People start a Hosting business for various reasons. Some treat it as a second source of income. Some prefer it as a Run from home type of job. Some choose it for its reasonably low startup costs.

There are some reasons though, why you shouldn’t get into the Hosting business. Do not come into this business if you want a stress free life. Someone’s site going down is certainly not a piece of cake, especially when the customer is on the phone with you.

This business is stressful, if you are a small business or if you have a million dollar hosting business. Web Hosts who have grown big are still stressed out, even if they have employees to take care of things.

Do not come into this business if you have strict time restrictions. This is a 24/7 business. Be prepared to sacrifice your social life if need be. Customers have problems at all times. Servers can go down anytime. Hackers are working on cracking your servers overtime. A Web Host doesn’t sleep easy.

Do not come into this business with visions of making big money in no time. A frighteningly large percentage of Web Hosts go bust or become dormant because they haven’t gotten their Return on Investment (ROI). Many are those who have underestimated the cost or overestimated the ROI. These Web Hosts quietly fold their businesses and suffer the losses. If money is your motivation, then prepare to be demotivated. Money doesn’t come easy in this business and requires a lot of work to get a decent amount.

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What should you bring to the table

Ideally a new entrepreneur would bring in some Business experience to the table. If you have run some sort of Technical business such as computer sales, ISP, website design or E-business, it can give you a good start, because you would already know about how to run a Company in your area, accounts, taxes and legalities. If you have every owned a Website and have managed it, that would be pretty useful. If you have been working in a 9-5 job, you may want to brush up on Business basics, before you go further. This link can help you get started http://www.bankrate.com/brm/bizsteps.asp

Technical knowledge would be a must. The hosting industry is filled with 14 year olds running their hosting companies quite successfully. What they have primarily is Technical knowledge. You should have preferably installed and studied about Linux and Windows. You should have some understanding of the various technical components of a Internet server and control panel software. If you have an idea of HTML and some scripting, it would be very useful.

It goes without saying that you should be a avid Internet surfer and be comfortable with running your business in front of your computer. A stable broadband connection is also needed for you to be online full time.

[ Use your time to build your business. We’ll take care of your servers. Hire our hosting support experts to maintain your servers secure and stable 24/7 . ]

Choosing your Server

The real estate of the Web Hosting business lies in the servers you lease or own. Space on your server is what you sell. For example if your server has 50G of Disk space, discounting the Operating system and Control panel software, you can resell maybe 30G of it.

When you start your business, you need to get a Server so that you can host websites on it. Many newbies get confused here. Should they lease a server, should they go Colo, or should they start as a basic Reseller.

Your choices centre around Co location hosting (where you put your server in a data-center. The data-center provides bandwidth and physical space.), Dedicated server (lease a managed server from the Data-center) and Reseller hosting ( A reseller is a middle-man who sells web space on somebody else’s server. The most common form of reselling is something like this – Say the actual price of a hosting account is $10, the reseller gets it at $5, and can resell at whatever prices he wants. )

If you are starting on a budget, and have lesser than best Technical knowledge, you would be best taking on Reseller hosting. Its cheap, starting on an investment of under $100 for a reseller account. You would be managing the front end technical support of your clients, but will be spared the high end technical administration of your server. On the flip side though, you have no real control of your and your clients websites. Should the server go down, all you can do is tell your Web Host and patiently wait, all the while fielding calls from your clients.

Once you cross around 100 domains, you could graduate to Dedicated servers or Colo. In case you are getting into Web Hosting big time, it would be advisable to always buy a Web Hosting business. You get a ready clientele and can be spared initial hiccups. The going rate for a web hosting business is generally 1x to 2x times revenue. Make sure to check that the customers are happy, that they are all on monthly or quarterly plans, there is competent technical support in place and the servers are stable.

Remember your entire business plan is based on the Disk space and bandwidth that you are selling. No matter what server you are purchasing, remember a server can hold up to 300-500 accounts. This is the ideal figure. DO NOT base your business model on the premise that you can squeeze in 1000s of accounts into one server. Keep aside about 10% of your disk space and bandwidth for emergencies. The equation for disk space works like this

Saleable disk space = Total server space – 10% free space – Space for Operating system and software