Sponsored By

Operating Records Management Within Self-Storage FacilitiesImprove your cash flow in 90 days

January 1, 1999

6 Min Read
Operating Records Management Within Self-Storage FacilitiesImprove your cash flow in 90 days

Operating Records Management Within Self-Storage Facilities

Improve your cash flow in 90 days

By Cary McGovern

Recordsmanagement and storage can improve your cash flow one unit at a time--if optimallyimplemented--in as little as 90 days. This column will address the ways to get into thebusiness one step at a time. Costs can be controlled, management education can beimplemented slowly, operating practices can be optimized and marketing can be made simple.

Improving Your Cash Flow

Records management and storage can yield 2.5 to 3.3 times the gross storage revenue onany storage unit larger than a 10-by-10 for records storage at the carton level. Yield canalso be improved up to 4.5 times the gross revenue when implementing open-shelf filestorage, such as medical-records management. In order to achieve these results you mustimplement a strategic plan that addresses each of the following issues:

  • Optimum shelving design

  • Inventory control

  • Management training

  • Operating practices

  • Marketing

Selecting Self-Storage Units for Records Management

The foremost determinant of cash-flow maximization is the selection of the largeststorage unit(s) that you have available to begin your records storage operation. It iscorrect to say that the larger the unit, the higher the yield percentage--up to apoint--then it levels off. It is also correct to say that the higher the ceiling height,the more the revenue increases. Most self-storage facilities have fixed ceiling heights of8 feet or 9 feet, so ceiling height-maximization is not a requirement using this model.

It also is best to select several units that are in close proximity to one another.Although this is not imperative, it can help in the logistics of your operation. Once yourunits have been chosen, the selection of racking that creates the highest cubic footageyield is important. Considerations should be given to floor-space layout, equipment andits use of space, handling, access, aisles and passageways.

Racking Alternatives

You can choose either box-storage racking or open-shelf-file racking. In a self-storagefacility, it is not wise to mix these two within the same storage units. Spaceoptimization is usually best accomplished by placing box storage in whole units. The sameholds true with open-shelf filing. Shelving configurations can change storage densityyields significantly.

Your marketing plan should have identified if you intend to market horizontally orvertically. Vertical markets such as healthcare are excellent revenue producers.

Controlling Your Start-Up Cost

Traditional start ups can cost hundreds of thousands of dollars, but some methods cancost very little out-of-pocket expense. Of course there are some initial costs, but thegoal is to limit them first, and then spread them over several years.

So, what are the costs? Since you may have decided to use an existing self-storagefacility with extant units, there is little new cost related to the facilities. There maybe some amount of remodeling expense if you need to take out separating walls betweenadjacent units.

Racking can be purchased or leased from the shelving supplier one unit at a time. Mostself-storage facilities have existing customers with units that contain business records.These customers should be your first prospecting market. Since they are already storingrecords in passive units, it's likely that you can convince them that records managementis to their advantage. You can document the cost savings for your customers and use it asthe primary tool for justifying the costs in a switch to records management over passivestorage.

Records management does require both computer hardware and industry-specificrecords-management software. This software in a traditional operation can cost more than$25,000 just to get started. Of course, you can purchase it and add that cost to theequipment lease over several years. FileMan has developed an alternative that allows youto rent the software on a transaction-by-transaction basis. This method is sometimesreferred to as "metered" software. It is actually not much different than the"time-sharing" software concept and uses the Internet to make the cost of thisoption quite attractive. You will need only a PC, Internet access and inexpensive,bar-code, portable readers. These costs also can be loaded into the lease.

Your immediate goal should be to fill half of your first unit designated for recordsmanagement. This portion of the first unit should offset all of your start-up costsamortized over the term of the lease. From then on, the only additional costs are relatedto shelving for each new unit that you convert to records management. Keep in mind thatshelving cost should equal approximately the first seven to 10 months of storage revenue.Once shelving is paid for, then your storage revenue and yield should grow substantially.

Other costs to consider relate to other products and services that you may provide,such as shredding and destruction services and new cartons for customer storage.

This model presumes that you will develop a working partnership with a local couriercompany. As I wrote in the January issue of Inside Self-Storage, the split forpick-up and delivery may vary, but you should expect to receive as much as 40 percent ofthe gross courier fee. Retrieval revenue should add an additional yield equal to about 40percent of the total storage revenue for box storage and sometimes even higher foropen-shelf, medical-record storage. The more products and services that you offer yourcustomers, the more your yield per unit will increase. There are also electronic billingservices for your customers and direct deposit of your net revenue with no personnel costrelated to monthly billing while you use the metered Internet service.

The key to optimization of your revenue per unit is low start-up cost spread overseveral years, with a minimum amount of added work for your existing management team.Additionally, your customers have access to their records-index information from their ownPC in their office. They can request pick-up and delivery service through the Internetwithout talking directly to a manager, and you can receive an e-mail immediately as atransmittal order and delivery receipt. To reduce management time further, you may want tonegotiate with your courier to perform the actual retrievals for your manager.

Training and Marketing

There are two very important issues that remain: management training and marketing. Thetraining issue is actually a two-part situation. The first part regards basic training inrecords storage and retrieval practices. This training can be accomplished using video andaudiocassette programs designed specifically to get you off to a fast start. The secondpart is relative to software training. If you choose the traditional software method, thesoftware vendor will provide the training as part of your start-up cost. If you choose theInternet metered software, you will have interactive CD-ROM training, operating manualsand access to a help desk for personal coaching. As far as marketing, your strategy shouldbe guided by your business plan.

Regular columnist Cary F. McGovern is a certified records manager and owner of FileManagers Inc., a records-management consulting firm that also provides outsourcingservices, file-room management and litigation support services for the legal industry. Formore information about records management, contact Mr. McGovern at File Managers Inc.,P.O. Box 1178, Abita Springs, LA 70420; phone (504) 871-0092; fax (504) 893-1751; e-mail: [email protected]  or Web: www.fileman.com.

Subscribe to Our Weekly Newsletter
ISS is the most comprehensive source for self-storage news, feature stories, videos and more.

You May Also Like