THINGS TO CONSIDER WHEN STARTING A RECORDS
MANAGEMENT COMPANY (100)
Tuesday May 6, 2014
10:30-11:45 AM
Moderator, Frank Albi
President
Business Information Solutions
Cincinnati, OH
[email protected]
513-721-3453
THINGS TO CONSIDER WHEN STARTING A RECORDS
MANAGEMENT COMPANY (100)
Tuesday May 6, 2014
10:30-11:45 AM
Agenda
Moderator, Frank Albi
General Introductions
Panel Discussion
Questions & Answers
Conclusion
THINGS TO CONSIDER…
Finance and Accounting
Cheryl Creviston
President/CEO
Jayhawk File Express
Topeka, Kansas
[email protected]
BASICS OF FINANCIAL STATEMENTS
PROFIT AND LOSS STATEMENT – the “bottom line” for a specific period of time What you billed to your customers
Less what you paid to keep the doors open and provide service to customers What’s left over – the bottom line
BALANCE SHEET – snapshot of the financial condition on a specific date What you own - assets
What you owe – liabilities
Net Worth – what is owned minus what is owed
CASH FLOW STATEMENT – movement of money into and out of the business Net cash flow is the sum of cash flows from :
Operations Financing Investments
Profit and Loss Statement
Revenue
REVENUE Profit RECORD STORAGE $100,000
Record Storage Cost $ 60,000
Net Income $ 40,000 40%
WAREHOUSE HANDLING $ 50,000 Warehouse Handling Cost $ 45,000
Net Income $ 5,000 10% PRODUCT SALES $ 5,000
Product Cost of Sales $ 3,500
Net Income $ 1,500 30%
TOTAL REVENUE $155,000 TOTAL COST $108,500
GROSS PROFIT $ 46,500 30%
Profit and Loss Statement
Overhead
OVERHEAD % of Revenue
Marketing Expense $ 1,500 1% Management /Administrative Expense $ 13,000 8%
Sales Expense $ 7,000 4%
Other Expenses $ 2,000 2%
Total Overhead $ 23,500 15%
NET OPERATING INCOME $ 23,000 15%
MISCELLANEOUS EXPENSE
Interest $ 1,500 1%
Amortization of Withdrawal Charges $ 3,000 2%
Depreciation $ 2,000 1%
Total Other Expenses $ 6,500 4%
Record Storage Costs
Total Capacity in Cubic Feet = number of cubic feet available for storage
Total Square Feet = square feet available for storage
Revenue per Square Foot = total storage revenue / square feet (times % full factor)
Cost Per Square Foot = facility costs (rent, utilities, cams, insurance, etc.) / square feet Revenue Per Cubic Foot = storage revenue / cubic feet available for storage (% full factor)
Cost Per Cubic Foot = facility costs (rent, utilities, cams, insurance, etc.) / cubic feet Revenue per Box = revenue per cubic foot x 1.2
Cost per Box = cost per cubic foot x 1.2
Balance Sheet
ASSETS(what you own)
Liquid Assets (Cash in Bank, Accounts Receivable) Non- Liquid Assets (Equipment, Vehicles, Racking) LIABILITIES(what you owe on what you own)
Current Liabilities (due in one year or less) Accounts Payable
Taxes Payable (payroll, sales) Long Term Liabilities - Loans Payable EQUITY / NET WORTH (Assets minus Liabilities)
Shareholder’s Equity Retained Earnings
Cash Flow
Cash flow from Operations
+ Cash received from customers + $ 75,000 - Cash paid out for supplies - $ 1,500 - Cash paid out for labor - $ 25,000 Cash provided from Operating Activities + $ 48,500
Cash flow from Financing Activities
+ Cash from loan proceeds + $ 45,000
- Loan payments - $ 3,000
Cash provided from Financing Activities + $ 42,000 Cash flow from Investments
- Purchased racking - $ 25,000
- Purchased vehicle - $ 20,000
Cash provided from Investing Activities - $ 45,000
Net cash decrease for period - $ 38,500
THINGS TO CONSIDER…
Sales
W. Powell Jones
President
Secure Records Solutions, LLC
Thomasville, GA
[email protected]
229-226-0414
Do Your Homework
Is your market currently being vended or is it “open for the taking”? If it is vended, what is the competitive landscape?
What services are currently being offered?
What are the rates, levels of experience & professionalism? Is the area Urban or Rural? Do you have limits of a target area/market? Are you starting with Select volume accounts?
What are your facility/location advantages for your clients/prospects?
Sales Cycle
The sales cycle is much longer than most types of sales and it takes time to land accounts. Prepare yourself and be patient.
You must build relationships, build your brand, develop referrals and concentrate on your strengths.
You will need to continually prospect, network and ideally form partnerships. Developing a pipeline is critical, so look at Contact Management Software to use.
Compensation Options/Packages
There are many opinions in our industry on the best method for sales compensation.
Salary only Salary + Commission Other incentives
Sales training, setting expectations and measuring results are critical to success. Hunting new accounts vs. Farming existing clients.
It is very likely the entrepreneur will be the lead sales person, at least in the early stages of your business.
THINGS TO CONSIDER…
Technology & Diversification
Vince Fuemmeler
President/CEO
IMS
Mexico, MO
[email protected]
573-581-2800
Avoid Tunnel Vision
As you put together your business plan, realize there may be much more to a records management center than just storing boxes or shredding paper. Internal software is critical to managing your business.
External software for resale can play a vital role to diversification and expansion. Value Added Reseller (VAR) opportunities
Channel Partners
Internal software
Be a leader in your market and invest in software that will help you track your inventory.
There is software available to reduce time spent looking for boxes, scheduling routes and allowing client access.
Consider having the ability to deliver boxes/files both in hard copy and digitally. If you choose to deliver boxes/files digitally, make sure you choose a secure method of delivery.
External software
Simply being a provider of box storage, scanning or shred services may not be enough.
Value Added Reseller (VAR) opportunities
There are many document management software applications that businesses are looking for to streamline and reduce their paper.
As a VAR, you bring something more to your clients and can say “yes” to more questions while prospecting.
The concern over “cannibalizing” your own box storage business by offering scanning services and software is a myth.
Channel Partners
There are more software applications that can possibly be sold directly to business. Find a channel partner that can bring you new products.
Recurring revenue is key
As you may already know, having boxes on the shelves creates recurring revenue.
Other opportunities for recurring revenue include: Shredding services
Scanning (back-file and on-going)
Document management software, both server & cloud based Specialized software (forms processing, mobile applications) VoIP solutions in telecommunications –cloud based
