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  1. #1
    Join Date
    Jul 2003
    Location
    Goleta, CA
    Posts
    5,550

    Post Common Mistakes New Businesses Make

    Just because you have a plan doesn't mean it will work. All of these are common but sometimes we all need a reminder to steer our business ship away from the rocky coast.

    *Adapted and taken from Writing Business Plans That Get Results

    Industry:

    The section will discuss the larger business environment and trends. By going over
    the industry, you can also show how your business will address it.

    Common Mistakes:

    1.Failing to demonstrate a well-rounded knowledge of the industry
    2.Appearing to be a “fly-by-night” operation
    3.Appearance of a lack of direction.

    Your Product/Service:

    The section will discuss the “what” of your business.

    Common Mistake:

    1.Describing the product/service too technically, too broadly, or too ambiguously
    2.Failing to complete research on how to protect from liability or competition.
    3.Identifying too much red tape/uncertainties from regulatory agencies.
    4.Including weak future development plans

    Market Analysis:

    The section will demonstrate that you understand the market, that you can penetrate it, and that there is a demand for your product/service.

    common mistakes:

    1.Believing that the size of the market base is equally distributed
    2.Failing to prove that your target market represents the major portion of the demand for your product/service
    3.Making unrealistic market share projections
    4.Failing to demonstrate a clear understanding of the product/service and the market
    5.Failing to include an accurate estimate of the profitability of each service transaction.
    6.Not properly assessing the total market potential or changes
    7.Presenting the facts to make your market appear to serve your business, rather than your business serving the market.

    Competitive Analysis

    (some people choose to include this in "Market Analysis," but
    that is your choice): The section will show that you are fully aware of the competitive forces at work in your marketplace. It will explain your strengths over the competition, as well as how you will counteract their advantages and overcome (or compensate for) your potential weaknesses.

    Common Mistakes:

    1.Not identifying known major competitors
    2.Underestimating competitive strength and potential
    3.Failing to demonstrate what makes you better
    4.Having no strategy for counteracting current (or emerging) competition
    5.Assuming you have no competition
    6.Failing to show an awareness of competitor’s plans in the market and their business
    cycles.

    Financials:

    This section will illustrate the financial needs and projections. It will describe the
    type of financing desired as we as the amount, payback terms, and potential return on investments.

    Common Mistakes:

    1. Making unrealistic sales and profits projections.
    2. Failing to make reasonable assumptions.
    3. Planning to spend too much money on “fringes”
    4. Failing to project the downside if sales don’t go as expected.
    5. Proposing a return lower than industry norms

    The Business:

    This section will illustrate who exactly will run the business, and how.
    Principals, and their roles, will be clearly indicated as well as their methods for effectively running the company.

    Common Mistakes:

    1. Failure to truly discuss principals’ strengths
    2. “Over hyping” principals
    3. Not offering concrete means for developing a positive work environment
    4. Failure to show a true chain of command
    5. Including non-essential staff as necessities
    Last edited by writespeak; 12-17-2006 at 03:25 AM. Reason: To subscribe to this thread

  2. #2
    Join Date
    Feb 2006
    Location
    Swellyville
    Posts
    2,340
    Very nice indeed. This can not only help new business owners but existing ones aswell. Very nice post here. All point mentioned are very valid. Another one for industry (especially in web hosting) would be lack of innovation. IMHO innovation is a must for any web hosting. With the constent raise of new "hosts" popping up every single day, innovation is most certainly key! Furthermore, the web hosting industry in general is confusing to most new comers. Alot of consumers dealing with web hosting that are new do not know exactly what to look for, what diskspace (nevermind bandwidth) even means. We as hosting providers need to focus on making it easier for the customer to better understand.

    Very nice post!
    Quote Originally Posted by pixelized
    Just because you have a plan doesn't mean it will work. All of
    these are common but sometimes we all need a reminder to steer our business ship away from the rocky coast.

    *Adapted and taken from Writing Business Plans That Get Results

    Industry:

    The section will discuss the larger business environment and trends. By going over
    the industry, you can also show how your business will address it.

    Common Mistakes:

    1.Failing to demonstrate a well-rounded knowledge of the industry
    2.Appearing to be a “fly-by-night” operation
    3.Appearance of a lack of direction.

    Your Product/Service:

    The section will discuss the “what” of your business.

    Common Mistake:

    1.Describing the product/service too technically, too broadly, or too ambiguously
    2.Failing to complete research on how to protect from liability or competition.
    3.Identifying too much red tape/uncertainties from regulatory agencies.
    4.Including weak future development plans

    Market Analysis:

    The section will demonstrate that you understand the market, that you can penetrate it, and that there is a demand for your product/service.

    common mistakes:

    1.Believing that the size of the market base is equally distributed
    2.Failing to prove that your target market represents the major portion of the demand for your product/service
    3.Making unrealistic market share projections
    4.Failing to demonstrate a clear understanding of the product/service and the market
    5.Failing to include an accurate estimate of the profitability of each service transaction.
    6.Not properly assessing the total market potential or changes
    7.Presenting the facts to make your market appear to serve your business, rather than your business serving the market.

    Competitive Analysis

    (some people choose to include this in "Market Analysis," but
    that is your choice): The section will show that you are fully aware of the competitive forces at work in your marketplace. It will explain your strengths over the competition, as well as how you will counteract their advantages and overcome (or compensate for) your potential weaknesses.

    Common Mistakes:

    1.Not identifying known major competitors
    2.Underestimating competitive strength and potential
    3.Failing to demonstrate what makes you better
    4.Having no strategy for counteracting current (or emerging) competition
    5.Assuming you have no competition
    6.Failing to show an awareness of competitor’s plans in the market and their business
    cycles.

    Financials:

    This section will illustrate the financial needs and projections. It will describe the
    type of financing desired as we as the amount, payback terms, and potential return on investments.

    Common Mistakes:

    1. Making unrealistic sales and profits projections.
    2. Failing to make reasonable assumptions.
    3. Planning to spend too much money on “fringes”
    4. Failing to project the downside if sales don’t go as expected.
    5. Proposing a return lower than industry norms

    The Business:

    This section will illustrate who exactly will run the business, and how.
    Principals, and their roles, will be clearly indicated as well as their methods for effectively running the company.

    Common Mistakes:

    1. Failure to truly discuss principals’ strengths
    2. “Over hyping” principals
    3. Not offering concrete means for developing a positive work environment
    4. Failure to show a true chain of command
    5. Including non-essential staff as necessities
    <<< Please see Forum Guidelines for signature setup. >>>

  3. #3
    Join Date
    Jun 2004
    Location
    North of some border
    Posts
    5,589
    Moved to Running a Web Hosting Business Tutorials.

    Looks good. Thanks for posting it.

    Lois
    Do you have a WHT question or concern? Please open a helpdesk ticket.

    "Do what you can, where you are, with what you have." – Theodore Roosevelt

  4. #4
    very informative post specially for someone like me who is looking to start hosting buisness
    AKDesigner
    We Design Your Dreams
    ---------------------

  5. #5
    Join Date
    Jan 2007
    Location
    USA
    Posts
    45
    Might I add: You don't want to get too big too quickly. Know your limits. Especially if you're just wanting to host a handful of people. =)

  6. #6
    I would suggest that as with starting any business NOT checking with a lawyer at some point in the process could prove to be an incredibly bad idea.

    Good Luck.

  7. #7
    Join Date
    Aug 2006
    Location
    Bradford, UK
    Posts
    11
    Interesting read, keep it up.
    Regards,
    Dean Hannah

    COOLBLUENET - Shared Web Hosting

  8. #8
    awesome tutorial, thanks!
    Soon launching new web host!
    Reseller | VPS | Dedicated servers

  9. #9
    Join Date
    Mar 2005
    Location
    Houston, TX
    Posts
    271
    Very nice. This is a good read for new and existing hosts.
    ░▒▓ STOP!
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    ░▒▓ DO NOT Host with DoNotHosting!!!
    ░▒▓
    RULES, LIMITS, and MORE rules.

  10. #10
    Hi,

    Thanks for the very comprehensive leicopter views of the common pitfalls. A great asset to newbie and established hosters alike.

    Cheers !!

  11. #11
    thanks a lot for the tips

  12. #12
    Thanks for this tut, valuable reading!

  13. #13
    Join Date
    Jul 2005
    Location
    A Gigopolis In The Making
    Posts
    316
    very informative and useful! thanks
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  14. #14

    Lightbulb

    Mmmmmmm really nice and very usefull information for anyone planing to start a hosting business or even for anyone whose already in the business.
    Goviphosting.com - The Best SEO Hosting Experience | Over 8 Years in Business
    For Speed, Performance, Reliability with Unmatched Dedicated Support.
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  15. #15
    Join Date
    Aug 2002
    Location
    Bharat
    Posts
    4,722
    Good information, and if clubbed with what Serverpedia said innovation makes it great.

    I must take a print and stick it on the pinup board in front of my desk.
    Vinsar.Net - Quality Web Hosting at Economical Price on USA & European Servers
    Offering domains, shared, reseller & VPS hosting.
    Reliable Domain Reseller Account Resell Domains with Confidence

  16. #16
    Amanah Tech Guest
    Looks good. Do you have any suggestions about promotions for starting businesses?

  17. #17
    Join Date
    Aug 2002
    Location
    Bharat
    Posts
    4,722
    Amanah

    Starting new business:

    If you have lot of funds, then google is your friend do some adwords, may be you can do some limited time promotional offers in places like WHT.

    If don't have enough funds then best is to target local clients, you can get many of them with little personal effort.
    Vinsar.Net - Quality Web Hosting at Economical Price on USA & European Servers
    Offering domains, shared, reseller & VPS hosting.
    Reliable Domain Reseller Account Resell Domains with Confidence

  18. #18
    Amanah Tech Guest
    Thank you,

    What kind of companies do you think is the target market for hosting providers?

  19. #19
    Join Date
    Aug 2002
    Location
    Bharat
    Posts
    4,722
    To start with, local web designers, IT solution providers/consultant, any one else who want to host a website.
    Vinsar.Net - Quality Web Hosting at Economical Price on USA & European Servers
    Offering domains, shared, reseller & VPS hosting.
    Reliable Domain Reseller Account Resell Domains with Confidence

  20. #20
    Amanah Tech Guest
    Quote Originally Posted by vinsar View Post
    To start with, local web designers, IT solution providers/consultant, any one else who want to host a website.
    Makes sense, how about more demanding users?

  21. #21
    Join Date
    Aug 2002
    Location
    Bharat
    Posts
    4,722
    If you know them and if you can handle them its fine.
    Vinsar.Net - Quality Web Hosting at Economical Price on USA & European Servers
    Offering domains, shared, reseller & VPS hosting.
    Reliable Domain Reseller Account Resell Domains with Confidence

  22. #22
    Great and wise advice
    █ Specializing in Shared & Reseller Hosting
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    Genome Hosting Solutions

  23. #23
    Join Date
    Apr 2007
    Posts
    12
    great read cool beans TY for the post

  24. #24
    Join Date
    Jun 2007
    Location
    Lindon, UT
    Posts
    34

    Question Price points?

    You made some great points on things I didn't think about, thanks for the great pointers.
    Last edited by spatical; 06-06-2007 at 07:16 PM. Reason: My orginal post was not relevant here.

  25. #25
    Join Date
    Jun 2007
    Location
    Norman, OK
    Posts
    2
    Good information, thanks a lot!

  26. #26
    Join Date
    Jun 2007
    Location
    India
    Posts
    201
    very informative thank u ....

  27. #27
    Join Date
    Nov 2007
    Location
    Norway
    Posts
    4
    good information, have done some of this mistakes myself

  28. #28
    Join Date
    Feb 2008
    Location
    Oklahoma
    Posts
    29
    Very good information here. This will definitely help out those who are new to the hosting industry. I also would like to agree with you Serverpedia, innovation is truly a master key that all companies should have. You have to keep that mind rolling all the time in a creative manner in order to keep up with the technology as well as competition.

  29. #29
    Moved to Running a Web Hosting Business Tutorials.

    Looks good. Thanks for posting it.

    really i want to find this kind of tutorials.

  30. #30
    I couldn't agree more, great tutorial.

  31. #31
    Join Date
    Jun 2008
    Location
    Philippines, Manila
    Posts
    67
    Thanks for the information, this will surely help me out with my new plan model.

  32. #32
    Nice points.
    I made some of these mistakes.

  33. #33
    Decent information. I'd definitely give these ideas some thought before starting anything serious to all the newbies out there.

  34. #34
    Join Date
    Nov 2009
    Posts
    275
    Hey great read thanks

  35. #35
    Very nice post.

    I have to agree with all of your points. The most common mistake is not setting the right price. Many new host think of there pockets no and worry paying for there cheap reseller.

  36. #36
    Join Date
    Dec 2009
    Location
    North West Arkansas
    Posts
    181
    Hosting companies do make allot of mistakes, one that I notice a quite often is when a new hosting company posts an advertisement in a forum's market place they expect that they will get customers right off the bat. This is far from true... statics show that it takes a client 7 views in order to go with a hosting company that they find in a forum. Which if they make a customer in the first 2 days then they are doing better than so many others. The reality is, a hosting company is not going to do the work for it's self, and definitely not at this time with all the new hosts coming into the market daily.

    Basically, you are gonna have to work if you want to make it. You can't run your company on auto pilot and yet have a great company. The business world doesn't work that way, and life does not work that way. I believe that every hosting company out their who has a good strong team, rather it be 2 or 40 and also has the dedication required in today's market can make it in the industry as yet another good hosting company.

  37. #37
    Join Date
    Jul 2007
    Posts
    56
    Nice post, should be made sticky in New members intro section.

  38. #38

  39. #39
    Join Date
    Jul 2009
    Posts
    919
    Wow, this thread was very informative and covered a lot of mistakes that could be fatal to beginning companies. This was a really good thread and definitely should be read by those whom wish to start their own web hosting company.

  40. #40
    Quote Originally Posted by cywkevin View Post
    Competitive Analysis

    (some people choose to include this in "Market Analysis," but
    that is your choice): The section will show that you are fully aware of the competitive forces at work in your marketplace. It will explain your strengths over the competition, as well as how you will counteract their advantages and overcome (or compensate for) your potential weaknesses.

    Common Mistakes:

    1.Not identifying known major competitors
    2.Underestimating competitive strength and potential
    3.Failing to demonstrate what makes you better
    4.Having no strategy for counteracting current (or emerging) competition
    5.Assuming you have no competition
    6.Failing to show an awareness of competitor’s plans in the market and their business
    cycles.
    In my opinion, competitive analysis is the most important factor to consider when setting up a hosting business. A business owner should be able to see very clearly how he is going to conquer the market. It's like going to a battle fully-armed and ready.

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