The Water Environment Research Foundation, or WERF, funded research that identified business characteristics common among 15 successful Responsible Management Entities, or RMEs. The 72-page report, Business Attributes of Successful Responsible Management Entities, provides guidance to businesses and organizations interested in becoming RMEs.
Your definition of success and the authors’ probably differs. They found that successful RMEs had:
• technical expertise in treatment technologies through staff or subcontractors;
• expertise to manage all RME business aspects professionally;
• the customers or financial backing to afford professional management and business staffs;
• a governing body that set policy and a professional staff that made the decisions for long-term survival.
Translation: Successful RMEs are certified in operation, maintenance, and inspection through recognized training courses. They limit the types of treatment systems they operate to three or fewer to simplify construction, operation, and maintenance by minimizing inventories on spare parts and training requirements. Successful RMEs are comfortable with these systems and use them repeatedly. Performance reliability is key, says the report.
Successful RMEs have full managerial capabilities that include a paid manager, someone who collects from the 5 to 10 percent of customers who don’t pay, and one or more individuals responsible for the RME’s formation and early growth. The report states that the founder was often quite passionate about the use of decentralized systems as a way of addressing groundwater pollution from failed onsite systems.
Successful RMEs have full financial capabilities that include a long-term financial plan, a strategy for long-term growth, enough money to be self-sufficient, a sustainable monthly charge and an independent financial advisor. Researchers found that most RMEs don’t start out with sufficient customers to make them financially viable, so they grow their way to financial viability. However, customers resist paying more than $40 per month for sewer service. The kicker is to develop a large enough customer base to cover administration costs while keeping the monthly charge at, ideally, $30.
The sustainable monthly fee must cover all expected costs, yet one common mistake RMEs made was equating it with only the cost of operation and maintenance. Long-term management also includes such items as sampling and testing, replacing failed mechanical equipment, taxes and bonds, franchise fees, and profit. Failure to account for any of these can be disastrous, because the cost is often a large lump sum.
As we know, RMEs can’t operate unless the public accepts the need for long-term maintenance and is willing to pay for it. That requires continuous public relations, and the presence and enforcement of onsite regulations. Enforcement means installers and homeowners operate under the same rules, which punish those who ignore their onsite problems or profit from shoddy or incomplete installations.
However, the job of many local health department regulators has become too big. Successful RMEs have gotten around that issue by operating as a regulated public utility, developing close relationships with regulators, or operating as a special district or zone developed to take responsibility for onsite systems.
The report concludes that the decentralized industry would benefit from focusing more on financial and managerial issues, and less on debates about the performance of competing technologies. The success of RMEs depends mostly on management, acceptance of the venture by the public, and sound financial planning. The report, Project No. 04-DEC-4SG, is at www.ndwrcdp.org/publications/index.htm.
The next WERF research project, which ends in June 2009, focuses on how to become successful RMEs. NAWT was asked to be one of the reviewers. It’s encouraging to see WERF recognize the role of pumpers, and we are going to push to keep it that way.
RME ROAD TO SUCCESS STARTS HERE
It’s no joke. Knowledge is power — the power to grow your business responsibly and professionally. The power to improve your company image in the community and with regulators through nationally recognized certification. Join the hundreds of others who have accepted the challenge to grow through learning at an upcoming NAWT training session. Check out future training sessions in the Training and Education listing in the Association News feature in this issue of Pumper.
