Should I consider starting a hosting company?

12 replies
Hello folks,

This is question is mainly for people who have been into hosting industry, maybe running a hosting company by themselves etc.

I'm currently generating over 200 leads per/month to hosting companies as an affiliate. Should I consider starting my own hosting service? How much money do I need approx. to set this up?

I know those questions are extremely wide and I haven't done much research, but I'm just curious about it. For me it seems that it's pretty saturated business with tonloads of competition. But then again, I'm just a superaffiliate without much previous knowledge about it.

Cheers
#company #hosting #starting
  • Profile picture of the author malloc
    The easiest way to test this would be to skim 10 or 20 of those leads and sell them hosting plans under a reseller account. Many reseller account come with a WHMCS licence even so the cost would be trivial. It is easy to do this with minor profitably, little cost and risk. This way you can see if it is going to work for you.

    In my opinion the main issue is about support to your customers. Hosting is a 24/7/365 operation and customers expect essentially instant attention to their needs.

    It is sort of like being a landlord. Most landlords get into it for the money then realize afterward what it means to be a landlord. So make sure you want to be in the biz first.
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  • Profile picture of the author hustlinsmoke
    In 2002 hostgator was started by Brent Oxley and I believe he was still in college and bought a server. I was one of his first customers in 2003. I am still with them even though he sold out.

    Now though it is easy to get a vps and sell hosting through a reseller plan.

    Should you start one, that is up to your mentality, can you fight, do you scrap for pieces and try to get all of it. It is not going to be an easy task since there is so much competition but if you give 110% support and customer service you will succeed like hostgator did.

    My biggest mistake was selling my hosting company in 2001 for I think now as peanuts.

    One thing you need to think about though, Every year seems hosting prices come down due to competition. The main money is in the vps and private servers, although 200 customers on a vps can bring in a few hundred dollars also.
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  • Profile picture of the author Kingfish85
    Originally Posted by online only View Post

    Hello folks,

    This is question is mainly for people who have been into hosting industry, maybe running a hosting company by themselves etc.

    I'm currently generating over 200 leads per/month to hosting companies as an affiliate. Should I consider starting my own hosting service? How much money do I need approx. to set this up?

    I know those questions are extremely wide and I haven't done much research, but I'm just curious about it. For me it seems that it's pretty saturated business with tonloads of competition. But then again, I'm just a superaffiliate without much previous knowledge about it.

    Cheers
    What experience do you have? Server management skills? Security skills? Business skills? It's easy to get tons of customers, keeping those customers however, is a different story. It's also not a get rich over night business that many think it is & end up failing.

    Right now you're an affiliate. Unfortunately, there's only a "Few" people on this forum that are remotely qualified to give you any sort of advice on this. Those who say otherwise, read their post/question/experience history and you make the judgement.

    I'm just a superaffiliate without much previous knowledge about it.
    You've answered your own question. If you don't know what you're doing, save yourself and any potential customers the trouble. Take a look at the offers section at some of the clowns advertising in there that have nothing but problems because they haven't the faintest clue of what they're doing. Half of them aren't even registered businesses. The fact that you have done zero research, are asking these questions to is only going to turn into a mess. As mentioned, unfortunately other than the basic operations of using cPanel, most on this forum have no idea what goes on behind the scenes nor how to do it.

    EDIT: You will have to deal with the following: (that assumes you become a legitimate business and not a fly-by-night reseller claiming to be a "CEO")

    Software
    Hardware
    Security
    Billing
    Support issues
    Server administration
    Backups
    Software configuration
    Software integration
    Licensing
    Migrations
    Troubleshooting
    Marketing
    Legal issues
    Damage control
    Monitoring
    Capacity planning

    The list goes on.

    Most of these tasks are on-going and only a fraction of the real world tasks.

    Another thing worth asking...what makes you any different from the next company? Do you know how to price & spec plans for the industry that will work for customers & you as well?

    Plan on selling cheap? Forget that, there's always another "company" or what have you, that will under cut you. Not competing on price, but rather quality? Back to the first few lines on my post regarding skills/experience.

    Originally Posted by hustlinsmoke View Post

    One thing you need to think about though, Every year seems hosting prices come down due to competition. The main money is in the vps and private servers, although 200 customers on a vps can bring in a few hundred dollars also.
    Disagree with both depending on the level you're on in the industry. Over the past 2 years, we've had an almost 300% increase in growth. A. Our prices have not "dropped" & B. We provide less resources as the next guy. It comes down to quality of service and the type of service people require.
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  • Profile picture of the author AlexGeorge
    It can be hard starting up a successful web hosting company now because of all the competition. Big hosting companies can afford to offer services much cheaper because of the number of customers they have. You'll need to have a fair bit of knowledge about web hosting, and be tech savvy. It's doable, but you'll need to find a way to get customers to join you and not the 10,000 other hosts out there.
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  • Profile picture of the author seobro
    This is very doable now. Consider that most hosting companies are giving poor service. Like they are cutting costs and over loading their servers. OK as a result they are down a lot now. Most compete on price. What is important to us is a hosting company that is almost always up. Also, to be able to get help if a hacker comes in. Those can do a lot of damage to us. Big firms simply do not care. That creates a great opportunity for you.
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  • Profile picture of the author wrcato2
    Hello Online only, My wife and I owned and operated our own ISP and hosting company for 3 years. We had all the equipment, 2 T1 lines ran into my wifes parents basement that we used for our server room etc.

    It was a big learning curve for me because I was used to windows and had to learn how to use unix. Fortunately we made enough money to outsource a guy in Illinois to take care of our servers remotely.

    That allowed me to take care of tech support and sales and my wife took care of the hosting and design side. I had a phone stuck to my ear 24/7. It was tough. just 3 people running a 300,000 dollar a year company.

    We sold out to another local ISP that was much larger than ours and our biggest competitor. I even work with them for a year.

    that was back in 2001. Heck "Ultra Internet" was written up in web hosting magazine.

    I would do it all over again too.
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  • Profile picture of the author misterkailo
    Timing is a big factor.. Hostgator is like the Facebook of hosting
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  • Profile picture of the author stevendbrady
    Personally, I've done it twice and would never, ever want that headache again. There's definitely some great money in it, and it sounds like most others that have chimed in have had more success than I did, so take my thoughts as a grain of salt. It's a business that you have to stay on top of, no matter what. You need to outperform the competition, provide a higher quality service for less money, pay your affiliates more than the competition, and be ready to drop everything in your personal life if there's even the slightest issue with service. You're dealing with business owners and you take money out of their pockets with each service issue. To me, no longer worth the headache.

    And let's not even talk about the server fires.
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    • Profile picture of the author tsgeric
      Using a reseller account (e.g. from Hostgator or someone else) to resell hosting to others is an idea that's been on my mind for a long time, however what stops me cold is the question of how I would provide support.

      I think there are a few hosting companies that say they will provide support to the end user (on a reseller plan). Other companies provide support, but only to the reseller. Other companies will support end users up to a certain number of tickets a month. Others yet serve as 3rd party support.

      Can somebody with experience in this matter comment on a hosting provider they have used, or some other solution they have used, to be able to provide support to end users that have bought hosting through a reseller account?
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      • Profile picture of the author TopWebZone
        Originally Posted by tsgeric View Post

        Using a reseller account (e.g. from Hostgator or someone else) to resell hosting to others is an idea that's been on my mind for a long time, however what stops me cold is the question of how I would provide support.

        I think there are a few hosting companies that say they will provide support to the end user (on a reseller plan). Other companies provide support, but only to the reseller. Other companies will support end users up to a certain number of tickets a month. Others yet serve as 3rd party support.

        Can somebody with experience in this matter comment on a hosting provider they have used, or some other solution they have used, to be able to provide support to end users that have bought hosting through a reseller account?
        Exactly what stopped me from getting into the hosting services. If you're a one man/woman show, it's not a good idea. Unless you're just a reseller and are prepared to pay 3rd party monthly email-only support fees. I don't know of any company that also offers telephone support, which IMO is crucial for maintaining you customer base.
        Thomas
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        • Profile picture of the author tsgeric
          Originally Posted by TopWebZone View Post

          Exactly what stopped me from getting into the hosting services. If you're a one man/woman show, it's not a good idea. Unless you're just a reseller and are prepared to pay 3rd party monthly email-only support fees. I don't know of any company that also offers telephone support, which IMO is crucial for maintaining you customer base.
          Thomas
          Yeah. I've seen companies that offer email support, but based on my own experiences, if there is not phone support, that will lead to customer frustration and dissatisfaction and that's not something I want to put out there.
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  • Profile picture of the author ronrule
    Sure, why not. If you're getting those leads already then you might as well get the residual customer out of it. Do it right though, not as a reseller - companies are bought and sold all the time, and the last thing you want to have to do is move paying customers to a new host. Set up your own VPS with Azure, AWS, or Rackspace and run it that way. You will never have to worry about hardware, storage, backups, etc. and can focus on building your brand.
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