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How to jump start a stalled web hosting business?

by webatomic
7 replies
I've been running a web hosting business since 1996, but things have just flattened out over the last few years. It's such an incredibly competitive market and I've tried playing the "battle the competition for the cheapest plans" game and that gets you nowhere. Any tips on what I might do to goose things up a bit and drive some new signups/sales?
#business #hosting #jump #stalled #start #web
  • Profile picture of the author john_kennedy
    I had the same problem. Trying to compete with the big boys on price will never work. You will always lose. You need to find a niche market. Once I did that, my business literally exploded. I went from a handful of clients on 1 server to over 1200 clients on 6 servers. It grew so fast, I was unable to keep up with the work and sold the entire business for a tidy profit. The new owner has continued in my footsteps and is now close to 1500 clients. I sure miss the money (20k a month) but not the work!

    If I were to do it over again, I would JV with someone who could help with the work. I am currently under a non-compete agreement so can't reopen using my name.

    John
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    • Profile picture of the author webatomic
      Originally Posted by john_kennedy View Post

      I had the same problem. Trying to compete with the big boys on price will never work. You will always lose. You need to find a niche market. Once I did that, my business literally exploded. I went from a handful of clients on 1 server to over 1200 clients on 6 servers. It grew so fast, I was unable to keep up with the work and sold the entire business for a tidy profit. The new owner has continued in my footsteps and is now close to 1500 clients. I sure miss the money (20k a month) but not the work!

      If I were to do it over again, I would JV with someone who could help with the work. I am currently under a non-compete agreement so can't reopen using my name.

      John
      When you found your niche market, did you change your company entirely to service that niche, or did you keep everything intact and launch another brand or something?
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      • Profile picture of the author john_kennedy
        Originally Posted by webatomic View Post

        When you found your niche market, did you change your company entirely to service that niche, or did you keep everything intact and launch another brand or something?
        I actually bought the company and then rolled my clients into the new one. When I bought it there was about 230 active clients. The focus was on WAHM and offered a CMS/ecommerce package with each account. This allowed them to setup a website and store without having to know anything about HTML or ecommerce. I charged a setup fee of $50. This covered the license fee for the software that runs the website.

        John
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  • Profile picture of the author Nathan Denton
    Agree with the previous comments on price. Web hosting is so competitive there are very low profit margins. Considering JV's to reach new clients would be a great way to source business. I would also take a look at your existing advertising sources and see if they could be tweeked or refocussed in any way.

    Are you able to offer your hosting services with other add-ons or upsales to increase your profit margins?
    Signature
    Online marketing, offline marketing and various other things.
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  • Profile picture of the author JB
    A friend on mine who is a network administrator with a huge company was saying that cloud is the way everything is set to go over the coming years. His take on it is that there are relatively few cloud providers int he market and that the ones who set up good models now will make an absolute killing. It's a lot more complicated to get going and probably pricier too but something you need to consider in terms of where the market is going.
    Another option would be to offer a service that is tailored to Web2.0 sites - there are a few sites out there with this as their target niche and they look pretty successful. Worth looking at what they are offering to see if you can put a twist to it.
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    • Profile picture of the author JohnMcCabe
      You've had your answer a variety of ways here, but they all pretty much boil down to...

      If you can't be WalMart, be the anti-WalMart.

      When WalMart comes to a new town, there are always a few businesses that give up and close down. Others refocus, finding a piece of their market that WalMart can't make enough money on to serve. For example, I read about one hardware store that went from selling screws and nails to specializing in antique, replica and salvaged hardware for people doing historical restoration.

      Here in my own town, WalMart sells seafood. Publix sells seafood, Winn-Dixie sells seafood. Yet, a couple of years ago, a seafood shop opened up in one of the omnipresent strip malls and they're going strong. Their secret? Superb quality, reasonable prices (not cheap, reasonable) and creating a personal connection with their customers.

      If the WalMart-style hosting market isn't working anymore, look for a boutique market you can serve at a decent profit...
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      • Profile picture of the author webatomic
        Originally Posted by JohnMcCabe View Post


        If the WalMart-style hosting market isn't working anymore, look for a boutique market you can serve at a decent profit...

        Yes, thanks for the advice. I've thought about trying to find a niche in the hosting market, but I always end up discouraged, because the ones I come up with are not unique and the market's always saturated. I guess I need to do some more research.
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