bonding coverage.

Financial Requirements

If you are in the self-storage, moving and storage, or courier business, youalready have many of the financial requirements covered. Buildings are alwaysthe highest cost item. If you already own a facility, you can use a simpletransition method to convert one unit at a time to records management.

Racking costs are the next issue that must be considered. If you convert oneunit at a time, the rental revenue from that unit's records-storage boxesusually covers the cost of racking within the first 90 days. Racking can also beleased, if you don't want to buy outright.

Personnel costs do not increase if you already have a site manager in place,but I recommend outsourcing many of the labor requirements. Hardware andsoftware costs can be limited by using a metered software product that can bepaid for on a per-transaction basis. This will, however, require two barcodereaders--one a portable unit and one a direct- connect "wedge" unit.

Operational Idiosyncrasies

This business is filled with idiosyncrasies. First of all, records managementis a very low priority in most businesses--until something goes wrong. Recordsare mostly maintained out of fear of an audit or litigation. Consequently, whenthere is a problem, it comes in the form of a lawsuit or tax audit. Then,records management jumps from the basement to the executive suite overnight.

Records-management programs have been downsized in businesses and are aperfect candidate for outsourcing. Most businesses don't want to worry abouttheir records. They want to outsource them to a secure, confidential,service-oriented facility. If you are to enter this business, you need tounderstand the importance of this.

Marketing Strategy

There is no question that marketing is the name of this game. The industry ismarket-centric, and "nothing happens until the sale is made." There isno more important component in commercial records-center operations thanmarketing. There are several time-tested models for marketing records-managementservices, and I have covered several of them at length in previous articles.

Needless to say, there's a lot to consider when entering this business. Findout for yourself if records management fits your operating style by followingthe steps listed above.

Cary F. McGovern is a certified records manager and the principal of FileManagers Inc., a records-management consulting firm that specializes inimplementation assistance and training for new commercial records-centerstart-ups, as well as marketing support for existing records centers. For moreinformation write P.O. Box 1178, Abita Springs, LA 70420; call 504.871.0092 or877.FILE.MAN; fax 504.893.1751; e-mail [email protected];visit www.fileman.com.