In your opinion, do you feel with the right capitol (Say $20K-$30K) it is too late to be very successful in this industry? Seems to me the biggest problem with these startups is that most of them think $1000 is a lot of money to start a real company.

What would you do with $30,000?

$30k is more than enough for someone to make a decent go of the hosting business. Having said that, if you've never built a hosting business or have any direct experience in the hosting industry before, most of that $30k you'll probably waste, imo.

If you have the money, the business sense, and the ambition, then there is still money to be made in the hosting industry. The market is currently flooded with small players that are either working part-time, or that do not take their business as seriously as they should, and so there's plenty of room for a professionally run hosting business to take market share.

<- agrees totally with that ^^

I'd advise against starting up a hosting company unless you have prior knowledge of the industry. I'd give you the same advice for any company. If you start out with poor knowledge you'll waste a lot of money and there's no guarantee you'll make it.

You didn't give us any background information about yourself so it's difficult to make recommendations.

A Market is never ever full.

The hosting market just has far too many " kiddie " hosts and startups, Which could easily be solved by some form of legislation that required a $1,000 fee per year to sell hosting. Obviously all countries (i.e a company in the uk would have to pay the same as a company in the US) would have to have this.

But it would clear the market out a bit.

Its overcrowded sure, But if you can stand out from the crowd , then your golden.

perfectly stated :)

How would most the money be wasted by an inexperienced host?

Paying $3/click on Adwords etc., buying server(s) instead of renting to start, hiring employees right off the bat, opening an office right off the bat.

Besides blowing it all on an untargeted advertising campaign where a budget has to be 6 digits to be effective or overextending myself (office vs. home, outsourced 24/7 vs. hiring sales/support, managed server with outsourced admin work vs. dedicated staff, leasing vs. colo). The only thing I would want to own off the bat is my website and small licenses like for billing and support software, the stuff that breaks even in 6-12 months, regardless of growth.

Any other big money wasters I miss? Short of getting a big fat loan and opening a datacenter? :P

Sounds like you've done a lot of research.

Welcome to the industry!

My advice is simple:

1) Get a really nice website. Check out some of the big players that are in the same "market segment" you want to be in, and analyze their websites. Do they cater to the "technical" people? Or do they cater to the "business" people? Your website should be very specific for its target. If you want to attract businesses, then having a technically targetted website is bad. Stick to "emotional imagery" and simple message and you're gold.

2) Start with your local market, by doing face to face sales in your local area. If you can't convince people to sign up with you at a face to face presentation/meeting, then you have very little chance to convert the masses into customers.

3) Pick a market segment and specialize. Be very very specific. There are already enough "web hosting for everyone!" budget hosts out there, and cracking into that market with only $30k is unlikely to happen.

4) Consider purchasing customers. It's a quick way to get immediate revenue. With $30k, I would maybe spend 1/2 to 3/4 of it on purchase of customers. This will give you some income and help keep you afloat.

I hope this helps.

How would most the money be wasted by an inexperienced host?
Spending too much on advertising, for too little return. That would be the biggest money waster for the inexperienced host. It could be cheaper to colo than to rent servers, even in the semi short (~6mth) term.

If I were you I'd start slow and steady. Keep as much of that $30k aside, as you fumble your way into the business and get a feel for things.

Thank you all for taking the time to share your advice.

As far as purchasing clients, where would one go about doing that? Is there a more centralized website out there that I can't find? I've been watching sitepoint for a while and as far as hosts its all overvalued websites that are less than a year old, asking prices 15X their best months *claimed* revenue. Seems like a very unprofessional crowd.

Is the best method still to watch the advertising forums and try posting wanted threads regarding this, trying to lure a few kiddie hosts into quitting to get a jumpstart on the learning curve? (I like this idea, even if the churn rate is less then impressive, at least I am not paying for empty servers and learning the more technical aspects of support, as well as testing through trial and error the my software and support, if my initial choices end up not fitting my needs).

If I had to do it all over again this is where I'd spend/save my money


DON'T SAVE
1. Getting a PRO to optimize my site for search engines. If done right this can bring you to attention of tens of thousands of clients a month.

2. Getting a PRO e-marketer (not a designer) to make my website so it has maximum possible conversion rate.

that's the shortcut to getting in front of lots of clients and selling max number of them. You can do one by one local selling and all that but that's all small time that'll waste lots of time before it starts returning you money.

Now problem is today that, new sites take ~6months to even get a chance to get indexed. Perhaps way around it is to buy a hosting site that has been registered with search engines for 6+months for this purpose only.

SAVE
3. On staff (DIY at first), office, hardware - outsource for starters

That is a good point on the wait time to get noticed by the major indexes. I recognize the importance (and weak spot) in many other companys who don't take SEO and professional marketing serious enough, and I plan on taking advantage of this. I realize I will probably never be the first result, or even on the first page on google for "web hosting" but the old school organic efforts could at least pay off by being ahead of the thousands of hosts that do not try.

Anybody have any experience with a marketer? Have found a few easy enough in the past but would love some first hand feedback. Maybe that question is new thread worthy.

Thanks again all

I realize I will probably never be the first result, or even on the first page on google for "web hosting"

Only 10companies can get into the 1st page - off course you won't be one of them (for at least a few years:). Focus on other keywords. If you can find a niche, that'd really push you forward.

Conversion math
1000 viewers @ 1% conversion = 10customers.
1000viewers @ 2% conversion = double.

Marketing expert is something you should really heavily invest in. How to tell a good one from a bad one? I suppose if they convince you to be excited about investing 10K on their service by only looking at their website (NOT speaking to them personally cause that's entirely different form of selling) they'll probably manage to do a good job for your site too. That's just one of the quick tell-tell signs.

Anybody have any experience with a marketer? Have found a few easy enough in the past but would love some first hand feedback. Thanks again all

Send me their URL and I'll check their site and tell you if they could sell me :)

If you have rge money to invest you need a good business plan and alot of hard work. If you have all 3 there is plenty of money to be made in this industry.