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Why You Lose Business to Commercial Record Centers

July 1, 2000

5 Min Read
Why You Lose Business to Commercial Record Centers

Why You Lose Business to Commercial Record Centers

By Cary McGovern

In my last two columns, I described why records management is always cost justified andthat self-storage is an easy mark for traditional commercial records centers as a sourcefor new business. This article describes why every self-storage operation should offerrecords-management services. You have many options that range from very low cost and lowmaintenance to the more traditional high-maintenance, high-cost versions. If you do notoffer records-management services you will continue to loose this lucrative business toyour competition. It is your choice.

Two Absolute Truths

If there were two absolute truths in the records-management business, they would gosomething like this: 1) commercial records management is always cheaper and better thanself-managing your records; and 2) the best source of new records-management customers isalways self-storage. I have been working in the commercial records industry for more than30 years, and if there was ever a truthful business statement, these are two examples. Younotice that I use the word "always" in the above declarations. There is a reasonfor that: There is never an exception to these two rules.

For a moment, let's agree that I am correct. Then the question has to be, "Whyaren't you offering the service?" For the last three years I have spent a great dealof my time educating the self-storage marketplace with some success. I must admit, though,that there is still quite a bit of misunderstanding by self-storage owners and operatorsconcerning records management.

Always Cheaper and Better

In the May 2000 issue of ISS, I discussed the way to cost justify recordsmanagement. It is very straightforward and quite simple. One of the problems with recordsmanagement in most businesses is that it takes such a low priority and isn't importantuntil there is a problem. When a problem arises, it is usually in the form of litigationor an audit. Records then vault to the highest level of importance immediately.

Managing records assumes that you know what you have, how to find it when you need itand when to get rid of it. Records management is inventory control. Inventory controlpresumes two things: First, you take an inventory, then you keep control. In thecommercial records industry, inventory control is done as a regular course of action. Itis simple when done by using an inexpensive method: bar codes.

Self-Storage Always Loses to Commercial Records

Since we can always cost justify it and it is less trouble for the customer, it issimple to get commercial-records business. Uninformed businesses always look toself-storage to get rid of their "stuff." They really do not know of any otherway. You are close by, and storing with you gets their stuff out of the way.

But sooner or later, the volume grows and disorganization occurs. No one in thecustomer's business wants to go and search for records within a system that lacksorganization. As time goes by, it gets worse and worse. The customer looks for a betterway. Commercial records is the easy solution. It is cheaper, better and much moreprofessional. Why would anyone want to do it themselves when you can hire someone to do itfor you cheaper and better? Commercial records salesmen look for self-storage recordscustomers on a regular basis. I recently spoke to one such salesman who has gotten morethan two dozen accounts from one of my self-storage customer's operation before he beganoffering records-management services.

The Big Self-Storage Excuse

"Records management takes too much effort and I want to operate simply." Thisis what I hear from many operators and managers, but most of these folks are not aware ofthe various methods available to them. These methods range from very simple andinexpensive to very complex and expensive. Although there are several models, manyentrepreneurs want to jump to the high end immediately because of the revenue projections.It is true to say that records-management revenue always is a minimum of three times thatof passive self-storage. Lets review your options:

  1. Traditional Records Management: High capital cost, labor intensive and approximately two to three years to break even. This also provides the highest levels of revenue and profitability in the long run. It usually requires a separate facility with a high ceiling, dense storage racking, and an intensive and relatively expensive sales campaign.

  2. Boutique Records Management: This method is an offshoot of traditional records management. It implies a vertical market (i.e., medical or legal) and a packaged set of services designed for that industry group. This works well, but also requires relatively high costs for start-up.

  3. Nontraditional Records Management: This method was specifically designed for the self-storage market. It requires very little new cost. It can be operated out of your existing facility using existing units. It presumes that you will outsource many of the activities. The net result is very little effort, very little cost and three times the revenue of each unit utilized for records management. It also ensures that you do not lose any of the business to traditional commercial records centers and improves your cash flow--forever.

  4. Virtual Records Management: This method is by far the most misunderstood. It requires no additional expense, no work by your staff and no hassle. It requires that you enter into a business agreement with someone who will use your facility as his base of operation. You will lease him one unit at a time and provide access to work space. This agreement can be a partnership in a traditional sense, a resource partnership in the newer sense, or simply a lease relationship.

I have discussed each of these methods in separate articles. These are available at www.insideselfstorage.com (search the archivefor my name) or at www.fileman.com. This site alsoincludes many resources available to you at no charge, including the Revenue Calculator,which allows you to determine how much records-management revenue is available within anysize unit or building.

Regularcolumnist Cary F. McGovern is a certified records manager and the principal of FileManagers Inc., a records-management consulting firm that specializes in implementationassistance and training for new, commercial records-center start-ups, as well as marketingsupport for existing records centers. For more information, contact Mr. McGovern at FileManagers Inc., P.O. Box 1178, Abita Springs, LA 70420; phone (504) 871-0092; toll-free(877) FILEMAN; fax (504) 893-1751; e-mail [email protected];www.fileman.com.

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