If you had $50,000 handed to you in one lump sum check and were forced to invest it in a hosting business how would you go about it? and why?

For example.
With $50,000 would you spend it on a $50,000 acquisition?
$50,000 all marketing on your new resellers account?
Co location $30,000 marketing $10,000 tech support. etc. etc.

Im interested to hear people experienced and less experienced strategies.

Thank you all in advanced for your replies,

Jack

spend 25% on advertising spend 25% on great equipment spend another 25% undercutting the competion spend the rest on BeEr and women:D .

. . . spend the rest on BeEr and women:D .
There's some sound business advice if I've ever seen it! :D

Jack,

I would invest $5k on a great site. Then rent 2 good spec servers for around $600/mth for your inventory. Get an off-server backup account setup. TouchSupport for sysadmin and helpdesk for around $500/mth. So you have your inventory, sysadmin and helpdesk taken care of.

Then slowly start investing into adwords, increasing your adspend as you feel your way around their system. Use your capital ($50k) to fund your ongoing costs, as you build revenue with new accounts coming in.

I would probably invest $25k into adwords, over a 12mth period. You'll get better with adwords the longer you use it, so don't spend it all in the first few mths. At the end of 12mths, you should have enough revenue for the business to be self sustainable, and then you just keep organically growing from there.

Seeing how quick you can start a web hosting company these days, and playing it safe by investing in a VPS or dedicated server setup, I'd put a few grand in setting up the first server, outsource the technical support and set up automation systems to handle scalable growth, hold a certain percentage of cash for cash flow purposes (i.e. to cover overhead, etc.) then spend a significant portion (perhaps 60%) in marketing efforts.

Marketing would be non-traditional method, such as having contests where I'd give away cash and prizes to participants who refer the most accounts (not necessarily in affiliate format, because there are so many out there).

I currently have two Dell Poweredge 1750 servers 4gb ram and 300gb hd's. And i can house them at my office with 5 T1 connection lines. I have a small UPS backup power.

Should i be housing these at my office or not go in case of outage and/or management?

I have very good connections for outsourcing 24/7 tech support.

I like aggressive opinions. :)

Jack

See if you can colo them locally, in a proper datacenter. Having them in your office like that is a recipe for disaster.

Ok, any recommendations for backing up data? should i just buy a backup device or pay monthly?

Jack

I would probably invest $25k into adwords, over a 12mth period. You'll get better with adwords the longer you use it, so don't spend it all in the first few mths. At the end of 12mths, you should have enough revenue for the business to be self sustainable, and then you just keep organically growing from there.


Bob,

When you say, "the longer you use it", what kind of a position are you looking at in the sponsored results list?

The top 5 are always highly competitive, wouldn't $2K / month get exhausted fast? Or are you talking about focusing on very specific keywords.

I would look for an affiliate hosting and use the money for advertising and the sleep and see the money comes

Jack,

I would invest $5k on a great site. Then rent 2 good spec servers for around $600/mth for your inventory. Get an off-server backup account setup. TouchSupport for sysadmin and helpdesk for around $500/mth. So you have your inventory, sysadmin and helpdesk taken care of.

Then slowly start investing into adwords, increasing your adspend as you feel your way around their system. Use your capital ($50k) to fund your ongoing costs, as you build revenue with new accounts coming in.

I would probably invest $25k into adwords, over a 12mth period. You'll get better with adwords the longer you use it, so don't spend it all in the first few mths. At the end of 12mths, you should have enough revenue for the business to be self sustainable, and then you just keep organically growing from there.

lol, I'm calling my bank about a $50k loan right now! This Aussie knows his stuff! :agree: :D

I currently have two Dell Poweredge 1750 servers 4gb ram and 300gb hd's. And i can house them at my office with 5 T1 connection lines. I have a small UPS backup power.

Should i be housing these at my office or not go in case of outage and/or management?

I have very good connections for outsourcing 24/7 tech support.

I like aggressive opinions. :)

Jack


Dear Jack -

If I had $50,000 and was forced to go into webhosting and already had two dell poweredge 1750 servers I would Co-lo with someone.

Step one.
Find a co-location center that is close to you incase you have to reboot a server in the middle of the night.

Step two.
Get Insurance. - get a $3,000,000 insurance no-fault co-location priemum from an accredited insurance agency. They are hard to find and great to have in case of total catastrophic failure and loss of data. You will be covered.

Step Three.
Get a back up server to back up your data nightly between 12:00 a.m. and 2:00a.m. run a cronjob or webmin to do the back up job. keep the logs for two (2) weeks.

Step Four.
get in a 1/3 rack or 1/2 rack (be sure to talk to all the providers in a 200 mile radius on pricing and also what they charge for fees for assistance. You could be shocked. go with the best, lowest cost one.

step five.
put entreprise class appliances in rack. hookup your ethernet cables, KVM and Servers. Goto town.

Step six.
The most important. - Do not let anyone oversell you on band width. Hey if someone is going to give you 10megs for $125.00 take it. but if they want $125.00 a meg for bandwidth. Check around See Step four again. Call me a cheapskate but that is my profit you are talking about!!! $125.00/ $5.00 per client is 60 clients per meg to pay for the band width per month. OUCH THAT HURTS.

Do your due diligance. don't get suckered
-chris

Bob,

When you say, "the longer you use it", what kind of a position are you looking at in the sponsored results list?

The top 5 are always highly competitive, wouldn't $2K / month get exhausted fast? Or are you talking about focusing on very specific keywords.
What I meant was to ease into the adwords system, and you'll get to know it the more you use it. That's what I have found, as the longer you use it, and get used to how it works, the better your results can be, with fine tuning your ads and keywords etc.

lol, I'm calling my bank about a $50k loan right now! This Aussie knows his stuff! :agree: :D
Well nothing's guaranteed but I've been around the block once or twice. :D

get decent support. From a shared hoster like me, I like good support. i don't like to wait more than 2-3 hours for a human to respond to my email, and if I call, I don't want to leave a message, I want a live person who can understand English.

:confused: What I meant was to ease into the adwords system, and you'll get to know it the more you use it. That's what I have found, as the longer you use it, and get used to how it works, the better your results can be, with fine tuning your ads and keywords etc.

We've been using it quite a while but not recently since we've found better ways of getting clients.

What I've found is that $2k a month doesn't go a very long way on AdWords, maybe I just don't know the art of keyword selection :blush:

get decent support. From a shared hoster like me, I like good support. i don't like to wait more than 2-3 hours for a human to respond to my email, and if I call, I don't want to leave a message, I want a live person who can understand English.

If I wasn't computer literate to the extent I am, I would spend a decent part of that $50,000 educating myself on operating systems, programming, networking and more. Maybe take some classes or do certification courses.

You need to know about the internals of the business, there should be no exceptions to that rule. CEOs nowadays need to be CTOs as well.

:confused:

We've been using it quite a while but not recently since we've found better ways of getting clients.

What I've found is that $2k a month doesn't go a very long way on AdWords, maybe I just don't know the art of keyword selection :blush:
Adwords is a tough place to promote, and an easy place to spend a lot of $$ for stuff all return. There is an art form in using adwords well, with your keywords and layout of the ads, and it can take time and practice to fine tune. This is why I suggest folks don't rush into adwords, and get a feel for their system first, before they waste a lot of $$ real fast. :S

We have never had much success advertising regular hosting on AdWords. Either targeted keywords don't get you enough traffic, or more general keywords cost you an arm and a leg and get you a lot of traffic you don't want [or at least doesn't convert easily].

These we're doing some highly targeted advertising on adwords for colocation services (our spend is less than $500/mo), and it's been effective in generating leads for us, which is really our objective in that market segment. Generate leads, get people in for tours, get quoting opportunities, develop relationships ... these things take time, so it's hard to quantify how much revenue we've booked through Adwords, but it far and away exceeds what we spend.

Back in the good old days when you actually paid CPM for adwords, we had a customer bringing in 20-30 customers per day on $8 - $20/mo plans, mostly all annual prepay. He managed to fill up several servers and then they changed to CPC and he never really recovered, at least in terms of ROI. He went from being way positive to somewhat positive to lucky to break even most weeks.

I wouldn't want to be in the shared market these days trying to sell hosting. Far too many folks offering the farm for $50/yr or less these days. You have to find a niche where there's still a solid demand, ability to charge a premium vs. commodity hosting, and yet still be able to leverage off the shelf automation solutions or have the expertise to build your own, specific to your niche.

go out and do something in thename of .... :D got it ?

Spend 20% on hardware 100% on marketing :)

alot of marketing, possibly an advert on tv as i have not seen webhosting adverts on tv in the uk and think of the amount of people that watch tv it could be a good way of getting a large client base.

With your $50k you should go to business school. :)

(Or at least take a few basic accounting and business management classes at your local community college.)

Whatever you do, be 100% sure to write a business plan BEFORE you get started. Otherwise, you will be literally throwing your money into the wind and simply praying some of it lands on good soil... With a business plan you drastically increase your odds of success.

I wrote a 40 or so page business plan. I have taken many many business classes and am currently enrolled. My family is full of successful entrepreneurs so i can ask questions if need be. I read as many books as i can. Built to last, good to great, rich dad poor dad, think big and kick ***, 48 laws of power, many zig ziglar books, anthony robbins, john maxwell, dale carnegie, the one mintue manage, who moved my cheese, richest man in babylon (my favorite), think and grow rich, man i could go on and on. I love business and i love learning about it.

Thank you for that tip because I would recommend the same to anyone! :)

Jack

Look for a niche. When i see how much money the first Django and Rails Hosters made by offering good lighttpd+fastcgi+appserver and service packages (tuning helps, code reviews etc.). You will not get money from hosting another PHP site. This is so automated in setups that people sell it for the prices of the bare metal. With margins that only the huge companies can survive.

You need to find a way to sell services and special skills today. Few people understand this.

By the way "Four Steps to Epiphany" from Steven Gary Blank is a good book too for entrepreneurs.

Oh yes and addwords. Its getting more and more difficult to get a ROI. Google is just to expensive these days, they suck all the money and leave us with a ROI so small that my time (and risk) is not worth it. I stopped addwords and addsense a year ago.

Spend 20% on hardware 100% on marketing :)

Well i would do 50 percent on Hardware and the rest into Marketing. You can't convince someone to buy a bunch of crap for some money. Stuff is important that itself would bring new clients.

:confused:

We've been using it quite a while but not recently since we've found better ways of getting clients.

What I've found is that $2k a month doesn't go a very long way on AdWords, maybe I just don't know the art of keyword selection :blush:

Hire a professional SEO and he would reduce the work and find out the perfect keywords. Its all business and its normally tough to compete for niche keywords so making a perfect plan could fetch you nice results.

Find the 10 most popular publicly-quoted hosts in your country, buy $5k or shares in each of them, then hang round forums cheer-leading them all and posting great reviews in every negative thread about them.

- my cynicalview on what I believe 50% of WHT "members" already do :P

Find the 10 most popular publicly-quoted hosts in your country, buy $5k or shares in each of them, then hang round forums cheer-leading them all and posting great reviews in every negative thread about them.

- my cynicalview on what I believe 50% of WHT "members" already do :P
Damnit, Rob's onto us. The jig's up! :blush: