Planning your records-storage facility is the first issue to address after making the decision to enter the business. What size should the facility be? What shape? How big is too big? Where should it be located? What about security? How do you avoid fires? How does racking relate to building dimensions? What are your work-area and office requirements? This article addresses these important issues.
What Size and Shape Should the Facility Be?
Records-storage facilities range from small self-storage units to gigantic warehouses. There are many factors that affect the shape and layout of a facility, so lets briefly discuss each of these issues. In forthcoming articles, I will discuss them each in more detail.
There are three general models for commercial records-management facilities: nontraditional, traditional startup and acquisition. Each involves quite a different “footprint” and a unique set of circumstances.
Nontraditional records management exists within the walls of another existing business, such as self-storage, moving and storage, courier services, document destruction or warehousing. It presumes several components of operation are already available, with storage space being the first and most important.
What size is best for nontraditional records management? You can begin with whatever available units you already have. The smallest size in self-storage that makes any sense is a 10-by-10-by-8. This configuration is always best designed with contiguous storage units and the highest ceiling height available. Movers and ware housers generally already have an underused facility of varying height. Courier services and document-destruction businesses may need to acquire a small facility to begin. (I will attend to optimum size in the section relating to a traditional startup operation.)
Ceiling height is the prime ingredient. However, be aware there are some ceiling heights that make operations more difficult than others. My experience is ceiling heights between 11 and 15 feet are the least favorable because they require ladders and wide aisles. Once above 16 feet, it is possible to use catwalks or order-pickers more effectively.
Traditional records storage is a stand-alone business or one that grows out of a nontraditional one. I am going to get into a heap of trouble and many an argument from “traditionalists” here. This is solely my opinion, and there can arguably be many exceptions to it. But let me take my best shot at “optimum size” in a traditional startup mode.
Everything is relative to your capital structure and ability to carry your business over the initial startup phase up to the breakeven point. I base my recommendations on the ability to sell records management using a consultative approach that yields 100,000 billable cubic feet of storage in 30 months from opening day. When this model is applied, breakeven can occur be between 12 and 18 months, depending on the services you sell. I have seen breakeven occur in the first month of operation when the “right” services are sold. This is certainly the exception to the rule.
Make no mistake—this is a sales-driven business where value-based services are the key to a fast track toward profitability. That being said, optimum building size is based on sales goals. I recommend a building of a minimum of 10,000 square feet with a 24- to 30-foot ceiling height and the ability to build or lease a second facility of the same size adjacent to or very close to the first. The dimensions of 10,000 square feet by 30 feet of ceiling height yield an average effective billable volume of 135,000 cubic feet, or 112,500 standard box positions. This equals approximately three years until full.
Acquisition has become the favored method of entering the business by those with high levels of capital at their discretion. In this scenario, the purchaser buys the client contracts and may have the option to buy or lease the facility. This, of course, requires a much more careful financial analysis than the first two methods. The major players in the acquisition market review several key issues in making this decision. In some instances, the decision is based on new-client sales-growth expectations, market-share estimates and internal growth rate of the existing client base.
Where Should the Facility Be Located?
In commercial records management, location has more to do with access to trade routes and the client market than anything else. Since clients generally do not come to you, it is best to have a facility not in a highvisibility area, since the real estate cost is usually lower. There is very little advantage to having your facility in a high-traffic area.
Many, if not most, traditional record centers are in office parks or warehouse districts. I usually recommend a startup client begin with a market represented by a 25-mile radius. Sometimes this takes the shape of the interstate highway or local freeway system in your community. Access to your primary client base is the most essential component of the location decision—it should be within one hour of your facility.
What About Security and How Do You Avoid Fires?
We live a world filled with peril. Security, confidentiality and protection from disasters such as terrorism, fire, flood and storm are on the top of everyones mind. The first issue in the development of protection is to secure it as owners and operators. This is done through use of a standard industry contract that provides limitation of liability in regard to loss of client records.
As good stewards of clients records, it is normal and customary to protect your facility with standard intrusion alarms and monitoring services along with fire detection, prevention and protection systems. Of course, the most common and least expensive is a well designed, zoned sprinkler system. You will need to check your own local code enforcement regulations and experts in the design of systems that are suited for densely stored records in boxes.
How Does Racking Relate to Building Dimensions?
Self-storage racking has been designed to optimize standard-size storage units and is available from various shelving resources familiar with the records-storage industry. Believe it or not, traditional records centers sometimes design the racking before they complete the design of the building, since as little as 6 inches in one direction may mean an additional row of racks. Design, density, aisle spacing and bin arrangement are important to maximizing revenue. Always use an expert familiar with commercial records management rack design for this important planning process.
What Are Your Work-Area and Office Requirements?
You will always require some amount of staging and work-processing areas. The space is relative to the number of services you provide. I recommend a minimum work area that will hold eight pallets. Of course, records centers offering professional records-management services may require quite a bit more work space to stage and process boxes. Office space may be adjacent to the facility and may add up to an additional 1,000 square feet to your space-planning requirement.
Regular columnist Cary McGovern, CRM, is the principal of FileMan Records Management, which offers full-service records-management assistance for commercial records storage startups, marketing assistance, and sales training in commercial records-management operations. For assistance in feasibility determination, operational implementation or marketing support, call 877.FILEMAN; e-mail email@example.com; www.fileman.com.