Starting a hosting business: How it's Done

[Rudy]

Hello all. First off, I'd like to say nice forum. I'm always appreciative of forums that allow hosting companies to come in and chit-chat with other members, and also advertise without having their heads bitten off by the moderator staff. :)

I have had my business website, http://www.smoothstoneservices.com up for about 2 years now. Originally, I have only been offering custom web design. However, last fall I have launched Smooth Stone Services into the web hosting market. Despite my attempts to gain many clients, I have been unsuccessful up to this point.

Therefore, I have done some work to the site recently, such as modified my header to add a picture of some servers, and a bit of text advertising my cheapest price on hosting packages. I've also modifed the home page text a bit to get the primary message accross, and make the services that I want the most attention to stand out. (Web hosting and Design).

I have also added an affiliate program, where users can fill out an email form, and earn $5 for every person who they refer and signs up.

For those of you who are in the hosting business, I'm sure most of you have some experience with marketing, and getting the word out, gaining (and keeping) clients, and starting a business from scratch.

Not only for my own knowledge, but for the sake of discussion and having everyone learn a few tid-bits, what is your experience? What does a hosting company need to do in order to be successful, and what do they need to stay away from doing?

Hosting Clients - Feel free to chime in! It's your opinions that count, anyway! :)

I'll look forward to following this thread.

[ASP-Hosting.ca]

Have you tried paid advertising?

[Rudy]

Unfortunatley, I don't have that kind of money right now.

[1PlanHost]

Hi Rudy and welcome to the forum!

First, I would recomend that you consider doing a major overhaul of your site design in order to close more sales once potential customers visit your site. Spend some time browsing and comparing the company sites listed at HostSearch.com and you will soon see a pattern of what works for them. As you browse and compare sites you will notice that many look the same. That is because many have purchased a hosting template from templatemonster.com or some other template site. I would recomend staying away from those or else you will easily fall into the template trap and visitors will have a tough time distinguishing your brand from any other. We at 1PlanHost.com developed a different style than most because we want to be seen as different and not your usual host. We change our design each year to keep it fresh.

Next, spend some time developing lots of additional content on your site to assist your customers. Tutorials are especially helpful and many of these will show up in search engines if constructed right. We have numerous tutorials on our site and our stats show these bring a lot of backdoor traffic to our site. While it may be said that simple sites have value, you will experience a windfall of goodwill conversions from simply creating tutorials and articles. Just be sure to create your own rather than copy others in order to bring your style to it and you should be fine.

3rd, study hard on search engine optimization techniques. Never attempt to cheat the search engines but do use all the tools and techniques available that will increase your traffic. Even the best site in the world is useless unless it has lots of traffic that converts to sales. Start at www.planetocean.com and buy their ebook listed there. Do NOT waste your time (and money) with internet submitted search engine submission sites. If you are going to spend $ on search engine optimization be sure to study the field first because there are a lot of scams in the field promissing the world but delivering nothing. Personally, I loved the seminar learning at www.searchengineworkshops.com and it was the best investment that I have ever made when it comes to SEO. Too expensive? you bet it was, but the techniques I learned there 3 years ago and previously studying SEO has enabled us to be in the top 10 for many of our important keywords at Google such as "Windows 2003 hosting", "Windows ASP Hosting" etc. and therefore drive free traffic to our site leading to sales far exceeding the investment. If you absolutely don't want to spend the time earning the $ to attend one of their seminars then by all means do study SEO online and grab a few good SEO ebooks.

4th, find your niche market and meet their needs. Don't try to be a big fish in the ocean. Instead you can be a big fish in a pond or lake and do very well. The hosting business is very overcrowded and competative yet there is still enormous room for specialized market hosting. For example, we have a hosting reseller who specializes in hosting and developing web sites for pediatric dentist. She has become extremely successful in her field and has a staff now to assist her in developing the web sites. Notice that she targets pediatric dentist not just dentist which further defines her market. This is what works in today's competative market. Our company used to host and develop quite a few alpaca and llama web sites but one day a competitor lured away several of them simply because they marketed direct to these types of sites. Needless to say, we were surprised by the side swipe yet impressed with their marketing savy that lured away one of our oldest customers!

While there is so much more (pay per click advertising, directory advertising, forum advertising, etc) I would recomend consentrating on the above 4 first. Master these and you will be the master of your lake. Once you are master of your lake, you can easily swim up the river and on out into the big water.

PS. Sorry for the fish analogy. Our CTO went fishing this evening while I was still at work so I had fish on my mind.

Best Wishes for a .Net Success!

[sandrodz]

1PlanHost
awesome tips and tricks! you helped me allot!

btw, I also made my website all by myself, www.spyhost.net

please check it out and tell me what do you think? I realy did a good job on meta tags for google and other search engines, I made alt tags over all the images... please could you note anything that is bad, in design or...

thanks :D

[1PlanHost]

I am often reluctant to provide web site design and usability reviews for fear of offending a budding artist so please take this review as constructive rather than criticism of your work. Obviously you have spent a lot of time on it.

Yes I see you have done the neccessary work for basic search engine optimization. Spend some time now narrowing in on your most important keywords and work those into your site. Of course you will need "web hosting" but be careful that you narrow it even further than that because that phrase is indeed very competative.

Overall the design is good but I am not sure how spying relates to web hosting and thus the name spyhost unless you are marketing to those in the Private Investigation or spy industry. What country are you from? I ask this because in your pricing you have placed the $ symbol to the right of the amount rather than the left as it is traditionally placed in the USA.

You may want to consider trying different color variations. The current blue and red in my opinion are clashing. I may be wrong of course as designs and colors are very subjective to individual taste. Blue has traditionally served as a cool positive color for sales. Yet red is sometimes considered as threatening and may represent anger to some. Conversely, it is also the color of love. There is a whole field of study done on colors and people's reactions to them. Do a search on "psychology of color" in Google and you will see some helpful information on this subject. I particularly like http://www.colormatters.com

Your prices are indeed inexpensive. TIP: I would advise using the word "inexpensive" rather than "cheap." Cheap may give the impression of cheapness meaning low service and reliability. "You get what you pay for" is the phrase often used in this industry when criticizing a web host. Elevate your customer's expectations of your service by offering value priced or inexpensive rather than cheap.

Last bit of advice would be for you to get a friend who can go over your site in detail looking for typos and misspellings as well as any grammatical errors. I saw a few there and potential customers may be turned off by these.

Hope this has helped and as always Best Wishes for a .Net Success!

[WebEdit]

When your company does significant things you can send out press releases. There are lot's of sites you can do it with. Some are free and some cost more depending on how you would like them distributed.

Try free-press-releases.com for a free one or

prnewswire.com for a bigger professional one. home.businesswire.com is a good one too.

I'm the web editor at HostSearch.com and if you would like to do an interview with us for your company we will be happy to do one for free with you.

If you are signed up in our directory listing you can advertise yourself by adding pictures of your data center and/or staff to our host tour section too.

Get yourself some reviews on HostSearch and I think we'll turn into a good referrer for you.

[1PlanHost]

I second that, HostSearch has been a very good referrer for several years for us. Encourage your customers to review your service at HostSearch.com and build a positive reputation for reliability and customer support. The price for their pay per click program has historically been good in comparison to ROI. However, in recent weeks there have been some price inflating in the bidding system due to some heavy hitters entering the areana. These usually fade away after their budgets are shot and then you can get some decent prices.

Best Wishes for a .Net Success!

[Khun]

have you ever visited http://www.hostbiztools.com yet? it's all about how to run a hosting business.

[ElCaballo]

One word for ya bub. SPAM! OK, couple more words. If it works for viagra it can work for you. Spam then don't spam. After you have enough customers stop.

[1PlanHost]

Oh Yeah, great advice there - you really want lots of customers, go ahead and purchase a list of 50 million email addresses then spam the heck out of those at least once per day.

Doing so, will most assuredly cause the following milestones for your new hosting company;

1. You get banned from your bandwidth provider in 24 hours
2. Your entire network is shut down for spaming violation
3. ALL of your email servers are blacklisted at spamcop and numerous anti-spam list around the world. Therefore all those numerous new customers you just enticed to sign up cannot send any email from your servers to 80% of the world's ISP's including AOL who subscribe to these blacklist!!!!
4. Your local ISP shuts you down if you spammed from home
5. Your company is clearly identified as a trashy spammer therefore really boosting customer confidence.

I am sure there are plenty more milestones that your new company will achieve by spaming so if these are attractive to you, go ahead and spam away!

However, if you really want to avoid the above then learn to market your hosting service, differentiate your hosting plans from the rest of the flooded marketplace, establish your brand and gain customers the old fashioned way - Earn it!

Best Wishes for a .Net Success!

[WebEdit2]

Think of it this way... When was the last time you didn't chase a door-to-door salesman down the road? When was the last time didn't screw up a piece of junk mail and slam dunk it into the waste bin? When was the last time YOU bought something from spam email?

WebEdit2

[ElCaballo]

When was the last time MCI made $5 billion a year hosting send-safe (spammers)?

When was the last time your company made $5 billion a year?

Don't believe it? Go check Spamhaus.

I don't suggest random machine-gun spamming but a targeted strike to start you off can get the ball rolling.

And what is this about 'earning' it? What did that ever get anyone besides a sense of accomplishment and integrity? ;)

[1PlanHost]

For starters, do you seriously believe that MCI received a 5 billion dollar return on any spamming activity for it's web hosting services or any other service they offer? It just does not work that way no matter how you would like to fantasize about it doing so.

The road to wealth on the Internet or anywhere else in business has been and always will be earning it through HARD WORK and dedication. Anything else is only a fantasy driven by the desire for fast profits and laziness. Oh sure there are examples of those flash pan millionaires prior to the .com bust of 2000 who made it rich off of IPO's with inflated valuations, but where are they now? Most are back to the basics of marketing and good ole fashioned hard work!

Accomplishment and Integrity? Since when did those become negative traits?

Best Wishes for a .Net Success (due to your hard work)

[ElCaballo]

I was just kidding around about integrity and self-accomplishment. A joke to acknowledgement that you are on the right track.

I went back and looked at that Spamhaus article that talks about MCI hosting the viral spammers Send-Safe and it was 5 million a year not 5 billion. A bit high yeah? Anyway, 5 million a year is still not bad loot just for hosting a spammer.

Here is the article:
http://www.spamhaus.org/news.lasso?article=158

That doesn't tell us what the spammers themselves actually made just what they paid for hosting. Thus, I think spam, while illicit and immoral is still an effective means to jump start yourself. A one-off round of spam to get the word out and then on to the straight and narrow.

Now, I agree with you that hard work and a quality product are the right way but not everyone is smart or dedicated enough for that. If you are broke and not overly bright or hard-working like me then you have no choice but to fight dirty or you will never be able to compete. See, that's why Johnny wears a black hat instead of a white hat. ;)

[1PlanHost]

Perhaps you many want to read the whole article, including this important update at the very bottom

"Update: 2005-02-26
After extensive pressure, MCI finally relented and let go of send-safe.com."

Perhaps MCI did turn a blind eye to their customer who in turn was hosting the illegal spam operation but they did not do so for long under pressure from the Internet community. I also know from experience that unless you are paying MCI a cool 5 million to turn a blind eye you can forget about escaping their UCE policy and they have one of the toughest enforcement teams out there among bandwidth providers. It works like this,

1. You or one of your hosted customers sends spam
2. that spam is reported to spamhaus.org spamcop.net and many other anti-spam blacklisting organizations.
3. Those organizations place your hosting company email server on their blacklist of IP's (most of the time without any research to validate the claim)
4. Thousands of ISP and hosting companies subscribe to these blacklisting services and their databases on their email servers automatically block ALL email coming from an IP address on the blacklist
5. Even if you convice these organizations to remove your email server IP address from their master blacklist databases (the process usually takes several days and much staff time) those that subscribe to the list may or may not drop your IP from their list after the update. In other words, your IP address may be stuck on major ISP blacklists for months, years! (Think AOL, Earthlink, and other large ISPs blocking email from your servers forever and how your hosting customers will respond to that).
6. You as the hosting company may receive an email from these organizations if you are subscribed and/or have an abuse@yourcompany address registered with them warning about the reported spam.
7. Your bandwidth provider (or reseller company) will most definitely receive a report and they will then in turn send you a very strong warning to remove the offending spammer immeadiately or risk having your ENTIRE OPERATIONAL BANDWIDTH connection suspended until you comply. That means ALL of your hosted customer sites are down, no email, no site, no business.

That is the way it works my black hat friend so you will have to learn to play by the rules, work hard and smart and earn your customers trust before you can do business with them and expect them to be loyal to your brand. I have been in the hosting industry nearly 10 years now and have seen so many young hosting startups fail right out of the gate because they attempted to bend the rules and went on a spaming spree. Never have I seen any successful companies use such tactics and I know ours certainly would never even consider it. Sure it may be tempting, but the risk is too high and a hosting company who spams or permits spam on their servers will fail unless you have many millions to pay off your upstream provider or you are the upstream provider. Even then, public pressure, lawsuits and business appearance in the marketplace will cause you to rethink your ways such as MCI had to do!

Best Wishes for a .Net Spam Free Success!

[country-tyme]

Two part message, first to Rudy:
I am in agreement with 1PlanHost, that you should revamp your website. It needs a more professional look. Too many hosting companies use templates that can been seen site after site. I too started this way (2 different ones), but ended up designing my own and integrating the whoiscart into it. I would remove "About the founder" link on the home page and make an "about us" page. "About the founder" could be more appropriately placed in the web design section, with a link to the site and a comment about how that site came into being. I would check out some other hosting sites and view their terms of service. Check out some of the uptime guarantees also. Most downtime is prorated, not 1 month full refund!! You may want to include something about the data center. People like to know what data center their sites are hosted with. And lastly, paying up front for 1 year of hosting is not always the way one wants to go. It is much easier to try a new host for one month, 3 months...If they like the support and service they are receiving, then maybe they will upgrade or pay yearly, especially if the hosting company has yet to prove themselves.

Secondly, to Sandrodz:
Colors do say a lot. The red works in the main body, but not in the navigation menus. The red letters can't be seen properly. I would change the background color of the main body to white, to give it a cleaner look and somehow think about ridding it of so much empty space. Maybe a third column for the table to put the google ads into would balance it out a bit more, or better yet, remove the one you have there now. Are your selling hosting for you or someone else. You want to keep the potential clients at your site, not send them to someone else. Just my opinion.

Your faq page says "Can I host a porn site with you?
Yes you can host pornography on our servers."
Your free hosting tos says "2) Pornographic, obscene, nude, graphically violent, and other inappropriate content is strictly prohibited."
If this is related to paid and free hosting, change the faq. If this is related to free hosting only, change the faq to say so.

Links to order paid hosting do not work!!!

[1PlanHost]

Are your selling hosting for you or someone else. You want to keep the potential clients at your site, not send them to someone else. Just my opinion.

Links to order paid hosting do not work!!!

Nice post Country-Tyme ! Agreed that if you want to establish a hosting business then by all means do not link to other hosting sites and send your potential customers elsewhere. While you may make a few dollars off of affiliate links and AdSense, it will not increase your customer base and public image.

Best Wishes for a .Net Success!

[asifkk]

Nice article, with the reference of this article,

I have a very perfect domain for starting a large hosting company. this is CADHOST.COM , domain is older than other leading hosting companies like bluehost, hostgator etc. Please visit the site for further details.

Brokers may also contact and can have 5%

[DanielChew]

I just been away from my notebook then I saw a long queue of reply at here. Sound amazing from 1plan advise, thanks for sharing. Is that possible for you to share more about business with me :), looking forward to hear from you.

[aditd]

I have also added an affiliate program, where users can fill out an email form, and earn $5 for every person who they refer and signs up.



If this is only for people that sign up without buying ... then it is ok. If the visitor needs also to buy then the commission is quite poor considering that other host company start from 50$

[Manov]

Thanks for sharing this valuable information.

[JerrickYeoh]

To get more customer , you need more awareness with marketing while web hosting is real competitive business in online.
Your service need to appear in web hosting review & directories sites. It help you to get more quality traffic which might convert into sales.
You might need addon value with your hosting package to make it unique . Market your USP why your hosting is different from others.

[masterdrugstore]

It may be done by any.

[ashokkumar]

The most important things to keep in mind when creating a web hosting company are your expenses and the time you need to spend on each client. You need to have a back-end that will allow you a lot of room for markup and profit. You also need a back-end that will allow easy client sign-up, with minimal work on your part. This is why I recommend you use a reseller hosting package. You do not need to invest in expensive servers. You do not need to monitor them for down-time and risk losing all your clients if something on your server breaks on Friday night and you fix it on Monday or Tuesday. You do not need to buy expensive cPanel licensing (you are saving $450 per year just on that) and all other software. I suggest using HostGator’s Reseller Hosting, that comes with already prepackaged cPanel, WHMCS client billing software, Fantastico and much more. In case you don’t know what WHMCS is, it’s the all-in-one client billing/support software. It allows you to create invoices, subscriptions, and even has a great built in support ticket system. You get it for free with HostGator reseller hosting, which I think is pretty hard to beat. You can use coupon 25PERCENTSALE to get 25% off your order.