Hi, just wondering for a webhosting company, after you have your dedicated servers, site and domain up, what other intial cost's are there? I was talking to another guy who said there are legal issues, like "registering the buisness, getting tax id". I was wondering if someone could elaborate on this and tell me what other intial costs there are to launch a hosting company?
Well you're looking at a cost to register your business to make it legal and costs for addtional software such as support desks, sales scripts, payment processors, etc If you plan on hiring more support that's going to cost you as well.
To find out what type of business you want and how much it's going to be, check your state government's website. You at least should get a DBA which will set you back $50 in most places I believe.
You have to take into consideration the large cost which is the advertising - as there are so many web hosts on the internet, you need to spend a pretty penny in advertising costs in order to get the same (& hopefully more) in return.
Are you based in the US? As that would affect the legal issues you need to take into account...
I think like 3or4.com said one of the biggest costs is advertisement, for most of the scripts etc you can usually find a cheap/free alternative if you really wated to but advertisement (at least from my initial expierence) isn't cheap
You should think about ongoing costs for licenses such as CPanel and Fantastico (to name but a few). I suggest you also look into some insurance which covers you in case a client decides to sue you because their website was not online for 60 seconds (funny but it happens).
Advertising and marketing is also a big issue - it is competitive out there. You will need an accountant (or at least a book keeper) and your telephone bills will probably be tremendous. Think also about the cost of support services - outsourcing can help but is costly.
Then you need to estimate likely problems and build a financial buffer zone into your plans - e.g. what if a competitor decides to perform a Direct Denial of Service attack on your servers because said competitor is losing business to you? You would need to set up something to resolve this and it would help if you had funds in place in times of urgent need.
dataferret's talk about a financial buffer is extremely important. Unless you are looking to signup people for long term contracts, I don't see any point in overextending yourself when you are always unsure if you can count on the same payments each month. Customers can cancel as fast as they can signup.
CybexHost.com - Shared and Reseller Hosting Solutions on cPanel/WHM Linux Servers ModernTweak.com - Discount ModernBill Licenses, Hosted Installations, and Professional Services :: Pay for your discount ModernBill license with PayPal :: admin[at]cybexhost.com :: AIM: CybexH