4 Tips to Grow Your Oilfield Water Hauling Business

January 27, 2016

Starting your own oilfield water hauling business can be challenging, but also very rewarding. Here are some common things to consider to combat the health and future growth of your water hauling business.

1. Should you lease or purchase equipment?

Lease or purchase – it’s one of the most expensive investments your water hauling company will make. If you choose to buy your own equipment, the investment can pay off greatly over time. However, in many industries, leasing equipment is also a viable option.

Leases are typically structured rentals, where you pay a monthly fee for the rights to use your equipment. There is really no right or wrong answer; however, either choice requires a large financial investment. Consult with a licensed CPA who specialized in small business before making any decision. Inevitably, you may find that you’re able to lease equipment to expand and grow your business or doing so will give you the ability to go after bigger, more lucrative contracts in the oil patch.

2. Assess and learn from the competition.

Before launching an oilfield water hauling company, you’ll need to assess the competitive landscape to see if there’s a place for your company. In oilfield hotspot areas like Midland, Texas or Williston, North Dakota, there are already many well-established operators and a lot of competition. Model pieces of your business after successful operators in the field. Are they dropping their rates? Are they securing more contracts than you? You can access the competition’s strengths and weaknesses and form ideas where to be aggressive in areas of real mobility.

3. Don’t overlook back-office efficiency.

An often overlooked piece of running a successful small business is prioritizing back-office efficiency. Most small business owners don’t have the time and resources to manage an entire back office. It’s especially challenging when the owner of a small business is already busy paying employees, securing contracts and looking for bigger and better work.

However, a streamlined back office should be made a priority. But, it doesn’t have to come at a financial cost. Often, financial service companies like Scale Funding provide dedicated relationship management, A/R management, collection services as well as credit analysis and risk assessment so you can focus on growing your business in other areas.

4. Secure a steady flow of cash.

Growing businesses have one big thing in common – fast, affordable access to working capital. Without a steady flow of cash, not only are you likely to miss out on lucrative contracts, but you’re also going to run into situations where you need to hire employees or purchase equipment.

A traditional bank loan may be a good solution if your credit is in good standing, and you’re not in a rush for cash. A better and often used option may be invoice factoring (or accounts receivable financing). Unlike a traditional bank loan, you’re not locked into a limit or a capped amount. With factoring, the amount of money you can finance grows as your receivables grow. That means, as you acquire more business, you can have fast immediate access to steady cash to purchase equipment, pay employees and more.