Hi Guys!

I was thinking of getting into this business seriously now that I have experienced the hosting industry. I have some questions though. :D Please try to answer them as comprehensively as you can. Hopefully other wannabe resellers will benefit from these questions too.

1. What budget should a starter, ho wants to start a quality hosting, have.

2. To start with, is 1 person enough to manage the stuff.

3. Where should I invest the budget (suggested above). Example, hosting, templates, domain, billing software etc.

4. Should I look for a partner for my hosting company to increase the efficiency.

5. Is investing money for hiring staff at this stage a good idea.

6. How much time would I need to spend at my hosting before & after it starts.

7. What all should I know before tarting this. eg. PHP, MySQL etc.

8. Is HostGator a good choice to start with as it has so many features to help newbies/prohosts. eg. BillingSoftware, detailed guide, enom reseller.

9. Which other hosts are recommended.

10. Shold I get a paid template from somewhere like TemplateMonster or get one made frome someone.

11. What's the difference between those 2 in terms of cost, quality etc.

12. What else would I need to start my hosting company. resources etc.

13. Is it advisable to work at some other hoting company before starting my own.

14. Can you refer me to an online detailed guide on starting a hosting compoany.

15. Any other tips or suggetions.

Thanks,
Intelle

Well, im not a giant in hosting biz, but here are my answers

1.-Budget, you must have enough to pay your reseller account at leaset 3 months, the design, and others. For my appreciation, i would start with at least 150 (except the design)

2.- Yeah, 1 person is enough if you can handle it (support and business) but you have to be totally dedicated to your costumers

3.- Distribute in a smart way your budget, for example, a great design doesnt make you a great company.

4.-Depends of what you are looking for

5.Dont think so

6.- Enough to plan your business, study the market, and prepare your stuff

7.- If you are going to be a reseller you should know at least the basics, HTML, and some terms. If you are going with your own server, well you need to know a LOT more

8.-They are good

9.-Depend of your needs

10.- I prefer from a designer

11.-Obviously from a template is cheaper but... well, i prefer from a designer because i can indicate him exactly what i want

12.-With a computer and a Internet connection should be fine (and a lot of time). Also a budget

13.-That should be great, so you know in part how is the business

14. WHT Forums...

15.- Do not quit, you are not going to make millions in 1 day

great replies

good lucky :)

14. Can you refer me to an online detailed guide on starting a hosting company.

http://www.webhostingresourcekit.com can put some of your thoughts in order.

1. With about $100 you can start your biz

2. Yes

3. Depends. If you know how to design a little, try design your self, if not a designed maybe is cheapest than template. Just search!

4. If your partner is honest, maybe a good idea, but beware with Internet.

5. Just now I tgink so NOT.

6. Work about ONE week in design, install software, etc.

7. You need to know the control panel, internet, DNS, etc.

8. Really don´t know.

9. I had experience with www.powervps.com with VPS, reseller maybe a good Idea too. If you need Windows plans, contact me.

10. Ask for someone that can do for you cheapest than TM ;)

11. ANother guy replied so good :)

12. Read everything you can =)

13. Course

14. Try Google for . I forgot the name :(

15. READ, READ and have FUN that is good for health =)


Good luck!

1. What budget should a starter, ho wants to start a quality hosting, have.

Depends on what you are trying to accomplish. You want a custom designed website or template? Do you plan on advertising? Quality hosting depends on the quality of the reseller.

2. To start with, is 1 person enough to manage the stuff.

With a reseller account, yes 1 person is enough to manage.

3. Where should I invest the budget (suggested above). Example, hosting, templates, domain, billing software etc.

Depends on what the budget is. Of course you'll need a domain and hosting and some sort of website either template or custom. Everything else is not a necessity.

4. Should I look for a partner for my hosting company to increase the efficiency.

Don't do partnerships. Most of the time you'll just end up losing a friend or family member.

5. Is investing money for hiring staff at this stage a good idea.

No because the reseller will take care of the support. You just relay the information.

6. How much time would I need to spend at my hosting before & after it starts.

At least 14 hours per day. You would need to eat, sleep, breathe, and dream about hosting until you start to get butterflies and eventually up 24 hours.

7. What all should I know before tarting this. eg. PHP, MySQL etc.

You would need to be able to at least answer basic pre-sales questions related to hosting.

8. Is HostGator a good choice to start with as it has so many features to help newbies/prohosts. eg. BillingSoftware, detailed guide, enom reseller.

Not very many are complaining.

9. Which other hosts are recommended.

We are not allowed to self promote but hostquote is your friend.

10. Shold I get a paid template from somewhere like TemplateMonster or get one made frome someone.

Depends on what your budget is. If it's a tight budget, go with a template for now.

11. What's the difference between those 2 in terms of cost, quality etc.

If you are referring to question 10, difference is the design isn't unique to you. Imagine a customer browsing and seeing two companies with the same design.

12. What else would I need to start my hosting company. resources etc.

Many have said it before, if you are on a budget, you need to define your target audience and promote like hell to that target.

13. Is it advisable to work at some other hoting company before starting my own.

Would be a good start to learn the in's and out's. If you aren't very technical, you may get away with a sales position which will still help you alot so you'll know what types of questions are asked and learn at the same time. Try working for free.

14. Can you refer me to an online detailed guide on starting a hosting compoany.

www.thewhir.com

15. Any other tips or suggetions.

Make sure you know what you are doing before you do it.

Hi Intelle ,

Great to see you make a come back =)

Joshua

Thanks for the really helpful replies guys. Keep them coming. :)

BTW, I was thinking of a budget of 220$. If I get hosting for 6 months from HostGator, that'll be 150$. I'll need 10$ for a domain, that leaves me with 60$ for my template/design (unless I didn't count something, point me to it If you think I did). Can a designer make a good template in that much.

If u gonna join enom as a domain reseller, i guess u gotta have at least $100 more for a start..

Checkout DirectI, they are quite nicely priced too. No fees for private branding, but you got to use your own payment gateway.

Joshua

Originally posted by BarreTo
1. With about $100 you can start your biz



You won't go very far though. $100 has to cover:

1. a reseller account - probably from another reseller (since you won't have a lot of clients YET)
2. software costs - anything you want to offer your clients, or clientexec/WHMAP
3. advertising - if at all
4. legal incorporation - i'm not sure what the law is with that...but i'm sure there's some fee to register as a business
5. a lawyer to look over your SLA/TOS - not required, but recommended...its still cheaper than a lawsuit.
6. template/design costs.

Shoot for $600 capital before you even begin. You won't make money immediately though. Stick with it, stick with your clients, you'll do fine. Remember, there's a tonne of competition out there, but for the most part, they suck. :D

oh, as they mentioned before, also add payment proccessing fees, banking fees, domain names?

Originally posted by pixelvibe
also add payment proccessing fees, banking fees

> payment proccessing
It only occur when you actually sale something, and it would be subtracted from the amout of your sale.

> banking fees
It also occur when you actually make this transaction to your bank, and you should afford this from your sale.

Lesson in economics/accounting:

Profit = Revenue - Cost

Your fixed costs lets say are $400 (this is a very low estimate)
Let assume your variable costs are 5 bucks for an account, and you turn it over for $10.

Let's break it down (when output aka sales is q):
Cost Function C(q) = (VC * q) + FC = 5q + 400
Note: Your Marginal Cost (MCn) offers diminishing returnts to scale, thus our model is valid.

Revenue Function R(q) = Price * q = 10q

Break even accounting states that Profits (represented by pi) are 0 when R(q) = C(q).

Therefore:
5q +400 = 10q
5q = 400
q' = 400/5 = 80

You will need to sell q' units before you break even. In this case, you will need to sell 80 accounts to break even. (try plugging in your own numbers)

If you have multiple plans, you canse aggregate your functions.
R(Q) = (P1 * Q1) + (P2 * Q2) + ... + (Pn * Qn) Where you have n different plans. P1 = price of plan 1, Q1 = quantity sold of plan 1, etc...

Same for cost function
C(Q) = FC + (VC1 * Q1) + (VC2 * Q2) + ... + (VCn * Qn)


Let's get a little bit more compliated. In the above example, you are at 100% efficiency. In other words, your servers are completely filled ~ which rarely is the case. Let's say you are able to operate at 80% efficiency which is pretty rosy for a start out business...think of it as an current expenditure, it will increase your Variable Cost (VC). We'll call this VCr (for Revised)

VCr = VC * 1.25 (<- is 80/100 which is a "discount rate" or sort)

Cr(Q) = FC + (VC1 * 1.25 * Q1) + (VC2 * 1.25 * Q2) + ... + (VCn * 1.25 * Qn)

Let simplify again. You can do the following steps several times for each type of account and re-aggregate your results.

We now want to find your maximized profits. Let * represent an optimal level of production.

At an optimal level, the following condition must be satisfied:
MC = MR
or Marginal Cost = Marginal Revenue

Let's solve for MC and MR.

To do so, take the derivitive of C(Q*) and R(Q*).

C(Q*) = FC + (5 X 1.25 X Q*)
C(Q*) = 400 + 6.25Q*
MC= 6.25


In order to calculate the optimatl level of sales, we have to have a demand function.

This is where it gets messy. It's not going to be linear demand. So we know it has to be a curving line. Let's use a Cobb-Douglas (ish) model.

D(q) = 1050 - p^3
That means when price(p) = 0, you sell 5000 units (your max sales...this will never happen, because you wont find an equilibrium here...remember, you will venture into quantities above levels where C=R (break even point)). This is a rough approximation. So, at the same time, if you charged p = 10 dollars, you will sell 50 units. D(q) represents units demanded.

So! Lets find the inverse.

p = 10.2 - q^(-1/3)

R(Q*) = Price * q = 10.2 + q^(2/3)
MR = 2/3 [q^(-1/3)]

Optimal Condition

MR=MC
2/3 [Q8^(-1/3)] = 6.25
Q*^(-1/3) = 9.375
-1/3lnQ*=ln9.375
q = 0.001

Which is almost 0.

What does this mean? In a typical competitive market, unless your investment turnover ratio is far greater than 2, you're better off staying out of the hosting business. Either that, or I messed up the math. (It's 4:15am, i just can't sleep). Someone else can look it over and let me know if I messed up.

Oh yeah...how does this all apply?

In short, Sam_GHS, even though those costs wont be applied directly to your fixed costs, typically, expenses per sales is going to be forecasted. Then you use it to budget, and then you either overshoot, or fail to meet projections. It's all basic "activity based" accounting. Go to your local bookstore and find a book about managerial accounting. This all ties into our microeconomic models. (I wish I could draw charts in forums...would make this so much easier). As your variable costs increase, your net factor productivity decreases in relation to kapital investment, and profits decrease. You will have a higher break even, profitability, and optimal point (the higher they are, the less likely you are to meet it).

You can also depreciate the value of your Fixed Costs over time, but thats just more headache I'd rather not get into at this time.

So it all boils down to a business plan. People just starting out should NEVER think along the lines of "oh, well I'll have money comming in anyways". That's a surefire way to be broke in 2-3 months (and living back in your mothers basement potentially). Why? Because in the short, intermediate range of time, FC and VC should be treated the same (in my opinion)

Doesn't all that math make your head hurt?

1. Personally I would go with at lease 6 months to a year worth of income to cover your reseller needs. Reason I state so is so incase if something happen, ect . So if the reseller account is $50.00 that would be $300 to $600 for an account.

2. To start with I would say it is enough to manage all the stuff if you start with a reseller account. Really depending what type of market you are and if they need more "hand holding".

3. To be honest people say do not get a template, because it makes the person like they do not have enough money, ect. Though if you want to get a template go for it. Really I personally like some of the templates (one is $65.00). So get a template if you want. You can use php coin (free) for billing , and you should get a domain name which is about $10.00 maybe less depending where you go .

4. That is up to you :). Personally if you do look for one make sure it is the right one. If not you could have more problems then you want if you know what I mean. For me I am just sticking with my self, and getting some staff to help me.

5. Not right when you start I do not think it would. Unless you do mass advertising and get a ton of clients in at a time. For me I am hiring a staff member right when I open shop.

6. Before it opens I would say spend as much time you think you need before it should open. Learn everything you can, ect :). After you open you will wish you where not.. You should spend at lease 10 hours a day. Though most are on their hosting business 18 hours a day.

7. Some people start a web hosting business without knowing PHP, and MySQL to be honest. Yes it is helpfull to know these things, but I have seen it done before without knowing.

8. I hear great things about Host Gator, but do you research very well on every host you look at. A host might be good, but that does not mean that it is the right one for you. Look around, and ask questions. Test their support staff, and you will find your way to the host you think is suited best for your self :).

9. Personally from what I have used... is Idologic.com. I would also think affordablehost.com would be a good choice, and httpme.com. Their is so many out their that are good hosts. Though at the same time their are so many that are horrible hosts.

10. To be honest it depends on how much money you want to spend. Personally I can spend $300.00 or more for a design, but also on the other hand their is a template that costs $65.00 which I really like. Templatemonster is the place to buy when buying templates I would think :).

11. Costs can range from templates are $10.00 to $65.00. For a custom design it can range from $50.00 to $5000.00. They say the higher you go the better the design is. Though again I personally like a template design. :).

12. You will need a reseller account, php coin (or another billing program), and I would say look around for what ever else you think would help your business :).

13. You can work at another hosting company if you want. Though for me personally I wouldnt.

14. http://www.webhostingtalk.com your best bet ;)

15. Be honest, be helpfull, be respectfull, and be nice to your clients. If a server goes down or something is going on email them the problem. Clients understand more and respect a host more if you keep in contact with them. Also I would like to point out a place called hostlegal.com. They have TOS, AUP that you could start out with to help protect your self. Though might also want to write your own.

Also find a niche . If you do so that will help you stand out from other web hosting businesses. Do you want to target the local market or the internet? Or both? Do you want to give your clients more then just web hosting? Also do not treat your customers like numbers. Using their first name makes it more personal :).

I would do as much research as possible before starting a web hosting business. I started with this forum, and have been reading from the first day. I have finally decided to start a web hosting business when I finally think I am ready for the next step. Though also I have enough income to back me up incase if something happens.

What ever you do best luck to you, and have a great happy holidays.

Thank you so much everyone. Thanks Torith for that great bit of advice.