5 Most Important Factors to Consider Before Developing a VAR

Transcription

1 THINGS TO CONSIDER WHEN STARTING A RECORDS MANAGEMENT COMPANY (100) Tuesday May 6, :30-11:45 AM Moderator, Frank Albi President Business Information Solutions Cincinnati, OH CEO@721-file.com THINGS TO CONSIDER WHEN STARTING A RECORDS MANAGEMENT COMPANY (100) General Introductions Panel Discussion Questions & Answers Conclusion Tuesday May 6, :30-11:45 AM Agenda Moderator, Frank Albi THINGS TO CONSIDER Finance and Accounting Cheryl Creviston President/CEO Jayhawk File Express Topeka, Kansas ccreviston@jayhawkfile.com

2 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% NET INCOME $ 16,500 10% 2

3 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 Cash at beginning of period + $ 50,000 Cash at end of period $ 11,500 3

4 THINGS TO CONSIDER Sales W. Powell Jones President Secure Records Solutions, LLC Thomasville, GA 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. 4

5 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 Vince@IMSsecure.com 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 Embrace multiple avenues to generate recurring revenue, other than just boxes. 5

6 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 6