i'm going to start a hosting company once i become 18. it's ~1 years left but i'm starting to plan everything. At first - yes, i know how to manage servers. yes, i know that business is risky.
so i'd like to ask you:

1. is it possible to start succesfull not "0.99$" hosting nowaday? i'm going to offer QUALITY hosting for reasonable prices without huge (or any at all) overselling.

2. i have 2,000$ for beginning. is that enough?

3. i'm planning to get VPS for start and upgrade to dedi later. Is average VPS with guaranted 300 megs of ram enough for running cPanel + hosting some customers smoothly? or should i go for dedi instead?

4. is it good idea to advertise on big local sites, not related to web-hosting/developing?

It is quite possible to start a non-budget host that will be successful, but expect to have higher startup costs as well.

Now before we go any farther on your budget and whatnot, lets get your target market down as that is the 100% most important part of everything having to do with your business.

Who is your target market? (small business hosting is not a target market)

my business is targeted to local market. both personals and small business.

there's many hosting companies around, but most of them are overselling a LOT and their servers are far from stable while others set very high prices.

so i'd like to be in the middle - stable, fast server(s?) but lower prices.

Quite a broad target market you have there ;) It will be quite hard to target your services towards your market as it seems to include everybody but large businesses in an area that you would call local (city, county, not sure).

As you are most certainly aware there is a massive amount of hosting providers out there already (even in your local area). You are going to be comming to these people telling them that you have a better service because you don't oversell your products. That is simply one selling point and to many (especially those personal hosting accounts) they are not going to want to switch at all.

If you were going to be targeting your local businesses you should first find out what type of businesses are around and tailor your services towards them. A racing business is going to want different things out of their company than the local hobby shop will. There is a huge difference in services that would appeal to a website based simply on content (take for example a small website for the local race team) or a website that is going to be looking into an e-commerce solution. One group is going to want SSL (I'm sure you can guess which one) so that would most likely be a must in your services, the other is going to want the ability to grow and expand easily as their user group goes with them.

You will really find things to be a lot easier (to be more specific the ability to sell your services will be much easier) if you narrow your target market down some. I am by no means saying do not sell to XYZ because he/she/they aren't in your target market, but make your hosting the best out there for your market.

clap clap dollar makes a point, good job dollar. Targetting the market is important indeed.

Thanks ;) It was my number 1 mistake when I first started (number 2 would be not having a business plan, but that goes right with number 1 really) and I would say it is also my current biggest issue. I started out without a target market, now I have a target market with services and whatnot designed for them, but I have expanded outside of my targer market too far for my current brand.

It's a never ending battle, but I try to voice what i have learned when I can ;)

Of course i wont say: hey, i'm not overselling, switch to my hosting!
I'll say:"hey, i offer premium hosting for affordable prices!". not overselling is just a little part of advantages my hosting will have.

I've no dreams what huge well-known companies will switch to hosting that is running for a few weeks.
So my target is personals and youthful small companies that are not related to web developing etc. i'll transfer their sites from old hosting for free or small amount of money, install scripts on account setup etc.

How do you have a target market BUT also appeal to those not in it? I can imagine people will still visit your hosting site if in the market or not.

I know a target market is good and what it offers but you don't want to turn potential customers that arn't in it away either.

Thanks.

To the op: Well now we're starting to get a bit closer ;) Site transfer, script installation, etc.. It seems like your looking to target places that have an existing hosting account mainly and I would look to tailor your services to something along those lines.

The options are really endless, but what will really sell is a feature set that is of your own making. To get your thinking of a few ideas one host implemented "rollover bandwidth" a while back that was an intersting concept. Unused bandwidth from one month would roll over onto the next month. I do remember the term that they used actually having a copyright though so if that is a route you're looking to take then I would make sure to research your wording.

Another idea off the top of my late night head would be promoting the fact that your hosting is an easy 1 click upgrade. Explore your billing systems to find out that will allow the user to upgrade their account on the fly whenever they feel like it with 0 downtime. If I had a current site with XXXX amount of bandwidth and I was moving to your hosting which had less bandwidth for the same amount of money I would be a bit worried about growth.

While we are talking about growth and smaller busiensses scallability is another thing to imagine. Around here there is a pretty good sized company that is called Matrix paints (something along those lines at least). They may not be big on a global level; however, the owner has several different paint mixing factories and supplies a lot of high end automotive painters. This company was started out of his garage. With the growth he is experiencing he is going to want to know that his website can scale to any size without any problems.

When you approach the companies in question take the time to reasearch their business and growth pattern. Make sure you have a plan in place to scale their website to their needs. Taking the time to offer them a proper document on why your hosting is the best for their company is always a winner. Taking the time to make it truly personal to their business, properly bound, etc... is almost a guarantee that they are not going to throw it away. Flyers end up in the trash, 10 page bound documents with specifics about the company in question don't (at least not as soon as they are handed). Anybody would at least thumb through it before tossing it in the trash.

Now back to the target market, I personally think you are still not getting down deep enough to a true "niche", and in the current hosting industry that is what everything is about. Different clients really want different things (and there is a huge amount of needs for different small businesses). Some are going to want you to offer JSP support (apache/tomcat really works well but control panel support for it is very limited). Other people are going to want ColdFusion hosting. Many businesses love and trust microsoft and are gonig to be wanting ASP support for their applications. The list of needs could really go on and on. Getting down to an even smaller subset of small businesses within your local area will really help target yoru services. Targeting them for small businesses and personal websites is also going to be a pretty difficult thing to do.

To Plasma: There are many ways that targeting one group would appeal to another. Take for example the mention above about JSP support in hosting aimed at a small business. Not only would the small business owner like that type of a package, but at the same time a web systems developer would also enjoy having that type of feature set at his/her disposal. Same could be said about the coldfusion hosting. Targeting for 100% uptime for a business would appeal to existing webhosts (most likely resellers) as a way for them to host their helpdesk on another machine that will have 100% uptime even if their main website is down.

A target market is all about targeting your services, but really look at the general offers out there currently. A vast majority of the hosts represented here on WHT all offer generally the same exact services.

cPanel/DirectAdmin/Plesk/etc... based hosting with XXX Bandwidth and YYY disk space for $ZZZ per month. Value added features is the real way to sell your services anymore.

A great way to think of it is by seperating users into two broad groups:

Group 1 wants your basic webhosting package.
Group 2 has a very special need that they want filled with their hosting package.

Making your hosting something Group 2 really can't turn down will not stop those in Group 1 from purchasing your hosting; however, on the flip side not making your services tailored to Group 2 will surely keep them from purchasing from you.

If you want to run a little experiment in this thread it would actually be a bit fun I think, if you are in the market for hosting let us know what type of site you would want to host (feel free to make up a type of site if you would like) and I'll try and spit off some value added services that would appeal to your type of site. Then put yourself in the shoes of the "average" hosting customer and see if the hosting would still be appealing.

ok, let's say i'm owner of a small bakery. I'd like to represent my company, production and let new customers contact me.

My opinion is start a reseller hosting first, creat a name with your brand and if everything works well then you can start your own business with your own servers and products... see first what your local clients want from your business.....

ok, let's say i'm owner of a small bakery. I'd like to represent my company, production and let new customers contact me.

Hey now we're talking! This is a great example as it is far from what people would think of for the typical hosting customer. What we want to do is make sure our services are made to fit this type of customer without driving away other customers at the same time.

If I was to prepare to take on a client of this type, the very first thing I would do is examine their buisness. I will wirte the following as if they did not have a website at the moment, but many of the same principals would apply even if they did currently have a website.

Again I can't stress this enough when we are talking about local markets: research your clients! if you put yourself in their shoes you can quickly see how hard it would be to resist the following type of offer, now on to the fun part.

With your reaserch in hand I would sit down and begin to write up a proposal to the said company. In this proposal you should focus on some main selling points, and at the top of that list is why a web site can help increase their business, branding, etc... This is really the only thing that businesses are concerned with. If it isn't going to help business, it is most likely a pure waste of time. As mentioned in the post the company is looking to get into the hosting world many as a branding and point of communication with customers. Thos reading this post might be thinking currently that a bakery is nothing more than a small client; however, http://www.panerabread.com/ was a small bakery at one time as well.

With that portion said up there we go right back to the concept of scalability, which is something that your typcial CPanel based hosting is not going to provide. For a lot of personal sites this type of scaling is not really needed, for a business they want to have hte assurance that they can scale as needed and when needed. In my business plan I would have a very nice outline of how to scale their website from small to large.

To add in a small note as this is all comming from the top of my head, I would be sure to represent almost everything in a graphical manner whenever possible. The concept of baking is very closely tied with an artistic manner and the field itself is not "technical" in the same sense as any IP based company. For this reason I would say that graphics would speak much louder to them than charts and graphs. Likewise I would resverse this if I was going to propose my hosting to any type of IT firm.

Right along with that goes the idea that because these people are not part of an IT firm, creating, updating, and expanding their website is something they are going to have very little knowledge of. Odds are they are not expecting a huge expansion on the internet anytime soon and would like to be able to update their site on their own rather than keep a staff member around to update their site when needed. You are left with two options.

One option is to either employ or become a web designer/developer in order to help maintin customer websites. Offering these services for a small fee can have a huge return and also help to ensure a long lived client. When you are working directly with your client's website you begin to learn the ins and outs of the website as well as the client. It almost always developes into a semi-personal relationship which will make it hard for the owner to ever want to part from your hosting services. The other option would be to look into ways to make it very simple for the user to manage their own website.

Of the top of my head the two main ideas that come to mind would be a CMS (be sure to partner with some type of webdesigner!) or Macromedia Contribute. There are a few other platforms out there for content management when it comes to a website, but these are the ones that come to mind. For a bakery I would leverage the power of a content manangement system over Contribute, but if it were a more IT based situation I would actually go the other way. Again this is my general perception of the two industries out there and it is not a golden rule.

Now because you have a webdesigner you will be able to include a few printouts of example websitest that the designer has done (as well as links to working sites) for the user to look over and see exactly what he is getting. To somebody like this the simple idea of web hosting is most likely very confusing and what they are more interested in is an end product. Most people don't want to buy a car without seeing it first, and the same can be said for a website. Even if that car (website) is going to be a different color, different wheels, etc.. when they get it, they want to know more or less what they can expect out of it.

Now along with this you also need a demo for them to view the CMS/Contribute solution that you pitched to them so they can see just how easy it would work. For a bakery pictures are what will really sell their products so I would definatley want a solution that allows an easy upload of their pictures. Depending on the type of bakery you could even consider putting in an idea that would allow them to have a live webcam stream if they wanted to (from their bakery). All these are viable options to give them and let them know just what can be done with their website.

Another thing that really comes to mind when I think of a bakery service is the ability to have a "view map" type situation. I am not 100% sure on the services offered for this (maquest, yahoo, etc..) and their licenses but I would have that all figured out with an example of it for them to see.

Now that we have the general ideas for interaction with their customers lets take it up a notch and let them know of some things out there they can do with their website that they haven't even thought of yet. Odds are if it's a bakery there is at least a few people working there. E-mail is a great idea to pitch to them as ways to keep their employees updated on news, events, etc.. Since we're talking about e-mail, why not make sure you have a very simple newsletter solution in there for their website so they can contact their "fans" whenever they need to?

The list could go on but my fingers are really starting to get tired. We have really went from:

X bandwidth with Y space for Z per month which will allow you to have a website to a true "solutions". Put yourself in the shoes of the owner of that business and think about the difference in the offering.

Option A: A webhosting account
Option B: A beautiful looking webhosting accont, full e-mail solution, map solution, simple enough management that the owner can update the site whenever he/she wants to, and the ability for the hosting to grow as large as it needs to for the business.

Now in reality this solution only has a few value added services that we would pitch to a bakery; however, if you look back over everything I typed and put yourself in the shoes of your average web hosting customer you can see that hte hosting is most certainly not a turn off at all.

My tain of thought is starting to go astray so please feel free to ask questions and ignore typos ;)

Very nice writeup there dollar, bookmark'd ;) Cheers.

Thanks plead ;) Just trying to help those where I went wrong.

$2000 seems ok, but you will need to Market this site properly or you will lose a lot.

You guys are very right it is really hard to run your own web hosting company because there is SOOO much compertition out there that are selling web hosting for like 1 gb space and 50 gig transfer for like £1 for 1 year. Like how the hell do they do that huh

good design - PM Me for a quality Design
flashy advert - PM Me for Flashy Advert
nice name - Domains, check out whois.sc or afternic for some quality names
nice logo - PM for sleek logo
nice slogan - think of something snazzy in co-ignition to your name
good ad spots - WHT Reccomended then try other forums.. NP and DNF
SEO - search google or get a user to help you with it or software..
link builing - submit to several hosting directorys and web sites and forums
VPS - id say JaguarPC for this ...
cPanel - comes in a JaguarPC VPS (I think)

this is how i started.
use all adveretising opertunitys you can get and TARGET ads to the right audience..
if you owned a bakery would you put a sports stand inside it ? NO youd put a cake stand in it..
if you saw a website offering flags would you put an advert for the world best cheese on it ?
NO!
target ads..
hosting related sites/domain related sites = money makers..
world Best Cheese Sites = :( Bankruptsy

good design - PM Me for a quality Design
flashy advert - PM Me for Flashy Advert
<!-- Snip -->
nice logo - PM for sleek logo

And that would be breaking the rules ;)

;)
wont let me edit though :S
and it was a discreet little sneaky ad in :P
also ill do logo for free...

I would suggest listening to the BofCast, its done by Ros who is well known on these forums... he outlines the best ways to start a small web hosting company on low budget.

I would personally suggest not using a reseller, and starting with a VPS - you will pay abit more, but with a company such a PowerVPS you'll get a good job, buying an outsourced tech support package, and then adding a couple of extras to cPanel... spend 1 month making your VPS secure, and if required paying another company to seal and upgrade everything... create your website and start selling...

I would suggest looking at these for your company...
- Kayako eSupport, or Support Suite
- TouchSupport (per domain package)
- PowerVPS Power1 or Power2 Packages
- RVSiteBuilder (perfect for offering newbies)

That's my advice!

it is very interesting in what you said there dollar...

I would suggest listening to the BofCast, its done by Ros who is well known on these forums... he outlines the best ways to start a small web hosting company on low budget.


ros-- when i looked up in search there were many whose name started with ros.

please give full name so i can do a search on his topics of starting a web hosting company.

thanks

You guys are very right it is really hard to run your own web hosting company because there is SOOO much compertition out there that are selling web hosting for like 1 gb space and 50 gig transfer for like £1 for 1 year. Like how the hell do they do that huh

You do not want to compete on quantity, but on quality. Please your customers with great service and they will refer other people to you. People are still willing to pay a premium for first-class support. So, do not care what the $1 dollar host is doing. Don't try to compete on that level.

Christoph

thanks for suggestions.
i wish my 18th birthday is today so i can register my company tomorrow tomorrow and start hosting.

Don't RUSH it. Think it out, have your plan, and write everything down on paper first.
When I came in, I was glamourized by evertyhting I saw here at WHT. I ran right into it like a brick wall.
Bought dedicated servers, wrote up my TOS/AUP by hand, everything. but I was stuck somewhere.
I even got a few free customers when the site was up and running to start off with, but........ as I said do not rush it.

David K.
JE

Don't RUSH it. Think it out, have your plan, and write everything down on paper first.
When I came in, I was glamourized by evertyhting I saw here at WHT. I ran right into it like a brick wall.
Bought dedicated servers, wrote up my TOS/AUP by hand, everything. but I was stuck somewhere.
I even got a few free customers when the site was up and running to start off with, but........ as I said do not rush it.

David K.
JE

So, what happen now? :)

and how and what do you think is the best way to market a site

Hans

the best way depends on target market A LOT.

for example, if my target market is local and agegroup - teenagers, i'd advertise on local banners' exchange network which displays ads on many sites both managed and visited by teenagers.

if my target market is local small business companies, i'd advertise on local business' news portals, sites helping to deal with the law and businessmen's communities.

I would recommend you start with a reseller account first.