Web Hosting Talk : Web Hosting Main Forums : Running a Web Hosting Business : Running a Web Hosting Business Tutorials : Part 3: Money

[CX.Eric]

Here is my 3rd tutorial on wht, this is about finances how to manage them and get them if you are a new host.

Something you have to remember "the customer will never pay what YOU want" , if your reseller or server costs 100$ and you plan to sell 10 plans..10$ each to cover your expenses...think again nobody will buy it unless you oversell your *** off like servage.net

IF you oversell then trust me you are digging your own grave…here is a worst case scenario:

You bought a 4gb space reseller

You marketed as a 500gb dedi server/s

You sold 50gb space for 5$

You sold 10 accounts and you are now making enough to pay for the reseller

A spike occurs in space usage

Your hosting account is now full

Now your bandwidth is drained

Your customers are furious

Your paypal has 5-9 disputes

You get sued

You gat bashed on forums like this one

You are finished..end of story

Now here is what you should to to make some profit and have a healthy business

• GET MONEY!

Now this is the only tried and tested way to get money actually there are 2 but the other one is really really lame and takes longer… now what you should do is DEVELOP sites on normal shared hosting I mean even if you are the brokest person in the world you must have 10$ each month get hosting from hostgator or bluehost or godaddy and develop a site, now do not tell me you don’t want to develop you want to host this is where you are tested if you cant run / build a site how the hell will you run a host?

So just suck it up and get to work – designs – coding and advertise it as much as possible (ONLY FREE ADVERTISING NONE PAID)
If you start going on paid ads you will blow your budget

The best thing to do is either open a proxy site or get money via adsense OR open teen communities have huge traffic then sell the place.


That will give you enough money to get started I suppose, if not then design templates sell for 10$ per template.

OR make articles and sell them on webmaster articles.


Now I will NOT list the url for those webmaster sites because that would be advertising and its against wht policy plus its good for you guys to find such places on your own.

• Managing money:

NEVER take your payment dates as a joke if its 1st jan then its 1st jan not the 2nd and not the 3rd
prompt payments to your provider is the only way of getting good services/response.

Always keep a track of your customers and at least 1 week before your payment date make sure that they ARE gonna pay you and not dump you for a cheaper host.

Always stay 20$ ahead of your budget.

Now if you are already a successful host then try to have double of what you are spending and keep enough money for refunds that is if only you offer refunds and for a a certain period only but if you take yearly payments then yea you need to hang on to the money for the whole year not the whole amount just keep deducting each month from it


Notify your customers that their payment is coming up in 1-2 days and they need to pay you or send invoices upto 4 days before their payment dates.



That’s it for for my 3rd tutorial, this is just getting started there are a lot more things to consider while beginning a host.

[cywkevin]

The first issue with any business is raising capital.

As the OP mentioned you can get that from your own capital achieved through work.

You can also get a low interest loan from a family member.

Your firm's organizational structure will determine where the cash comes from.
At some point you may have to considered complex financing such as issuing preferred stock, notes, and bonds, liquidating assets.

I've found it's best to take your startup costs plus an additional year's worth of operating expenses. You can stockpile money for longer periods but this is the bare minimum you'll need to get started.

Remember (90% of businesses fail in their first year and the number one reason is insufficient finances) They simply failed to raise enough capital at the start.

A lot of companies overlook billing schedules:

I strongly reccommend that you don't use anniversary billing. Prorate new customers and bill on the 1st of the month. It makes tracking non-paying clients substantially easier and it's really the only way to accurately monitor transfer usage. Cpanel resets it's internal bandiwdth statistics on the first of the month so the math can get tricky if you have customers paying on separate due dates.

Marketing:

Tap your friends and family, they'll want to help you succeed.

Word of mouth is great but at some point you need to advertise to get the word out and grow your business. You can't simply open shop and expect customers to find you.

Consider a marketing budget as part of your costs because at some point marketing will come into play.

You'll also need to make other decisions at some point:

Do you want to bring in a partner to pool resources.
How much control will other owners have?

What if I die?
Who controls the company? Who informs the customers if the company can no longer continue?

Am I happy?
If your business has grown with a large client base and you feel that work is a burden or simply lose your passion. Consider selling the company. The great joy of being your own boss is the personal reward, if you don't enjoy what you're doing, you can always sell and move on.

How will I use profits?

If your firm isn't generating a great ROI you might want to consider mutual funds or purchasing bonds to supplement your profits and establish flexible financing options for future growth or unforseen costs.

Feeling bold, you can always start up a firm in another industry to keep the cash rolling. This is usually the riskiest use of profits.

As always you can invest back into your company.

Be willing to Accept Failure

If you simply can't make your business work, don't keep betting on a losing horse.
Set goals for yourself and know when to get out before you've lost everything.

[CX.Eric]

Partners are definetly a negative while running a business online YOU CANNOT TRUST WHOM YOU CANT SEE seriously unless you sign real papers and meet in person partner ships are not an option.

And 60% of the hosts out their are teens (one man show) thats why im pointing out the main points tat they have to lookover.

[Segey]

Can you give some more tips on your hosting business promotion? You mentioned a word of mouth, but is there anything else one could do?
What is the ratio of online/offline advertisement for a small/medium business?

[CX.Eric]

Hello Segey, my next tutorial is all about online/offline advertising methods some really nifty tricks

And all my tutorials deal with small-medium hosting businesses..

[NextGeneration]

Can't wait to read your other tutorials, excellent job Dluzion.

[trendy]

Originally Posted by Dluzion

Hello Segey, my next tutorial is all about online/offline advertising methods some really nifty tricks

This sounds cool. If i may suggest, it will be better if there are more examples given for better understanding

[Tdothost1]

I think someone should send this thread to servage.net

[sTag-Dan]

Originally Posted by Tdothost

I think someone should send this thread to servage.net

Bad experience with servage?

[CX.Eric]

What he means is servage is a MAJOR overseller and this tutorial could tell them how to run their business

lol

[Tina J]

pixelized: You should consider writing some tutorials. You have excellent writing and communication skills.

CX.Eric: You posted some good information but I had a bit of a hard time following your train of thought. This sentence: "Now this is the only tried and tested way to get money actually there are 2 but the other one is really really lame and takes longer" took me a few times to understand what you were saying.

Normally, I wouldn't critique a WHT post and I certainly don't mean it as an insult. However, you posted a tutorial which is aimed at trying to communicate good information to others. Don't take this the wrong way, but it might be helpful if you wrote a rough draft first, cleaned it up a bit and then posted. I think you raise some excellent points,

--Tina

[CX.Eric]

Thanks for the feedback Tina!
And that is the rough draft, i was kinda of in a hurry so just copy pasted from my notepad file and went on my way.

I try to be as straight forward as possible but time is always against me

Thanks again!

[Tina J]

Originally Posted by CX.Eric

Thanks for the feedback Tina!
And that is the rough draft, i was kinda of in a hurry so just copy pasted from my notepad file and went on my way.

I try to be as straight forward as possible but time is always against me

Thanks again!

Holy cow, I thought for sure I'd come back to you being all pouty and grouchy at me. Nice to see there are still some people who can take constructive critisism!

Again, you've included some excellent information. Thanks!

-Tina

[CX.Eric]

Thanks Tina for the kind words

[IGobyTerry]

Originally Posted by CX.Eric

Partners are definetly a negative while running a business online YOU CANNOT TRUST WHOM YOU CANT SEE seriously unless you sign real papers and meet in person partner ships are not an option.

And 60% of the hosts out their are teens (one man show) thats why im pointing out the main points tat they have to lookover.

I think it's important to point out that partners are not bad, but you do need to do it the right way. By having a partner, your chances of succeeding are increased greatly, and if you do end up failing, you haven't lost quite as much money as you would have running the company single handedly. If you do choose to have a partner, you should always know them before hand, and have personally met them. Make sure that you two are able to understand each other and discuss issues. That doesn't mean you should always agree, but you're able to communicate with one another with an open mind and understand what the other person is trying to explain.