How To Start Your Own Web Hosting Business

Think about it – everyone who wants to start a websites needs web hosting. Once they get a web host, they are likely to stick with it for a very long time, and perhaps start more sites with the same web hosting company.

That will mean it’s the best business to be in on the Internet right?

Well, not exactly. As you may know by now, web hosting is one of the most competitive industries out there. Yet smaller providers continue to exist, and thrive.

In this article, let me give you a brief overview of how to start your own web hosting business, based on my own experiences with Host Commando. Although this is not the exact thing we are doing (cos that’s a secret), it’s pretty close.

Basically, there are 5 steps you need to take:

1. Create a Unique Selling Proposition or USP
2. Get a reliable dedicated server, with WHM and cPanel
3. Get a reliable web hosting automation software
4. Do some simple SEO and a lot of promotion
5. Prepare for the worst, but expect the best

Create a Unique Selling Proposition

This is actually the hardest part. No matter what the hosting companies tell you, they are all basically selling the same thing – hard disk space. It’s just a small section of a hard drive on a computer that is referred to as a “server”.

And no, don’t say “I will provide the cheapest solution” or “I will provide the best customer service” because quite honestly, you cannot beat the larger players at their own game.

I think it will be better for you to provide “value added hosting”. In other words, offer something more than just hosting. Offer a service, like we did with Host Commando, where we help users install, optimize and troubleshoot WordPress.

Whatever the extra stuff is, make sure you mention that clearly in your sales page and ads. Then, follow through on your promise to the best of your abilities.

Let me give you an example:

• Host with us and we’ll design your corporate website for free
• Host with us and get free Internet marketing coaching

Or sometimes, it can act to support your existing business model instead while building a stream of residual income:

• Hire us to design your website, and get free 6 months hosting
• Join my Internet marketing workshop, and get free webhosting for a year

Just remember that if you decide to offer value-added hosting, you cannot afford to sell it cheap, simply because there will be additional work for you to do. Go “premium” and make your hosting appeal to those with a bigger pocket – it’s not a sin!

Get a Reliable Dedicated Server

This is really the easiest part, if you’re not too fussy about the cost. Just get a dedicated server from HostGator from as low as $174 / month to start with.

If you get a dedicated server from other providers, make sure your dedicated server has the following:

1. The Web Host Management or WHM script to manage your server and accounts in the server
2. cPanel installed and configured with the latest specs, for your user hosting accounts
3. MYSQL, Apache and latest version of PHP
4. Good and timely support (the most important part actually)
5. Some sort of server monitoring or alert tool

Again, getting the HostGator server is your safest bet. They will give you both the automation tools I mention below for free.

Get Web Hosting Automation Software

This is the part that sucked up most of my time when I wanted to start a web hosting business.

Basically, there are two good solutions you can use – WHMCS and WHMAutopilot.

Yes there are others, but if you take the time to do research you’ll find that these are the top two recommendations. Even established hosting companies use them.

Since I didn’t know better when I first got started, I flipped a coin and decided to go with WHMAutopilot. Although the software is decent enough, I soon regretted my decision when I saw what WHMCS can do.

Without getting too technical, let me explain why WHMCS is better:

1. Better overall User Interface or UI – you will not be scratching your head for too long
2. Way better support and forum / community – there are a lot of smart people willing to help you out with your questions
3. Better provisioning and reporting tools – makes it almost 99% automated
4. Built-in support ticket system and knowledgebase
5. Much more integration options and third-party add-ons

WHMCS will cost you $249.95 One Time if you buy an “Owned License”, or $15.95 monthly for the “Leased Version”.

If you bought the HostGator dedicated server like I asked you to, you’ll get the basic Owned License version of WHMCS for free. Basic is good enough when you’re getting started

Next, you need to get a domain name reseller account with Enom.

Enom integrates very nicely into WHMCS (and also WHMAutopilot) and allows you to easily sell domain names with your web hosting account. The process is 100% automated once you’ve set it up in WHMCS.

If you get the HostGator dedicated server package, you’ll get an Enom reseller account for free as well.

Now all you need to do is set-up everything – WHMCS, HostGator and Enom to work together perfectly. It’s the perfect combination if you want to slash the learning curve and get started fast – it’s not for those who want to save money and waste their time.

How do you set-up everything?

I can’t teach you that unless I create a 3-day hands-on workshop, so good luck on your own. But don’t worry, – huge part of the web hosting industry involves around this “holy trinity” of hosting and help should not be that difficult to find.

A few forums that may be helpful:

1. WebHost Automation – Can get a bit technical, so prepare
2. Top Hosts Forum – Another webmaster forum
3. Web Hosting Talk – Good participation here, one of the largest
4. WHMCS Forum – Probably the most useful if you’ve decided on WHMCS

NOTE: Leaving a forum signature to your new webhosting site (while participating honestly) will help you with the next part, Search Engine Optimization.

Simple SEO and A Lot of Promotion

Let’s not get too much into SEO as there are more e-books and blog on that topic that any human being can possible read in a lifetime.

All I have to say about SEO in terms of web hosting is don’t rely on it. Have you ever met a webmaster who didn’t know SEO? Chances are most web hosting companies understand SEO better than you do, and spend much more money on it.

Sure, you must get your keyword research right and have basic software like Keyword Elite. Sure, you must make an effort to some link building and SEO.  Sure, you should have basic knowledge about how Google ranks websites.

But that about all you should do. Trying to make money from search engine traffic is just to darn slow in the early stages – you need a more direct approach to avoid heartbreak.

Try approaching people who are already in the business of building websites or web design, and offer them your affiliate program so that they are more open to promoting your hosting package to their existing clients.

Approach other marketers and ask them to do an email promotion for you. If your USP is solid and you’re offering an attractive affiliate payout there should be no issues with this.

You may also want to offer a promotional discount or free trials to get your hosting business going.

Prepare for The Worst Case Scenario

As a business owner you must always hope for the best and prepare for the worst.

What is the worst that can happen with your web hosting account? You lose some money. How much money exactly?

Well lets say your HostGator dedicated server costs $174 a month. By going with HostGator you also get WHMCS and Enom for free, so you save money.

How many hosting accounts can you sell from one dedicated server? Opinion varies, and it depends a lot on your packages, but generally speaking you can easily fit 50 accounts into a single dedicated server. Sometimes you can stuff in up to 200 accounts.

If you’re selling for $9.90 a month, that will mean you need to sell about 18 accounts only to break even. If you really cannot do that, you should reconsider your intentions of starting an Internet business in the first place.

Everything you make after that is pure profit, so push yourself to sell your first 18 accounts as soon as possible, preferably before the next invoice for your dedicated server is due.

That’s why I recommend that you stop hunting for freebies and “cheaper” options that don’t work well and end up costing you more. The solutions I give on this page are proven to work, go with them first before you decide to get adventurous!

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Tagged as: enom, hostgator, how to, web hosting, whmcs