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  1. #41
    When I started, all I had to pay for was my reseller account. I used my parents phone, power etc but it gets to the point where they say that you've got to start paying for those bills. I pay my fair share in bills now. Especially the telephone which I now have 3 lines with enough capacity to get 10 lines in here now. I'll be adding two more lines shortly and getting a freecall number for sales.

    The hosts that are really small charging less than $5 a month can do that because they don't have the same overheads as a host that has a reasonably large customerbase. They're able to undercut the larger companies obviously. But just wait until they get a few more customers and find out that they're not really making any money and just paying these unexpected bills.

    I've now got two part time tech support people and someone is going to take care of the accounts and billing for me shortly. If I'm charging $5 a month per account, suddenly I'm not making any money at all. There's also lots of cheap dedicated servers now but they don't come with much software so sysadmin load is much higher and instead of answering the phone and replying to sales calls, you're maintaining your existing customer base.

    Once you've got all these staff members etc, you need more customers so you advertise more and to advertise, you need to be making a profit really to get noticed out there with all the other hosts that exist.

    That's just my thoughts anyway.

    Cheers,
    Nigel

  2. #42
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    I cost that I'm starting to find is the phone lines. If you have an 800 number and say it costs you $0.20 a min. If one of your client phones you for just 5 min for support that's $1. What if they call you a few times and get up to $3 or $4? Then you have to spend about $4 a month on phone expenses for that client when he is only paying $9.95 a month for hosting.

  3. #43
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    well if your paying 20 cents per min on your 800 # then your crazy since you can go to cheapest800.com and get it for 4.9 cents a min.

  4. #44
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    I'm in Canada. In Canadian dollars it is about $0.20 a min to get calls from the US.

  5. #45
    Att - 0.07 per min.
    Also, if you plan on having more than one caller at a time (or don't want to appear as though you work from your garage) you will have to start looking into buying a phone system. Not sure if you have ever looked at the cost of having one capable of 4+ lines, music, conference calls...etc..etc.. but i can tell you IT AIN'T CHEAP
    iVersit Communications - Powering Your Success
    http://www.iversit.com/

  6. #46

    Unforseen...that's an understatement

    1. Nights where I get calls at 3 AM for technical problems.
    2. Upgrades at 4 AM.
    3. Staying up late to correct cutomers' problems.
    4. A good, chrooted FTP daemen (ncFTPd)
    5. Time developing a secure shell
    6. Securing BIND after being hacked into
    7. Installing qmail after sendmail was hacked into
    8. User and system management (account setup, account removal)
    9. Due to our highly specific needs, we developed our own control panel
    10. T1 line
    11. 512 megs of additional RAM after 8 months
    12. Three 18GB drives due to a mistake by Dell (they put two 9 gig drives in when we ordered 18s)

    I could go on and on about this, but I think I'll spare you of the rest. Running a dedicated server takes a lot of time and money, and before you ever decide to provide hosting accounts, you had better make sure you've secured the system and developed automated systems for everything. Even with all of the custom scripts you will design to do these jobs, you'll stay busy. I made the mistake of waiting till later do cover these bases, and it's almost too late now.
    Last edited by ShellBounder; 10-31-2001 at 10:10 PM.

  7. #47
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    Re: Time

    Originally posted by ShellBounder
    1. Nights where I get calls at 3 AM for technical problems.
    .
    The main reason why I don't provide phone support. I'm also usually not at my best when called out of bed in the middle of the night.

    Is there a rule in the book o' hosts that says: Thou shallt give support 24 hrs a day, 7 days a week and thou shallt not rest? Thou shallt not adhere to business hours?

    Don't get me wrong, I hold customer service very high. But only during those 16 hrs that I call "office hours" The other 8 hrs I call "bed" hours. The only thing that makes me jump out of bed during these hours is a server problem. Not some peep who does not know how to set up his email account in outlook express

  8. #48
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    I think everyone should offer phone support however I think it is the phone costs which are one of the biggest unforseen costs. Local line is about $35 a month then you got the cost of long distatnce and as I said before a 800 number can get costly.

  9. #49
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    Maryland
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    I would say the number one biggest overlooked expense is:

    Your time.

    Let's say you bring in $5000 in revenue one month, and you paid $4500 in bills. Wow.. you made a profit, right? But how many hours did you put in toward your business that month? If it's a 4-week month and a 40-hour work week, that's 160 hours, and that means your $500 profit is effectively an hourly wage of about $3/hour. Now I don't know about you, but I feel my time is worth a LOT more than that.

    I think in planning you should decide ahead of time how much you want to pay yourself and figure that into your expense projections. You are probably not going to be able to pay yourself initially, but you should be able to project your business growth to the point where you DO make the salary/wage you want. If you projections don't ever meet that goal, then you should seriously think about not starting it up in the first place, or making some major changes to your plans.

  10. #50
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    I completely agree

    If you want your business to succeed and grow you have to incorporate your own salary into your business plan and be realistic. If you give yourself a salary of $1500 a month that is not good. The minimum you should probabley start at is $3000 a month.

  11. #51
    Rarely do I handle phone support, I've got someone else that does that with voice mail. But it's still a pain to get calls from him to troubleshoot a server problem. Nonetheless, I've learned a lot, so it's not all bad.

  12. #52
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    So we have worked out that you don't need a lot of phone support. If you were to make a list of things you need to do your own hosting this is what I'd have. Let me know what you think.

    1) Server
    2) Collocation
    3) Merchant Account
    4) Bank Account (Monthly Fees)
    5) Control Panel
    6) Server Software
    7) Merchant Account Terminal

  13. #53
    Join Date
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    Orlando FL USA
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    8) Payroll
    FutureQuest.net
    Quality Services & Professional Support Since 1998
    Click Here To Visit the Community

  14. #54
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    I meant the list to be the basics. Without payroll.

  15. #55
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    Location
    Orlando FL USA
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    I believe paying at least yourself is part of the basics... it really is so important... however I'll hush.

    Can we then add "Legal Stuff" e.g. biz license, taxes, et al? Things that go with starting any business correctly...

    Ok I'm really going to hush now...
    FutureQuest.net
    Quality Services & Professional Support Since 1998
    Click Here To Visit the Community

  16. #56
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    Oct 2001
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    716
    i have a question...is it needed to have a biz license?... here in Rhode Island i called every single office that has to do with biz and they all told me that there is no need to register or to get a license to have an online biz... and then i asked if i can do it anyways and they said they cant... i mean why do you need it in the first place...

  17. #57
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    I have to agree with Deb on this one. You need a business license. The reason is you need one is because you have to open up a business account with a bank to use some good Merchant services like Revcom. Also when your customers send you checks they would rather be sending them to yourbusiness.com rather than Your Name

  18. #58
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    Oct 2001
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    716
    right.... but we opened our business account just by registering the business... we didnt need no business license... we tried to get one but they didnt let us because in RI you dont need one for online business...also there are no taxes in the state of RI for online business...

  19. #59
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    Can you open a business account where you are without a license?

  20. #60
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    Moscow
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    Never start it with a single server - it was a mistake that we did two years ago. Better take at least 2 servers (buy them, do not rent) and colocate. You will need your CPU intensive SQL tasks executed on the second machine. Now we use a seperate server for every service: DNS, Mail, SQL, Web, Control Panel, but it was a big task to move thousands of user accounts in to the new system.

    Imagine, that just in a rare case, your Web server is down, your users will have at least an opportunity to send/receive mail, if you have a seperate mail server.

    Guys, you forgot network infrustructure: we found out that we need a seperate IP block, router and switches. These things cost a lot.

    When you install several servers, it is more cost effective to rent a
    seperate rack-cage instaed of several rack units.

    So, consider installing several servers and switch. Yes, more investments, at least $5000 but it will pay back in the long run.

    Also, you need to spend some $$$ for professional designer to create your corporate style: logo, envelopes, etc.
    Best Regards,
    Anatole

  21. #61
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    Southern California
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    Originally posted by one_web
    right.... but we opened our business account just by registering the business... we didnt need no business license...
    Registering it where?
    HostHideout.com - Where professionals discuss web hosting.

    • Chicken

  22. #62
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    Oct 2001
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    716
    you can open a business account but you need a paper from city hall that says they know your business exist...that would cost you $10..but when i went to business license they said they dont have any for online business... so you have to go to city hall and ask to register your business..all they do is ask for your name address and business address and that is it...oh and of course they take your 10 bucks...and your done... well i dont know but it sounds crazy to me but what can i say it is Rhode Island

  23. #63
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    That's called a DBA (doing business as). It's all I needed to get my business banking account.

  24. #64
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    DBA/Business License> every state is different. It might help to check with your local Business Development office (also called Economic Development, varies by area) which often has close ties with the Small Business Administration http://www.sba.gov -I believe- ... they can tell you exactly what you do and don't need.

    It's very possible you don't need a business license. Where I live I need a seller's permit which enables me to get things tax-free (wholesale, as in physical products, which I needed for my gift shop) and also gives me esteemed right to charge and file appropriate sales taxes on goods and services in-state.

    No other licenses are required here. But, your development office and/or the SBA and/or city/county government should be able to give you good help.


    ~~~~~~~~~~~~~~~~~~~~
    That said... in my hosting biz, which is still quite small (and that's okay)... I am still a reseller. The cost of each plan, that I pay to my host, is what pays for much of that long list mentioned: control panel, hardware, RAM upgrades, technical support staff, bandwidth, data center, etc. At my stage it is a MUCH better margin than having my own server(s). There's not a snowball's chance of me having my own servers right now.

    Given that, remember that many of the things you already have, and now you get to write them off as business deductions! For instance, you can list your home phone # with the phone company as a "dual listing" so it is also your biz phone. I recommend getting caller ID so you can figure out if you should answer, "Hello?" or "AAA Webhosting, this is Bailey, how may I help you?" Trust me, your friends will make fun of you if you don't. Technically you must split out how much of the phone is business use. Use your best judgement.

    You already have a 2nd line, most likely, for your dial-up connection, or you are already paying for your broadband. However it happens, it's now tax-deductible, both the line itself and the ISP fees. Of course, you have to split out personal use, BUT I suspect if you are like me, 95% of my online time is business-related, I have no problem justifying that. An expense I already pay, now I get to write it off.

    Cell phone -- I already had one for personal use, but four years ago bought a gift shop and needed to be phone-accessible for employees, reps and vendors. I just upgraded to a nice digital plan with US Cellular which will be a MUCH better deal than my current analog phone. Anyway... a personal expense that is now written off. 98.9% of my calls are business related, in some way. The new plan is 1500 minutes for $40/mo. and that includes a ton of excellent features. Very exciting for a small-town girl.

    Pager -- this was the first thing I got when I took up hosting/reselling with a vengeance last winter. Got a nice alpha-numeric pager for $16/mo. It is tied into my support system as well as an "urgent" e-mail address. When clients e-mail me "urgently" (a special address) or send a support request, I receive it in real-time. I am always within 2 hours of a computer at any rate, this makes it possible to get heading in that direction.

    Laptop -- I could do without this if I had to. But I picked one up on ebay because I get a lot of migraines and am often sick (you know, one of those sickly kids in school) and this way I can still putter about on the 'net while sacked out under the covers. Last December I installed a completely new shopping cart system on my gift shop's website, full products, pages & everything, while down with pneumonia. Orders sky-rocketed with the new system. Laptop is paid for. But is it necessary? Mmmm, where I'm at, no, but your situation might be different depending on job/logistics.

    Merchant Account -- this was my biggest expense. It runs about $35/mo. when all is said and done and it's barely used. RIGHT NOW. I don't regret the professional image though. And it will get more use. Revecom was too unreliable and I didn't feel it looked professional enough. Now I have 100% control on it.

    Finally...
    Advertising -- for the first time ever, I am going to start advertising locally. I spent a good $60 on various papers and stuff at OfficeMax and will also burn $50 in print cartridges on the project. Don't forget postage.......

    I am targeting local business owners looking to save money in a slim economy. All the local competition is horribly expensive and they don't give their clients 1/10 the tools and features I do. So time to open some eyes.

    So there's my beginner's list. I've gotten by on this for a year now. And my taxes are much happier too.

    Bailey

  25. #65
    Join Date
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    I'm right behind you.
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    1,143
    A huge internet bill after finding out about this board
    Marketing For Hosting Companies:

  26. #66
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    Nov 2001
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    Ann Arbor, MI
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    What helped us a lot is that we started as a partnership of three people.

    Three people can do way more work in their spare time than can one, and don't have to hire additional employees for three times as long.

    The biggest thing that most people don't consider though, is the cost of advertising. They're like "I have enough money to pay for my server for 3 months, will I have enough customers in those three months to pay for it?"

    They're not thinking "How am I going to get customers?" You are going to need some money for advertising. Even if you just plan on cold calling businesses in your area, you have to consider the time you'll spend doing it and the cost of mailing out brochures to the interested ones.

    Starting out getting your local businesses online is a great way to compete with the giants. Also, specializing is good. We got a good start by offering database powered web sites that were specifically useful to realtors. We advertised targeting realtors, and soon, we had more customers as other local realtors learned that they needed to be able to offer the same thing in order to compete.

    A good partnership for us was also with a very popular screen printing shop. Most screen printing is done for advertising. They always ask their customers if they want their web site address printed on the back of their shirt or something. "Oh, you don't have a web site?".
    -Mark Adams
    www.bitserve.com - Secure Michigan web hosting for your business.
    Only host still offering a full money back uptime guarantee and prorated refunds.
    Offering advanced server management and security incident response!

  27. #67
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    Sudbury, ON
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    Another expense I'm finding out is a laptop is a must in the hosting business. You must check email almost everywhere you go.

  28. #68
    Join Date
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    Chennai, India
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    Some more expenses ...

    Medical expenses - You run a higher risk due to working loooong hours.
    Interest on credit cards. I suppose many of use cc to pay our bills
    and one fine day when our customers delay, we run huge bills.
    (Unexpected because what the company says when you sign up is in reality different from what you end up paying.!!)

    Lets Cheer up.

    Matra

  29. #69
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    Dec 2001
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    Kingwood, TX
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    52
    Water bill????
    You know we are humans we need to use the toilet a couple of times....and take a shower....

  30. #70
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    Medical expenses? You must be really fragile

  31. #71
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    Chennai, India
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    Unhappy

    Originally posted by netsolutions
    Medical expenses? You must be really fragile
    Well, I seem to have become fragile after 12 years in the IT industry, working looong hours and tight schedules


    Matra

  32. #72
    Join Date
    Jul 2000
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    Brooklyn, NY
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    430
    It takes time and money to build a successful company.

    The more you own the company the more bills you will have to pay as you grow.

    Basic idea of what I pay every month:
    - server leases
    - server upgrades, backups etc...
    - dedicated phone lines (one is toll free 800#)
    - merchant fees
    - cell phn.
    - dsl
    ...these are just some of the bills that I have to pay every single month

    Soon I will be hiring staff, and that's when I'll have to sacrifice a lot of income.. but at least I'll know that the company is finally on it's feet.

    You should take a lot of things into consideration before you think of running any business.

  33. #73
    Join Date
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    Chicago
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    This thread alone will testify to one of the reasons that I choose not to go into the web hosting business but rather the advertising one.

    The big thing about web hosting is that starting up there is a lot of funds needed to get going, where in ads you only need a hosting account and some software. Once I started making some money I switched to a dedicated box and all is good

    Btw, in the state of IL., in order to get a business bank acc you need two things: City Business License and proof of registered assumed name, which you need to get a business license. Once you have those two you can get a business bank acc at any bank. The only thing that has always perplexed me about the assumed name game is why they required us to post an ad in the local newspaper for a few weeks before they issued our certificate? My best guess would be to see if anyone objected to the use of my business name...?
    ---
    Dan Ushman
    Co-founder & CMO
    SingleHop, Inc.

  34. #74
    bobcares is offline [email protected]
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    Let me summarise all the requirements.
    1) Dedicated Server
    2) Control panel software
    3) Extra Bandwidth
    4) Extra IP's
    5) Billing System
    6) Site Desing and development
    7) Credit Card Processing system
    8) Office (not necessary)
    9) Internet access for you. (you already have it)
    10) Support Staff
    11) Office Intrastructure...
    12) Additions free stuff for clients such as shared SSL certs, Zope etc...
    13) A good Bank.
    14) Site and server maintance
    15) Marketing costs
    16) A lot of time...

    I hope I haven't missed out any thing..

    Have a great day

    regards
    amar
    A student once asked his teacher, "Master, what is enlightenment?"
    The master replied, "When hungry, eat. When tired, sleep. When you need care, come to bobcares...."

  35. #75
    Join Date
    Jul 2001
    Posts
    260
    Someone mentioned InCorp and I have no clue what that is.

    Also how does this sound:

    1) Server ~ $250/month from rackspace.com
    2) Backups? Thats a lot extra and is it really worth it?
    3) Cell Phone ~ $40/month
    4) Cpanel/WHM ~ $99 monthly
    5) Advertising ~ $500 monthly for the 1st 4 months?

    Thats all I think that I'd really need, and it adds up to about $900 monthly for the first 4 months of operation. Is that too expensive? What else do I need? This would be for the first four months, I say this because I probably wouldn't need to advertise as much after this because of word of mouth etc.

    Brian
    Last edited by BrianF; 12-27-2001 at 07:59 PM.

  36. #76
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    900 a month for 4 months ads up to 3600 dollars. This is a lot of money for most new companies. Especialy when you don't have any starting customers...
    ---
    Dan Ushman
    Co-founder & CMO
    SingleHop, Inc.

  37. #77
    Join Date
    Jul 2001
    Posts
    260
    Whoops I meant to say adds up too, not ads :-). So altogether I would be spending 3600 for my first 4 months of operation, just 500 dollars monthly on advertising. I would spend so much in the beginning to push clients my way and to get my name out there, from then on its mainly word of mouth.

    Brian

  38. #78
    Join Date
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    Ann Arbor, MI
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    Originally posted by BrianF
    Someone mentioned InCorp and I have no clue what that is.

    Also how does this sound:

    1) Server ~ $250/month from rackspace.com
    2) Backups? Thats a lot extra and is it really worth it?
    3) Cell Phone ~ $40/month
    4) Cpanel/WHM ~ $99 monthly
    5) Advertising ~ $500 monthly for the 1st 4 months?

    Thats all I think that I'd really need, and it adds up to about $900 monthly for the first 4 months of operation. Is that too expensive? What else do I need? This would be for the first four months, I say this because I probably wouldn't need to advertise as much after this because of word of mouth etc.

    Brian
    Did you already get your merchant account or find a credit card launderer?

    If you can't afford Rackspace's tape backups, you should at least get a second drive to back up to.

    Two other companies a step down from Rackspace.com would be skynetweb.com and catalog.com if you wanted slightly cheaper, but still fairly good service.

    Your advertising sounds reasonable if spent in the right places. But you'll need a lot of luck to fill the one server up within 4 months. Filling the first one is always the hardest. Make sure you have some reserves to last past your first 4 months.

    Also, Plesk seems to be cheaper than WHM because of no recurring fees, although it doesn't seem to do as much. Have you looked at it?

    Good luck.
    -Mark Adams
    www.bitserve.com - Secure Michigan web hosting for your business.
    Only host still offering a full money back uptime guarantee and prorated refunds.
    Offering advanced server management and security incident response!

  39. #79
    Join Date
    Jul 2001
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    260
    Thanks for the response.

    I was thinking about revecom for my merchant account and possibly ubersmith for billing. I know the first server will be hard to fill, but I wasn't counting on filling it right away! I configured a linux server at rackspace with two 30gig hard drives, one for backup and it was about 300 dollars a month, what I wanted to spend. I don't like the Plesk v.2 control panel, thats why I'm getting WHM and CPanel, too bad its so expensive.

    What do you think about ubersmith? Are there any other programs that do this type of thing, but slightly cheaper?

    Where are the best places to advertise with the best results? Directorys, search engines, etc?

    Thanks,
    Brian

  40. #80
    Join Date
    Nov 2001
    Location
    Omaha
    Posts
    2,131
    advil
    advil
    advil
    advil
    advil
    advil
    advil
    advil

    hard liqour
    hard liqour
    hard liqour
    hard liqour
    hard liqour
    hard liqour
    hard liqour
    hard liqour

    o ya i dont think i saw a ssl license in there
    =)
    $100 bucks a year

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