Starting an oilfield water hauling business takes work. It’s not always easy, but for some, the rewards of entrepreneurship far outweigh the risk as there are many benefits to being an oilfield water hauler. Here are some tips to help you succeed.
Before you even begin your venture, research is required to start a water hauling business. Here are just a few things you should think about and research:
Water hauling businesses operate by bidding on and winning contracts. There are two ways water haulers acquire drivers to fulfill contracts; subcontracted drivers or owner-operators.
One of the problems right now according to William J. from JKJ Transportation, LLC, is finding truck drivers.
“Most of your good truck drivers are taken. That’s the hardest part to this industry is finding the help, the employees.”
When you start a water hauling business, you’ll need to be sure to meet the proper federal and state requirements, as well as tax, license, and permitting regulations for the type of trucking industry you’re entering. Below are a few of the important requirements.
When you oversee the operation of commercial vehicles, your insurance requirements typically cost more than other businesses. Visit the US Small Business Administration website to learn about what coverage requirements you need.
You may also be required to comply with health and safety standards and regulations enforced by the US Department of Labor’s Occupational Safety and Health Administration.
If you’re operating your oilfield water hauling business with your private drivers, you’ll undoubtedly need at least once commercial vehicle. To finance equipment purchases, you’ll want to secure working capital to fuel your operations. You can also consider leasing versus buying the needed equipment to save some of your working capital.
The upfront costs of any business can be overwhelming, and water hauling is no exception. Securing large contracts from oilfield companies can be difficult and is extremely competitive. As a start-up company, you’ll have to work hard to build a reputation and secure your first master service agreement. You may have to start by accepting smaller contracts.
In a previous blog, we interviewed an oilfield foreman who gave this advice about building your reputation:
“Word of mouth travels fast around here, and we are not Googling these service companies in the Permian deciding if we will work with them or not. It is difficult and takes time to build a good reputation, but a bad reputation can start as quickly as after the first job.”
When you secure your first MSA with an oilfield exploration or production company, you’re essentially in business. MSAs are contracts that an oilfield company uses with their suppliers. Be sure to review your MSAs in detail to help ensure payment from your customer. By not complying or understanding your MSA completely, your customer could refuse to pay you. Be sure to understand invoicing and insurance requirements, and any conditions regarding liens or encumbrances.
William J from JKJ Transportation, LLC, says water hauling is a tough business and you need to watch and hustle it to get new contracts.
“Watching the drilling, seeing what they’re doing, where they’re at…”
Right now, he’s seeing the biggest growth in West Texas.
However, even though it’s a tough business, William stated that the demand is “real high, real high demand.”
Growing and operating a business requires access to working capital. Most oilfield service and exploration companies take 30, 60, or even 90 days to pay. When you need cash for payroll, equipment, fuel, and other business needs, you don’t have time to wait. Many oilfield water hauling businesses rely on invoice factoring to secure steady cash flow. Instead of waiting for customer payment, invoice factoring pays you the same day.
If you’d like to learn more about our invoice factoring programs, give us a call at (800) 707-4845 or fill out the form below. Our month-to-month financing programs provide companies the working capital they need to grow and succeed.