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Records Storage: A Revenue Opportunity for Self-Storage Operators, Even in 2020?

Even in the rise of the “paperless office,” businesses still produce paper records—and need a safe place to store them. In fact, records storage can be a great add-on profit center to an existing self-storage operation. Here’s what to do to capture that ancillary revenue.

The business of records storage has changed dramatically since the term “paperless office” was first used in a 1975 edition of “Business Week.” The article in question predicted that by 1990 most records handling would be electronic. So, why is it that 45 years later, businesses still aren’t paperless? Sociologists believe the use of paper is so ingrained in our daily lives that it’s simply too daunting for any business to take it away entirely.

There’s little doubt that the volume of business records sent to offsite storage locations, including self-storage facilities, has reduced dramatically over the last 20 years, and the use of cloud storage for documents continues to grow exponentially. However, boxes of records remain prevalent in most businesses, even in 2020. Companies like Access Information Management, Iron Mountain Inc. and others store hundreds of millions of them. The average growth rate is zero to 1 percent, but volume hasn’t decreased in several years.

An Opportunity for Self-Storage?

Is now still a good time for self-storage operators to venture into the records-storage business? The answer is yes, but it isn’t the same business model it once was. In the early 2000s, my former business saw an average of 35 new records-storage start-ups in the self-storage industry annually. Some of those clients have since cashed out, but others maintain the service as a healthy complement to their self-storage business. There are:

  • Those who sold. Several sold their records-storage contracts without touching their real estate investment. Some had amassed hundreds of thousands of boxes, while others had as few as 50,000. These sales typically netted three to three and a half times the annual records-storage and service revenue.
  • Those who remained. Some have done very well adding new accounts with little or no additional sales or marketing costs. Sales remain an over-the-counter offering to business customers or as an add-on to existing self-storage needs. The pitch is simply, “Let me tell you about our small-business records-storage package” No muss, no fuss, no bother.
  • Those who are unaware. Today, most self-storage operators are unaware of the value of records storage as an ancillary service. Let’s change that.

Expanding Your Customer Relationships

Generally, self-storage customers have a shorter contract term (months) than records-storage customers (years). What if you could lengthen the term of your self-storage tenants’ stay simply by adding small-business records-storage packages to your relationship? This doesn’t extend your self-storage contract all by itself, but it may give your business tenants a reason to stay with you beyond their normal storage needs.

The problem has always been that records storage is more complicated, and it has certain liability issues. However, small-business packages are clean, simple and structured to bring in higher return per square foot while limiting liability in the contract to $1 or $2 per box in storage, a tactic used in the commercial records-storage industry for decades.

New Ways to Offer Records Storage

If you’re interested in adding value to your relationships with business customers, consider offering three records-storage packages:

  • Small, or Bronze: Limited to 25 boxes
  • Medium, or Silver: Limited to 50 boxes
  • Large, or Gold: Limited to 100 boxes

Pricing would be tiered. For example, your small package might be $29.95 per month, medium $44.95 per month, and large $79.95 per month. You’ll store boxes ranging in size from 1.2 to 3 cubic feet and charge by the cubic foot. You’ll likely stack them three or four high, even without any shelving. If you’re strategic in your price structure, the yield per box ranges between $1 and $2.

When a customer’s records-storage volume reaches its maximum, he simply rolls up to the next package and price. If he reaches max capacity for your largest package, you have three options:

  • Add a new package.
  • Convert the account to a standard records-storage account like a traditional commercial-records storage provider would offer.
  • Sell the account contract one at a time for multiples of annual storage rental.

Enterprising self-storage operators who want to truly maximize their records-storage revenue can offer various add-on services. At a minimum, you must offer box check-in and check-out at your service counter, but you can also consider box pick-up and delivery by a third-party courier.

A Few Final Tips

Carefully plan and price your records-storage offering. Promotion can be limited to over-the-counter sales, or you can include the service in your wider marketing efforts. Create a brochure that articulates pricing, terms and inclusions. Be clear about the manner in which you transfer contracts from one package size to another or an ultimate end stage.

Finally, use a standard records-management industry contract, which is used by hundreds of commercial records centers worldwide. You might have to adapt it to your limited services, but it has long been used to limit liability of the storage vendor.

While the model for records storage has changed greatly, it can still be a valuable profit center for self-storage operators in the right market.

Cary F. McGovern is a trainer and mentor for commercial records storage, records destruction and document imaging as a business opportunity. During his 45-year career, he’s consulted in the development of more than 500 commercial records centers, trained 3,500-plus students and performed more than 2,500 client-needs assessments in 39 countries. He’s written 300-plus articles for industry trade magazines and spoken at dozens of conferences. For more information, call 504.669.0559; e-mail 217cary@gmail.com.

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