Self-storage facilities are the first choice for records storage and, consequently, have an advantage over commercial records centers for providing records- management services. Several key factors enable self-storage operators to block commercial records centers from targeting their facilities, one of the most common and easiest sources of new records-management business. This article discusses why this is and how to implement a simplified records-management strategy.
There are hundreds of thousands of business startups each year. The majority of these are small, entrepreneurial businesses that range from a single-practice lawyer to new equity-capital-funded enterprises. They have one thing in common: business records.
In the United States, all businesses must keep records, and they typically keep them for far too long. According to a recent study, the average records carton stays in storage for 16 years. This is way beyond the average practical or required life of a business record.
So why do they do it? The answer is actually quite simple: It is easier to keep records than to decide to destroy them. The nature of our record-keeping systems is driven by regulatory compliance, litigation avoidance and sound business practice. It is confusing to figure out what you need to keep, and the whole process is filled with "mythology." Ask anyone how long they should keep records--the most common answer is seven years. But there are thousands of laws and rules requiring business records to be kept for very short and long periods. Seven years is just one of the many possibilities.
How Businesses Choose a Provider
The business owner opens his doors for business with hope and expectation. Over the first year, he grows his business, purchases supplies, pays his bills and adds employees. At the end of his first year, he files his first tax return. He has now begun the process of record keeping. He has accounting records, tax records, personnel records, payable and receivables records and usually a myriad of others. He sticks them into several boxes, labels them "2002 Stuff--Boxes 1-10," puts them in the closet or attic and generally forgets about them--he is busy running his business. Several years go by, his business grows and he runs out of room in the closet or the attic is about to crash through the ceiling because of the weight of the boxes.
What does he do? Well, he could take them home and put them in his garage, but his wife doesn't want that stuff around and, besides, she can't open the car door with all those boxes there. Then he remembers there is a self-storage facility on his way from home to work. That's it--he'll rent a room! That's the solution for his first 100 or so boxes.
Every once in a while, he sends a lowly clerk out to storage to fetch a record. The boxes are not indexed, so the clerk has to open several cartons to find what the boss wants. It takes two hours, and the storage room becomes littered with files stacked on boxes that have never been returned to their proper place. No one cares. Time goes by. The room fills up, and the owner is faced with the need for a new or bigger room.
This is an endless cycle. No one ever has the right amount of space for storage because they either have too much or too little room. Rarely is it just right and then only for a short period of time. New business-records growth can average from 25 percent to 100 percent for the first five years of a new business operation. The owner's cost is escalating and he can't find anything. A simple retrieval takes a search party and half a day.
What to Do?
Records are purely and simply a big pain in the neck for most businesses. They don't want them, but they need them. They constantly grow, and the paperless office is a myth. Up to this point, you have been the happy provider of storage for many businesses and have collected your rent every month. But you operate on a 30-day lease.
Let's say a business customer of yours has grown to the size where he is looking for ways to reduce cost and improve efficiency. This problem jumps off the table when a salesman from a commercial record center appears at the company's door offering a solution more efficient and cost-effective than your storage units. He takes the business from you like candy from a baby. You lose the account without contest. He gets a new account with a permanent lease and annuity revenue. How can you convert your 30-day contract to permanent revenue and increase your yield per unit?
It's simple. You can offer records management when he walks in the door the first time, tie him to a permanent lease and create annuity revenue far exceeding the typical commercial records center. You can double or triple the monthly revenue on these accounts and save your customer money. Is this magic? No, not at all. It is simple with no additional staff, no additional space, no additional computers and very little new capital investment. Nontraditional records management can be implemented in self-storage within a week with the right skills, tools and resources. You need simple systems, packaged training and marketing, outsourced labor, and courier services and software.
Regular columnist Cary F. McGovern 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.