If you are the owner or developer of a self-storage facility, you can rent air. How much can you rent? How high is the sky? The two fundamental differences between self-storage and commercial records management are renting cubic vs. square footage and changing the storage agreement to a permanent contract. This article discusses these two dynamics.
Over the past few years, I have mused with the thought, "Whose idea was it to build the first two-story building?" Think about it--they doubled their floor space without acquiring more land. What a novel idea it must have been at the time.
The means of production in the Industrial Age was "land, labor and capital," all of which are finite. In his masterpiece The Post Capitalist Society, management scientist Peter Drucker implies that in the current and future business environment, the means of production is "knowledge," which is infinite. So, in this age of infinite knowledge and finite resources, we need to develop new business models that create and enhance wealth in our business investments.
Creating Wealth in Self-Storage
How can we create wealth in self-storage without the components of land, labor and capital? Actually, the answer is right in front of our eyes. You already have land, labor and capital invested in your business (or soon will, if you are a developer). My musing about the two-story building gives us our first clue:
Clue # 1--Renting Air. If I currently rent square footage, perhaps a 10-by-10 unit, how can I rent cubic footage of 10-by-10-by-8 for more money? In the commercial records-management industry, we rent air or storage by the cubic foot each and every day. There is a caveat to this, though, and it is actually very simple: The higher your ceiling, the more cubes per square you have to rent.
Clue # 2--Permanent Lease. Changing the typical self-storage contract from 30 days to a permanent lease is the norm in commercial records management. The contract has a term of one year; however, the retrieval and permanent-retrieval fees are a disincentive to change. The contract has a price escalator and an evergreen clause as part of its standard terms and conditions.
Clue # 3--Simple Operations. The implementation of very simple methods for operations and sales are essential. It should include only business processes with basic steps that ensure any self-storage manager can follow them.
Clue # 4--Replicable Training. Automated training using multimedia allows managers and staff to quickly understand and reinforce the operations methods.
Clue # 5--Minimal Capital. The primary goal is the infusion of capital only when off-set by specific revenue. Each capital dollar becomes an annuity investment, an investment that keeps on giving forever.
A Different Perspective
Although traditional records management remains a business opportunity of major proportions in the United States and Europe, nontraditional records management has become a new application of an old business. What's new here is not the concept but its application. What is needed is a new perspective. So, how is nontraditional records management different and why is now the right time to take advantage of it?
Those of you who simply want to enhance revenue in existing or new properties may want to consider this simplified method because it has low cost and risk while yielding high return on investment. You do not have to compete with the traditional provider of records-management services such as Iron Mountain. You apply the methods they use but in a very different way.
Here's a typical scenario: I am a lawyer or accountant. I start my business with no records. After a year or two, I have a couple dozen boxes of records and no place for them in my office. I bring them home and put them in my basement or garage. A year or so later, my wife tells me to get this stuff out of here. I look around for a place to put it. I remember the self-storage facility conveniently located on the way to my office. I rent a 10-by-10 unit and stick my stuff in there.
You are the first choice for records storage for most small businesses today. You give them the key to the unit and charge them rent on a month-to-month basis. What is wrong with this picture? With 40 million boxes in self-storage in the United States alone, you are the primary target for all commercial records centers because they easily can get records out of your facility with no penalty. You can change that today. You can take away their opportunity for new business, maximize your storage revenue and change the focus to permanent storage. This is not hard to do if you follow just a few simple steps.
Regular columnist Cary McGovern, CRM, is the principal of FileMan Records Management, which offers full-service records-management assistance for commercial records-storage startups, marketing assistance, and sales training in commercial records-management operations. For assistance in feasibility determination, operational implementation or marketing support, call 877.FILEMAN; e-mail [email protected]; www.fileman.com.