Written by Brad Traversy | 09 May 2010

Starting a new web hosting business can be very overwhelming and intimidating. It seems there are new hosting companies sprouting up every minute. What will separate you from them? There are many dedicated server and reseller plans out there to choose from. How do you know where to start? What features do you look for? Many people (including myself a few years ago) jump too fast at the first deal they see. Acting on impulse and not doing the right kind of research and planning can be your company’s downfall before it even starts.

 

Dedicated server or reseller account?

Both have their advantages and disadvantages. A dedicated server gives you full control. From creating customer accounts, installing software and maintaining uptime, it’s up to you. This can be a good thing if you have server management skills but bad if you are inexperienced in both the technology world and the business world.

Purchasing a reseller account is usually the way to go if you are new to running a hosting company. You do not have to have the skills to manage your own servers. Chances are, if you are just starting out, you don’t have a huge cash flow, and a reseller account is much cheaper than going dedicated.
The answer is fairly simple…If you are just starting out and you are not both business and tech savvy, then go with a reseller account. If you have been around the web hosting world for a while, you are financially able, and you have server management skills, then maybe you should think about going dedicated.

Virtual Private Server - You also have the option of a VPS, which is a partition of a server that acts as a dedicated server. VPS is usually cheaper than a DS and also gives you that control. There are managed and unmanaged VPS deals.

 

Shopping For a Reseller or Server

One thing you should know is that price is not everything. You might get a good deal on 100GB disk space, but they might lack support, software or something else. If you plan on purchasing a reseller account or a dedicated server, you must do some research on different companies and make sure they offer what you want to offer as a web hosting company. Most companies that resell hosting, reflect the companies that they are reselling from. If you want to give good support, you have to make sure you will get good support. A few things to look for when searching for a reseller…

• The Company Itself – How long have they been in business? Do they have any awards? Read customer reviews as well. You don’t want to purchase an account and have them go out of business2 months later.
• Disk Space and Bandwidth – Figure out your package plans before buying someone else’s. Make sure you are going to see some profit.
• Control Panel Software – Double check what kind of software is available to you as well as your clients. CPanel/WHM is very popular right now. If you have some unknown hard to use control panel to offer, it is going to turn people off.
• Support – Support, in my opinion, is one of the biggest aspects of running a web hosting business. A lot of us just starting out running a hosting business need all of the support that we can get. If you can’t get the support that you need, how are you going to give the support that your customers deserve?
• Other software/hardware – Does your provider offer site builders, PHP, SQL or any ecommerce solutions for you and your customers? What kind of hardware do they use?

 

Calculate Company Costs

Make sure you calculate what you will be spending to start and maintain your company. This can range from a $25/month reseller account and a little advertising to multiple servers, employees, merchants and much more.

• Server(s)/Reseller Account(s)
• Control Panel /Other Software (If not included)
• Billing Software
• Merchant Services (If you are planning on accepting credit cards)
• Advertisements and Directory Listings (People are not going to magically show up at your site)
• Added Support Costs
• Added Employees
• Toll Free Number
• Web Design + Graphics
• Domain Registrar Services

 

Advertise Your Business

• Spamming web hosting forums is not going to get you the business you want and most likely will just give you a bad reputation.
• There are TONS of established web hosting companies that you will be competing against. You will most likely have to offer “better” deals and features than your competition. That means charging lower rates, at least for now.
• Have a professional looking website and use solid SEO strategies and SEF URLs.
• Submit your company into a web host directory. There are a few around, but the best and cheapest is Reliable-Hosts.com 
• Create professional banners. If you cannot create them yourself, hire a professional graphics artist.
• Offer free hosting. You could offer a free package with low disk space. If the user likes your service, they will probably upgrade in the future. You could also offer free hosting with the condition that you get to post a banner or link on their website.

 

Support and Customer Service

Great support is key for a new hosting company or any company in general. Treat all of your customers like they are your only one. Ultimately, this is the best advantage that new companies have. There are many large hosting companies out there that have so many customers that it can often create poor support. I have had shared hosting from top companies and waited 2 days for them to answer a support ticket. Be on top of your customer support requests at all times. Be their friend. They will then be happy to refer you to someone else. Live support is great, but lets be realistic, if you are just starting out, it is probably only you running your business and you can’t possibly be at your computer 24/7. You should however, check on your requests/calls as much as you can throughout the day. If you see someone is having a problem, do not put it off. Make them feel like they are important and you are doing everything in your power to help them.

There are many more aspects of running a web hosting company, but these are some key factors to keep in mind when just starting out.

1. Reseller or Dedicated?
2. Smart Shopping
3. Calculating Costs
4. Good Advertising
5. Great Support