Becoming a web hosting reseller can be a good way to generate a residual income but it isn’t simply a case of setting up your hosting business platform and waiting to become rich. Before you start you should ensure that you have a solid, long-term business plan in place.
This business plan should take into account the costs of setting up and running your business. You should also think about how you will fund the early stages while you are building your client base. How you will market your web hosting business is also an essential component of this business plan. Finally, you need to think about how you provide support to your customers. Those customers may well be inexperienced when it comes to web hosting and could require more support than you expect.
Running a Web Hosting Business – The Costs
Unless you are planning to use your own servers, obviously you will incur a cost to rent server space from a wholesaler. If you pick the cheapest wholesaler you could regret your decision at a later date. It is worth paying a little extra to ensure that you are using a reliable wholesaler.
Renting the server space will not be the only cost that you incur, though. Your business plan should also factor in the cost of other business expenses such as business insurance and accountancy fees. If you are aiming to provide 24/7 support to your customers that will mean employing staff which will be another cost.
The one thing that will be difficult to assess is how much marketing will cost. This will depend on how you intend to market your business.
Finally, you should include an amount for contingencies. There will almost certainly be costs that you will incur that you didn’t foresee.
Once you have worked out how much your business will cost to set up and run you should think about how you will fund those costs in the early days when your outgoings will exceed your income. It is best to err on the side of caution when considering how long it will take to build your customer base up to a level where you can cover your outgoings from your income. Otherwise, you could run out of money.
Marketing a Web Hosting Business
Marketing your business is as important as how you run it. If you simply wait for people to find you on Google you will be disappointed.
In theory, there is nothing to stop you from being completely global, but in general, it would not be practical to do that. The marketing costs and other business expenses would be huge. A better approach would be to pick a specific market. As an example, you could decide to target local businesses or businesses in a specific trade sector. Having a clearly defined market makes it easier to target your potential customers.
Once you have defined your target market you need to decide how you will get your message to those potential customers. This might be by advertising in the local newspaper or the trade press for the business sector that you are targeting. It might be that you decide to attend local networking events or trade shows.
your marketing activity to see what produces the best results. Bear in mind that it’s not just the number of customers that the activity generates that you should be measuring, but also the cost per customer.
Unless you’re certain you can scale up your business quickly if you need to, it’s worth starting slowly. Although suddenly gaining an extra thousand customers might sound great, unless you have the resources to deal with those customers it could cause you major problems.
Servicing Your Web Hosting Customers
Although it’s tempting to assume that a web hosting business is something that will run itself it is likely that your web hosting customers won’t be experts and may require a lot of support.
Will you provide that support via telephone support or will you only be offering support via email? Will you offer a live chat facility on your website? Are you able to provide out-of-hours support? What about when you are on holiday or are unable to work because you’re sick?
How you provide support to your customers will have an impact on your costs, but could also differentiate your web hosting business from the thousands of other web hosting businesses that you are competing with.