Do you want to start a web server hosting company? If YES, here is a complete guide to starting a web server hosting business with NO money and no experience plus a sample web server hosting business plan template. One good thing about the information age is that there are several business opportunities that come with it and one of them is server hosting or web hosting as it is popularly called.
Sever hosting companies are companies that provide space on a server owned or leased for use by clients, and they also provide internet connectivity, typically in a data center. If you are IT inclined and you have the start – up capital and are also looking to start a business in the IT industry, one of your best bet is to start a server/web hosting company. There is indeed a large global market for web hosting companies.
All you need to do to attract clients and maximize profit as a newbie in this industry is to ensure that your business is well – publicized, reduce downtime to the barest minimum and your fees are affordable. To achieve all that is stated above, you should be ready to work hard and smart, hire dedicated and competent employees and above all have a reliable server.
A server/web hosting business is a lucrative business to go into because individuals, businesses and the government need the services of server hosting companies. However, to start this kind of business, you will need to have technical skills to secure your server.
Due to the technical nature of this business and the need to understand what you will be getting into from the business aspect, it would be wise to consult a business consultant in the area where you intend starting the business. This is to enable the business consultant go through your business concept and advise you on whether to proceed with the business or not. If your business concept is a great one, the business consultant would offer you tips and suggestions on the way forward that will be helpful to you during the course of running your business.
Hence, if you have done the required feasibility studies and market research, then you might want to venture into this business.
17 Steps to Starting a Web Server Hosting Company
1. Understand the Industry
It is known fact that the server hosting services industry has come to stay and of course it is one industry that plays key roles not only in the business world, but also in almost all aspects of what goes around in our world today. This is so because there is hardly any serious minded business or organization or even individual who does not have an online presence cum their own website.
The Server Hosting Services industry provides internet hosting services to third party service providers. These services most commonly take the form of website hosting where industry operators provide leased server space and internet connectivity to individuals and organizations to make their websites accessible over the internet. Players in this industry also provide application-specific services such as e-mail application hosting and game hosting et al.
Research conducted by IBISWorld shows that the demand for the Server Hosting Services industry grew substantially over the past five years due to high demand from companies hoping to expand their online activities and presence. This trend is expected to continue to grow. Most of the employees, management and business owners in the Server Hosting Services industry have worked in complimentary information technology industries.
The Server Hosting Services Industry is indeed a very large industry and pretty much active in all the parts of the world. Statistics has it that in the united states of America alone, there are about 18,573 registered and licensed website hosting companies responsible for employing about 139,069 and the industry rakes in about $20 billion annually. Going forward, the industry is projected to grow at the rate of 7.1 percent annually between 2012 and 2017. The companies with lion shares of the available market in this industry are Endurance Int’l, GoDaddy.com and web.com.
The fact that server hosting companies can easily be found in the United States of America and in the cyberspace, does not in any way make the industry to be over saturated. The fact that there are people and organizations out there who would always need the services of server hosting companies from time to time to host their websites makes the business ever green.
Some of the factors that encourage entrepreneurs to start their own server hosting companies could be that the business is highly thriving and profitable and can be started in any part of the world.
Like every other IT related service, server hosting services is continually evolving. Technologies are changing and improving rapidly and as a result, the technological boundaries of hosting are being pushed to meet the ever changing demand. This creates opportunities for consumers not just to search for the cheapest hosting deal or the most flexible hosting model, but to think about the kind of business models they want to support and whether or not they need specific features in their packages.
Lastly, customers are also becoming savvier with respect to potential security issues connected with the cloud. As a result, server hosting companies are developing stronger communications around this issue in the form of copy, collateral, and training et al for their sales and marketing teams. The need to fight malware and abuse is a major theme affecting all kinds of website hosting companies, not just cloud hosts. Continuing investments and upgrades in this area remains a major concern for server hosting companies.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who require the services of server hosting companies cut across individuals, corporate organizations, government agencies, investors and business owners cum entrepreneurs who own websites/servers.
So, if you are looking towards defining the demographics of your server hosting company, then you should make it all encompassing. It should include corporate organizations, business owners, research centers, institutions, banks, military establishments, blue chip companies, businessmen and businesswomen, start – ups, entrepreneurs, aspiring entrepreneurs, and telecommunication companies within and outside the city you are operating in who have the capacity to pay for your services.
3. Decide Which Niche to Concentrate On
Most server hosting companies tend to operate general services that involve every business activity that a standard server hosting company is expected to offer. That is why it seems like there are no niche areas in the industry. But on the other hand, some server hosting companies may decide to major in some key areas such as;
- Dedicated website hosting
- Cloud hosting
- Shared hosting
- Application-specific hosting (wordpress hosting)
- Providing website building, security and value-added features
The Level of Competition in the Industry
Irrespective of the line of business you decide to pitch your tent in, you are still going to compete with others who are into the same line of business, and server hosting business is not an exemption. The level of competition in the server hosting industry depends largely on your area of specialization and how big and organized your server hosting company is.
It is obvious that as more big players like Amazon and others move into the server hosting services industry; it now becomes pretty important for smaller server hosting companies to have strong partnerships. Affiliate and reseller relationships are becoming a mainstay of how these businesses profit as a number of small to medium sized server hosting companies become bundlers for the specific service packages needed by small business users and online companies.
The truth is that no matter the level of competition in an industry, if you have done your due diligence and you brand and promote your products or services properly, you will always make headway in the industry. Just ensure you have what it takes to proffer the right solution to people and organizations’ server hosting concerns and you know how to reach out to your target market.
4. Know Your Major Competitors in the Industry
In every industry, there are always brands that perform better or are better regarded by customers and the general public than others. Some of these brands are those that have been in the industry for a long while and are known for that, while others are best known for how they conduct their businesses and the results they have achieved over the years.
These are some of the leading server hosting companies in the United States of America and also in the globe;
- Endurance International
- GoDaddy
- com
- IPage
- Blue Host
- Hostgator
- Inmotion hosting
- hostmonster
- WebhostingHub
- FatCow
- Amazon
- Rackspace
- SoftLayer
- NetHosting
- Peer 1 Hosting
- Windows Azure
- Superb Internet
Economic Analysis
When it comes to starting a business such as server hosting company, you just have to get your feasibility studies and market research right before venturing into the business. It is good to mention that server hosting business is not for rookies; it is for professionals who have gathered the required experience and expertise to proffer solutions to server hosting concerns.
Starting this kind of business definitely entails that you acquire the required degree and profession certifications and also build good working relationship with stakeholders in the industry. If you are already a major player in the IT services industry before venturing out to start your own server hosting company, then this might not be an issue.
Depending on the scale at which you want to start from, you might require as much as multiple thousands of dollars to strike this off and at the same time you might need far less than that if you choose to start the business on a small scale by offering limited services.
You are expected to hire the services of experts that will help you with a comprehensive economic and cost analysis of the business within the location that you intend launching the business. If you get your economic and cost analysis right before launching the business, you may not have to stay the long before you breakeven.
5. Decide Whether to Buy a Franchise or Start from Scratch
Unfortunately, you can barely find a franchise of a server hosting company to purchase, meaning that if you want to own a server hosting company, then you must be ready to start from the scratch. This is so because the business is still pretty much green and there are loads of opportunities available to aspiring entrepreneurs that are interested in the industry.
The truth is that it will pay you to start your server hosting company from the scratch. Starting from the scratch will afford you the opportunity to conduct thorough market survey and feasibility studies before choosing a niche to major in.
Please note that most of the big and successful server hosting companies around started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success and of course you can build your own server hosting company to become a successful brand with clients from all across the length and breadth of the United States of America and other countries of the world.
6. Know the Possible Threats and Challenges You Will Face
If you decide to start your own server hosting company today, one of the major challenges you are likely going to face is the presence of well – established server hosting companies within your market space. The only way to avoid this challenge is to create your own market.
Some other threats that you are likely going to face as a server hosting company operating in the United States are unfavorable government policies, the arrival of a competitor within your location of operation and global economic downturn which may affect your server hosting company. There is hardly anything you can do as regards these threats other than to be optimistic that things will continue to work for your good.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
You have the option of either choosing a general partnership or limited liability company for your server hosting company. Ordinarily, general partnership should have been the ideal business structure for a small – scale server hosting company especially if you are just starting out with a moderate start – up capital.
But if your intention is to grow the business and have clients from all across the United States of America and other countries of the world, then choosing general partnership is not an option for you. Limited Liability Company, LLC will cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder’s meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your server hosting company; limitation of personal liability, ease of transferability, admission of new owners, investors’ expectation and of course taxes.
If you take your time to critically study the various legal entities to use for your server hosting company, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company(LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
8. Choose a Catchy Business Name
When it comes to choosing a name for a business, it is expected that you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Usually it is the norm for people to follow the trend in the industry they intend operating from when naming their business.
If you are considering starting your own server hosting company, here are some catchy names that you can choose from;
- Xtrip Server Hosting Company
- Gconnect Server Hosting Company
- com Server Hosting Company
- Diamond Base Server Hosting Company
- Upper Cloud Server Hosting Company
- Octopus Link Server Hosting Company
- Hydra Cloud Server Hosting Company
- QWERTY Server Hosting Company
9. Discuss with an Agent to Know the Best Insurance Policies for You
In the United States of America and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is imperative to create a budget for insurance policy covers and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your server hosting company.
Here are some of the basic insurance policy covers that you should consider purchasing if you want to start your own server hosting company in the United States of America;
- General insurance
- Risk Insurance
- Financial reinsurance
- Health insurance
- Liability insurance
- Workers Compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are considering starting your own server hosting company, usually you are required to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to challenge organizations and individuals in court for illegally making use of your company’s intellectual properties.
So also, if you want to protect your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO.
11. Get the Necessary Professional Certification
Asides from the result you produce as it relates to server hosting services to your clients, professional certification is one of the main reasons why some server hosting companies stand out. If you want to make an impact in the financial consulting services industry, you should work towards acquiring all the needed certifications in your area of specialization.
You are strongly encouraged to pursue professional certifications; it will go a long way to show your commitment towards the business. Certification validates your competency and shows that you are highly skilled, committed to your career, and up-to-date in the market.
These are some of the certifications you can work towards achieving if you want to run your own server hosting company;
- The IAAP Certified Professional in Accessibility Core Competencies (CPACC)
- GIAC Certified Windows Security Administrator
- CloudU Certification – Rackspace
- OSWP Offensive Security Wireless Professional
- Ace Web specialist
- GPEN – GIAC Penetration Tester
- Cisco Cybersecurity Specialist Certification
- Degree in ICT Related Courses
Please note that you cannot successfully run a server hosting company in the United States and in most countries of the world without necessarily acquiring professional certifications and business license even if you have adequate experience cum background in the IT security consulting services industry.
12. Get the Necessary Legal Documents You Need to Operate
Having the necessary documentations in place before launching a business in the United States of America cannot be overemphasized especially a server hosting business. It is a fact that you cannot successfully run any business in the United States without the proper documentations. If you do, it won’t be too long before the long hand of the law catches up with you.
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own server hosting company in the United States of America;
- Certificate of Incorporation
- MySQL Server Support & Certified Hosting
- SSL Certificates
- Federal Tax Payer’s ID
- State Permit
- Business License and Certification
- Business Plan
- Non – disclosure Agreement
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Consulting contract documents
- Online Terms of Use
- Online Privacy Policy Document
- Apostille (for those who intend operating beyond the United States of America)
- Company Bylaws
- Memorandum of Understanding (MoU)
13. Raise the Needed Startup Capital
Aside from the required certifications and hands-on experience, starting a server hosting company can be relatively expensive. Securing a standard office in a good business district, purchasing computers and internet servers, equipping the office and paying your employees are part of what will consume a large chunk of your start – up capital.
When it comes to financing a business, one of the first things that you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business or to partner with you.
Here are some of the options you can explore when sourcing for start – up capital for your server hosting company;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell of shares to interested investors
- Applying for Loan from your Bank
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends
14. Choose a Suitable Location for your Business
The server hosting business and most internet based type of businesses does not necessarily require that you see physically with your clients, hence it can be located anywhere since most of your business deals are conducted over the internet.
The fact that you can operate your server hosting company from your home does not mean that location has little influence on the success of a server hosting company.
It cannot be overemphasized that the location you chose to open your server hosting company is key to the success of your business; hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where the demography consists of people with the required purchasing power and lifestyle.
So, if you are looking for a location for your server hosting company, ensure that it is located in a business district/ICT hub in your city, a place that is visible and easily accessible. Of course, you would not want to locate this type of business in the outskirts of town. Your clients should be able to drive down and locate your office with little or no difficulty.
15. Hire Employees for your Technical and Manpower Needs
There are few special technologies or equipment needed to run this type of business; you will need IT server, customized cyber security software and customized antivirus amongst other unique products developed by your team of Programmers and Software Developers. So also, you will definitely need computers/laptops, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves).
When it comes to choosing between renting and leasing an office space, the size of the server hosting company you want to build, and your entire budget for the business should influence your choice. If you have enough capital to run a standard server hosting company, then you should consider the option of leasing a facility for your office.
As regards the number of employees that you are expected to kick start the business with, you would need to consider your finance before making the decision. Averagely, you would need a Chief Executive Officer /President (you can occupy this role), IT Specialist, Legal Secretary, Admin and HR Manager, Programmers and Software Developers, Business Developer/Marketing and Sales Executive, Accountant, Customer Service Executive/Front Desk Officer.
You would need a minimum of 5 to 10 key staff to effectively run a medium scale but standard server hosting company. Please note that there will be times when you are expected to go out of your way to hire experts to help you handle some high – profile clients especially from big corporations. If you are just starting out, you may not have the financial capacity or required business structure to retain all the professionals that are expected to work with you.
The Service Delivery Process of the Business
The job of a sever hosting company is to provide space on a server owned or leased for use by clients, as well as providing internet connectivity, typically in a data center for their clients hence they will ensure that they put the required facility and structure to deliver the above stated services.
Basically, when clients hire your services or pay to get their server hosted on your platform, they expect their server/website to experience minimal downtime and also to be fast an efficient. Clients are expected to renew their payment usually after a year or when their subscription expires.
16. Write a Marketing Plan Packed with ideas & Strategies
As a server hosting company, you would have to prove that your server hosting platform is reliable and has minimal downtime before attracting corporate organizations and individuals to host their website on your webhosting platform. So, if you have plans to start your own server hosting company, it will pay you to first build a successful career in the ICT services industry.
People and organizations will only host their websites on your server hosting platform if they know that they are going to get seamless service and also minimal or no downtime while on your platform.
So, when you are drafting your marketing plans and strategies for your server hosting company, make sure that you create a compelling personal and company profile. Aside from your qualifications and experience, it is important to clearly state in practical terms what you have been able to achieve in time past as it relates to the sever hosting industry and the organizations that are hosting their websites on your platform. This will help boost your chances in the market place when sourcing for clients.
Please note that in most cases, when sourcing for clients from corporate organizations and other institutions, you will be called upon to defend your proposal, so you must be pretty good with presentations. Here are some of the platforms you can utilize to market your server hosting company;
- Introduce your business by sending introductory letters alongside your brochure to all the corporate organizations, web designers, business owners, research centers, institutions, banks, military establishments, blue chip companies, businessmen and businesswomen, start – ups, entrepreneurs, aspiring entrepreneurs, and telecommunication companies within and outside the city you are operating in who have the capacity to pay for your services
- Advertise your business in relevant ICT magazines, radio and TV stations (make yourself available for server hosting and ICT related talk shows and interactive sessions on TV and Radio)
- List your business on local directories
- Attend international ICT expos, seminars, and business fairs
- Create different packages for different category of clients in order to work with their budget
- Leverage on the internet to promote your business
- Join local chambers of commerce and industries around you with the aim of networking and marketing your services and products; you are likely going to get referrals from such networks
- Engage the services of marketing executives and business developers to carry out direct marketing
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If you are in business and you are not deliberate about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portray your business to be. One of the secrets of larger corporations is that they are willing to spend fortunes year in and year out to boost their brand awareness and to continue to communicate their corporate identity the way they want people to perceive them.
If your intention of starting a server hosting company is to grow the business beyond the city where you are going to be operating from to become a national and international brand, then you must be ready to spend money on the promotion and advertisement of your brand.
In promoting your brand and corporate identity, you should leverage on both the print and electronic media and also the social media (the internet). As a matter of fact, it is cost effective to use the internet and social media platforms to promote your brands, and it is pretty much effective and wide reaching.
Another strategy is to sponsor relevant community based programs, TV and radio programs, advertise your business in relevant ICT magazines and newspapers. Below are the platforms you can leverage on to boost your brand and promote and advertise your server hosting company;
- Place adverts on ICT related magazines and newspapers, radio and TV stations.
- Encourage the use of word of mouth publicity from your loyal customers
- Leverage on the internet and social media platforms like YouTube, Instagram, Facebook, Twitter, LinkedIn, Snapchat, Badoo, Google+ and other platforms to promote your business
- Ensure that you position your banners and billboards in strategic positions all around your city
- Distribute your fliers and handbills in target areas in and around your neighborhood
- Contact corporate organizations, website designers, business owners, research centers, institutions, banks, military establishment, blue chip companies, businessmen and businesswomen, start – ups, entrepreneurs, aspiring entrepreneurs, and telecommunication companies within and outside the city you are operating in who have the capacity to pay for your services by calling them up and informing them of your organization and the services and products you offer
- Advertise your business in your official website and employ strategies that will help you pull traffic to the site
- Brand all your official cars and ensure that all our staff members wear your branded shirt or cap at regular intervals.