Considering the Records-Management Business
By Cary McGovern
In my last two columns, I discussed the reasons why you may want to consider offering records-management services in your existing facility as well as the permanent nature of records storage. This article discusses the important components that should be addressed by operators who store and retrieve business documents for their customers.
If you have decided to inquire further into this dynamic aspect of the storage business, there are several issues for you to consider.
Any business requires that you study the nature of its processes, financial requirements, operational idiosyncrasies and marketing strategies. Each week, several operators call or e-mail me regarding records-management start-up services. My first response is to ask them, "How much do you know about the records- management business?" Depending on their answer, I generally recommend some basic level of training, which typically includes:
- Read all of the articles you can find on the topic, including ones I have written for Inside Self-Storage. They can be found at either www.insideselfstorage.com in the archive search, or at www.fileman.com. Over the past four years, I have poured more than 25 years of document and information-management knowledge into these articles. Reading these will certainly generate more questions.
- Call for clarification. I will answer your questions directly in a free, comprehensive discussion of the topic. A full 30 percent of my phone requests end up in the inquirer's decision to not consider the records-management business. It is not for everyone.
- Call PRISM International (formerly the Association of Commercial Records Centers) and speak to Executive Director Jim Booth. Have him send you a PRISM start-up packet and ask about the industry growth over the last few years. He can be reached at 800.336.9793.
- You can also visit the association's website at www.prismintl.org and click on the "Member Mall." On that page, you can peruse and check out different PRISM members' websites. There are many that will give you a keen understanding of the marketing tactics used throughout the world.
- Iron Mountain, a leader in the records-management field, is a publicly traded company that discusses financial issues very carefully. Its discussions about the financial nature of the business and the seemingly "permanent nature of storage revenue" is quite amazing, to say the least. Log on to the Iron Mountain website at www.ironmountain.com and read all of the press releases issued during the last two years (you will find their link at the bottom of the Iron Mountain home page). Particular attention should be given to press releases for the period of October 1999 through the acquisition of Pierce-Leahy in February 2000.
Although there are many considerations to be made--for those considering the records-management business--the most important are a sound contract form, security and confidentiality. The industry has settled on a standard contract form available from PRISM, which has been consistently used throughout the United States and Canada. It covers issues of liability by limiting it to only the cost of the storage box, usually about $2. This practice has been well established for years.
The cost of reconstructing a business record could run in the millions of dollars. Many commercial records centers offer extended valuation insurance or recommend the client acquire coverage through his own insurance carrier. The issue of security is of great importance to most customers, who want their records to be maintained in a sound environment. Simple security systems such as keypad entry and surveillance cameras--which are typically already in place at many self-storage operations--are great selling points. One of a client's most frequently asked questions is, "How do you deal with the confidential nature of my records?" This is usually accomplished with a confidentiality statement, signed by your employees, and then bonding coverage.
If you are in the self-storage, moving and storage, or courier business, you already have many of the financial requirements covered. Buildings are always the highest cost item. If you already own a facility, you can use a simple transition method to convert one unit at a time to records management.
Racking costs are the next issue that must be considered. If you convert one unit at a time, the rental revenue from that unit's records-storage boxes usually covers the cost of racking within the first 90 days. Racking can also be leased, 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 and software costs can be limited by using a metered software product that can be paid for on a per-transaction basis. This will, however, require two barcode readers--one a portable unit and one a direct- connect "wedge" unit.
This business is filled with idiosyncrasies. First of all, records management is a very low priority in most businesses--until something goes wrong. Records are mostly maintained out of fear of an audit or litigation. Consequently, when there 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 a perfect candidate for outsourcing. Most businesses don't want to worry about their records. They want to outsource them to a secure, confidential, service-oriented facility. If you are to enter this business, you need to understand the importance of this.
There is no question that marketing is the name of this game. The industry is market-centric, and "nothing happens until the sale is made." There is no more important component in commercial records-center operations than marketing. There are several time-tested models for marketing records-management services, 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. Find out for yourself if records management fits your operating style by following the steps listed above.
Cary F. McGovern is a certified records manager and the principal of File Managers Inc., a records-management consulting firm that specializes in implementation assistance and training for new commercial records-center start-ups, as well as marketing support for existing records centers. For more information write P.O. Box 1178, Abita Springs, LA 70420; call 504.871.0092 or 877.FILE.MAN; fax 504.893.1751; e-mail email@example.com; visit www.fileman.com.