Sunday, August 14, 2011

How to Start Your Own Web Hosting Company.

A question that is asked quite frequently. First and foremost we must point out that web hosting is not a get rich quick scheme or an easy business to run. It takes alot of patience, computer and technical knowledge and a solid background in Computer Science to run a successful and solid web hosting company. Some may disagree with this, especially with the innovation of "Control Panels" that makes it easier for anyone to get a pre-built server and start hosting sites. In reality, it's not really that simple. Yes you can lease a dedicated server from a provider and start hosting sites once you are familiar with the control panel BUT a very important point to remember is those control panels still have their limitations. If you do decide to start your own hosting company, here are some basic questions to ask yourself *before* starting a hosting firm.

1. How much time do I have to invest into this company?

In this day and age, most clients are expecting 24 hour support. Are you able to be on call 24 hours a day to handle all the technical and sales requests that will be coming in once you start your company? Prompt support is a very key aspect of having a successful hosting business, so this is one of the first questions you should ask yourself before starting your company. Am I able to offer the support my clients will need?

2. Familiarity with the latest software and platforms?

Have you done your homework in terms of researching what are the latest software, how they work and the pricing. It is very important to be familiar with the software that needs to be installed on the server(s) that you will be using to host your client's websites. For instance IIS when using Windows 2000 server is something you will need to be very familiar with, if you are going to be hosting sites on a Windows Server.
On a good note, Microsoft offers a huge library of information on all their software, but it will take a serious time investment to be familiar with all the options available, security leaks, and you have to be always on the look out for the latest patches. In terms of Linux, this is a bit more complicated. A strong command and knowledge of SSH (Secure Shell Security) is needed. Even if you have a control panel such as Cpanel which offers a program called Web Host Manager, a strong background in Telnet Commands will be needed or you will be lost.

3. Financial Investment

Are you willing to spend the money necessary to start making some money? In many cases you will need to make some serious finanacial investment when starting your own hosting firm. Be very weary of the fact that many of the software on the market are not cheap, and the type of servers most of your clients will be expecting their sites to be hosted on, will not be cheap either. Many expect their site to be hosted on Dual Pentium servers that are sturdy and reliable, so some investment will be needed.
On the other hand, there is the cheaper way, which is to simply lease a dedicated server that offers a high amount of bandwidth from another hosting firm, and then host your clients sites on that server. It's an easy way to start your own company with little investment, BUT be forewarned that with network outages, server crashes, you will have little or no control unless you can contact your dedicated server provider for a prompt reboot or resolution of the network problem.

4. Hiring of Employees?

Will you be hiring any employees to start, or will you be a one man show until the business picks up? If you choose to not hire any employees then obviously your financial investment is less, BUT your time investment into the business has now skyrocketed. No employees will mean you will have to handle all the technical and sales requests along with any other problem that may occur. It is important to weigh this aspect carefully as it could make or break you.

5. Resources/Steps To Start A Hosting Company.

Important steps to take
A. Registration of Company Name

Do a search on the internet for trade name registration in your particular state. This will allow you to register a DBA known as Doing Business As name within your particular state. This option is the easiest way to have an actual business name instead of using your actual real name. If you would like to go straight ahead and become a Corporation instead of just using a DBA then you can use a site such as to get started with your own Corporate business. 

B. Purchasing of Servers/Leasing of Servers

If you decided to purchase your own servers, you have a few options. You can get a server custom built by manufacturers or you can even go the option of leasing your server from a company such as Dell or Gateway. They offer a monthly leasing to own plan. If you decide to lease a Dedicated Server , then you can review offerings from companies such as,,, just to name a few. Each of those companies will allow you to lease a server on their connection, set a specified amount of bandwidth, and allow you to host your client's websites on the server you lease from them. 

If you're starting small we highly recommend using a Reseller account from either HostGator or GreenGeeks. Both these providers offer Reseller alternatives at a reasonable fee. You can read more about Reseller Hosting in our related articles below or directly on these two providers' websites.
C. Office/Data Center Space

With the purchase of servers, you'll need office space or as some say a Data Center to house these servers. You will have to look around for space in your local city for the best location with enough space for growth to house your servers and your connection.

D. Bandwidth Providers

If purchasing your own servers direct, you'll need a provider that can run a line to the server through a router to feed the bandwidth. Some companies that offer bandwidth are : ,,, and for cheaper bandwidth you can use Each of these companies will allow you to have bandwidth in your data center facility. 

These are just some of the *basic* steps necessary to get started with your own hosting firm. The task may seem daunting, but it can be achieved with hard work and dedication. The web hosting market may seem saturated with new hosting companies forming literally each day, but there is still room techncially for another good company. Once you can offer the support and reliability your customers need then you will grow as a firm mainly through word of mouth. If you treat your customers good, they will refer others to your service. In a nutshell, hosting is not an easy business to start, but it can be a profitable and rewarding one when the necessary steps are taken.
Here are some more essentials before you can start: 
Pricing scheme: You should set a reasonable price. One that people can afford, but don't try to be the cheapest either. You probably can't (and shouldn't) compete with hosts that can offer dirt cheap prices because they're probably overcrowding their servers and offering poor service.

Terms of Service (TOS): Also known as service level agreements. You can get an idea of what to put in your terms of service agreements from the Webhosting Talk forum thread Starting my hosting company.

Billing and Accounting: You should consider getting payment for services in advance (at least a month). Also, you need to keep your finances in order. Consider getting a third-party service when getting merchant accounts to minimize liability (particularly when handling credit card numbers).

Some things to keep track of (and anticipate):

* Server Monitoring: You need to know immediately if a server goes down (try Alertra to monitor your equipment)

* Redundancy: Backup, backup, backup. All data kept in your servers, as well as (and especially when it comes to) your main connection to the Internet (in case it goes down).

* E-mail List: You need to notify you clients in advance in case of scheduled or un-scheduled outage or other service interruptions, so an e-mail list, kept preferably off your own servers, is essential.

* Problem Customers: Dealing with them can be time-consuming. You can minimize your chance of having to deal with them by paying special attention to your pricing scheme (too cheap and you get customers with little understanding of how the business works) and TOS (can include a clause allowing you to terminate the accounts of overly obnoxious/abusive/rude customers).

* Security Issues: You need to keep your servers up to date with the latest security patches and turn off all unnecessary applications (as they also open your servers to both hacking and virus/worm attacks)

The following forum threads also offer additional insights to keep in mind:

* Want to Start a Web Hosting Company

* What is needed for a hosting company?

* Starting a UK web hosting company

* Wanting to Start a Webhosting Business

* starting a hosting company

Highlights of DOs to consider:

* Get a good accounting software/system

* Invest in good control panel

* Go reseller first before going dedicated

* Invest in good web design (avoid using templates if you can)

* Have a detailed business/marketing plan (as it is the basis of your every move), it should enable you (and the bank) to clearly see the direction of your company

* Keep track of hidden fees

* Choose merchant solutions carefully

* Use managed servers if you're low on tech skills

* Pay attention to bandwidth (T1 is slow, anything lower is widely shared so won't perform well, high-ends are expensive)

* Pay attention to potential liability issues (such as insurance, TOS, consumer rights, etc)

Of course, all those money, time and infrastructure investments are no good if you don't have customers. So how do you go about building your client list amidst intense competition?

1. Offer a server product that caters or targets (a) small community/ies or niche. Make sure you develop a good reputation in that community by meeting their specific needs.

2. Target small business in your area. Offer them better deals (good prices and personalized service) because chances are, they get their hosting from the local ISP (who probably over-charge them for it because it isn't theur speciality).

3. Develop relationships with web designers. Get them to recommend your service to their clients.

4. Take advantage of your own personal network. After all, don't you prefer to do business with people whom you know personally, rather than companies from who knows where? People tend to feel more secure if they know that you aren't likely to take advantage of them, because they probably know where you live :-).
5. Do the rounds in web hosting forums. Make use section that match clients with hosts' offers. Just make sure you don't under-price your services.

We hope that this helps anyone who is trying to get into the hosting biz!