How to Start a Website Hosting Company

A 2012 survey by Netcraft discovered that 140,000 websites were being created every single day. That’s more than 51 million a year. All those sites require hosting services, and web hosting companies to provide those services. There is clearly a demand for good web hosting companies. Are you thinking of starting one?

If you get it right, web hosting is a lucrative business. However, it isn’t a get rich quick scheme. It requires practical knowledge and a lot of hard work. If your business is going to succeed, the key is to create a stable platform and build a business from there. It is not passive income. If you have the drive to start the next web hosting company, let’s get started.

What is a Web Hosting Company?

A web hosting company owns web bandwidth and storage space, which it rents to its customers (websites) for a set period of time. You will know some of the larger ones, such as GoDaddy and Bluehost. There are numerous smaller ones, though, often operating in specialized niches.

Types of Web Hosting Companies

There are three types of web hosting companies. They operate in slightly different ways and have slightly different benefits associated.

  1. Reseller hosting

Reseller hosting is where a small company buys hosting services from a larger company (like GoDaddy or HostGator) wholesale, then resells these services to customers at a higher cost. The smaller company pockets the difference from this arbitrage.

The benefits of reseller hosting are that you don’t need to build your own servers or operating systems for your business. You don’t need to have much technical knowledge. Larger hosting companies have a variety of different reseller packages available, so you can pick the one that best meets your needs.

     2. At Home Server

At home server companies build their own servers with their own storage space. They rent space on these servers to their customers. They also provide the operating system, software, and technical support.

The main benefit of this is you have total control over your service. Plus you take all the revenue from your customers. On the other hand, you have to make sure your service is as stable, reliable, and fast as possible. Any technical issues are laid at your door, nobody else’s.

     3. Data Center Co-location

Data center co-location is the middle ground between the first 2 options. The small company rents server space from a larger commercial data center, but the rest of the product is up to them. The smaller company controls the operating system and software.

The benefit of co-location is that you still have total control over the service you provide. The toughest part, keeping the server up and running, is done for you.

Now you know what a web hosting company does, and the different types of companies that exist, you need to choose which one you’ll start.

Do the Business

The next step is to decide how you’re going to run your web hosting business. Research other operators in the industry and see how they work. Note what they charge, the bandwidth that they provide, the level of technical support they offer.

Formulate a pricing plan that’s competitive in the marketplace, but still, makes it worthwhile for you and your company. Decide on a unique selling point. Are you going to be a company that piles it high and sells it cheap? Could you be the company that charges a little more, but is there for their customers all the time, holding their hands as they build their websites? If you want to operate in a specialized niche, now is the time to decide on that.

Spend Money to Make Money

As with any business, you have to have certain things in place before you can start. This is the point where you have to arrange an internet service provider that can supply your bandwidth at a reasonable price, with an exceptional level of service – 99.9% up-time is considered acceptable.

You also need to purchase the bandwidth. Work out how many customers you want to have, and plan it from there. A rule of thumb is 10Mbps of bandwidth can supply 1,000 customers.

Consider also power, if you’re running a server from home. Your server will need to be online all the time, that drinks up a lot of juice.

Other things you’ll need to consider is what hardware you’ll need, operating system and software licensing costs, and how you’re going to run customer support. How will you cope when hundreds of customers are calling you with queries that are important to them? Can you deal with them yourself, or do you need to hire some help?

This may all sound quite daunting, but if you plan it all out early, and price your service appropriately, you can make a success of your web hosting business.

Do the Hustle

Once your web hosting company and its services are up and running, you need to go out and find some customers to use them. You need to think about advertising and marketing. Hustle. Let everyone know you’re there.

Possible options to boost your business include SEO, Google AdWords, Facebook ads, face-to-face networking, and a whole lot more.

The way you start a web hosting company isn’t a whole lot different from how you start any company. You plan, you consider outgoings weighed up against income and your market. The main thing you need to remember is that your customers are building their businesses on the back of your service. Reliability is absolutely key. If you cannot provide a stable service, you won’t be in business for long.

OK, now go do it. Good luck!

1 Comment
  1. Great post! As a web host, one thing I would definitely advise against going the home server route when starting a web hosting company. While this may have been viable ten to fifteen years ago, today’s consumers demand gigabit speeds and near perfect uptime.

    A great alternative to a reseller or a colocated server is a managed VPS server. This gives you the same level of access as a colocated server, but without the hefty price tag. Instead of purchasing hardware like you would for a colocated server (could cost thousands of dollars), a managed VPS can go from just $30 per month.

    Just a tip for any new web hosts 🙂

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