How to Start a Web Hosting Company

Do you want to do business online? Do you want to learn what it takes to start a web hosting company? Then below is a sample web hosting business plan template and feasibility study report.

For the obvious reason that every website online needs a website server to function, the web hosting industry is at the very center of all e-commerce and online business opportunities. Aside providing the tools needed to set up a business online, web hosting is a business opportunity in itself. You can start a web hosting company with minimal effort and investment, little or no expertise or experience.

Today, there are multi-million and multi-billion dollar web hosting companies such as HostGator.com, BlueHost.com, etc. In fact, several new webhosting companies spring up every year, but only few of them will be successful as the ones mentioned above. However, you can still find success in this industry if you follow our lead.

5 Reasons Why You Should Start a Web hosting Reselling Company

• Webhosting is the heart and engine room of all online businesses in the world. What this means in essence is that no internet business will exist without the webhosting industry. Even the big multi-million dollar companies host their website somewhere.
• The webhosting industry seem saturated, but the truth is that there are still millions of small and medium sized businesses worldwide that don’t have an online presence yet. So there is still room for entry and growth in this industry.
• It is a business you can start on a small or large scale. You can either choose to start big by buying your own servers or you can start small with virtually no overhead by becoming a webhosting reseller right from the comfort of your home.
• The ultimate potential of running a webhosting business is that it is a strong source of residual income. What this means in essence is that once a client signs up for your service, there is 99% probability that that client stays for life; paying you a monthly recurring fee.
• You have unlimited potential to generate revenue from several sources. You can achieve this by entering into joint venture or partnership with domain registrars, web design companies, theme developers, web server managers, web service providers, webmasters and bloggers, etc. you can also start an affiliate program and recruit affiliate marketers.

Starting a Web Hosting Company – Sample Business Plan Template

1. Choose your platform and control panel

There are two options to choose from: Windows and Unix. While Unix offers a more stable hosting environment and is less expensive, Windows has the advantage of being able to support ASP, .NET, MS SQL, and so on.

Most other programs used to develop websites such as Perl/CGI, PHP, Flash, etc; can run on both Windows and Unix. But if you are not sure which to choose, a smart idea is to choose a hosting provider that offers both operating systems under a single reseller plan. The next step is choose a control panel. Control panels vary from very simple and user-friendly ones to robust and intricate ones like the H-Sphere system.

2. Choose your reseller hosting provider

This is one of the most important decisions you can make when starting your web hosting company. Your choice of a reseller hosting company can make or mar your business. And your company will only be as good as the reseller hosting company you choose.

Just do a search on Google for the phrase: “Reseller Web hosting” and you will see a lot of options / companies to choose from; each with their own unique pecks and conditions. But before choosing a reseller hosting company, you must ensure that they meet the following criteria:

• 24/7 phone support or Live Chat Support
• Robust control panel features and flexibility
• Plenty of bandwidth and disk space to start with
• A good reputation established over many years
• A customer forum

3. Set up your hosting plans and decide on pricing

Like other hosting companies, you will offer a range of hosting plans; from smaller simple plans, to medium and high-end subscription plans. However, it is important that you limit this to anywhere between 3 to 5 plans, as offering too many subscription plans could leave potential customers confused. Before deciding on your pricing, you must make sure you see the competition’s offers and prices.

4. Set up a business website

This is a very important step, as your website will serve as your showroom, signpost, and office on the web. You must bear in mind that a smart layout and great, easy to understand content is the most important part of your website.

Also, you must make sure that your website addresses your customer’s needs and answers the most common question on the minds of potential customers: “What’s in it for me?” Spend less time on describing your company and more time on telling customers how exactly you will solve their problems. While it’s important that you are succinct, you must make sure your main page has at least 500 words. This is necessary for search engine optimization and marketing.

List of Equipment You Need for a Web hosting Company

• Web Servers (that is if you intend starting a big webhosting company)
• Broadband connection
• High Powered Computers / Laptops
• Stabilizers
• Inverters
• Power generator set

5. Set up your payment facility and client billing system

To be able to receive payments directly on your new website, you will need to set up a merchant account and payment gateway. You must ensure that your reseller hosting company and control panel platform support these features.

You will also need to install some billing software that calculates exactly how much customers will pay and charges their credit cards and bank accounts. However, most reseller hosting companies have their own in-built client billing system. As for the payment facility, you can consider using PayPal or 2Checkout.com

6. Set up support help desk

You will need to set up a channel for effective communication with your clients. Your control panel or platform must support this feature. It goes without saying that you will support the services you are selling. To reduce the burden of having to answer too many questions, you should put up an FAQ section on your website. For even more effective and instant communication, allow your customers to call you for live phone support.

7. Create a welcome email

This is very important, as it reminds prospects of vital information about your business. A typical welcome email includes the following:

• A username and temporary password
• A confirmation of the plan details
• The DNS/registrar changes
• A link to the control panel
• Instant access to FTP and email features
• Links to your FAQ page

8. Market your new business

Though it is time and money consuming, marketing your web hosting company is an effective strategy for attracting potential customers to your website and making sales throughout the fiscal year. Here are a few ways to market your new company:

• Tell friends and relatives about your new company and the services you offer
• You can hire sales reps to talk to local business owners within your environment and convince them have a web presence
• Adopt SEO as one  of your strategies
• Use paid advertising such as Facebook, Google Adwords, etc.
• Slap up ads on classified websites
• Use social media to spread the word

5 Challenges of Starting a Web hosting Company

1. It is a highly competitive industry

The web hosting industry is a highly competitive, saturated industry. But you can still find success by targeting specific niches or geographical areas. Examples are:

• Industry niche: You can provide services and plans strictly for specific industries such as webhosting for fashion businesses, e-commerce sites, bloggers, etc.
• Purpose-driven niche: You can also provide purpose driven services like SEO hosting, blog network hosting, Virtual Private Servers and Dedicated servers, etc. a good example of a hosting company offering this type of service is WpEngine.com
• Geographical niche: You can also target specific regions, areas and countries. For instance, webhosting for Los Angeles based businesses, Nigerian businesses, etc. Targeting these localized niches will bring you closer to your clients as you will understand their need and provide them support accordingly.

2. It is volume-driven business

Yea, a web hosting business is volume driven. So don’t expect to make much money in the first few years of operation; except you are offering high-priced premium services.

To become a successful, well-established web hosting company, you need thousands or millions of paying customers; and you definitely cannot get this on a platter of gold. Except you want to resort to buying an already established webhosting company.

3. Convincing customers to sign up with you

This problem is understandable. Convincing clients and small business to sign up for your company can be a headache. Why? The reason is because there are already established web hosting brands out there, so why the hell should they use your company when you don’t have a track record of experience?

No one would like to see his source of business revenue dwindle because of server downtime or unavailability. So it is up to you to work out a reason why customers should give your company a trial.

4. Dealing with customer support and complaints

Another pain you will face in this business is customer support. You will have to deal with customer complaints effectively and fast; else, they will migrate and spread the word about your bad services. You can outsource your customer support services but I recommend you don’t. Customers are the heart of every business so keep them close.

5. You must be web savvy and technology inclined to be able to setup and run a web hosting business. You must understand how to execute web script installation, server management, etc. However, you can beat this challenge by employing or partnering with someone who understands the technical intricacies of web hosting.