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Thread: Buying clients?

  1. #1
    Join Date
    Jul 2005
    Posts
    38

    Buying clients?

    Its be a while since i looked into this but a while back i read up on buying clients where people build up these hosting companies and then sell them.

    Is this a good idea to buy them? Sometimes i find im stuggling to get new clients. I think it would be a good idea.

    Any thoughts?

  2. #2
    Sure, this is a good idea if it's good for you.

    In other words, if the cost of purchasing customers from someone else is affordable for you, and you are ok with the risk.. then go for it.

    There are usually a few hosts for sale in the "other offers" forum category here... however, I personally think the "companies" being sold are overvalued. (ie: Some folks are selling their customers who they've had for only 1 or 2 months... for more then 12 months gross revenue!)

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  3. #3
    Join Date
    Jul 2005
    Posts
    38
    yes i noticed that thats why i asked. i would only pay double the the recoupable value i think. aslo if i am on resellerzoom.com and they elsewhere how do i get the swiched over? or would you keep them where they are? have you purchaced any? thanks for responding !

  4. #4
    Originally posted by sfera
    yes i noticed that thats why i asked. i would only pay double the the recoupable value i think. aslo if i am on resellerzoom.com and they elsewhere how do i get the swiched over? or would you keep them where they are? have you purchaced any? thanks for responding !
    Yes, we've purchased about 15 smaller companies in the past year (with under 50 customers each). We've also purchased one larger comapany, who had 200 customers.

    To answer your question, it really depends on what you're buying and how your curret setup is configured. For example, if you are buying only 5 customers from someone.. then it would make more sense to just bring them over to your existing server and billing system.

    However, if your existing server or billing system is LESS then the new company you are buying, then you might want to consider moving your existing customers into the new system you just bought.

    From what I can see, it sounds like you are just starting out. There are sometimes "whole packages" for sale in the offers forum, where you can buy a domain name, website, and maybe 10 - 15 existing customers.. including a billing system software, etc..

    This might be something for you to consider....

    However, be VERY careful. Fraud is rampant around here, and it isn't unusual for the seller to artificially inflate the number of customers they think they have, or how long the customer has really been a customer, or how much the customer is actually paying, etc...

    Buyer beware.

    My advice is that if you are having trouble attracting customres right now.. then you will continue to have trouble even after you've purchased some. If you are not able to attract customers, then there is something fundamentally wrong with your business setup. Either you need to advertise, you need to rethink your pricing, or you need some kind of USP (unique selling point) that sets you apart from the 50,000 other hosts who offer the exact same thing you do.

    Buying customers is a growth strategy, but it is a TOOL and should not be considered as a way to quickly make money... if your business is not correctly structured, then you'll soon be the one selling your customers to try and recoup the money you've lost...

    Good luck!
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  5. #5
    Join Date
    Oct 2002
    Location
    EU - east side
    Posts
    21,913
    Thread moved to Running a Web Hosting Business.

  6. #6
    Join Date
    Jul 2005
    Posts
    38
    hey thanks for the tips!

    i am new yes, i dont really mass market my hosting. i just offer hosting to my website clients. I may be buying a system here in the future however there are no clients.

    how are you able to tell if you are getting scammed or not? are there reputible people that can be trusted?

  7. #7
    Originally posted by sfera
    how are you able to tell if you are getting scammed or not? are there reputible people that can be trusted?
    There are usually warning signs, although they may be subtle.

    For example, if the person refuses to explain why domain xyz.com (one of his customers that he claims is his) is using a domain nameserver that is not registered to him or not included in the sale...

    For smaller sales, it's easily possible to verify every customer, so that's not hard to spot. For bigger sales, this is impossible to do, so you must do a few random spot checks at least.

    You can also check to see his domain logs for his website to check if anyone is ever visiting, etc.... also trace his IP addresses and make sure they match up with whatever he tells you. (ie: If he says he has a dedicated server, but the IP traces to some reseller account, then that's not good.

    Generally, we NEVER give out more then $500 without some kind of "safety net" involved. This might take the form of a neutral 3rd party to hold the money while we confirm the sale is legit, or perhaps 50% up front and then the other 50% only after we confirm all is correct, etc...

    Generally speaking, you can't trust anyone. A small company sale is always "buyer beware".
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  8. #8
    Join Date
    Jul 2005
    Posts
    38
    ok well thanks alot mrzippy. greatly appreciate the help.

    perhaps i could call on you in the future & pay for your time to help me with the purchase. It alway helps to have someone that knows alots and has the experience.

    thanks

  9. #9
    Originally posted by sfera
    ok well thanks alot mrzippy. greatly appreciate the help.

    perhaps i could call on you in the future & pay for your time to help me with the purchase. It alway helps to have someone that knows alots and has the experience.

    thanks
    Sure, I'd be happy to assist in any way I can. You can always also ask for help on these forums. There are many hosts who have been here a while, and have many years of excellent experience.

    Cheers!
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  10. #10
    Join Date
    Oct 2005
    Location
    India
    Posts
    7
    Hi
    Could you suggest some third party company to act as mediator or some company who could help one of my client find a buyer for his web and irc hosting company. The price is going to be a bit high probably over 50K as they got nice client base. So my client prefers to keep some mediator for all the deals for safety.

    Greets

  11. #11
    Originally posted by ircguru
    Hi
    Could you suggest some third party company to act as mediator or some company who could help one of my client find a buyer for his web and irc hosting company. The price is going to be a bit high probably over 50K as they got nice client base. So my client prefers to keep some mediator for all the deals for safety.

    Greets
    Have your seller/client contact a good lawyer who specializes in selling "online property" type of businesses.

    A good place to find a decent lawyer is to visit WHIR magazine (http://www.thewhir.com/magazine/) and look around their advertising area for a lawyer.

    Here's a few links:

    http://www.heidengroup.com/
    http://internetlitigators.com/

    Good luck!
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  12. #12

    A Good Lawyer

    Thank you for the shout MrZippy.


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    Last edited by SoftWareRevue; 11-17-2005 at 11:30 PM.

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