There are many different guides out there telling you the pros and cons, the do’s and don’ts of running a hosting company. I felt like I should make a guide after my experience of running a web hosting company, explaining the steps I took to make the venture successful, as well as the pros and cons of actually owning a hosting company. Hopefully this will answer some, if not all of the questions you have to ask.

Capital


The first thing to consider when looking into starting a hosting company is capital. Many people ask if capital is important in a hosting company and the answer is yes, very. It’s hard, nigh on impossible to start any company without a cash injection at the start. Having said that, it’s always best to start small, so that if things don’t take off, you aren’t out of pocket too much.

Choosing the right route for you

One of the best ways to start your company is to begin with reseller hosting. While this is technically more expensive than a server (if you compare it by disk space/bandwidth : cost) the pros should far outweigh the cons. The first positive is that reseller hosting is not that expensive. Secondly, having reseller hosting means that you have the security of someone else looking after your clients as well as yourself. It also allows you to gain the knowledge of how to run a company without being thrown in at the deep end, allowing you to build up your knowledge at a more steady pace.

I’d also suggest to go for linux hosting, not windows, as the majority of people look for linux hosting. It gives you a bigger market and the bigger the market, the more chance you have of getting hold of a client.

How to run the business

The first thing you need to be aware of is that, at the start, you will have to put in a lot of work and hours. It’s not easy and unless you completely focus on one market (e.g. UK market) then you need to be prepared to answer emails and IMs throughout the day and evening. It simply isn’t profitable to hire a member of staff at the beginning, so it is up to you to do the dirty work. The more you do for the company, the more it will do for you. Gaining a good reputation in hosting is very important. As companies pay large amounts of money for SEO, the best route is through word of mouth which is, of course, totally free!

Secondly, make sure your website looks professional. People simply won’t buy your product if they think your site looks tacky. Try not to use a template as it just makes your site look like the hundreds of others out there. People don’t need to know there aren’t 20 support staff, they just want to know you will give them a quality service. There’s nothing worse than lying to a client.

Thirdly, don’t push the boat out too far. You are here to offer a hosting service and while it’s nice for clients to have a whole host of exciting and innovative options to choose from with their hosting, it’s simply not worth it. If you get the basics right, you can build on them when you get some money coming in.

Expanding the business

One of the most important questions in business is, when do you expand? It’s a tricky question and I can’t answer for all cases, so be prepared to do what you think is best for your business.

Never try to spend more than you have. If you are bringing in a small profit, don’t upgrade to a server or bring in any staff. If you jump onto a server too early, you will find yourself making heavy losses. If you bring in a staff member, they will not be happy if you lay them off only a month or two later. Take things one step at a time and keep things steady. You might feel big and special having your own server, but you’re feel even better if you are making a profit off it!

Staff

Staff is such a broad term, but when it comes down to it, the only staff you really need to hire are technical support staff. Until you get a really decent sized company going, this is all you will need. It means there is someone else to take some of the work load off you and they can also work different times, to cover the international cliental.

You also need to find the fine line between quality staff and reasonable wages. It’s always best to hire staff that can speak English well (unless of course you are a Spanish, German etc. web host, obviously). There’s nothing more damaging to a company than a client that can’t understand what is being said to them by a tech support guy! I’m sure you’ve all encountered it and it doesn’t leave fond memories. You also need to find the lowest threshold you can in regard to wages. Also, when it comes to contracts, don’t sign any. Give them a six month probationary period before you consider it, otherwise you could get stuck in a very bad bind.

How should I sell the business?

There is no real answer to this, but I have always found quality over quantity is the best way to go. While people love a cheap deal, it is not people looking for a cheap deal that you really want to target. One client paying £20 a month is much better than ten at £2 a month. You want your company to come across as being professional and reliable and if you stick to that and remain loyal to your customers and give them a great service, you will find you attract some of those prize clients that everyone in the hosting industry looks for.

Always offer yearly hosting as well, as you will find that clients do leave in the hosting industry. Having a yearly deal binds them to hosting with you for a year and hopefully renew their hosting after that period. If they don’t and only, say, stay six months, you are basically gaining six months of payment without having to even provide a service. A 10% discount, or a month’s free hosting will often seal the deal. That is often enough to seal a deal. Remember though, you then have to provide them a service for a year, so you need to make sure you are able to do so before committing. Having said that, if long term commitment isn’t for you, then web hosting definitely isn’t.

To conclude…

Remember to sell yourself, don’t be afraid to put yourself out there but don’t overdo it. You don’t want to make false claims that you can’t backup. You want to provide a basic, quality service before thinking about expanding. In the web hosting industry, reputation is key.

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Thats one of the best write up's ive ever read and has answered alot of questions ive had in this area.

I thought of going into this business many times but never really knew where to start, seems reseller hosting is the best way to get kicked off , is there any more tips and recommendations you could give for a beginner into hosting ( but established web developer ) to kick start in this area ?

Look forward to reading more on this subject

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The only thing I can really recommend is to read around the subject a lot before you begin. Other than that, I'm happy to answer any questions I can :)

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Probably better is to use just other companies hosts, don't see any reason why anyone should build hosting company of course if he doesn't want to make from that money, but nowdays when is so much popular host companies it is very difficult and probably unreal.

I agree that it's difficult but I don't agree that it's unrealistic. The last few months have opened up some gaps for new blood :)

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Is it possible....? I mean building own UK Web Hosting Company would need 100 brains right.

And why should it need 100 brains? Starting a hosting company is much easier than you think

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Reseller hosting is one of the best ways to start. I started a reseller hosting a year ago, but I gave up. It's easy, you just need to answer customers' question and send difficult techinal issues to the support of your hosting company.

Hello to everyone at this forum.....I am really new at this and wish a good time to spend discussing

Hello to everyone at this forum.....I am really new at this and wish a good time to spend discussing...