The Basics of Business Management

It’s critical to know the techniques of running a successful company.

By Ed Butts, PE, CPI

As the theme of the columns this year is business, we are going to cover business management this month.

Although many of you are undoubtedly more experienced about managing a groundwater or pump business than me, I managed and owned a well and pump firm for more than 20 years. Thus, it is my hope I can convey a few pointers and food for thought to current owners, newcomers, and those not yet involved in business management.

This will not be a basic review of counting the nickels and dimes involved in managing a business, but ways to expand known management techniques to ultimately improve the firm.

Knowing the Fundamentals

Many people who participate in the daily world of running a business jump in while not fully understanding or appreciating how complex and fateful the decision can be to their lives. From the mundane tasks of deciding on appropriate marketing and advertising strategies to more complex responsibilities such as preparing balance sheets and creating benefit plans for their employees—a successful owner or manager of a company must be able to handle or delegate all aspects of operating the company.

This usually begins with a certain degree of fundamental business knowledge which, in time and with the expected incidents of success and failure, eventually develops into worthwhile experience. The unfortunate but simple fact is most businesses fail within their first few years of operation. Although some of these failures can be attributed to inadequate capital funding or simply poor timing within the applicable market, most companies that fail do so because the aspects and burdens of running a company were not fully considered and dealt with by those who began it.

There are many different and distinct aspects of running a successful business that the management of a company must constantly focus on. These range from how much to pay different employees and contribute to their benefit plans; how often the company needs to reorder stock and supplies to continue to adequately serve its customers and projected workload; overseeing a vehicle fleet; tracking and payment of overhead expenses and taxes; understanding what is and is not acceptable in terms of ethical business behavior and practices.

However, what is critical is the way managers and owners of companies handle these issues. Besides the differences in operating and planning that naturally arise between industries, there are also considerable inherent differences within the industries themselves. These intra-industry differences can arise because of the size and diversity of the business, geographical and marketplace differences, the number of employees a company has, managing expenses and overhead, and goals for growth and sustaining revenue.

In short, because of this variety, it is difficult to pinpoint the biggest flaw a struggling firm may exhibit. Yet from studying numerous cases of companies that have succeeded as well as those that have failed, the biggest cause of failure for all businesses seems to be their inability to adapt to changing market environments as well as to fully and consistently treat their customer base with the service and respect they deserve.

Thus, it is important to keep track of what successful competitors and other firms in the same enterprise and local market are doing and to make sure your firm is not being left behind by a company not afraid to diversify and take risks and reap the rewards from these risks.

Knowing Your Customers

It is important to note the word “customer” does not simply refer to the end recipient of a product or service. For example, a customer who is purchasing a product or service from one enterprise but intending on reselling or repackaging that product or service is just as much of a customer as the customer who is the final end user of the product. This exchange can also include selling a product or service to a government agency, between wholesalers, and to another well or pump firm.

As technology has taken on a much larger role in business operations during the past few decades, it is important for companies to become more vigilant about their supply chain and asset management. Supply chain management is the term for how effectively a company deals with their suppliers and their customers.

No longer can a firm assume their current contracts will remain intact and perpetual, and their customers will not have any other viable purchase options. The fact is today’s customers are more educated and savvier about what they want and need. Due to this dynamic, companies need to be aware of every aspect of their supply chain.

For example, a well drilling company that wishes to ensure success in their local market area must be aware of the purchase procedures that go into every aspect of the business—all the way up and down the supply chain. This supply chain may include manufacturers like the producers of drilling rigs; the wholesalers or suppliers that provide well casing, pumps, drop cable, and ancillary equipment; and the customers themselves such as a city or private homeowner.

With proper communication and mutual cooperation, companies can work with their suppliers and their customers to streamline processes and payments. For example, it may be more beneficial to charge a lower price or concede a warranty situation but lock in the customer’s goodwill for a long-term period rather than using a one-shot piece-by-piece sales strategy.

This may not necessarily seem like an innovative business strategy, but it seems to me to be happening with enough frequency to warrant mention. I’ll discuss supply chain and asset management techniques in greater detail in the April 2026 issue of Water Well Journal.

Always Reinventing Yourself

Companies also need to reinvent themselves constantly and continually improve and change their procedures if they wish to be and remain successful. This continual improvement must occur throughout all areas and tiers of the company from management, accounting and finance, human resources, marketing, to the field staff.

This often requires a bit of experimentation and may make many employees in the company nervous or anxious, as some people fear change. However, a truly well-run company is one that continually senses the needs of its employees as well as its customers and works to adjust to them.

Another area that cannot be stressed enough is always maintaining a company-wide sense of proper business and personal ethics. Although from news reports it may seem as though unethical behavior in business is something that exists only in large corporations, virtually all companies can temporarily lower their bottom line or increase their profits or revenues by performing what they may believe to be a one-time unethical act.

Unfortunately, what often begins as a one-time event of “taking advantage of the situation” can cascade into an unending and expanding atmosphere of unethical business practice, affecting virtually everyone in the firm. Unethical acts include overcharging customers, not delivering on a promised good or service on time or at all, using substituted inferior or less than high-quality materials. Sadly, the list can go on and on.

Along with maintaining a sense of ethical behavior, social responsibility is another key factor for any business that wishes to succeed in the long term. This aspect of ethical behavior is especially important for companies that operate in the area of the environment. Deciding how best to make use of and protect the natural resources of an area, such as a groundwater aquifer, is key to better usage of the resources.

This goes beyond simply not polluting the landscape or waterways and making sure what goes into the well will protect the installation and not contaminate the aquifer. For the drilling of wells, it is important to understand that our natural resources, once contaminated or depleted, cannot be replaced or even remediated in many cases.

Although there are laws and restrictions regarding well construction, a truly responsible company is one that always looks toward protection of the resource they work with by improving the way it performs a service or produces a good regardless of the perceived cost.

This leads again to the importance of innovation, a critical ongoing component of any business. It will take time, but if companies are able to maintain or improve their relationships with their suppliers and customers, they will find themselves in a much better position to take on and succeed as we move through the 21st century. This holds as much true for the small, family-owned water well companies as it does for large, multi-international corporations.

The Importance of Delegation

Another characteristic of an effective business manager, particularly in our ever expanding and more complicated world, is a willingness to delegate certain tasks to others. Obviously, a manager or owner must have knowledge of and oversee all operations of the business and require accountability from subordinates, but attempting to micromanage a business will usually lead to personal exhaustion, missed opportunities, or errors in responsibilities.

In most instances and except for smaller single proprietorships, the days are gone when a single individual can reliably handle the multitude of tasks involved with selling, purchasing, invoicing, bill collection, filing taxes, administration, and inventory control—all while simultaneously serving as the firm’s well driller or pump installer. Finding and selecting a trustworthy and responsible individual or outside firm who can lift some of the burden from an owner will not only spread the workload but make each day a little easier to get
through.

Business management means just that: managing. Even if certain responsibilities are delegated to others, it is essential that an owner or manager possess an adequate working knowledge of expenses and overhead versus sales with regular updates to enable righting the ship before it sinks, if necessary.

In many trade businesses subject to seasonal sales variations, inventory replacement or replenishment (i.e., restock) is often ordered in advance of the actual need to take advantage of deeper discounts and shipping allowances. This is not a bad practice, but sufficient forecasting of projected sales and cash
flow based on work backlog and historical sales should be conducted to ensure adequate funds will be available or accessible to at least cover the fixed primary overhead, specifically labor and benefits.

In lieu of cash flow, establishing a line of credit with your bank or other lender may compensate. This is truly a balancing act with businesses as the interest paid on a line of credit may offset the savings incurred from additional material discounts.

Using Business Management Software

NGWA recognized the need to empower business owners to secure a successful future and rolled out in the last year NGWA Business PRO, a cloud-based software system that helps groundwater professionals streamline their operations and increase efficiency.

It was developed by water well contractors for water well contractors. Synched with QuickBooks Online, NGWA Business PRO was exclusively developed for any size water well business. The new program offers many functions and reporting capabilities:

• Estimates
• Work orders
• Cost tracking
• Data mapping
• Recordkeeping
• Equipment management
• Inventory management
• Accounting (balance sheets, profit/loss, year-to-date, estimate vs. invoice cost comparison, profit margin, gross profit, net profit)
• Tracking service work by the site, not the customer
• Onsite contract creation
• Onsite payment processing.

NGWA Business PRO’s comprehensive suite of modules and capabilities is designed to meet the accounting and resource management needs of each business—no matter how small or large the enterprise. Companies simply pay a monthly fee which provides NGWA Business PRO to three users (additional users can be added for an additional small fee).

Have an Open Door

Finally, business management should not just mean counting dollars nor be a reserved, stuffy operation. Successful companies have a true open-door management policy for all parties. If employees feel their leaders trust them with the details of the business and want their input about the direction of the company, the employees will be a lot more likely to buy into the plans and ideas of the leaders.

Management must always be aware of the fact that employees need to feel involved and important to the company, a simple example of “wants and needs.” In my opinion, most water well businesses should be interpersonal businesses, meaning the firm is most effective when the owner or manager remembers the employees are individuals with unique and often dynamic ideas.

This seems to be most valid for family-owned businesses. A danger to morale can surface, though, when non-family employees feel family members are shown undue favoritism. Although not always easy, an owner of a family enterprise must continually be fair and objective in managing the business and dealing with all employees.

Those who work with family and non-family members will certainly want the best for their relatives and perhaps know issues they are dealing with, but it is critical to be fair and objective toward everyone at the company.

It is also important to remember employees cannot simply “leave their problems at the door” when arriving for work each day as managers would prefer. Like it or not, your employees will occasionally face and think about a situation during working hours which may impact their productivity. I believe the most effective managers always remember this attribute and adjust their attitude and relationships with their employees to fit the situation as well as occasionally start a dialog with them so they feel empowered and part of a team or even extended family.

This is important for the morale of the company and shows the manager truly cares about the employees and their lives. Even things like providing small gifts on birthdays or bringing donuts and coffee to a company morning meeting can foster goodwill between managers and staff.

Other inclusive activities such as company picnics, dinners, and holiday parties can present a true bonding opportunity, especially if the employees’ entire family is involved. It will go far beyond what any ordinary meeting can accomplish and can greatly reduce the stress when an unexpected work situation arises.

Other items like including individual lockers, personal or sick days off, use of a shop or equipment for personal reasons, and clothing allowances can also benefit employees’ attitudes and improve general working conditions. I know for a fact these relatively simple adjustments can work as we successfully practiced many of them at our firm.

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This concludes this installment on business management in our year-long series on business procedures, operation, and management techniques. We will continue next month with a look at managing and scheduling field crews.

Until next month, work safe and smart.

Ed Butts, PE, CPI, is the chief engineer at 4B Engineering & Consulting, Salem, Oregon. He has more than 40 years of experience in the water well business, specializing in engineering and business management. He was honored by the National Ground
Water Association with the 2025 Technology Award. He can be reached at epbpe@juno.com.