Web Hosting Talk : Web Hosting Main Forums : Running a Web Hosting Business : Running a Web Hosting Business Tutorials : Common Mistakes New Businesses Make

[cywkevin]

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

[Swelly]

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!

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

[writespeak]

Moved to Running a Web Hosting Business Tutorials.

Looks good. Thanks for posting it.

Lois

[webhosting-templates]

very informative post specially for someone like me who is looking to start hosting buisness

[Oklina]

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. =)

[InternetLitigator]

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.

[cbn-dmhannah]

Interesting read, keep it up.

[Greenlush]

awesome tutorial, thanks!

[MisterZim]

Very nice. This is a good read for new and existing hosts.

[nexus-action]

Hi,

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

Cheers !!

[Kiven]

thanks a lot for the tips

[billardent]

Thanks for this tut, valuable reading!

[edu4vision]

very informative and useful! thanks

[Goviphosting]

Mmmmmmm really nice and very usefull information for anyone planing to start a hosting business or even for anyone whose already in the business.

[Vinayak_Sharma]

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.