Most business owners would like to try new money-making opportunities with little or no risk. It’s easy to say, but can be difficult to do. If you already have a self-storage or moving and storage operation, you have little or no business risk when you provide commercial recordsstorage services using the records storage lite (RS-lite) model I have addressed in my past several columns.
Is It Risky?
The introduction of a new service and the uncertainty about its potential can create risk—the possibility of loss, damage or any other undesirable event. Most businesses desire low risk and hope for a high probability of success and profit. When considering records storage for your operation, ask yourself: Where is the risk, and how significant is it?
Any change, good or bad, includes some potential for hazard. Your own analysis will usually reveal potential dangers: investment costs, equipment and software, sales potential, personnel and labor costs, and unpredictable demand. According to risk-management experts, there are three things you need to know when facing a new venture: What can happen? What could result? And what can be done about it?
What Are the Costs?
The costs for implementing records storage in a self-storage environment include those for space, people, processes and management. In the storage business, many of these requirements are already in place. Now you just need a method of records-storage operation, including sales templates and training, software (a small-business edition) and racking (one unit at a time).
Is There a Right Size?
When it comes to operating records storage in self-storage, there are no hard and fast rules about market or facility size. RS-lite can work in any community, modest or high-end properties, even in multiple storefronts (see last month’s column). You set the rules and decide what services you will offer. Simply determine where you want to begin. You can always take things up a level down the line.
Is There an Exit Strategy?
One of the most fascinating things about the records-storage business is the service contracts are what make the value, not the real estate. As a self-storage operator, you already have your real estate investment. Records storage simply dwells within it. If you want to get out of the business, just sell the contracts to a competitor.
Today, there are many more buyers than sellers in the commercialrecords market. Books of business are much sought after by industry players. Of course, selling contracts presumes you have the “right” agreement in place with each client. The industry standard contract is tried and true and offers many benefits including: long terms with an evergreen clause, withdrawal penalties, price increases, limitations of liability and more. It is available from the industry trade association, PRISM International (www.prismintl.org).
Is There a Downside?
In the past, there have been several drawbacks that have kept self-storage operators from entering the records-storage business. Today, however, because of the current use of technology, strategic outsourcing, batch processing and personnel abatement—all parts of the RS-lite operating model—there are few if any downsides.
Technology makes the processes simple. Outsourcing most of the work provides greater control and decreased cost. Getting the client or an outsourced resource to do the work at the right time makes the reduction of staff not only possible but easy. (For more information, refer to my column on “Manpower for RS-Lite” in the November 2004 issue, available at www.insideselfstorage.com.)
How Profitable Can It Be?
There is no ancillary service in the storage business that matches the profitability of records storage. Some would argue for art, boat/RV or wine storage, but they simply don’t experience the same volume as records storage, which can be a thousand times greater.
Storage by the cubic foot means you rent air space as well as floor space. And records storage means long-term, renewable contracts. Many professionals in the industry say it creates permanent revenue, simply because each client’s volume grows every year. Records accounts stay with you long after self-storage clients have moved on.
When it comes to risk, you need to know what can happen, what could result, and what can be done about it. If you decide on records storage, you can easily construct a low-cost model with an early exit strategy. If you like the business, you can take it to a higher level with no lost steps. What could be better than low risk, low cost, high profits and a built-in exit strategy?
Regular columnist Cary McGovern will be exhibiting at the Inside Self-Storage Expo in Las Vegas, Feb. 23-25. He will also present a seminar on “Records Storage Lite.” Mr. McGovern is the principal of FileMan Records Management, which offers full-service assistance for commercial records-storage startups and sales training in commercial records-management operations. For help with feasibility determination, operational implementation or marketing support, call 877.FILEMAN; e-mail firstname.lastname@example.org; www.fileman.com.