Top Mistakes New Coil Tubing Startups Make And How to Avoid Them
- Nate Jones, CPCU, ARM, CLCS, AU
- 4 days ago
- 3 min read
Starting a coil tubing company in 2026 can be highly profitable, with successful operators generating strong revenue within their first few years. However, many new coil tubing startups fail to reach their earning potential due to avoidable mistakes. Understanding these common pitfalls—and planning ahead—can protect both your operations and your bottom line.
Mistake 1: Underestimating Startup and Operating Costs
One of the biggest mistakes new coil tubing startups make is underestimating costs. Equipment purchases, maintenance, payroll, fuel, compliance, and insurance can quickly exceed initial projections.
Many first-year coil tubing businesses expect rapid profits but face cash flow issues instead. In reality, it can take time to stabilize earnings, even though established coil tubing companies can generate millions in annual revenue.
How to avoid it: Build conservative financial projections and budget for unexpected downtime, repairs, and insurance deductibles.
Mistake 2: Buying the Wrong Equipment Too Early
New startups often overspend on equipment or purchase units that do not match their target contracts. High-horsepower coil tubing units, pumps, and tooling are valuable—but only if aligned with actual job requirements.
Overspending can delay profitability and increase insurance exposure due to higher equipment values.
How to avoid it: Start with versatile equipment that supports multiple service types and upgrade as contracts grow.
Mistake 3: Inadequate Insurance Coverage
Insurance is often treated as a formality rather than a business strategy. Many startups carry minimum coverage limits, only to find those limits are insufficient for major operator contracts—or worse, during a claim.
Without proper coverage, a single accident can erase months or years of earnings.
Key policies new coil tubing companies typically need include:
Pollution Liability Insurance
Mistake 4: Weak Safety Programs
Safety performance directly impacts earnings. Poor safety records lead to higher insurance premiums, lost contracts, and regulatory penalties. Major oil and gas operators heavily evaluate contractor safety histories before awarding work.
How to avoid it: Implement documented safety procedures, routine training, and equipment inspections from day one.
Mistake 5: Ignoring Contract and Operator Requirements
Many new startups lose out on high-paying contracts because they do not meet insurance limits, safety documentation, or compliance requirements.
Even profitable coil tubing operations can be excluded from contracts if paperwork and coverage are not in place.
How to avoid it: Understand operator requirements early and structure your insurance and compliance strategy accordingly.
Mistake 6: Not Planning for Growth
Some startups focus only on surviving the first year without planning for scale. As revenue increases, so do risks, payroll, equipment values, and insurance needs.
Failing to update coverage can expose growing businesses to serious financial risk.
How to avoid it: Review insurance, safety programs, and risk exposure annually as earnings and operations expand.
Why Choose Wexford Insurance
Wexford Insurance specializes in helping coil tubing startups and established oilfield service companies avoid costly mistakes. We work with multiple oil & gas carriers nationwide to structure coverage that supports growth, protects earnings, and meets operator requirements.
Request a free coil tubing insurance quote from Wexford Insurance and protect your coil tubing business from day one.
