The oil and gas production is one of the fastest growing industry. There are many opportunities for entrepreneurs with knowledge in the field to capitalize on it get involved with their own business.
In order to get into the industry and get in line with major businesses, there are many things you need to consider. There are many surprising facts about the oil industry that will complete affect how your business operates.
In order to smoothly navigate your new oil and gas business, we have compiled the top 5 money management tips to get your business on top – fast.
1. Create a Business Plan
Business plans are a must for any business in any industry. A business plan is your map from your starting point to your grand appearance at the finish line.
Business planning can be a burden, but it is completely necessary to have a successful startup. This will help you set realistic goals and take measures to complete them in real time frames. Your business plan will help you stay focused, measure your success, and revisit your overall plan when a new opportunity arises.
Many of our clients stress the importance of involving a third party financier or a private investor in this process. This person will have a better, and unbiased, look at your business with no emotional attachment. They will not officially decide anything without your approval, but they will help you set goals, and push you to reach them.
2. Create a Marketing Plan
A marketing plan is something that will be involved in your business plan. This should not be something that is overlooked in your budget. Your business needs to implement marketing efforts in order to reach customers. Without customers, you can’t operate your business.
Your marketing plan should include the 4 P’s in the marketing matrix. They are as follows:
The money needed to invest in or buy products for your business
The actual product you are selling (i.e. oil and gas)
What efforts you are going to take to sell your product
Where you will sell your product. (i.e. Locally, nationally, regionally)
3. Get Your Hands on Cash
To start your oil and gas business off on the right foot, it is crucial that you have a strong source of working capital to your name. In order to get oil and gas to sell to your clients, you need loads of equipment, tools, people, and more.
There are many ways that you can go about getting cash for your startup. Obtaining a small business loan or a cash flow loan will help you get financing for all of your needs. Getting financing through an alternative business finance company, you will be able to get funding faster and at lower rates. When you finance through a bank, you can wait up to 30, 60, or even 90 days to receive funds.
4. Hire When You’re Weak
As much as you want to, you can’t do it all. When business owners try to do everything, their business as a whole will suffer.
When you feel that you are being stretched too thin or are needed in more than one place at a time, it’s time to add to your team. Finding the funds in your budget is one of the biggest reasons why business owners take on too much.
There are many forms of financing that can help you secure a strong source of capital to better manage payroll. Payroll funding for oil and gas businesses allows you to get an advance of up to 96% on outstanding invoices. Rather than waiting on payments to be paid and processed in full, with payroll funding or invoice factoring, you will be able to get a cash advance of the funds that are already owed to your business – without incurring any additional debt.
5. Understand Oil & Gas Cash Flow
What many people do not understand about the oil and gas business in how profits and cash flow work. Because most of the work is based upon receivables or invoices, you are constantly waiting on payments. This can completely halt your growth, and get you into financial trouble.
There are many ways to remedy this. One of the easiest, and fastest, ways to do so is by utilizing the benefits of oil and gas factoring. When you use oil and gas factoring, you will sell your outstanding invoices or receivables to a factoring company to get an advance of 96% of its total. This type of financing is a great option for startups and new businesses because it allows you to get the cash owed to your business without incurring any debt to your name. This is because the factoring company takes a small portion of each invoice as payment.