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Thread: Part 3: Money
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10-26-2006, 07:46 AM #1Junior Guru
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Part 3: Money
Here is my 3rd tutorial on wht, this is about finances how to manage them and get them if you are a new host.
Something you have to remember "the customer will never pay what YOU want" , if your reseller or server costs 100$ and you plan to sell 10 plans..10$ each to cover your expenses...think again nobody will buy it unless you oversell your *** off like servage.net
IF you oversell then trust me you are digging your own grave…here is a worst case scenario:
You bought a 4gb space reseller
You marketed as a 500gb dedi server/s
You sold 50gb space for 5$
You sold 10 accounts and you are now making enough to pay for the reseller
A spike occurs in space usage
Your hosting account is now full
Now your bandwidth is drained
Your customers are furious
Your paypal has 5-9 disputes
You get sued
You gat bashed on forums like this one
You are finished..end of story- GET MONEY!
So just suck it up and get to work – designs – coding and advertise it as much as possible (ONLY FREE ADVERTISING NONE PAID)
If you start going on paid ads you will blow your budget
The best thing to do is either open a proxy site or get money via adsense OR open teen communities have huge traffic then sell the place.
That will give you enough money to get started I suppose, if not then design templates sell for 10$ per template.
OR make articles and sell them on webmaster articles.
Now I will NOT list the url for those webmaster sites because that would be advertising and its against wht policy plus its good for you guys to find such places on your own.
- Managing money:
prompt payments to your provider is the only way of getting good services/response.
Always keep a track of your customers and at least 1 week before your payment date make sure that they ARE gonna pay you and not dump you for a cheaper host.
Always stay 20$ ahead of your budget.
Now if you are already a successful host then try to have double of what you are spending and keep enough money for refunds that is if only you offer refunds and for a a certain period only but if you take yearly payments then yea you need to hang on to the money for the whole year not the whole amount just keep deducting each month from it
Notify your customers that their payment is coming up in 1-2 days and they need to pay you or send invoices upto 4 days before their payment dates.
That’s it for for my 3rd tutorial, this is just getting started there are a lot more things to consider while beginning a host.Last edited by CX.Eric; 10-26-2006 at 07:49 AM.
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10-26-2006, 08:07 AM #2Predatory Poster
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The first issue with any business is raising capital.
As the OP mentioned you can get that from your own capital achieved through work.
You can also get a low interest loan from a family member.
Your firm's organizational structure will determine where the cash comes from.
At some point you may have to considered complex financing such as issuing preferred stock, notes, and bonds, liquidating assets.
I've found it's best to take your startup costs plus an additional year's worth of operating expenses. You can stockpile money for longer periods but this is the bare minimum you'll need to get started.
Remember (90% of businesses fail in their first year and the number one reason is insufficient finances) They simply failed to raise enough capital at the start.
A lot of companies overlook billing schedules:
I strongly reccommend that you don't use anniversary billing. Prorate new customers and bill on the 1st of the month. It makes tracking non-paying clients substantially easier and it's really the only way to accurately monitor transfer usage. Cpanel resets it's internal bandiwdth statistics on the first of the month so the math can get tricky if you have customers paying on separate due dates.
Marketing:
Tap your friends and family, they'll want to help you succeed.
Word of mouth is great but at some point you need to advertise to get the word out and grow your business. You can't simply open shop and expect customers to find you.
Consider a marketing budget as part of your costs because at some point marketing will come into play.
You'll also need to make other decisions at some point:
Do you want to bring in a partner to pool resources.
How much control will other owners have?
What if I die?
Who controls the company? Who informs the customers if the company can no longer continue?
Am I happy?
If your business has grown with a large client base and you feel that work is a burden or simply lose your passion. Consider selling the company. The great joy of being your own boss is the personal reward, if you don't enjoy what you're doing, you can always sell and move on.
How will I use profits?
If your firm isn't generating a great ROI you might want to consider mutual funds or purchasing bonds to supplement your profits and establish flexible financing options for future growth or unforseen costs.
Feeling bold, you can always start up a firm in another industry to keep the cash rolling. This is usually the riskiest use of profits.
As always you can invest back into your company.
Be willing to Accept Failure
If you simply can't make your business work, don't keep betting on a losing horse.
Set goals for yourself and know when to get out before you've lost everything.Last edited by cywkevin; 10-26-2006 at 08:16 AM.
Patron: I'd like my free lunch please.
Cafe Manager: Free lunch? Did you read the fine print stating it was an April Fool's joke.
Patron: I read the same way I listen, I ignore the parts I don't agree with. I'm suing you for false advertising.
Cafe Owner: Is our lawyer still working pro bono?
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10-26-2006, 08:50 AM #3Junior Guru
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Partners are definetly a negative while running a business online YOU CANNOT TRUST WHOM YOU CANT SEE seriously unless you sign real papers and meet in person partner ships are not an option.
And 60% of the hosts out their are teens (one man show) thats why im pointing out the main points tat they have to lookover.
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10-27-2006, 03:22 AM #4Disabled
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Can you give some more tips on your hosting business promotion? You mentioned a word of mouth, but is there anything else one could do?
What is the ratio of online/offline advertisement for a small/medium business?
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10-27-2006, 07:18 AM #5Junior Guru
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Hello Segey, my next tutorial is all about online/offline advertising methods some really nifty tricks
And all my tutorials deal with small-medium hosting businesses..
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10-27-2006, 06:56 PM #6Newbie
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Can't wait to read your other tutorials, excellent job Dluzion.
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10-27-2006, 09:11 PM #7Junior Guru Wannabe
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Originally Posted by Dluzion
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10-27-2006, 10:13 PM #8Disabled
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I think someone should send this thread to servage.net
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10-30-2006, 04:16 AM #9Web Hosting Master
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Originally Posted by Tdothost
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10-30-2006, 06:37 AM #10Junior Guru
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What he means is servage is a MAJOR overseller and this tutorial could tell them how to run their business
lol
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10-30-2006, 08:43 AM #11Invented the Internet
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pixelized: You should consider writing some tutorials. You have excellent writing and communication skills.
CX.Eric: You posted some good information but I had a bit of a hard time following your train of thought. This sentence: "Now this is the only tried and tested way to get money actually there are 2 but the other one is really really lame and takes longer" took me a few times to understand what you were saying.
Normally, I wouldn't critique a WHT post and I certainly don't mean it as an insult. However, you posted a tutorial which is aimed at trying to communicate good information to others. Don't take this the wrong way, but it might be helpful if you wrote a rough draft first, cleaned it up a bit and then posted. I think you raise some excellent points,
--Tina||| 99.999% Uptime SLA!!!
Plenty of space and bandwidth to fit your needs!
www.AEIandYou.com - - (WP Friendly - Premium Reseller Hosting and Cheap Dedicated Servers)
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10-30-2006, 09:06 AM #12Junior Guru
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Thanks for the feedback Tina!
And that is the rough draft, i was kinda of in a hurry so just copy pasted from my notepad file and went on my way.
I try to be as straight forward as possible but time is always against me
Thanks again!
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10-30-2006, 10:59 AM #13Invented the Internet
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Originally Posted by CX.Eric
Again, you've included some excellent information. Thanks!
-Tina||| 99.999% Uptime SLA!!!
Plenty of space and bandwidth to fit your needs!
www.AEIandYou.com - - (WP Friendly - Premium Reseller Hosting and Cheap Dedicated Servers)
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10-30-2006, 12:44 PM #14Junior Guru
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Thanks Tina for the kind words
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12-09-2006, 07:16 PM #15Web Hosting Master
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Originally Posted by CX.Eric
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12-09-2006, 07:46 PM #16Web Hosting Master
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With Partnerships make sure you both sign a legally binding partnership agreement. Don't make it yourself, go to an Accountant or lawyer. Otherwise if you've invested 75% and he's only invested 25% and you two fall out, in court your a 50/50 partnership.
Sean
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12-09-2006, 08:43 PM #17Backup Guru
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Originally Posted by CX.EricScott Burns, President
BQ Internet Corporation
Remote Rsync and FTP backup solutions
*** http://www.bqbackup.com/ ***
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04-28-2010, 12:47 PM #18WHT Addict
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a good way to build capital is to design websites, you can generate a lot of capital fairly quickly providing you can find the clients.
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03-11-2012, 08:32 PM #19Junior Guru
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Great tutorial! I would say that instead of being just $20 ahead for a small host, I'd recommend a $200 emergency fund.