Why Offer Records-Management Services?

January 1, 2001

5 Min Read
Why Offer Records-Management Services?

Why Offer Records-Management Services?

By Cary F. McGovern

Records management is adifferent business from self-storage. So why would a self-storage operator optto offer records management at his facility? I have assisted more than 135business owners and entrepreneurs in offering those services--30 in the lastyear alone. What in the world is going on? Why records management? Why now?

What's Going On?

In an era where computers are a dime a dozen and everyone is using theInternet, why do business records still predominantly come in paper form? Thisis a question I am asked by my customers and consulting clients all the time. Ihave heard industry pundits discuss this phenomenon. I have read hundreds ofarticles discussing the movement to digital data. I have watched Star Trek andseen the paperless office on the 23rd-century starship. How do we get there fromhere?

There are literally hundreds of reasons that paper proliferates. Here arejust a few:

  • People like paper. It is truly a sociological issue. Paper is the form we have been using for 2,000 years. People are comfortable with it and are slow to change.

  • Computers complicate life. The old theory that computers simplify our lives just isn't true. Computers merely give us more options and increase our productivity. In reality, they complicate our daily existence.

  • Xerox and HP have ruled. These two giants have sold hundreds of millions of printers, copiers and fax machines--all pumping out paper. When we receive an e-mail, we print it out, make 10 copies and file them everywhere. It's our nature.

Why the Growth in Commercial Records Management?

The commercial records-management industry has grown from the infant it wasafter World War II to a giant in recent years. This industry, like all others,has witnessed significant consolidation over the past few years. Pierce-Lehay,Iron Mountain or Brambles--all big industry players--have bought most of thelarge local and regional commercial records centers in major markets of 1.5million and more. Last year, Iron Mountain bought Pierce-Lehay, and Bramblesbecame Recall. These are the high-end players who have hundreds of millions ofboxes in storage throughout the world.

The Australian and European markets are booming, and there is a rise incommercial records centers in Asia and South America. In the United States andCanada, local and regional entrepreneurs have new opportunities to formcommercial records businesses where Iron Mountain has bought up the competition.

Why Records Management in Self-Storage?

There are several reasons self-storage facilities are likely prospects toenter the records-management business. A few of them include:

  • Similar Business Components--The components of business resources in self-storage line up nicely with those of commercial records. A self-storage operator can go into the commercial records business for very little additional capital.

  • Existing Business--If you operate a self-storage facility, it is likely that at least 5 percent of your units already have records stored in them. The national average is between 5 percent and 10 percent. We estimate, based on current research and experience, there are about 300 million boxes in in unmanaged self-storage units.

  • Increased Revenue--Records management rents your units by the cubic foot rather than the square foot. Do the math: Your revenue should equal between three to five times that for regular square footage. (You can use the revenue calculator at www.fileman.com to calculate the revenue on any space.)

  • Low Unit Turnover--It is true that once you have records in a records-management contract, you don't lose the business. No longer is it a month-to-month lease but perpetual. If someone wants to take their records out of your facility, there is a retrieval fee and a permanent-retrieval fee referred to as the "hostage fee" by most insiders in the industry.

How Do I Decide If This Is for Me?

I receive three or four phone calls or e-mails a day from self-storage,moving-and-storage, courier and warehouse companies asking me about thisbusiness. I always recommend they first do some research. Articles on the topicof records management can be found at www.fileman.com under"Resources" or at www.insideselfstorage.com (search for my name).Although they may seem redundant if you read them all at once, they cover a widevariety of records-management topics. This will give you a better basis fromwhich to ask questions. I am also available for free consultation on thesubject.

Only you can determine if the records-management business is for you. Manyself-storage operators have made the leap--but with differing results. It is thetype of business where you can determine how fast you want to grow. Fast growthrequires a full-time, aggressive marketing program. Slow growth can beaccommodated with very little marketing. It's your choice. You can give it a tryand make some money. If you get into the business and decide a year later youdon't like it, you can sell your book of business to a competitor.

Some Things to Remember

I could provide several tips for succeeding in the records-managementbusiness--too many to list here. These are a few:

  • Limitation of Liability--Use the standard industry contract promulgated by PRISM International, the industry trade association for records management (www.prismintl.org). Jim Booth is the executive director.

  • Optimize Space--Unit selection and optimized rack design can improve rental revenue by 50 percent or more.

  • Software Options--Buy or time share. Minimize your software cost on the front end.

  • Standardized Industry Practices--These are tried and true. Use them. Don't try to reinvent the wheel.

  • Outsource, Outsource, Outsource--It is likely that outsourcing some or all of your activities will optimize profitability and reduce labor.

  • Select the "Right" Model--You can operate a traditional, nontraditional, boutique or virtual records center. All are different and one may fit you best.

Regularcolumnist Cary F. McGovern is a certified records manager and the principal ofFile Managers Inc., a records-management consulting firm specializing inimplementation assistance and training for new, commercial records-centerstart-ups, as well as marketing support for existing records centers. For moreinformation, visit www.fileman.com.

FileMan Records Management is developing a model for sellingrecords-management services on the Internet. The company will soon be pilotingseveral versions of its method. If you are interested in becoming a FileManPilot participant, e-mail [email protected]or call toll-free (877) FILE-MAN.

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