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  1. #1
    Join Date
    Jan 2004
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    7,029

    $20,000.00 budget?

    now would $20,000.00 be enough to start a good web hosting business? If you had 20,000.00 (just starting the business) how would you spend the money exacly?

    Me I would hire support techs (good ones), servers, advertise.
    I am back....


  2. #2
    The point with any form of investment, though, is you absolutely need to acocunt for how it will pay itself back according to a set business model/plan.

    Some hosts set out to make a short-term loss in order to make long-term gains - but for the smaller host, it is perhaps wiser to ensure you get a return on your money fairly quickly.

    It all depends upon your goals, though. You have to have a good idea of your target market and customers. Personally I think the local market is always going to be the first port of call. Face to face business works so nicely, and can have networking benefits.

  3. #3
    Considering many quality hosts have started on a shoestring budget if you had $20,000 to invest and did the proper planning etc... you should have no problem building a solid business.

    It is all about planning(in general), marketing and financial planning, not the amount of money you have to start. Give some of the hosts around here $20,000 and they would spend it all and have little to show for it, because they did not plan well.

    Derrick
    ResellerEdge.com - High Quality Reseller/ Multiple Domain Hosting.

  4. #4
    Join Date
    Jun 2003
    Location
    Bay Area
    Posts
    220

    It all depends on your business plan...

    but if I had to do it...

    i'd have 3 months of colo paid for + redundant net connect... and... unless you use zebra, ur already in the hole. Damn.

    I'd spend wut was left on whatever aix machine I could afford. AIX or fujitsu sun compatible. mmmm
    -- My software isn't buggy; it develops random features --

  5. #5

    Re: $20,000.00 budget?

    Originally posted by Torith
    now would $20,000.00 be enough to start a good web hosting business? If you had 20,000.00 (just starting the business) how would you spend the money exacly?

    Me I would hire support techs (good ones), servers, advertise.
    It would take a lot more then just doing that

    Check out http://webhostingreport.net/

    Thanks,
    JezzoMaster

  6. #6
    Join Date
    Mar 2004
    Location
    na
    Posts
    256
    I would think you should invest on something that you are most confident on. If you are a currency broker, i don't think you will want to put something on a new venture which involve lots of time and effort.

    I do agree you can always cut your time by hiring quality support crew and also whatever need you would require.

    Let's think about it. If you spend your $20000 in your first month, how are you going to maintain the cost for the subsequent month? What about working capital? How long will you take to earn back the 20000 or at least enough to support the people you hire?

    With such, you might have the money (but still not enough) to make money roll. So think of how much time you can spend as well in addition to the heavy investment you are going to put in.

    Alternative view from just me.

  7. #7
    spend some on your servers infrastructure, everything on a cluster, high availability environment, to have a disaster recovery plan, run your server farms in two data centers

  8. #8
    Join Date
    Mar 2004
    Location
    Arkansas
    Posts
    93
    Why waste all your money on support techs if you are just starting and dont have any users....start by either getting several large reseller accounts (buy as you need) or a VPS, or with that kind of money you could go ahead and get a good ded. server.
    Outsource your support (if you cant handle it yourself) (at first anyways) you can get good support @ 50 cent per domain. Ofcourse as you grow, you will most likely want to have your own support staff, that way you can keep a close eye on the goings on, and if they arent up to par, replace a few people. then you may look into trying to get some colo going after you have a strong user base.

    But IMHO hireing techs right off the bat is a very very bad idea. (if you plan on using them for general support anyways) You may look into getting a server admin on a "contract" type thing as needed if you start with your own server.

    And ofcourse you need to advertise your company, as many would say i would suggest the local market for start. You may also look into getting some sales reps to work on a commission. Take out a couple help wanted ads in the local news papers and such, forms are good...etc etc etc

    Given 20k, i think about anyone that knew what they were doing should be able to build a very strong, money making hosting biz.

    Look at all the resellers gone mega hosting. Infact, a simple $10-$40 reseller account is how a lot of us around here got started(and alot of hard work). If we would have had 20k, well, it would have made/make life alot easier...
    YourDotComPeople.com Hosting And Web Design For Small Businesses!

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  9. #9
    With $20,000, you could probably acquire a small hosting company with 200-300 customers. It would be a good investment because it would allow you to have income from the start.
    Great Hosting Companies for Great Businesses

  10. #10
    $20,000 can buy a small hosting company with 2000 clients, when it was beatted by competition, many larger webhosts acquire fast growing webhosts using this tactics.

  11. #11
    Originally posted by nowisph
    $20,000 can buy a small hosting company with 2000 clients, when it was beatted by competition, many larger webhosts acquire fast growing webhosts using this tactics.
    you gotta be joking right?
    P4HOST.COM -- Specialize in quality Web Hosting solutions.
    Affordable -- Prices are very comparative
    Reliable -- Very low load average guaranteed. 60 day money back. Fast Support --Support Forum -- Providing hosting since 2003

  12. #12
    Join Date
    Nov 2000
    Location
    San Diego
    Posts
    3,407
    Originally posted by nowisph
    $20,000 can buy a small hosting company with 2000 clients, when it was beatted by competition, many larger webhosts acquire fast growing webhosts using this tactics.
    That is BS. Show me where you got this from or is this some random speculation?
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  13. #13
    Join Date
    Feb 2002
    Location
    Australia
    Posts
    24,027
    Originally posted by nowisph
    $20,000 can buy a small hosting company with 2000 clients, when it was beatted by competition, many larger webhosts acquire fast growing webhosts using this tactics.
    Change that 2000 to 200 and you might be near the money, imo.
    WLVPN.com NetProtect owned White Label VPN provider
    Increase your hosting profits by adding VPN to your product line up

  14. #14
    Join Date
    Jun 2001
    Location
    Denver, CO
    Posts
    3,302
    It doesn't matter how much or how little money you have. If you have time, experience and even just a little bit of money you can start a decent hosting operation. I know, we started our business on a shoe string, litterally with no money. At the time, we had slow and steady growth - that was all find and dandy with us.

    However, since you are talking about investing a decent sum of money, two things to consider:

    1) What is your role in the company? What would it cost to hire someone to fill any roles you are not experienced or do not want to take on?

    2) Will you personally require a salary for the first 6-12 months of operations?

    The greater number of roles you can initially fill will keep your payroll costs to a minimum. The less amount of money you have to take as a salary during the infancy of your business will also dictate quite a bit. If you can afford to keep rolling all of your revenues back into the business, then you can grow faster.

    Hiring a bunch of people when you have no customers is a very risky thing to do. If you have people sitting around doing nothing, they are going to get bored and will not be happy employees. They will also burn through your cash before you know it's even gone.
    Jay Sudowski // Handy Networks LLC // Co-Founder & CTO
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  15. #15
    Join Date
    Feb 2002
    Location
    Australia
    Posts
    24,027

    Re: $20,000.00 budget?

    Originally posted by Torith
    now would $20,000.00 be enough to start a good web hosting business?

    Yes.
    If you had 20,000.00 (just starting the business) how would you spend the money exacly?

    Good domain name - business registration fees in your local area, and possible insurances - Good site designed - 2 good quality leased servers - 1 server for your site + helpdesk + billing - other server for clients (preferably in different datacenters) - sysadmin on hourly rate to secure and monitor the servers and also help on your helpdesk - invest $X/mth in online advertising.

    Now here's the tricky part, it all comes down to how quickly you gain cashflow_traction. Your business is operating solely using that 20k, but that will only last X mths (maybe 4 to 6), and you have that amount of time to build up a positive cashflow and get profitable. Hopefully if you have a good product, find a great place to advertise and gain clients, by 6mths in, you should be operating profitably.

    No guarantees with business and the hosting business is extreme. Your chances of success are purely based around your skill level and a heap of luck.
    WLVPN.com NetProtect owned White Label VPN provider
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  16. #16
    there was a good example of xxxxhosting being beatted, and acquired by a big player with $35,000 only, for 3000 clients. It's the commerical world.

  17. #17

    *

    Was it a small hosting company that sold $1/month hosting accounts. A host with 3000 clients with an average of $6-$7 per account is making between $18,000-$21,000 per month in revenue. Where would one go to find hosting companies with 2000-3000 clients wanting to sell their businesses for $20,000-$35,000
    Great Hosting Companies for Great Businesses

  18. #18
    Join Date
    Feb 2002
    Location
    Australia
    Posts
    24,027
    Originally posted by nowisph
    there was a good example of xxxxhosting being beatted, and acquired by a big player with $35,000 only, for 3000 clients. It's the commerical world.
    Got a link for that sale?
    WLVPN.com NetProtect owned White Label VPN provider
    Increase your hosting profits by adding VPN to your product line up

  19. #19
    Join Date
    Jan 2002
    Location
    UK
    Posts
    1,541
    Are you good at design? If not hire a designer who can make you a nice clean looking site. Invest in the back end, billing systems etc... make ordering as simple as possible (something we are working on at the moment)
    You need a way to take payment, merchant account etc.

    Personally i wouldnt go with what some people say and get loads of servers, they're not a lot of good if you have no customers. so i would get either a reseller or just one server. As well as a domain registration reseller account or something like that.

    Save the rest of the money, you might need it as it may take a few months to get the money coming in and you still need to eat.

    Oh and don't forget support, instead of techs get a live support prog, FAQ software and ticket support and maybe some flash tutorials.

    Hope that helps

  20. #20
    Greetings:

    For better or worse, the hosting market place valuatations are in an influx.

    Some companies are paying 12 to 18 months of revenue (mostly if there are very close synergies and migration can be swift) while others are paying 2 to 4 months (sometimes a lot less).

    A lot will depend on how quickly the seller wants to sell along with what is being sold and the value the buyer can turn around (and how quickly).

    Thank you.
    ---
    Peter M. Abraham
    LinkedIn Profile

  21. #21
    Join Date
    Nov 2001
    Posts
    309
    there was a good example of xxxxhosting being beatted, and acquired by a big player with $35,000 only, for 3000 clients. It's the commerical world.
    If the clients of this "company" are paying $5 yearly, then $35K sounds about right

  22. #22
    no that's $7 dollars monthly, average $12 dollars per month per client. When the company fall, it can only sell for one month profit.

  23. #23
    Join Date
    Mar 2004
    Location
    USA
    Posts
    35
    I would defately invest in a design, so your website sticks out. A place like ceonex.com does amazing work for that. They are not cheap, but if you have the money to spend I would definately go there. They have the best designs I have seen for hosting companies. Very inspired by these guys. They blend in flash with their designs perfectly.

    Once you have a good design, your going to need the coding done.. I would setup a automatic account creation script, and maybe a database of all your clients that is coming in.. might as well make it all automated for yourself and well laid out.. since you have the money to spend on making a nice running site.

    If you do not have the time to be around enough to give your cleints the support they need, then I would hire a support rep. Otherwise I would do it yourself, until you simply can't handle it all alone. If you got a full time job on top of this hosting company and just cant keep up with things.. yeah, it might be a good idea to hire someone.. Atleast someone to manage your servers incase something did go wrong

    But you have a nice running site.. great servers.. great support.. but no client?! Guess I would invest in some advertising.. This is the area every host struggles in it seems like. Get a good advertising strat and your good to go. If I had more money, I know I would concentrate more on this area

    There is my words for ya

  24. #24
    Join Date
    Mar 2004
    Posts
    1,301
    I would get a customized control panel, have a company for search engine optimization (companies like www.highrankings.com or www.patrickgavin.com )
    Have a support tech not techs have superior hardware all new P4s and Dell, Have a big advertising campaign and make use of all the possible mediums: PPC adv. at Google and Overture and get my keywords from www.wordtracker.com CPM at sites like www.tophosts.com www.thewhir.com . Go Local by getting good flyers done, have a great website, tie up with www.cj.com of www.linkshare.com start my affiliate program and pay good commissions.
    "Web Hosting is not just about selling space, it is about facilitating customers needs with your plans and supporting the customer for a long lasting mutually beneficial relationship."- Yaser

  25. #25
    Yaser, my thoughts exactly. It's amazing to me it took so long to give the advice. I think you should have the basics taken care of but you should really focus on getting paying clients so you can support the business expenses and yourself. I know from experience it's not easy but I have learned it is all about getting your message out. If you have some time I would also suggest reading Guerilla Marketing, it really gives you some great ideas.

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