I've been in this business for over 9 years and started "small" myself, building ground-up piece by piece. Here's what I would suggest for you to build a reputable company.
Go to someone like http://www.clook.net
and get their smallest reseller package, it is less than $20 USD/month. Put up a nice website, find your niche, and market to them. Sell small packages, treat your customers with integrity, and build a name. Upgrade through their packages as you grow your revenue base, expanding your operation as you do. Once your revenues reach a certain point get yourself a VPS somewhere or a cheap server. Now you have additional flexibility, lots more bandwidth and diskspace to provide, etc. If you've got what it takes from a business plan perspective to succeed, you'll be able to achieve this. Get a 2nd server, a 3rd, and so on.
Simply having a server doesn't mean your bank account fills up--it certainly requires work. My guess is that between you and your friends, if you have the determination and willingness to learn, you'll find the time. My caution, however, is to compare the differences between free and not free. Clook, for example, has a very very strong reputation and high quality of service. Your investment (even at <$20USD/month) will be reflected in your quality and your customers will thank you. It is much easier to build momentum with happy customers than with angry customers.
Best of luck to you, I hope you achieve your goals.