Things You Need to Know to Start and Run a Web Hosting Service

It may seem that starting your own web hosting company is difficult and requires a lot of money to invest, but that’s not necessarily the case. It’s quite the opposite. Starting any business from the cosiness of your home is always an option that doesn’t cost much.

As for starting a web hosting by yourself, it’s neither difficult nor requires too much investment. To illustrate: startup capital is around 100 euros per month, while a lack of knowledge of operating systems and server administration doesn’t make the possibility of owning a web hosting company unrealistic.

As the prospect owner of such a business, you need to meet a few minimum prerequisites, just like in any other business.

Advanced knowledge of English – web hosting niche includes terms that people with beginner’s level or even intermediate level of knowledge of English language can’t understand.

Sense of business and economy – regardless of your technical knowledge of the business, your part of the business as an owner will be much more related to creating deals, achieving good customer relationships, a lot of paperwork, taxes, laws, financial plans, etc.

Poised as a person – running your own business will force you to be able to cope with stressful situations which abound in this business.

Persistency – as in any business, web hosting business has a lot of ups and downs.

1. You Need to Have a Backup Financial Plan

Although you can start a web hosting business by investing a small amount of money, it isn’t a bad idea to initially provide a backup financial plan or, at least, to nurture good relationships with competitors in the niche.

The vast majority of web hosting companies fail when they encounter the very first financial problem. A backup financial plan may consist of having a negative account balance in the bank or some revolving credit card that you’ll only use in no-win situations or current daily periods of illiquidity.

Also, as a newbie in the web hosting business, you must be aware that you won’t be able to compete with hosting companies that offer special kinds of services such as MySQL hosting. These services, whose features and performances are compared here, are primarily used for web databases.

In other words, MySQL is a relational database management system based on Structured Query Language (SQL) and can operate with scripting languages (e.g., PHP or Perl). Because MySQL can store anything from a single data record to an entire inventory of e-commerce products, it’s used for various business purposes.

It’s recommended that you don’t get into this business if you don’t have, at least, a minimum of knowledge of web site design, if you weren’t a user of premium web hosting services with another provider in the previous period, and if you don’t know the difference between domains, hosting, dedicated server, File Transfer Protocol (FTP), etc.

2. Don’t Deceive Your Customers

Quite a several companies have emerged and vanished from the web hosting market after operating for only one or two years. After disappearing, users remained without their websites and essential files that were on hosting servers, but the most significant loss for such users were domains.

The owners of such web hosting companies have, in most cases, registered user domains in their name. After their disappearance from the Internet, the users couldn’t contact the hosting owners and thus remained without their areas. And areas are essentially one of the essential items in the functioning of a website.

That’s why you need to build a good relationship with your competitors because in the event of shutting down your business, you’ll always be able to find a new hosting for your customers with another provider and your customers won’t know that a financial problem is a reason for you leaving the business.

It’s more honourable to give away your users to a successful hosting provider than to disappear without an explanation, which can lead to legal consequences to you because, by this, you’ll commit the crime of deceiving your users.

It isn’t unusual for people to start a web hosting company and then, after a while and after developing it well, sell the company, brand, or users. It can be a background plan of making a profit in case you only plan to be a part of the web hosting industry alone for a certain period of your life. These kinds of acquisitions of web hosting companies are not unknown at all. Moreover, they are ubiquitous in this business.

3. When’s the Right Time to Register Your Company?

For starters, it isn’t necessary to register the company already on the first day. Building a business from scratch raises a lot of costs, and by rushing into a startup without consulting, you can miss out on the various grant opportunities that business beginners receive from the country or startup funds.

It would be best if you got acquainted with the business first, create a website with Squarespace and start promoting your web hosting company (prepare for patience because obtaining organic traffic is tough), install and set up customer billing portal, form at least some basic business plan, formulate prices for your services, devise a marketing strategy, etc.

Skipping some of these steps will almost certainly lead to failure or in throwing away startup capital and probably quitting because you won’t attract a single buyer.

Everything listed above fits in a startup investment of fewer than 100 euros a month, and you can register and expect first clients only in the second or third month after launching your company’s website.

And from the moment you get a few clients, you’ll start rubbing hands together because you’ll realize that running a web hosting business can be quite profitable. Please don’t get discouraged by learning that the web hosting market is highly competitive, and big guns have already taken a large piece of the market for themselves.

Your initial realistic step should be to come up with your company’s name, check its availability, and register a domain for your website. You can then choose the right kind of reseller hosting plan, that is, to lease a reseller WHM (Web Hosting Manager) hosting account intended for resellers of web hosting services.

With the reseller account, you get the ability to create multiple cPanel sub-accounts. With WHM, you’ll create a hosting account dedicated to the website of your web hosting company, learn how to create hosting packages, how to manage hosting accounts, server firewalls, how to distribute, and modify the DNS of each hosting account, etc.

There’s an option of buying websites at e-auctions, after which you can offer free hosting for some time (maybe six months) and then an affordable hosting price when the time for renewing the hosting plan comes. This will make you stand out quickly and attract clients.

4. Reseller or Not?

With reseller hosting that you can purchase at wholesale prices and offer them in the market at higher rates, you also get full technical support so you can always inquire and ask your direct provider questions for details that aren’t clear to you. Tech support will ever meet your requests because it wants to keep you as a user.

Here’s a tip for future owners of web hosting company: you don’t have to instantly reveal all the details about your desire to start your own hosting company because this will give you a better chance of stealing as many craft secrets as you can from your startup provider.

The mistake many rookies in the web hosting business make is that they focus only on reselling. Beeeep! Wrong! By only reselling hosting packages, even by reselling only one, your clients will start to think that you’re nothing else but an ordinary reseller.

There’s nothing wrong with that from your point of view because you can earn a lot of money by being a good middle-man. However, users don’t like middle-man much.

The fact that someone is getting the right margin from something which they can have by paying directly from an actual hosting provider can give you a hard time. As a reseller, you should pay good attention to marketing and branding, providing users with the right mix of hosting services such as business and budget hosting packages, multiple-domain hosting, and even VPS.

If you absorb and comprehend the basics of the web hosting business and have strong determination, you can honestly go a long way, that is, make a profit.