Hardly a day goes by when an entrepreneur doesn’t dream of a new venture, fresh profit opportunity or an exciting challenge. It must be something in our blood, because it never goes away. For example, in records and information management, several basic services are typically provided:
- Hard-copy paper storage
- Magnetic media storage
- Confidential document destruction
- Document imaging services
For those already in hard-copy or magnetic-media management, remember that adding new services always comes with nitty-gritty details, never-ending service requests and a zero-defect customer expectation. Add a long sell cycle, significant front-end capital, and you know why Google only lists a few providers in each market.
If you’ve been involved with any of the above, you’ve probably also taken a look at the shredding industry. They all interact and support the other in one form or another.
If you’re storing tapes or paper, it’s probably driving you crazy to call a shredding company to destroy those items requested by the customer. (Rest assured, the shredding company is likely looking at your storage business with the same envious eye.) So, what would it take?
Is Shredding for You?
Does the shredding business fit your model? Unlike storage, the financial barriers of entry can be as low as the first lease payment on a new mobile shred truck ($200,000 to $250,000). It’s even possible to find a used truck on the market for less money. You’ll also need a software package of approximately $5,000 to $7,000 to manage and run the business.
Like the records business, shredding services aren’t without devilish details, and the selection of a software package is just as important as doing your research on mobile vs. plant-based shredders.
Technology is playing a greater role in the document-destruction industry today, replacing the “Make Shift” Act or Outlook scheduling programs traditionally used for daily operations. Competition is greater, customer expectations are higher, and technology is a vital part of operating an efficient and accurate operation. It is also becoming an important part of the sales process.
Let’s start with billing and expand from there. Just as in records management or self-storage, your customers will expect you to accommodate a number of billing models based on their preference or past experiences with other vendors. In the early days, customers were typically billed on a per-pound rate, but there has been a trend toward billing by the tip, which is the physical act of emptying a container.
This sounds simple on the front end, but containers come in different sizes; some are replaced (an empty one for full one); and some will not service the bin if it is not at a specific capacity, but may still want to charge a “check” fee. Then there are tiered rates for servicing more bins within a location, or the occasional hourly rate. The billing options seem to become more creative as the industry continues to evolve.
Scheduling is another main ingredient and, if done correctly, assures you never miss a service date for a customer or a container. Schedules can range from weekly, monthly, every three weeks, every four weeks, every other week, every Tuesday and Friday, etc. The choices are endless.
To also add to the complexity of which containers are serviced and on what days, customers are looking for more historical account-activity information. For example, what has the capacity been each time the shredding company serviced a container for the last six months? The customer wants to know if the destruction company is servicing the containers too often or not often enough.
Another challenge for shredding companies is that the containers seem to have legs. Equipping the driver with a portable barcode reader capable of capturing the new location or flagging bins as lost or misplaced helps to manage the inventory of containers, which can carry a value of $50-$100 each, depending on size and type. Having the ability to capture the customers’ signatures and print receipts or a destruction certificate on a portable receipt printer makes operations more efficient by recording the activities the driver performs while on the road, ensuring greater accuracy for billing.
Routing is another key element to the document destruction business both on the road and even within buildings. If you can reduce vehicle usage by 20 percent a day, or route the driver through the building or campus in the most efficient way, you can cut your costs and improve your margins. Why does one driver service “Customer A” in 30 minutes, while it takes another driver 60 minutes?
If you’re looking for another profit opportunity and a new challenge, the shredding business just might be your ticket. Start-up capital is reasonable, the sell cycle is shorter and the complexities are minimal with the right technology. In addition, the ability to grow improves with the enforcement of current and future regulations. Best of all, technology enforces all the business rules.
If shredding seems to be your next logical entrepreneurial step, investigate your options wisely. Find the best technology to suit your needs and put it to the test. With the right resources, you’ll be shredding your way to quick profits!
With more than 20 years of experience in the hard-copy, magnetic-media and shredding businesses, Lee A. Miller is president and CEO of Andrews Software Inc., a provider of software services and products to commercial records centers, media vaults and document destruction companies. For more information, visit www.andrewssoftware.com.