Do Unto Others

The Golden Rule—do unto others as you would have them do unto you—can be applied not only to people, but also to their confidential information.

Keeping that in mind helps Scott Fasken of Colorado Document Security (CDS), Grand Junction, Colo., put the emphasis on security at his mobile shredding company.

The Golden Rule joins one other important rule—don’t race to the bottom on pricing—to provide a business model that has helped CDS grow and prosper for the past two years.

FILLING A VOID

Scott Fasken was winding down a chapter in his professional life when a story on ABC’s evening news motivated him to think about the next chapter.

In the spring of 2003, Fasken and his wife Jill were selling the retail business they had owned for 10 years when a story on the Enron fiasco included footage of a mobile shredding truck.

 Fasken could not recall seeing any such trucks operating in the western Colorado region where he lived or anywhere he had visited, so he started doing some research on the industry. His research led him to a couple of helpful resources, including the National Association for Information Destruction (NAID) and John MacAdams, now with DataGuard USA in Lakewood, Colo.

“John offered a lot of knowledge of the industry and truck leasing,” he says. “And NAID and its Web site also provided some crucial information as I headed off to my first NAID convention in Orlando in May of 2003.”

The research process really kicked in then. “I did more research and then wrote a business plan and gave it to my attorney for his feedback,” Fasken recalls. “When I went to see him a week later, he offered to become an investor, which wasn’t what I had in mind; but it told me I was on the right track.”

In October of 2004, Fasken headed up to Canada to take delivery of a mobile shredding truck from Tornado Technologies Inc., Stettler, Alberta, and Colorado Document Security (CDS) was ready to conduct business.

The challenge Fasken faced from his base in Grand Junction was much different from what operators in a population center are up against. Whereas an entrepreneur in a city of 2 million is fighting for some market share, CDS has to figure out how to create a profitable market in a sparsely populated, far-flung territory that includes western Colorado and parts of New Mexico and Utah.

While route management in a city means trying to minimize the number of trips into a certain ZIP code during a given week, in the wide-open spaces served by CDS, it means obtaining enough revenue to justify a round trip of several hundred miles.

“We cover in Colorado anything west of the Continental Divide, from Grand Junction down to Montrose, and then over and then down to Durango and the Four Corners area and into New Mexico and Utah,” says Fasken. He has obtained his own commercial driving license, but now has two Tornado trucks and Pete Ellinwood as an additional driver on staff.

For the enterprise to have succeeded in its first two years, it has also required Jill’s office management skills, Scott is quick to point out. “She handles the administrative side of things, including accounting, contracts, fuel tax receipts and governmental affairs. She does all of that ugly work. Her role that way is terribly important. The job is not done until the paperwork is done.”

Quips Fasken, “If there is an entrepreneur couple looking for a tip, it might be that the ‘for better or for worse’ vows should include something about QuickBooks.”

MANAGING RISK

Scott Fasken says his company’s name was chosen carefully. “If you take a look at our company’s name, it doesn’t say ‘shredding.’ We view it as security. To paraphrase James Carville, ‘It’s security, stupid.’”

Putting the focus on security is a result of Fasken’s own background running a whitewater rafting business—which he says was completely dependent on proper risk management. “There are operators who come and go in that industry because of an accident or even because the food they served was not stored properly.”

 Fasken also managed a county fairgrounds, which again entailed assessing risks properly for reasons ranging from retaining customers to retaining a liquor license.

The impact of putting the emphasis on security starts with the sales process and results in black ink on the bottom line, says Fasken. “We present information that we are there to protect them. It’s the Golden Rule: If I have your information, you want me to shred it properly.”

The value proposition is increasingly understood by corporations large and small, says Fasken. “Wal-Mart will pay a premium price for secure shredding,” says Fasken of a company that has built its reputation on seldom paying premium prices for anything. “Companies like Wal-Mart and Wells-Fargo are saying, ‘This is terribly important to us.’ That security is what we’re selling.”

More than federal and state regulations, Fasken says high-profile cases of confidential information leaks and the resulting civil lawsuits are driving the industry. “Six percent of bank customers think of changing their accounts every day because of security concerns,” says Fasken. “It’s not a matter of federal agencies and court enforcement. The market provides a need for risk management.”

Adds Fasken, “Privacy officers at companies like AOL and at the Veterans Administration have lost their positions or been put on the spot. The reason to shred is to protect your job. It may seem like a selfish reason, but it’s good for companies, their customers and their employees.”

That same scrutiny applies to CDS and its own employees, Fasken is quick to mention. “We try to take the ‘60 Minutes’ approach—as if ‘60 Minutes’ is in the bushes watching our company every day and at every stop,” he comments. “You don’t bring five bins down and empty them one at a time if those bins are out of sight in any way.”

The focus on security is also critical to allowing CDS to charge customers accordingly to cover the costs that come with serving its mammoth geographic territory. “Firms need to look at how they set their prices,” says Fasken. “You may shop at Sears when something is on sale, but you don’t buy everything there. We don’t need to train our customers to shop on price. There is a good justification to charge for on-site shredding and for NAID certification,” he adds.

Emphasizing security and pricing accordingly has been one key strategy for CDS. Another has been to craft alliances and relationships with the wider industry in order to be able to sensibly serve the far-flung Four Corners region.

ALLIED INTERESTS

Among the challenges faced by CDS is stretching a limited marketing budget into a number of towns spread out over a vast area with separate media markets and distinct networking groups (such as chambers of commerce).

One way CDS has been able to overcome that is by serving as a sub-contractor or local referral for national companies that serve national accounts.

 Fasken says he has been able to make such arrangements with most of the nationally known shredding firms, as they are usually pleased to find a cost-effective way to serve customers in the remote region.

“Even at my first NAID meeting, before I had my truck, I began talking to people about sub-contracting and referral arrangements,” Fasken recalls. “This gives them the ability, if they have a contract with a national bank or property owner, to serve that area and not have to drive 150 miles to reach one customer. And in terms of risk management, it keeps them off the mountain passes in winter.

“There are a number of companies with locations in Denver who, when they get a call out this way, referring the caller to me makes them look good because ultimately they are helping provide the service from a NAID-certified member,” he says.

 Fasken says NAID certification and the support of NAID overall has been another critical alliance that he is glad to have forged. “We joined NAID immediately and as soon as we could we became NAID-certified,” he notes. “Every NAID meeting I go to is a profit center, because I learn so much, whether it’s at the exhibits, the sessions or in the hallways.”

Additionally, Fasken has enjoyed getting more involved in the wider industry through NAID. “I have been very fortunate to be on the Complaint Resolution Committee and I have also volunteered to assist Ray Barry (of South Carolina-based Total Training Services) on the Public Relations Committee,” he remarks. “I would urge anyone in this industry to volunteer—they’ll put you to work,” says Fasken.

Less than three years after entering the business, Fasken is pleased with how CDS has grown and he sees prospects for continued growth. The company is working to expand its risk management services by reminding clients of the risks they take by storing records longer than they are required to do so.

“Wells-Fargo has a terrific seven-years-and-out program that it asks all branch managers to follow,” says Fasken. “As a company, they are very concerned and focused, and we would like to get other companies thinking that way.”

By way of example, Fasken points to a small medical practice that called CDS for a 66-box purge job for records that had been stored for 10 years or longer and were no longer even catalogued (and thus close to useless). “It became both a storage cost and an obligation in case of litigation (to go searching for documents). We urge our clients to recognize the applicable statutes of limitation on storage.”

The focus on records management has prompted Fasken to work toward forming a Western Colorado chapter of the records management trade group ARMA (the Association for Information Management Professionals).

CDS is also paying more attention to electronic information, relying in part on alliances and preparing its own storage and destruction strategies.

With publicity about information leaks abounding, Fasken says that even in the two-and-a-half years he has been actively selling document destruction and information management, he has noticed the difference.

“People who looked at me two years ago as if I was dumb as a rock are now calling me asking for service,” says Fasken. “People are getting concerned about lost data and seeing others lose their jobs or be raked over the coals on TV. They are starting to understand the risks and the issues.”

Such a wide level of understanding improves the chances for CDS to convince its customer base that a secure shredding service provider is worth the expense on the balance sheet. 

The author is editor of SDB and can be contacted at btaylor@gie.net.