Starting a hosting business – There are literally thousands of web hosting providers offering everything from shared hosting to colocation, and everything in-between, including cloud servers, VPS and dedicated servers, backup and management solutions and even DDoS protection.
How startups typically occur
With a fair amount of regularity, I see threads started on a number of web hosting forums with queries on how to start hosting for commercial clients. These are generally started by web designers who are looking to expand their business by hosting their client’s sites, and expanding the hosting side from there.
Selecting a backbone provider
For the most part, they understand that going with any EIG brand as their backbone provider isn’t recommended by many in the hosting industry, at least if they want to avoid headaches down the road. Providing hosting for clients where you’ve developed their site is a whole lot easier than simply opening your hosting services to the general public. Why? There’s already that element of know, like and trust.
The transition to commercial hosting
As web designers, if you recommend to a client that they use xx and x, they’re generally very open to your suggestions. One of those recommendations may be to always use some type of security plugin for WordPress sites. Very few should disagree. As a straight up hosting provider though, you provision an account or server for a client and it’s entirely up to them what they do or don’t do, within the terms of your TOS.
Do you have a business plan?
I’ve heard some say you don’t need a business plan, but that’s extremely irresponsible. You need to map out how your new business will conduct business, and that includes protecting your assets by incorporating. If you go the sole proprietor route, you’ll need liability insurance. A business plan lays out operational procedures, addresses marketing and so much more.
Projecting the return-on-your-investment
So many entrepreneurs in the hosting industry start out on a shoestring because the entry to launch is so low. Realistically, you need to be able to support operations for an entire year without touching any incoming revenue, and that may not happen for months. Far too many become frustrated and drop by the wayside as they envisioned hosting as a fast track to big bucks.
While the investment in hard dollars is nominal, the investment in soft dollars is substantial. A considerable amount of labor goes into building a successful hosting operation from the floor up. When you’re projecting a return-on-your-investment, you need to evaluate hard and soft dollar aspects of the business.
Should you go with a reseller package or a VPS or dedicated server?
If you’re only talking about a minimal amount of clients, a reseller package is ideal because it will separate your clients from one another. However, if you want more control over what you offer, a VPS would be the better solution.
Add-on domains? Good or bad?
I see a good number of people asking about add-on domains, but the issue there is security risks. Many shared hosting providers will allow you to have extra domains and websites on your account for free, and while upfront that seems extremely economical and the way to go, it ultimately exposes every single one of those websites to increased malware exposure.
With a reseller account or VPS, those accounts are separate from one another, so if one WordPress site gets hacked, it won’t affect the other sites.
When to upgrade to a dedicated server?
A VPS is simply a shared virtualized environment on a dedicated server whereby cores of a CPU and specific amounts of RAM and storage can be allocated to each account. As more cores, RAM and storage are allocated, the price goes up, sometimes more than the cost of a better spec’d dedicated server.
The amount of resources that you currently require, or project to need in the near future will determine when you should upgrade.
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