Understanding Diversification into Records Management - A Successful Game Plan is Critical! by Patty Huber, Partner and Operations Specialist, Spinney and Huber LLC

The decision to diversify into other product lines usually results from the desire to grow your business, capitalize on empty warehouse space, or to tap into under-utilized resources. As consultants, we are often contacted to evaluate existing facilities with excess capacity, with the idea of potentially expanding into the records management business. Below is an outline of 5 key considerations when diversification becomes a topic of conversation at your company.

Facility
A stand-alone building (minimum 24' ceiling height) located in a non-flood zone area would be preferred over a multi-tenant facility because of potentially hazardous adjoining businesses. Adequate square footage for growth is important; however the ceiling height is key to producing the highest density possible per square foot when properly racked.

The roof of the facility should be leak free and provide a water proof environment for the storage of paper documents.

Exterior walls should not have windows or glass. Adequate ventilation and air circulation can be maintained through ceiling or wall exhaust fan systems. Maintaining a climate controlled environment is not necessary when storing hard copy records; however, most media requires climate and humidity controlled environments, as well as fire suppression systems.

Fire protection with automatic fire sprinkler system is the preferred method for hard copy record storage facilities. You should work with an industry fire protection consultant and industry shelving vendor, along with your local Fire Marshall for approved fire sprinkler installation. Hydraulic testing should be performed to insure an adequate water supply to support sprinkler requirements. ESFR (Early Suppression Fast Response) systems would be recommended.

Racking decision of catwalk or single level depends on ceiling height. Once correct racking has been installed, warehouse lighting is critical. Single level aisle lighting will be based on shelving design and layout. Cat-walk systems require lighting under each level. A client review room area will be needed for those clients that will want to review records at your facility. This space should be air-conditioned/heated and in close proximity to warehouse to accommodate large reviews that require palletized records.

Safety & Security
As part of the facility requirements - record storage clients demand the highest level of security for their records.

Preferred security systems for a commercial records center should include central station monitoring, perimeter entry contact alarms, interior motion detectors, closed circuit TV covering dock and access areas, exterior lighting, key pad or access card entry systems.

Perimeter fencing and lighting is preferred for exterior security protection. Any overhead door should be gated and locked during business hours.

Employees should be bonded, with checked references and background information. Uniforms and photo ID badges present professional appearance. Confidentiality agreements should be executed by all employees. Drivers should have clean driving record and be able to pass all medical/drug testing.

Protection from unauthorized access is a required feature for your record center. Clients should be required to provide a list of authorized users for all retrieval requests. All visitors, clients, prospects, and vendors, must be required to sign into the visitors facility log, wear an assigned visible ID badge, and sign a confidentiality agreement.

Technology
It is important for commercial record centers to utilize the latest technology offered in record management software
Barcode tracking systems should be utilized to ensure 100% accuracy on all inbound and outbound orders. Item locator system should allow for dynamic placement of all inbound materials. Additional value added services such as online Web ordering or documents imaged on demand and available through the Web, not only provide customer ease of access, but also reduces administrative expense. Sales
Your company has already established a trusted and secure relationship with your destruction clients which should provide in-roads with any potential records storage prospect, although a sales cycle of 60-120 days is not uncommon. Telemarketing has been successfully utilized in securing customers for the commercial records center.

A complete service and pricing guideline should immediately be established and incorporated into formal proposals and presentations. In addition to box/file storage, additional sales offerings should be considered such as open shelf filing, inventory management, off-site project management, as well as media rotations and storage. Service agreement should be executed by each customer prior to initial pickup to limit liability in case of disaster or loss.

Operations
Records center must be prepared to provide a 24/7 operation, 365 days a year. This can be accomplished through an answering service or cell/paging system with 1-2 hour response. Pickup/delivery vehicles consisting of panel vans or box trucks for larger pickups are utilized. Typical material handling equipment would consist of hydraulic hand trucks, two and four wheel dollies, rolling ladders, and electric forklift and order pickers - depending on the shelving system installed.

Staffing consists generally of customer service representatives that handle all customer communication, as well as data entry and invoicing. Warehouseman handles inbound and outbound scanning of all cartons and files, along with driver who make scheduled or on-call pickup and deliveries. Any combined shredding/records operation should never combine active records with destruction pickup requests because of the potential for inadvertent mix-up.

Once you have carefully assessed the startup costs and requirements, consider the prospect of venturing into a business with unlimited prospects, controllable receivables, recurring revenues and with the potential for 25% annual profits.

Ask the question "Is your current operation experiencing these results?"