Success Story: Mike McKenny and Natural Resource Management

Earlier this year, Mike McKenny successfully sold his business, Natural Resource Management, a great small business located in Sacramento. Mike is someone who seems to have been crafted out of integrity, kindness, and pure grit.

I had the privilege of working with Mike during the process of selling his business. Natural Resource Management is a private utility billing company mainly focused on water and sewage. What stands out about them is their dedication to their customers and Mike’s dedication to his employees.

Mike started the business with very little besides a bike and a ton of elbow grease. Below is his story.

Personal Background & Journey

Can you tell us about your background and what led you to start this business?

In high school, I worked on a hog farm and did side jobs bucking hay and whatever else I could do to make money.  After graduation, I wanted out of the small farming town, so I joined the Marine Corps.  It was a good experience, and I grew up a lot in the 4 years.  I was stationed in Camp Pendleton, California, for all 4 years and did two deployments overseas.  While in the corps, I found that I could learn quickly by using my hands and seeing the task at hand.  I took many courses in the Marine Corps, from radio operator, forward observer, and Humvee driver. 

After the service, I stayed in California because I felt there were more opportunities in life and work. 

What inspired you to enter this particular industry? 

After the service, I worked as a plumber and several more years in construction, mostly block & concrete work building mobile home parks. I found a job for a small Mom & Pop company that worked from their home.  It was billing for Utilities in the submetering industry, which was not heard of back then.  It was new and innovative. Over the years, the three of us built the company and made it a sizable submetering and billing company.  With me in my 40s and they were in their 70s, I attempted to buy them out so they could retire. 

At the last minute, they backed out of the sale.  I felt I could open my own business and do better.  I wanted to run an honest business that treated small and large property owners equally and treated everyone with the same respect regardless of anything.

Business History

How did your business evolve over time?

After several months in L.A. starting the business, I moved to Northern California. The first two years were very hard. I had a few billing contracts to pay the rent, but not much more. When moving, I used a rental mailbox service, so I was not locked into an address. Having the mailbox in Sacramento was important to me. 

During the first couple of years, I would ride my bike from Elk Grove to Sacramento to pick up business mail three nights a week.  I also would drop off mail from the small amount of invoices I was sending at the time. 

For the first two years, I didn’t draw a paycheck. I lived with very little, and even getting a haircut was a major decision. I would schedule a haircut around when I had an in-person meeting or went out on an installation job. 

In everything I did, money was at the forefront of the process. There were no trips to visit family.  There was no dating.  There was nothing except working the company by myself during business hours.  At night, I would ride my bike to drop off and pick up mail.  During the summertime, there were a couple of times I had to stop my bike ride to rest because of severe cramps from the heat.  However, mail had to be taken care of because customers’ payments had to be posted on time. 

On one trip to get mail, I was caught in a rainstorm on my way back from getting mail.  I pulled into an Asian fast-food restaurant and asked the old lady if I could get a plastic bag to put mail in.  While dripping from rainwater, I took the mail out of my backpack to show her I didn’t want it to get wet.  She handed me a plastic bag to put mail into.  I then put it back in my backpack and said thank you.  I got home after the long, wet ride but felt bad I didn’t pay for the plastic bag. 

The next day, I bought a thank you card.  Again, the money for a card was a lot for me then.  I wrote a letter stating that her help was very kind and very much appreciated.  I just opened my own business and didn’t have the funds to eat out, so I’ve never visited your restaurant before. But I would like to buy you lunch with the $20.00 enclosed.  Simply, you helped me more than anyone has helped me in years.  A simple plastic bag really made an impact, as well as your kindness to help a stranger.

Can you describe a moment when you realized your business was going to succeed? 

After about two years, I started to draw a small paycheck.  I had about 20 contracts in place and a couple of small installation jobs done.  I started to try to make sales by cold calls and mailing sales booklets to management companies.  However, whenever I had a meeting, I didn’t have an employee to cover the phones when I left the office.  About this time, a neighbor was looking for a part-time job while her kids were at school.  She worked out great as my first employee. 

This was about the time I knew it was going to work.  I was making enough money to pay all bills and buy food, and I was able to have a part-time employee.

Operations & Success

What is unique about your business that sets it apart from your competitors?

I believe in servicing small properties in the same way as medium or large properties. Most submeter installation and billing companies would not service a property under 40 units. This is where I believe I made a difference: We would service any size property. 

Also, as the utility customer service industry moved towards automated phone answering services, I stayed with live customer service.  All e-mails from clients and customers are answered in 2 hours or less. 

When a customer calls with a concern, the question is most often answered in detail during the first call. If a mistake is made on an invoice, we point it out, apologize formally, and correct it quickly. Owning a mistake is important in being transparent. We also pride ourselves on timely, accurate invoices month after month. Always being on time and allowing a long 21-day payment period are not common in the industry, but customers appreciate it. 

What strategies or decisions were key to growing the business? 

About four years after opening the company, I started to do considerable volunteer work for a nonprofit organization in Sacramento, NorCal Aids Cycle.  After a couple of years, I became the crew leader with about 50 crew members supporting cycling events with an annual event being 330 miles in 3 ½ days. 

I’ve met a lot of people when volunteering, but one individual stood out.  She was riding to support her brother, who was battling AIDS.  She worked hard to learn how to ride and complete each training ride.  She completed the main event with pride but didn’t plan to do it again the following year.  She said her brother was doing better, so she would look for a job while still supporting him. 

I offered her a job, and within the first month, I could see that my life and business were going to change for the better. She became the dedicated employee every small business owner dreams of. If I was out of town on an installation job and only had a few hours left to finish, I could call her to see if she could pick up my child from school and stay with him until I got back in the late evening. 

She was the rock I could always lean on and a major reason the company grew with a solid foundation.  The first weeks of her employment, I knew I was lucky, and my only concern was I needed to pay her enough to keep her as a long-term employee. 

Selling the Business

Why did you decide it was the right time to sell the business? 

I was a foster parent for 8 years with six different teens.  Some I helped make it to high school graduation, while others lost their privilege to live in my home.  Nonetheless, it was an experience in that I felt I made a positive difference in each one of the kids. 

I became a foster parent to a very young 9-year-old boy.  Some days, his behavior was that of a 5-year-old, and other days, he was more destructive than a very defiant teenager.  As I learned more about his history, I found a very injured kid, and part of that was from the broken, overloaded child protective system. 

After about four months with him living in my home, the case worker informed me that if I cared about him, I needed to adopt him as soon as possible because of factors in the extended family.  Although he was more than a handful, I found he had a heart and wanted someone to love him.

Once the adoption was finalized, I received all his history, which answered a lot of questions. I changed his medical coverage and, over the next 2 years, chased answers to his poor behaviors and major destructive meltdowns.  During that time, I took online classes to learn more. We have three formal diagnoses and continued individual and family therapy. 

After losing an out-of-town job because I couldn’t leave home to be on-site, I realized this was becoming a burden to the company.  After weeks of deep thought, I believed the best was to sell the company while the foundation was still strong and take an early retirement, which would benefit my son. 

The second element to the decision is because I’m a long-term HIV positive survivor. I’ve been on medicine and under a doctor’s care since 1990.  The medicines in the early days were very toxic, with numerous side effects. The medicines today are much better but very expensive.

Back in the 1990s, I did not even consider living into my 60s. I believe this is why I did so much volunteer work in the early days of the company. I also know that is a major factor in my becoming a foster parent. Adopting the last foster child was not planned or expected. Even though he has special needs, it was the right decision.

How did you prepare for the sale, and what was the process like for you? 

It was difficult to start because I was seeking the bank or someone to value the company. However, calls were not returned, and one business banker said they could not value the company because it was not like other companies. After a few days of searching for a business broker, I contacted Sierra Pacific Partners, and Luke Middendorf contacted me.

The process was more detailed than I expected, but it would ultimately benefit the company's sale. 

During the interviews with prospective buyers, I sometimes felt hopeless. I felt like they were not listening to me. They were looking only at numbers from P&L statements and tax returns. But I believe this is all part of the process because not only does the buyer need to make a decision, but I also needed to decide if I felt it was the right fit. It was a roller coaster. 

What emotions did you feel when the sale was finalized? 

At first, I didn’t feel anything because there were still many steps to complete before the escrow funds would be released. 

The following week, when the buyer, Brandon Staples, came into the office, it felt much more real.  Not walking into my office was a hard change, but after two weeks, the habit is gone. 

Looking Forward

What’s next for you after selling the business?

Brandon would like me to remain involved with the company because of my knowledge of each property, contract, and installation job. However, we still don’t know what that will involve. 

I’m working on a CT54 sailing yacht. My plan is to home-school my son and circumnavigate the world. The yacht will soon be seaworthy, and I’ll have all the safety equipment on board by the time we leave. 

What advice would you give to other entrepreneurs thinking about starting or selling their business? 

This is very hard because each business is so different.  Basically, for me, I had a dream that I could do it better than my previous employers.  I felt it was important to be fair to everyone, not just the large property owners.  It’s very hard to start from nothing. However, the years of work, long days, and nights will pay off eventually. 

How would you like your business and your journey to be remembered?

For me, it’s simple.  I was fair to everyone: every customer, client, owner, and worker.  Because I was fortunate to have a longer life than previously expected, I performed considerable volunteer work and then gave back to the community by being a foster parent.  Neither of these were easy, but I met so many different people on my journey and learned so much from them.  I hope in years to come, the new owner and employees will reflect on me as he was a nice guy, a good guy, and he started something worthy with this company.

About Natural Resource Management

Headquartered in Sacramento, California, Natural Resource Management is a full service utility submetering and billing company. NRM uses the Latest Technologies in Submetering Systems and Utility Billing Software. We offer a wide range of utility conservation and utility management solutions to property owners and Managers of Multi-family and Multi-Use Communities in reducing or eliminating water, gas, and electric costs. Each of us has a role in taking action to conserve our natural resources.

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