Records Management: 12 Steps to a Business Model

Cary McGovern Comments
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The first step in starting a business is developing the plan, the cornerstone of which is the business model. Just as self-storage ranges from mom-and-pop operations to multimillion-dollar chains, records storage centers vary in type and style. Your business model needs to reflect the individuality of your organization.

A business model describes how an organization functions—a general template of major activities. It identifies the company’s products, services and customers. It also provides information about how a company is organized and generates revenue and profits. Business models combined with strategy should guide major decisions.

The Components

The records-storage business model includes the following components.

1. Profit Model:

Profitability is determined before you begin business. Under capitalism, methods of calculation differ. Often, it is the difference between sales price and the costs of products or services. The term also refers to the value added after production factors have been credited.

2. Pro Forma Model:

This projects the revenue and expenses along with sales goals. A pro-forma document is provided prior to business activity as a model for the actual transaction.

3. Facility Model:

There are more than 100 ways to design a facility. Your goal is to optimize storage and work areas to make the most money.

4. Technology Model:

Technology is used to improve margins (value to the customer) and decrease cost (to your business). Include it only if it does both.

5. Services Model:

Services define your business. A service is the non-material equivalent of goods. Service provision has been defined as an economic activity that creates benefits by facilitating either a change in method, a change in process, or a change in an intangible asset.

6. Pricing Model:

Pricing is based on cost plus margin for any service and is one of the four aspects of marketing. It is the manual or automatic process of applying the fee for purchase and sales orders, based on factors such as: fixed amount, quantity break, promotion or sales campaign, specific vendor quote, price prevailing on entry, shipment or invoice date, combination of multiple orders or lines, and many others.

7. Marketing Model:

What do you do to get in front of prospects? Marketing is “the process of moving people closer to making a decision to purchase.” If it doesn’t facilitate a “sale,” it’s not marketing.

8. Sales Model:

This is anything you do to close new business. Mastering sales is considered by many as the art of persuasion. Others define it as “a systematic process of repetitive and measurable milestones, by which a salesperson relates his offering, enabling the buyer to visualize how to achieve his goal in an economic way.” Several types of sales exist including direct, consultative and complex sales. Complex sales vary from other types in that the customer plays a more proactive role, often requiring a response to a request for proposal.

9. Operating Model:

This determines how you will provide your services. Business operations are all activities that produce value for the stakeholders, owners, employees and customers. Business operations encompass three fundamental management imperatives that collectively aim to maximize value from business assets: generating recurring income, increasing value, and securing income and value.

10. Finance Model:

Finance addresses ways to raise, allocate and use monetary resources over time, taking into account the risks entailed in projects. Finance measures success and profitability and may incorporate the study of money and other assets; the management and control of those assets; and managing the risks.

11. Sales Compensation Model:

Compensation is the remuneration received by employees, or the pay structures within sales organizations. Some of the main issues deal with how to attract, retain and motivate employees. It addresses pay structure, variable rewards, benefits, stock options or bonuses—all of which can be allocated in such a way to retain top salespeople.

12. Exit Strategy Model:

The final step is to plan for the ultimate sale of the business to maximize stakeholders’ wealth. An exit strategy, exit plan or strategic withdrawal identifies ways to terminate company ownership or the operation of some part of the company. Entrepreneurs and investors devise ways of maximizing their wealth and the capital they have invested in a company. The most common strategy is to sell the equity position to someone else at a predetermined value, which is identified at the beginning of the venture. 

Cary F. 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 fileman@fileman.com; visit www.fileman.com.

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