I've seen a lot of posts from people looking to start a business with web hosting. The typical responses I have seen are "if you have a niche service to offer then you can make some money".

I have to say after reading these threads on multiple different sites.. why do you need a niche? Can't you provide the standard web hosting services any business offers?

What I am trying to say is if you want to be the next microsoft of web hosting then you need need a big niche mafia style but if your joe blow with a dedicated server who would like to do something and run a small business that pays for itself and hopefully turns over a little profit, then what's to stop the new comers?

My understanding is, even to turn over a small profit or have the business pay for itself, you will be initially investing a lot of personal time to keep things going.

I think the services offered have to come with good customer service, uptime and assistance to clients. I see web hosting companies claiming this as their niche but to me this is just standard business practice.

I've posted this as more as a discussion than a specific question. Good to hear from anyone.

I think the references to niche markets are only that some people have found that they are able to market effectively in niche markets, or areas with smaller audiences rather than the mass market of web hosting in general. There are many multiples of thousands of web hosting companies so one that has a particular service that provides a benefit to a niche market that few other hosts provide is an advantage.

With all that said the ability to start up a business in the mass market or niche market can be done. Either way proper business planning and operation will achieve good results in both markets.

I've researched starting a webhosting company for years and could not find my niche.

Why do I feel I need a niche? It differentiates you from the competition. Look at the Webhosting offers section and see how many "deals" are shown. There are TONS on a DAILY basis. Why would I choose YOUR hosting over another? You all provide the same thing...webhosting with a good amount of space and a good amount of bandwith. So pricing/service/support/quality of server come into mind. Then Reliability/bandwith speed.

For example, I recently looked for webhosting. I was only interested in 1 thing, Clustered hosting because of the reliability and speed. I looked in the offers section, and there were only 3 I found (clustered hosting is obviously a niche and usually more expensive than cheap hosting). Cartika, Iron Mountain and Jodohost. I'd been with Cartika, they were excellent, their price didn't fit my needs. So I was left with Iron Mountain and Jodohost. Iron Mountain uses Solar Energy, had a fast website and fast download link. BAM! I signed up right away.

It all comes down to why would I choose your company over the thousand others? No niche and you look like the rest, no customers and you're out of business before you even begin.

If you don't have a niche, you're nothing special. The niche is what compels the buyer to buy the service from you instead of from someone else.

It isn't limited to just hosting companies either. Having a USP (Unique Selling Proposition) is essential to maximum business success in business of any type. The "niche marketing" techniques are then built upon whatever your USP is.

Dan Kennedy (http://www.dankennedy.com) talks a lot about this in his book The Ultimate Marketing Plan: Find Your Hook. Communicate Your Message. Make Your Mark. (http://www.amazon.com/Ultimate-Marketing-Plan-Communicate-Message/dp/1593374968) Highly recommended read.

:D Bailey

I have to say after reading these threads on multiple different sites.. why do you need a niche? Can't you provide the standard web hosting services any business offers?
You can provide the standard web hosting services any business offers, but the point is at who do you target your advertising? If you're going for the same market as GoDaddy and their ilk, you've already lost. You don't have their advertising budget. If you instead find your target audience (niche) and focus your strategy on connecting with that market, you'll have the possibility of picking up some new clients.

It's easier to find customers when you have a niche. For example someone here said that only designs and host website for churches. He does one website and then if he is good he get more customers by the word of mouth. For example the priest will recommend his work to other priests.


For example, I recently looked for webhosting. I was only interested in 1 thing, Clustered hosting because of the reliability and speed.

H-sphere clusters are not made for reliability but they can limit the downtime at 1 service if a server goes down.

The troubles would come when you try to sale. The shared hositng market is overcrowded and any newbie company need to come with something that would impress potential customers a lot... and at the same time to give a proof that it is relaible enough.

web hosting market is too saturated.. host oversell like crazy for the price of peanut. Everyone is running around , just to get the best deal. When the host went down, they will just move on.. it's a cycle..

It's important to have one group of people that you target to specifically. You could say my niche is providing hosting to teen webmasters, and especially Game Maker users as I used to work with that myself. :)

Everybody is making some way or other some money. To stand different from these persons and want to earn some decent amount within your goals time (most of us have a short duration!) you need a saleable idea, that's what is described as a niche idea.

I have to say after reading these threads on multiple different sites.. why do you need a niche? Can't you provide the standard web hosting services any business offers?

Let's put it this way: You either need a very large marketing budget, or you need a niche. Pick one.

The advantage of marketing to a specific segment is that you can concentrate your efforts on that specific segment rather than trying to do blanket coverage.

And in that marketing, you can present yourself as being a specialist provider.

The reason for doing so is that specialist services can often command a premium.

The trick is that in order to succeed you really do have to deliver on that promise.

I think Scott Burns really hit the nail on the head with his comment of choosing between a niche market or having a LOT of capital to mass market.

Most businesses just don't have access to millions of dollars in marketing money and even those that do often find a higher "bang for the buck" by focusing on a few specific market segments.

Keep in mind that you can always expand later or extend to new markets once you have established a foothold in your first niche market.

Yep and also look on what your competitors are missing there.

Well...

You actually have some options:


Same Web hosting with huge Advertising Budget
Web Hosting with an incredible, atractive and innovative Add-On
Make a list of possible Niches and choose the bigge$t one or the one that promises highest revenues(do your homework, maths)
Choose a sector(Local, Regional, International, etc.)
(Combine several of the above)


When I started webhosting(2001) I just targeted locally, as there was no competition, today there is, but I'm already the biggest in my city and have a lot of word-of-mouth customers.
But also, combined the Add-On variant, that is, I do good designs, so I give my customers the webpage if they host with us.
My hosting is VERY expensive, but that's because I don't compete with Hosts that you "don't see" in person.
My customers are "alla old fashion", that is.., they call, you go, they pay, you deliver..., that's it.(some email messages are some times needed).
My minimum plan is 28.00US/month for 100mb.

If I dedicate more time to sales I could reach 400 customers in some months, 400 x 28US = 11200.00US/month wich only needs a 80US VPS account.

Now, I can't go to sales yet for my current business because I have 2 other projects, which are Niche based(you see, this is the key).
Ofcourse you will not earn millions/month, but how about some 20000US/month
One of my projects will cost like 70us/month minimum targeted to certain kind of spanish speaking companies(I live in Mexico) so I have all latinamerica and Spain as market. Each customer will have my "Powered by:" signature at the bottom(covering the Advertising issue).
These companies are always looking what is the other one doing(competition), so I think it will be very easy for them to check my signature and contact me.

If I get like 400 of these customers, I will have 28000.00US/month.
And that's just with one project
You see, I DON'T need thousands of customers, because:
- The Nich targeted product and
- Low competition
Allows you to increase the price.
So instead of they going to a Web Design Company who creates all kinds of websites/systems and charges them the right price for their project. They'll contact a company who is SPECIALIZED in offering a solution for their kind of business, several times cheaper.

Look Kayako.com, why have they apparently grown so much as a company?
Because they offer a Support Ticket system(specialized product/service) which defines a specific market(Niche) at a price several times cheaper than the one you'll get done from a Developer company.

Look live365.com, they offer the possibility to stream radio through the Internet, allowing hundreds of radio stations to transmit on the web, and also allow hundreds more of One-Man companies to have their own radio station.
You can see in their sites live365.com is the provider, so, more radio stations will end up go with live365.com


Salutes

Giorgio

Excellent explanation of local marketing, Giorgio!