Author Archives: sbechara

Planning your webhosting business

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In my last article, I talked about the factors which should be present in order to become a successful webhost. In this article, I will talk about planning for the success of your webhosting company.

In order to become successful, you will need to plan for your webhosting company’s success. At the heart of your planning phase is a business plan. A business plan helps you put all your thoughts on paper prior to starting your webhosting company, and helps you identify any issues which need to be addressed prior to launching your business. A business plan is primarily composed of the following sections:

  • Products and Services
  • Market Analysis
  • Marketing Strategy
  • Sales Strategy
  • Milestones
  • Management Summary
  • Financials

Since it is technically impossible to cover all of the above aspects in one article, I will start by taking a look today at the products and services a webhost can sell, and will discuss the subsequent sections in later articles.

Products and Services to consider selling:

  • Domain registration services: Usually, there isn’t much profit to be made here. However, if you’re offering shared and reseller hosting services, you will need to offer domain registration options, because many clients bundle their domain name with their shared or reseller hosting service.
  • Shared hosting services: While there is a margin profit to be made here, you will need to provide very good support, since all your competitors are doing it. I highly suggest you hire a service company which provides outsourced hosting support. This will ensure that you’re providing 24/7 support, at the fraction of hiring a full-time employee.
  • Reseller hosting services: This offering is very similar to shared hosting services, except that you’re allowing your clients to resell hosting services to their clients. Therefore, your support will need to be even better since your customers are business owners, and will lose money every time your service is unstable.
  • Dedicated Servers: A dedicated server is a physical hardware computer with high specifications, which will be dedicated to one client only, whereas a shared hosting account resides on a server shared with other accounts, as the name implies.
  • VPS hosting services: A virtual private server (VPS) is a part of a dedicated server, functioning as a dedicated server, through a software technology called virtualization. This technology allows you as a company, to sell a VPS to your customer, which almost functions as a dedicated server, at the fraction of a price of a dedicated server.
  • Cloud hosting services: While a VPS server is usually part of a dedicated server, a cloud server usually sits on top of a server farm, which usually consists of hundreds of physical servers or more. This allows your server instant upgrades to virtually unlimited resources and failover abilities.

My next article will talk about additional streams of income for webhosts, by selling products and services which will complement your webhosting offerings. Stay tuned!

Samer Bechara is a business consultant who specializes in business planning, online marketing and web-based technical solutions. He can be reached through his website, Thought Engineer.

Reasons for becoming a webhost

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So you have decided that you want to start your own hosting company and become the next VPS.net? Congratulations for your enthusiasm! However, if your reasons for starting a webhosting company are ill-founded, then failure becomes a close reality, rather than an educated risk.

A lot of businesses fail before they have started, because they have been founded on incorrect assumptions, or simply founded for the wrong reasons. Incorrect assumptions could be rectified through business planning, which I will cover in the next articles. In this article, I will be focusing on the right reasons for starting your webhosting company.

In order to have a successful webhosting company, three factors should be present: Market need, skills, and passion:

Market need:

Before you start your webhosting company, you have to think if there is a real need for your service, that is, if someone is really interested in buying your service. If you’re trying to sell sand in the desert, then your idea is obviously a bad one, because sand is available everywhere in the desert, and for free!

For example, setting up a website which offers shared hosting, reseller hosting and dedicated servers while expecting clients to come in is a very bad idea. Why? Because there are thousands of reputable webhosts who are already doing it, are able to offer a better service, and can be profitable at a much competitive price. Would you rather buy a VPS server from vps.net, or from an unknown webhost operated by an unknown individual from an unknown place?

The answer lies in differentiating your services, while ensuring there is still a market need for them. You can differentiate your services by targeting a different group of customers (Engineers, non-profits, local clients, Spanish-speaking clients…); offering added-value with your services (Free website design, free marketing report, Basic SEO package…) or a mix of both. I will be taking an in-depth look on how to differentiate your services in later articles. For now, keep in mind that you will have to stand-out and shine in order to make a difference.

Skills:

Do you have what it takes to operate your business? Being technical enough to run a webhosting business is no longer a qualifier. These days, with hosting providers like VPS.net offering 1-click hosting options, the barrier to entry has become much lower for non-technical people. Based on my experience as a previous 6-year hosting company owner, here are some of the most needed skills:

  • People skills: Even if you’re considering starting an online hosting business, you will still need to have the skills to deal with people. Whether you’re providing support for your clients, communicating with your employees or with your upstream providers, you will need to use your communication skills. So if you’re someone who prefers to be alone, and doesn’t like talking to people very much, then webhosting is probably the wrong business for you.
  • Marketing skills: No matter how a great service you’re offering, if you can’t communicate the value you’re providing to your potential clients, you’ll not have a lot of new signups. You will need to communicate what makes you different from other webhosting providers, and why should clients choose you over other providers. I will be writing about this in a later article, but you need to know that communication skills are a must.
  • Technical skills: You don’t need to be a technical person, but you still need to know the difference between technical terms, such as FTP, HTTP, browser, server… Clients will use these words while communicating to you, so you’ll need to understand them.

Passion:

If you’re becoming a webhost just for the money, then you’re doomed to failure. In order to succeed as a webhost, you’ll need to be doing it in order to create a difference around you, in a way which keeps you fulfilled and looking for more. Ask yourself the following questions:

  • Why am I starting my webhosting company? What difference am I looking to create?
  • How would my clients’ conditions become better once they start using my service?
  • If it wasn’t for the money, would I still be doing it?
  • Is fear driving my actions, or passion?

If you can answer positively to the above questions, then you’ve got the passion needed to start your own hosting company.

Now that we have determined the reasons for becoming a webhost, the next articles will cover topics which will help you take your webhosting company from an idea to a real success.

Samer Bechara is a business consultant who specializes in business planning, online marketing and web-based technical solutions. He can be reached through his website, Thought Engineer.