I know, for some of you, $100k is nothing, but for me, it is alot!

The market is over saturated as we all know, but I think there is still opportunity going offshore by offering localized services and outsourcing labor to some country with low wages.

Is it still good to invest in e-com but not in web hosting in particular? What do you think?

As long as you have a good business plan drawn out, I think the risk would be reduced. You'll probably find risk in almost every business you go into anyway.

But all the best :)

BTW Welcome to WHT.

Yes, risk isn't by how much to invest. It's a normal accident in business life.

Thank you for considering my topic.

I know doing business is always risky. What I meant was that is web hosting more risky than other online investments such as marketing, eshop, etc?

I believe you can still be succesfull in the webhosting biz if you are able to fill the gap/hole that exist in the market.

All business involve risk. There are business that has more risk than others. I would consider web hosting to actually be a very small risk business. Try opening a restaurant, it's a much bigger risk/liability.

And you don't actually need $100K to start a web hosting business. There are many ways to start a hosting business, from a very small scale (getting a reseller account somewhere and outsource your tech) to a much larger scale (getting your own servers/equipments and hiring your own W2 techs). Not everybody has to start at the larger scale. There are quite a rather succesfull companies around here that started with a reseller account few years ago and now has become a large companies (e.g. HostRocket, Burst, etc).

Also, I don't think the hosting business is saturated. Look around your local area. How many local business in your area even has a web site?

Good luck on starting your new venture!

IMO you should use that budget to collect ineterest and use that money to pay for your needs which would infact make the risk less and still allow you to pursue a profitable business venture which would include financial stability and add prestiege to your hosting empire.

Really, you could have less risk, since you dont need 100k to make a web hosting business.
My 2 cents.

you can go into web hosting 2 ways. one way is with very little risk, going in with only absolute necessities and keeping a tight budget and building the business up. or you can go high risk, all in with your cash buying equipment, paying fees, and throwing alot of money to advertising and doing alot of praying and hoping your business plan is solid because you have just put everything on the line.

Just remember.

Little risk will often equla little returns or little losses.
whereas Big risks often have big returns or big losses.

choose your route :-)

What he said ^
"whereas Big risks often have big returns or big losses."

In saying that, we will be investing $750K into marketing in the next 6-8 months. :)

This question depends entirely on how successfull you want to make the business.. 750k wow I am impressed.

Hmmmm, for $100k maybe think about buying something already established. Ok, you won't get that much for $100k, but you never know.

Originally posted by universal2001
. . . In saying that, we will be investing $750K into marketing in the next 6-8 months. :)
Is that US$750,000.00 over the next 8mths?

I never had you pegged as a heavy hitter. With that kind of $$$ to invest into customer acquisition, I'd think you'd own your own network facility, and not be leasing dedicated servers from others.

Good luck with the campaign! :)

From where I can see web hosting business still has great potential but on the other hand tons of small host mushrooming everyday is making it pretty competitive. These small time hosts who do not have what it take to run a quality hosting service are responsible for the bad name that industry is gaining every day.

Coming back to your point of investment, I believe going in for acquisition or merger with already established company (hosting or non-hosting) would be a wise choice. $100k is still lot of money not only for you but most of the people; you may thing about partnership in some offshore/outsourcing company who has working in the same domain. For my money this is the time to invest on outsourcing companies to gain dual advantage.
Sitting here on the other side of dais I would welcome any investor for that matter. :)

Surely you wouldn't form your decision on whether to invest $100K in the hosting industry just from some opinions offered on a forum?

I would hope you would have a solid business plan with financial projections that would outline how much you need to invest, when and when you can expect to start making it back.

Greetings:

All investments have risk associated with them.

With that in mind, and the hosting market close to complete saturation, investing in the hosting market is close to 100% risk.

I don't know of a single company (public or private) that invested in hosting that made money; almost all lost large portions of their money.

So unless you have a solid business plan, operations plan, and marketing plan fully fleshed out that you understand.

Along with a key marketing niche and strong people to make it happen, invest your money some where else.

Thank you.

IMHO, any business decision or investment, whether it is a $10 domain name purchase or a $100k business investment should fall within the drawn out guidelines of your business plan.

When you deviate from your business plan, and no longer follow established, good business practices, you open yourself up to a higher probability of failure.

Every business decision has risk, but you can minimize that risk with proper planning. The number one thing that kills businesses, especially small businesses is poor financial planning and unwise spending.

Hello. Welcome to WHT!

I agree with what others said. It is actually depending on your business plan. If you have a clear and solid business plan, the risk is minimized.

If you really want to minimize the risk, you can start with something small. And then go big slowly. The money that you will be saving from starting small can be spent in acquiring clients through effective marketing efforts.

Thank you and I wish you well.

:)

All investments have risk and to minimize the risk you should invest on what you are familiar or at least you are really interest to. You do need have certain level of skill in industry where you invest even you are hire profession to manage your business.

Originally posted by voxtreme-matt
Surely you wouldn't form your decision on whether to invest $100K in the hosting industry just from some opinions offered on a forum?
Asking advice from hosts, in a forum such as this, could be considered part of due diligence, with creating a feasible business plan. Never hurts to ask. :)

Funny Voxtreme said that... Didn't Voxtreme INVEST and spent a lot of money to buy HTTPMe as a direct result of listening to some opinions offered on a forum in terms of user kudos, happy satisfied customers, etc. Surely they wouldn't have acquired hosting companies that had "bad" reputations and opinions from other users on this board.

The thing to keep in mind is that it isn't about the amount - $100K - but HOW it is allocated.

Is it being used in a smart way that is appropriate to achieve your goals or just "thrown" at problems in an attempt to solve them?

I'll put it this way... you could spend $100K the wrong way and end up out of business and be bankrupt.

Or you could spend $10K the right way and be a huge success over time.

I've seen a "professional CEO" get $5 million in funding and immediately waste $64,000 on a conference room table... and turn a once profitable business into a money bleeding enterprise that went bankrupt two years later.

And I've seen 20-year old first time business owners start with a few thousand dollars and build multi-million dollar companies.

There are numerous considerations but one of the first ones to ask yourself is - do you have the experience and knowledge to properly run a Web hosting business?

There are nuances to every industry & business model and if you aren't aware of them or haven't been "in the trenches" it could be very easy to throw away money at the wrong things.

If you don't feel you have the first hand knowledge, my suggestion is to start small, get a feel for it and build your experience up before throwing in a lot of money into it.

If you do feel very confident and/or you've been involved in a Web hosting enterprise to a sufficient degree - then it might make sense to invest a lot into marketing & support and start big.

There is always that risk-reward tradeoff - just make sure you are taking a good risk and that you have a solid business plan before you even start.

Best of luck with your venture! :)

Originally posted by dynamicnet
I don't know of a single company (public or private) that invested in hosting that made money; almost all lost large portions of their money.


Hi dynamicnet,

You're looking at one.

Simpli started in 2001 with an initial investment of $15,000. This was a pure hosting play -- although I did website consulting, design, etc. on the side, the investment money was earmarked and used solely for hosting.

We have had subsequent third-party investments of $5000 and $10,000 respectively, and I continued to do consulting through July of 2004, so the hosting business was able to reinvest nearly 100% of its profits back into itself.

We did not advertise at all from November 2003 to September 2004, yet our revenue has grown 200% in the past year, ensuring that we will be well into six figures of revenue for 2004. That six figures of annual revenue, again, was the result of only $30,000 in initial investments, plus the ability to reinvest the company's profit back into itself for the first 3 years of operation.

Total spent on advertising during that entire 3-year timeframe? Approximately $1500.

And I'm sure we're not the only pure hosting play on WHT that is healthy and profitable. There are other companies on here with higher revenue and similar or higher profit margins. And many of them, like us, do pure hosting (not consulting/design/integration/server management; no offense to those who do those as well, but the question was regarding an investment into a hosting company, not an investment into design or consulting companies.)

I am confident that I can take a $200,000 initial investment and turn it into a $1 million+ yearly revenue stream by using it for web hosting. In fact, I'm passing around a business plan to potential investors this month that intends to do just that. And again, I'm not even close to the only person (on WHT or off; current hosting company owner or not) who could do that.

Netcraft says there are 1 million new web sites created every month. (http://news.netcraft.com/archives/2004/08/31/september_2004_web_server_survey.html) IBM makes $1 billion a year on web hosting. This market isn't even close to saturated. Do you have to have a "hook" that grabs new customers? Absolutely. Do you have to have unique ideas and a fresh outlook? Yes. Selling $5/month shared hosting from a $50 Monster Template website won't catapult you into the $1 million a year realm. But that's true of any business; as you (dynamicnet) post here often, competing on price only leads to someone going out of business, and that "someone" is usually the smaller company. Starting a "cheaper" company won't make you thrive. Starting a better company? Yes. And there's still plenty of money to go around in this industry.

Originally posted by Aussie Bob
Hmmmm, for $100k maybe think about buying something already established. Ok, you won't get that much for $100k, but you never know.

This is probably your safest bet, you can get an established hosting business with 1,000 to 2,000 customers for $100K.

Greetings Erica:

Congratulatons on the blessings God has bestowed upon you.

We also count ourselves blessed.

However, not everyone has your business insights and skills to turn an investment into a money making venture.

Hence the risk right now is at its all time high given the market is saturated from the stand point of the volume of businesses competing on price.

So unless the business plan has a new wave on things, it will be same old, same old. And $100K will be down the tubes.

In 1999 we had the opportunity to aquire a local hosting firm.

For three years in a row, the primary investor put in $100K into the business. Yet in 1999 (the 3rd year), they were one 3rd our size having put in $300K compared to our $30K (overall) investment.

We ended up absorbing them for free with their permission.

So while there will be winners like yourself, winners like you are far and in between.

Thank you.

dynamicnet. Its possible to thrive on any level, it just depends on your level of commitment and a bit of luck.

A pal of mine who started hosting just a year ago, is now surpassing a 7 figure mark. He did this from a capital of only $30K.
It's possible, but not easy. And the age difference doesn't matter as well. His in his twenty's... And no, I won't release his name, nor the company he owns for privacy reasons. He wouldn't like the idea of people knowing some young kid is behind a power house. :stickout:

Draw up a good business plan. Stick to it. Turn $100K into a business worth ten times that in 18-24 months. I've seen it happen.

has noone learned anything from the dot com debacle?

Good ideas but dont go overboard too quickly.

We started with nothing. Zip, zero, zilch. We are now in our 5th year and doing quite well. So it is definately possible to start a viable business with very little, or nothing, and turn it into a profitable long term business.

As for the risk of investing $100K into a web hosting company, one major factor to consider is your level of experience with hosting, the market you want to get into, etc. 5 years ago I don't think I would have the experience. Today it would be a totally different story, and if I were starting a new business hosting business, I would worry that $100K wouldn't be enough to fully capitilize the venture.

Originally posted by universal2001
A pal of mine who started hosting just a year ago, is now surpassing a 7 figure mark. He did this from a capital of only $30K.
It's possible, but not easy.
lol, suuuuuuuuuure we believe you. :D

7 figures revenue after just 1 year in business and only 30k invested? I find that near impossible to believe. Almost as hard to believe you spending $750k in the next 6mths on advertising. It's easy to make big claims, when you're anonymous. ;)

Originally posted by Jay Suds
We started with nothing. Zip, zero, zilch. We are now in our 5th year and doing quite well. So it is definately possible to start a viable business with very little, or nothing, and turn it into a profitable long term business.
I agree. HTTPme started with nothing but a $35/mth reseller account, a near empty bank account, and a dream. Turned out quite well. :cool:

Originally posted by Jay Suds
5 years ago I don't think I would have the experience. Today it would be a totally different story, and if I were starting a new business hosting business, I would worry that $100K wouldn't be enough to fully capitilize the venture.

I agree. Hosting can be a tricky venture; there are lots of people out there who claim to know their stuff who simply don't. It takes a keen eye to spot these (and a willingness to realize when you've been duped, as well.) I'd say hiring competent staff members is one of the toughest pieces of the puzzle -- last month was the first month I really felt 100% comfortable with our staff's abilities and no longer felt like I was in the middle of an uphill battle with them.

There are a few things I see in the hosting industry now that are worth pointing out to any potential investor:

1) Low startup costs mean there are lots of fly-by-night companies. The hosting industry today reminds me of the PC building industry back in 1996-1997 -- lots of little one-person companies selling barely above cost and hoping to reap it back in extra fees. Here's a clue for those of you who haven't learned this (admittedly tough) lesson: customers who come to you because you're the cheapest usually aren't willing to pay extra fees. I know every hosting company owner has sold at or below cost before to make a deal. It's usually not worth it.

2) Know who you're dealing with. Meet in person. Get to know people. This applies to investors, owners, and customers alike. I have great friends and employees whom I've never met in person and trust, but the more money that is involved, the more risky it is. If you're looking to spend $100K, or even $10K, arrange a face-to-face meeting at the very least.

Most of our best customers are local customers whom I've met, shaken hands with, and recognize. It's important to build that rapport if you wish to deal with large amounts of money (I consider a large account for us to be above $500/month in terms of revenue from that particular customer, and we have many customers at that level or higher.)

3) A lot of people won't agree with this, but it's my personal view: The best money to be made in hosting right now is not in shared hosting. If you're thinking about investing $100K into a company that's going to offer generic $8.95/$7.77/$5 shared hosting, I have one word for you: don't. There are lots of hosting business plans out there where $100K would be an excellent investment. I don't believe that going head-to-head with the <$10/month crowd for shared hosting is one of them.

Greetings Erica:

Congratulatons on the blessings God has bestowed upon you.

Thanks! :peace: I do consider myself blessed and I do firmly believe I'm right where I should be right now.

winners like you are far and in between.

Well, I'm definitely not as successful as some (even as some of you posting in this thread!) :) But I have drive, dedication, and a determination to succeed. In the end, that's what it all boils down to. You can sell nearly anything as long as you're passionate about what you sell and you truly love what you do. If you're investing to make a quick buck, greed will make your business much more likely to fail. If you're doing something you truly love to do, your customers and staff members sense that and respect you (and are more willing to give you a chance.)

For me, it's seriously not about the money (as long as I have enough to live.) At the end of the day, I'm happy because I'm providing a service to my customers and putting smiles on their faces. That passion carries 100 times farther than any monetary investment will. I'm here not only because I enjoy making money, but because I love what I do. Customers see that and respond positively to it. That's what constitutes a success in my book.

Originally posted by universal2001
Funny Voxtreme said that... Didn't Voxtreme INVEST and spent a lot of money to buy HTTPMe as a direct result of listening to some opinions offered on a forum in terms of user kudos, happy satisfied customers, etc. Surely they wouldn't have acquired hosting companies that had "bad" reputations and opinions from other users on this board.

You've got the wrong end of the stick.

Yes, Voxtreme spent a lof of money on HTTPme but we didn't ask WHT if we should buy it. The money was spent because of the business model and reputation and the glowing reviews on the forum demonstrated this.

How about stop taking things out of context and throwing around figures on WHT that sound utter crap?

Knowing how you jumped from one cheap provider to another over the years (iirc, you started with one of those $129 Pegasus servers all those years back), I would be highly surprised if you were about to invest that amount in advertising.

And yes, if you make a wise investment manage it properly you can turn it into a good investment.

Voxtreme started with nothing too and isn't doing badly either. We've had some obstacles in the way but things now are looking good for us.

I have very recently just made an investment that will total just under 6 figures to get full ownership of Vox. Whilst this is a huge sum of money for me, I had no qualms in doing so because I was and am confident this will be a good investment.

Matt, such words give me inspiration todo better. When people don't believe in you, it's a great way to inspire oneselve to prove them wrong. Of course we could blow everything and just live on the streets, but that's a risk I will take anyday. Thanks :)

And it's surprising you made that comment though, because you and I both know the leverage of this market. Some of you guys started with just a reseller plan (AussieBOB! :cool:), and some started with just a simple dedicated server, that has grown 100%, 500%, if not 1000% percent each year.

:)

Originally posted by voxtreme-matt
Knowing how you jumped from one cheap provider to another over the years (iirc, you started with one of those $129 Pegasus servers all those years back), I would be highly surprised if you were about to invest that amount in advertising.

If I'm wrong, that is fine. But as Bob said, just floating figures around doesn't prove anything without solid evidence.

Originally posted by brav0
This is probably your safest bet, you can get an established hosting business with 1,000 to 2,000 customers for $100K.
You have to be kidding. :eek:

We have around 1,200 customers and if we sold, it would be at least 3 times that amount. Of course, if all your 1,200 customers are paying $2/mo, you ain't exactly worth much. ;)

I started HostNexus with a $10,000 (AUD) investment that paid for the site, few servers, bit of advertising and some software and we had made more than that after a few months and after 4 months, we were living off the revenue.

I'm going to start (yet) another brand next year (non "nexus" related and no partners this time :)) and I'll probably invest more than 10k AUD in it. Just about to start work on the site, will start with 3-4 servers off the bat plus outsourced support. I figure $20k USD will get the whole thing running and pay everything for 6-8 months.

A host with 1,200 shared hosting customers, each paying $100/yr, will have $120K in annual gross income. If expenses are ~1/3 of income, that leaves $80K in annual pretax profit. I think a host turning this kind of profit can be bought for $100K.

Originally posted by brav0
A host with 1,200 shared hosting customers, each paying $100/yr, will have $120K in annual gross income. If expenses are ~1/3 of income, that leaves $80K in annual pretax profit. I think a host turning this kind of profit can be bought for $100K.

My dear fellow, expenses are not 1/3 of revenue. Have you factored in support staff, 24/7 monitoring, accounting, merchant fees, taking a holiday perhaps? Anyone who thinks that expenses are 1/3 revenue needs to sit down and do a good business plan.

Remember, your own personal salary is considered a business expense...

Originally posted by amish_geek
Remember, your own personal salary is considered a business expense...

Wait.... y'all take salaries?! Darnit, I knew I was doing something wrong.

Originally posted by Aussie Bob
...It's easy to make big claims, when you're anonymous. ;)
Hey, I resemble that remark! :D

We started with a few hundred dollars back in 1996, and with timing, some luck, and hard work, made out pretty well. The amount you invest is not important. What is important is your dedication, understanding of the market, and ability to stand out amongst your peers.

People like to toss out values like 100k, 750k, etc... but this means nothing as money not well invested is money lost. What takes one person 750k to accomplish a goal might take another 7.5k because of ingenuity, timing, "who you know", etc...

The restaurant business seems saturated, but that doesn't stop new restaurants from popping up and doing well. Make a plan, give it your all, roll the dice, and see what happens. :)

- John C.

We're thinking about expanding our hosting business and I've been reading posts for a little over a month now. We're making the same determinations -- buy in or build from what we have -- in the next few months.

One recommendation I can make is do not be too hasty in determining where to spend your money. On the flip side, do not "What if?" yourself to death. At some point, you have to jump off the diving board.

A thread like this is one of the reasons I keep coming back to WHT. It's good for everyone.

IntraHost wrote:
Wait.... y'all take salaries?! Darnit, I knew I was doing something wrong.

LOL... sorry, that was too funny. :)

I do remember the first year of our business though - it was a real treat to go to Jack-in-the-Box and get a supersized meal.

Things sure have changed since '98 and that's fine by me!

Originally posted by IntraHost
Wait.... y'all take salaries?! Darnit, I knew I was doing something wrong.

Yeah, the sad part is, I've been dragging my feet, and still need to get my Fed Tax ID, and EIN. Once I get those, I can start paying myself salary, rather than using my business checking account to make car payments, buy gas etc... :rolleyes:

How'd you manage to setup an LLC without getting a Federal Tax ID and an EIN? Wowza!

BTW, one caveat comes to mind regarding business/personal expenses.

If you are setup as an LLC, corporation, etc. be very careful in how you spend funds for personal things.

The reason why is that this can be considered a "co-mingling" of funds and if someone were to take you to court at a future point, they could try to use that information to "pierce the corporate veil" and state that you were not conducting business as a company but rather as an individual.

I've seen some situations over the years in which a business owner spent a bunch of corporate funds on something that was totally personal in nature, didn't account for it properly and then later this was used against them.

You will also want to keep your corporate books and hold your shareholders meeting each year - even if it is only one person!

That being said, there are proper ways that you can have a corporation pay or re-imburse you for things like gas, auto, etc. and I am sure that this is what Aaron is doing, his post just jogged my memory on this point and I figured I'd mention it in case it is helpful.

In the US, Sole Proprietors must use their Social Security number for their "Tax ID", the IRS no longer gives out special ID's for sole proprietors. On the flip side, the employee requirement for LLC is 1. Meaning a sole proprietor can become an LLC. Therefore, you'd be an LLC'd company using your SSN until you actually filed for the special Federal ID for your LLC.

Originally posted by Jay Suds
How'd you manage to setup an LLC without getting a Federal Tax ID and an EIN? Wowza!

I heard many words about business plan of hosting company,
maybe someone write here aproximate plan of hosting company with some cost which was spend on server, software, advertising, etc.,
I think it will be interesting for many newbies

Originally posted by Novel
I heard many words about business plan of hosting company,
maybe someone write here aproximate plan of hosting company with some cost which was spend on server, software, advertising, etc.,
I think it will be interesting for many newbies

I think it varies case to case, like building a house. The cost of a house that is 60m2 in size would cost a lot less than a house that is 400m2.

Same with hosting. If you want to start small, then you probably don't even need a server. A reseller's account would be sufficient and if that the case your 'server' cost is only anywhere from $5/mth to maybe $100/mth. But if you are one of those very optimistic person and would like to go all out, you may decide to rent a top of the line server with managed solution thus costing you over $300/mth.

And same applies to software, advertising etc.

I agree you could start with far less than 100K no need to risk that much.

However you may want to start with your own medium server as i dont like leaving my clients hands the in mercy of some other company.

Yes - one can make money running a hosting company.&nbsp; In fact, it&nbsp;must be the "co-located in AboveNet" magic (tongue-in-cheek humor)!

I won't release any of our numbers, but Voicegateway.com Web Services is a pure-play web hosting company that is profitable, self-financed, and growing.

In a similar manner we started off as a consultant/systems integrator (for Voice-over-IP)&nbsp;&nbsp;and now focus entirely on hosting (only the name has remained from those early years.)

Originally posted by Simpli-Erica
Hi dynamicnet,

You're looking at one.

Simpli started in 2001 with an initial investment of $15,000. This was a pure hosting play -- although I did website consulting, design, etc. on the side, the investment money was earmarked and used solely for hosting.

We have had subsequent third-party investments of $5000 and $10,000 respectively, and I continued to do consulting through July of 2004, so the hosting business was able to reinvest nearly 100% of its profits back into itself.

We did not advertise at all from November 2003 to September 2004, yet our revenue has grown 200% in the past year, ensuring that we will be well into six figures of revenue for 2004. That six figures of annual revenue, again, was the result of only $30,000 in initial investments, plus the ability to reinvest the company's profit back into itself for the first 3 years of operation.

Total spent on advertising during that entire 3-year timeframe? Approximately $1500.

And I'm sure we're not the only pure hosting play on WHT that is healthy and profitable. There are other companies on here with higher revenue and similar or higher profit margins. And many of them, like us, do pure hosting (not consulting/design/integration/server management; no offense to those who do those as well, but the question was regarding an investment into a hosting company, not an investment into design or consulting companies.)

I am confident that I can take a $200,000 initial investment and turn it into a $1 million+ yearly revenue stream by using it for web hosting. In fact, I'm passing around a business plan to potential investors this month that intends to do just that. And again, I'm not even close to the only person (on WHT or off; current hosting company owner or not) who could do that.

Netcraft says there are 1 million new web sites created every month. (http://news.netcraft.com/archives/2004/08/31/september_2004_web_server_survey.html) IBM makes $1 billion a year on web hosting. This market isn't even close to saturated. Do you have to have a "hook" that grabs new customers? Absolutely. Do you have to have unique ideas and a fresh outlook? Yes. Selling $5/month shared hosting from a $50 Monster Template website won't catapult you into the $1 million a year realm. But that's true of any business; as you (dynamicnet) post here often, competing on price only leads to someone going out of business, and that "someone" is usually the smaller company. Starting a "cheaper" company won't make you thrive. Starting a better company? Yes. And there's still plenty of money to go around in this industry.

Originally posted by pixel_fenix
IMO you should use that budget to collect ineterest and use that money to pay for your needs which would infact make the risk less and still allow you to pursue a profitable business venture which would include financial stability and add prestiege to your hosting empire.

Hey, good idea! To get started, renting a dedicated server is like $50 a month. You can purchase the rest with your profits!

$100K is a good chunk of change.&nbsp; There is definately still a lot of money to be made in this business.&nbsp; Were you planning on colocating somewhere or trying to do things inhouse with that money?&nbsp; If you give good support and keep your customers online, I think that $100K is a safe investment.&nbsp; Just make sure you leave some left over to advertise.&nbsp; Getting your name out there is the hard part.

1. When making big investment, only the business plans which are written by experts in the industry are useful. A newbie's business plan is not worth the paper it prints on.
2. If you are a newbie, the best way to become an expert is to start small and gain experience by doing it.
3. Once you are an expert, you wouldn't ask whether it is a good idea to invest $100K - because you know the answer.

Thus, to answer the original question - if you ask, then yes, it is too risky to invest $100K in web hosting.

I strongly disagree.&nbsp; A business plan is a guide to formalize opening/operating a busienss.&nbsp; Everyone starting or running a business should have a plan.

It may not be perfect, it may not even be good, but at least you have a starting point.&nbsp; Plans should be reviewed and modified on a regular basis and will become more refined as the business is established.

If only experts wrote business plans, new businesses with new ideas, or new approaches to existing industries would never get off the ground.

Web hosting as an industry, compared to traditional established businesses that are 50 or 100 years old, is still in its infancy.&nbsp; That means there is no "expert plan".

The industry is evolving rapidly and what worked last year might be entirely wrong now.&nbsp; That leaves a lot of opportunity for "newbies" that even in this young industry bring new and fresh perspectives.

For example, is "free hosting" a good or bad business plan?&nbsp; One can't answer that without seeing a specific plan.&nbsp; "free hosting" has gone through several iterations with the business goals changing.&nbsp; First generation free hosts simply wanted to contribute to the web community and were not profit or money oriented.

Then came the banner-ad systems that offered free hosting in return for selling the banner ad inventory and making money syndicating that reach.

Some free hosting is offered as a "loss-leader" - accounts with small storage, bandwidth or other limits are used to entice the client and then provide a potential base for upsell or conversion to paid hosting as their needs grow.

Recently, the free hosts have shifted to syndicating PPC with AdWords or similiar systems instead of banners.

I suspect there may right now be other possible business models for free hosting being considered or under development.

After more than 6 years of offering paid hosting, do I think I understand free hosting and could write an "expert" business plan.&nbsp;&nbsp; No.&nbsp; Do I think I could brainstorm and come up with a new approach to free hosting.&nbsp; Yes - if I wanted to but that's not my focus or interest for now.

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Originally posted by riverpast
1. When making big investment, only the business plans which are written by experts in the industry are useful. A newbie's business plan is not worth the paper it prints on.
2. If you are a newbie, the best way to become an expert is to start small and gain experience by doing it.
3. Once you are an expert, you wouldn't ask whether it is a good idea to invest $100K - because you know the answer.

Thus, to answer the original question - if you ask, then yes, it is too risky to invest $100K in web hosting.