The Role of the Building in Records Storage

Did you know your building has a significant impact on the success of your records-storage business? The design, structure and appearance can influence every aspect of the business including sales, marketing, insurance, operations, utilities and much more. Its the keystone to a successful venture. More than one professional Ive met over the past 20 years has said, If someone had only told me this upfront ...

This doesnt mean you need the perfect building and an exceptional layout. You need to be ready for whatever happens, knowing unanticipated events often kill businesses. By focusing on how building design influences business operations, you can plan accordingly.

The Main Attraction

Looks are the most important aspect of your building. Does your facility draw prospective customers just because it looks good? An attractive facility can help close a sale more than 80 percent of the time. A clean, nice-looking building makes a statement and sales pitch more powerfully than any salesperson or advertising collateral.

Ask yourself, Does the care and attention given my facility send the message Im serious about serving clients? A buildings age and ceiling heights are not as important as cleanliness, neatness, security or sprinkler systems designed for records storage.

Prospective customers look for all of the above. Make sure you provide all of them, especially if the competition does. Take a look at other facilities and make sure your building sparkles in comparison.

Price to Pay

The cost of storage is what you are paying in rent per number of revenue-generating cubic feet of storage. While some refer to storage in numbers of boxes, I prefer to use cubic feet, reducing all sizes of boxes to a common denominator. Todays market pricing and ingenuity allow you to compete without focusing primarily on building efficiencies. Its appropriate, however, to understand the economics of 70-foot catwalk and 40-foot order-picker facilities so there are no surprises down the road.

A primary cost is labor, particularly when business grows to the point that youll need more than one warehouseman. Labor needs fluctuate depending on the nature of your customer base. For instance, medical-records storage demands more service than manufacturing, which will be far less active.

Generally, it takes one warehouse employee for every 100,000 cubic feet of storage. Low-ceiling, large-footprint buildings need more labor than high-ceiling, small-footprint buildings. Catwalk systems typically require more labor than order-picker systems. Its also more difficult to manage in a large square-foot, low-ceiling building compared to a small-footprint, high-ceiling facility. Its important to understand and evaluate these costs before you jump in, but they are not the only concerns.

Even your basic operating costs are determined by your building. Your geographical location, the buildings design and market demands drive decisions involving heating and air conditioning. If the market demands that your facility be heated and air-conditioned, then your buildings design and its insulation will affect utility costs. Further, if the sprinkler system is wet you will be forced to keep the facility above freezing; if its a warm climate, AC may be necessary for comfort as well as preservation of the records.

Insurance

The ability to secure insurance and its cost is often driven by the buildings design, and one of the most important features is how the sprinkler system is laid out. Youll want to know, for example, what the added liability may be if your sprinkler system isnt adequate or designed for the purpose of records storage.

Ill never forget the first time a customer audited our facility, a brand-new rental property with 22-foot ceilings. The sprinkler system extended from the ceiling to every row of storage racks. The entire 20,000-foot facility was spotless and ready for the white-glove treatmentor so we thought. When the client arrived, we proudly escorted him through the facility with smiles on our faces. As he quietly took notes, we asked if everything had checked out OK. He said would send us a report after reviewing his notes.

When the report arrived, it indicated our sprinkler system was not designed for the purpose of records storage. We had previously believed it was more than adequate and hadnt taken any actions or precautions to accommodate or reduce the risk. The report took us by surprise. In the end, we were able to keep the customer by telling him we would accommodate his needs in our new facility, which was already blueprinted with a sprinkler system designed for records storage. We learned that having a hydraulic engineer inspect and evaluate a sprinkler system is a good idea. For your site, be prepared by knowing requirements, liability and insurability issues before you start.

Sales and Acquisitions

While every successful business has its eye on long- and short-term profits, and how the facility will help to drive (or reduce) those profits, an area that is often overlooked is the role the facility plays in a potential business sale or acquisition. A component value of any commercial records center is efficiency.

Prospective buyers will often adjust their offers based on the cost of moving the inventory from a low- to high-efficiency facility. High-efficiency facilities equate to lower operating costs, higher profits and better EBITA numbers. As a separate note, having available expansion space is a positive factor when selling a business, while a full facility may reduce the selling price.

Any building that meets the needs of the industry, allows you to compete in your market and provides an acceptable level of owner risk is a strong candidate for successful records-storage operation. Reduce the surprises by knowing the factors that control your long-term success before you sign the lease. Some well-seasoned veterans of the industry might see this frank and open discussion as a deterrent to entering the market. Quite the contrary: Well-informed operators are an asset to any market or industry. 

Lee A. Miller is president and CEO of Andrews Software Inc. (ASI) and Andrews Consulting Services (ACS). ASI provides a suite of software products for commercial records centers, document-destruction companies and media vaults. ACS specializes in RIM consulting services for managing information assets. During his 20-plus years in the records-storage business, Mr. Miller designed and managed the construction of four facilities totaling nearly 300,000 square feet. For more information, call 800.807.2093; visit www.andrewssoftware.com

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