Startup funding can be tedious to acquire. In the oil and gas industry, getting funding to start a business can be even trickier due to the many concerns people have over the industry. Be it the challenge of global warming, or oil spillage in the sea, challenges will always exist in such a process. But to go through such challenges, you have to first understand what business idea you have in mind and have a passion for the same.
Starting a new oil/petrochemical company does not have to be a boring or stressful job; if you have the right tools. Determine your best skills if you are trained and skilled in the oil industry. First, choose which aspect of the oil/petrochemical industry best allows you to “showcase” your abilities. The ever-changing and highly profitable oil and gas industry offers excellent opportunities for enterprising entrepreneurs to launch new businesses. This document details how to polish the business idea and acquire the necessary funding to run it.
Determining and Understanding Your Business Idea
Decide if you want to work for a service provider, a retail or wholesale distributor of supplies and parts, a contractor, or an independent exploration company. You may sell oil field equipment, petrochemical products, and supplies. You can also start an oil field service or an oil and gas lease brokerage business. For an oil and gas equipment retail firm, this entails deciding whether you will buy and resell high-quality trunnion ball valves vs floating alternatives for your retail business.
Determine the proposed size and scope of the company once you’ve settled on the type of business you want to start. This decision will aid you in determining the location of your business as well as the amount of office, warehouse, and equipment yard space your new oil/petrochemical company will need. Next, figure out how many people you’ll need and what kind of preparation and experience they’ll need to succeed.
Determine the size of the demand for your product or service. Investigate local oil and petrochemical firms that are successful. Determine if you can compete on price, operation, and a well-established market reputation with them.
Choose a name for your new company. Choose a name that is easy to remember and clearly describes the petroleum product or service. Make a business plan. Compile a detailed list of all startup and ongoing expenses. This business plan will assist in startup fund acquisition.
Startup Fund Acquisition
Where do you get the funds you’ll need to start your own oil or gas company? Read on to find out.
1. Financial Bootstrapping
You might discover that you already have the funds you need at home. This could come in the form of existing assets or investments.
Bootstrapping is the simplest way to raise money for your company because you just have to persuade yourself. You’re also showing that you’re confident in your oil or gas output and your ability to turn a profit from it. You maintain complete ownership of the company by supplying the initial capital.
Crowdfunding takes the product and turns it into an investment opportunity for anybody who thinks it’s a good idea. Since crowdfunding is a public campaign, you will keep a complete record of your investments. This ensures you’ll be able to show off your extensive investment history while pitching to bigger investors in the future.
3. Angel Investors
Angel investors are typically wealthy people with a net worth of $2 million or an annual income of more than $200,000. Angel investors will contribute a maximum of $1 million. Investors can also provide business advice as an additional benefit. Your angel investor can be a valuable source of business advice if you can establish a strong professional relationship with them.
4. Those Around You(Friends and Family)
Your family and some friends will be aware of the risk/potential of your gas or oil share and may have even assisted you in its acquisition. This is also one of the simplest ways to acquire money since there is little red tape to slow down the process.
There are drawbacks to this source of capital, just as there are to every other source of capital. Your relatives may be willing investors who demand a lower rate of return than other investors. They may, however, have little or no business experience, if any, in the oil or gas industry.
5. Get a Bank Loan
Bank loans necessitate collateral as well as a strong financial history and credit score. Bank loans, on the other hand, are not the same as other investments. The bank would most likely ask you to provide a significant amount of details on your initial application to ensure that you will repay the loan.
6. Startup Competitions
Entering startup competitions requires little time and resources, making it a low-risk choice for new businesses. The advantages, however, are not limited to a large cash payout. Entering competitions gives you direct access to a large range of investment firms that scrutinize each entrant. Even if a company does not win the competition, it is common for angel investors to contact them afterward.
7. Venture Capital
Venture capital is the largest and most challenging form of capital to raise. The term “venture capital” refers to the financing that an investment firm provides to sometimes fledgling start-up companies. Since investing in a business at this point is considered risky, the company’s requirements are often stringent.
Don’t miss out on this chance if you, like many other firms, have access to production-ready oil or natural gas. Home production is strongly favored by the political and social system. Whether your goal is to open a refinery, or supply equipment to these refineries, take the time to craft your idea and decide what financing you will acquire.