How to Start and Run a Hosting Business – Part 2

I’m going to try and not buy a reseller account from another reseller who has bought their account from a reseller (still with me) so if you’re going to start a hosting business you need to research very reliable Reseller hosts or look into a VPS or Dedicated server.

VPS stands for “Virtual Private Server” and gives you the feeling of having a stand-alone dedicated server but for less cost. VPS also offers you the features of dedicated server but it’s still being shared by others. A good VPS host will allocate enough resources on their VPS to manage the amount they are selling too (without overselling). One sleep-at-night benefit is being isolated from other clients, no matter how heavy their traffic is it won’t affect your website or customers.

For me, it all lies with technical support if I purchased a VPS, hence I would need to pay for Level One support as soon as I launch the site which is an added start up and ongoing cost. This is because of software installs and other technical issues.

The Reseller option is much different (this is why it sells well) it offers a one man band, the opportunity to get started and not worry about too much technical and server maintenance knowledge enabling more time to promote the service and offer customer support. With the Reseller option you are given a “Web Host Manager” software package and with this you can customise the hosting plans you sell (webspace, bandwidth etc.) for your customers.

I wasn’t going down this route but I think I may choose it to get some clients on board without worrying about server installs and purchasing expensive software which are crucial to operating your hosting business and competing with your competitors.

My main selling point (and YOU need one) its called a UPS (Unique Selling Point) is “We don’t just sell Web Hosting we sell Web Businesses” – I’m going to stand out by adding huge benefits – people buy benefits and solutions not technical jargon and specifications.

Note: a VPS is just a Dedicated Server which can be part/fully managed and can be a much cheaper option than Dedicated.

If you were to purchase a Dedicated Server to start your Hosting Business, you would need to have the most popular software installed to compete in this marketplace.

These are some rough costs for you:

Dedicated Server $3000
RackSpace (to house your new server) $280 p/m
Cpanel with WHM $ (yet to find a price)
Fantastico De Luxe $90 (there are lots of add on costs for more servers) and a Annual license renewal at $20.00
ClientExec $199.99 (optional billing, customer and package management)
MySQL $738
Webstats (AWStats) this is free under the GPL licence)
PHP5 (free to download)

I may have missed some bits out, but this gives you a good idea of why many if not all people who want to get into web hosting start with Reseller Account. These are big start-up costs but it’s beneficial to get started off with your right option that suits your business plan. I still think I can use easily get going on a VPS or Reseller Hosting option. I won’t be overselling to get clients so that will be an obvious bonus. (most hosts do this) I think I’m leaning toward VPS to make sure I start with a good structure to the business. I don’t like the idea of another person on my Shared Server killing bandwidth with his own sites or reselling at stupid prices and overselling webspace.

Once you are fully established and running a smooth operation (or maybe before this) and you’re comfortable with your clients and revenue, you can then upgrade and run a self managed Web Hosting Company. All with your own in house or outsourced management team made up of technical support and sales staff.

After searching WebHostingTalk a great forum for any new host to start asking questions. It really amazes me the amount of hosting businesses out there and the amount of people who want to get into this industry (most must be making some sort of living from it). I still believe a huge percentage are failing to get it right from the start.

Onto your name Choosing a Brandable Domain Name – you may think this is not important but it is “Always” you’re not going into this half hearted you should always see it as building a memorable name that will try to convey your USP within one or two words.

In the next part I will talk more about buying a brandable domain name and some options for the design of the site.

Note: I haven’t mentioned this yet, but I’m opting with the Linux Operating System for two reasons (price and flexibility) Microsoft are stupidly expensive and I just don’t see the benefits and never have.