Reseller Hosting Business Startup Guide
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Reseller Web Hosting Bazaar: Amazing yet Bizarre!
The Internet has become a global phenomenon. Its reach is virtually limitless. There are millions of websites on the Internet, providing you with information on anything and everything, from a small needle to building your own aircraft. This enormous amount of data needs to be hosted some where. This is where web hosts come into action and where we make money. :)
If you reading this article, there is a good chance that either you are a web host or you want to start a web hosting company of your own. We at WebHostingBuzz have literally thousands of reseller web hosting clients and so it happens that I was sitting in my office one day when a request for the live chat appeared on my desktop. As usual I started talking to this potential client, who had great ambition to start his own web hosting enterprise but had little or no idea how to go about it. He had been designing websites for sometime and probably got interested by reading posts at a popular web hosting forum called WebHostingTalk. During the 50 minute chat, it became clear to me that many potential web hosts on the Internet have quite confusing ideas about how web hosting works.
This gave me an idea to write this article to share my knowledge about this industry and provide you readers with an interesting step by step guide to what needs to be done to start and run a successful hosting business. Most potential web hosts think that it is all about getting a reseller web hosting plan from a company and hundreds of clients would start pouring in just because you can sell x amount of web space for y amount of price. Web hosting is a full time job. It is time consuming and requires effort to make it work. No matter what, it can often complement your existing IT business acting as a source of additional income.
Web Hosting is a service based business. It is tough and when I say tough I mean it. Be prepared to work for at least 18 hours a day 7 days a week. Your mind would be pushed to the limit and your nerves would swell. Be prepared to lose your social life. Scary isn't it? however, if you do manage to find your place in this bazaar, chances exist that you would make a comfortable living and just might save enough money for that Porsche or a vacation at Bahamas you always wanted. As mentioned earlier web hosting is mainly service based which means that if you can provide a good web hosting experience to your clients, hopefully you will survive else you should be prepared to pack up your bags within few months if not weeks. By good service we mean that you be there when your clients really need you. A web server can go down at any time and while it may not mean too much to you, your client might end up losing thousands of dollars worth of business just because you were unable to come online to fix the issue for them.
There are a million things that can be said on how to run a web hosting business successfully and it would be impossible for me to list them all. Most of these are learnt through experiencing it and you will gain more knowledge with the passage of time. The important fact is that everyone can do it if the focus is right. Uptime and customer service along with competitive pricing is the key. You got to grasp this concept to increase the retention rate of clients that you have already acquired. One cannot stop the natural churn rate as there would be clients out there that do not require a web host simply because they do not want a website any more. You as a web host cannot control that. What you CAN control is what really matters. Investing back into the business is very important to keep the service levels high. Be particularly cautious about 1. Where you spend? 2. How much you spend? 3. Is it worth the spend? Not only that being a business man you should have the ability to take calculated risks. Remember money makes money.
Web Hosting Business is a Business
which means that in the end of the day you are doing it to earn money. What I am going to do is to teach you to do it properly and effectively so that you not only gain clients but also retain them.
Write Your Plan Down on a Piece of Paper
Something I would recommend doing before you jump into any business venture. It is always a good idea to write down your plans. All it takes is a word document. Starting small does not mean that you hire a consultant. You should write down meaningful sentences of what you would do to begin and where you want to see the company in the first three, six and twelve months. It is not necessary that it works out and in fact most of the times it ends up completely different from what you expect. You plan to take on 10 clients in the first 30 days of operation and you get 200 and your business plan goes to dump. In any case it is always a good idea to document your course of action so that you do not get lost on the way. Plan about what your opening budget would be like, and how you are going to spend it. Examples include domain registration, server management, marketing and administrative costs. A good business plan is always worth the effort when actually acted upon. My advice to you is to keep it simple and straight with maximum focus on producing results than just day dreaming about it. Keep the following things in mind
- Opening Balance
- Cost Study
- Fund Management
- Deployment Strategy
- Future Projection
You can base your plan on the points above and write down a good plan of action but remember to keep your plans flexible to changes. There is no guarantee that your proposal would work in the first place so you should not be immune to the rapidly changing hosting business environment around you. Also remember that I used the word *action* which means all your time would have no meaning until you have practically implemented the written procedures.
Check Your Wallet and Gauge Your Budget
You are lucky to be living in an age where technology rules the world. Due to the recent and rapid changes in the availability of technological products and services and the subsequent competition factor, consumers can now enjoy the advancements of mankind at an affordable price range. Web hosting sector has benefited from this change too. The overall costs of infrastructure such as web server hardware, bandwidth, personnel (outsourcing) has made it possible for web hosts to provide high quality service at a price which is not hard on the wallet. What does this mean for you? It means that you as a potential web host would not need hundreds of thousands of dollars to enter this market but you would need hundreds of thousands of hours of hard work to make it in this market.
Although the individual circumstances vary a lot from person to person, this article mainly focuses on start ups with low budgets. In any case this article is a good read for web hosts with large investments as well.
Patience with lots of research while managing your limited budget is what you need as start up reseller web host. The ability to take a risk in any business is important. Also there no excuse for the lack of knowledge. For example if you want to get few banners designed for your hosting company, make sure that you get the best deal. Search on Google, Designerstalk, Webmaster-Talk, SitePoint, KillerSites and do your research. You can also look for free lancers at Freelancers.net or GetaFreeLancer etc. My whole point is not to throw away your money to the first person you see. Do your home work and try to get the best deal while not getting the quality compromised.
Now that you have a general idea and ready to spend some money we can move on to the next step which will be the official gateway to your upcoming business venture.
Register Your Domain Name
The most basic step towards your online venture is registration of your domain name. Being a reseller web host you should try to avoid registering domain names with other hosting companies. Get your domain name registered directly from a registrar. We use NameCheap.com for most of our domain names but you can use any registrar that suits you. We recommend Namecheap
Try to register all the major extensions for example .com, .net, .org, .info, .biz, .us etc. This is important for your brand name protection as it avoids domain hijacking or your competitors trying to use your name to sell their services.
Try to be creative when selecting a domain name for yourself. A domain name that is easier to remember is often more suitable as it remains in the head of a potential visitor for a long time.
Secure Your Brand Name
This is the first baby step you will take towards your ultimate financial freedom. We live in the 21st century. Corporate environment has changed a lot. You can now sue Donald trump just because he has got bad hair or sell Paris Hiltons private belongings on the Internet just because she failed to pay a $200 storage facility bill. Yes it is silly but in todays competitive corporate environment you can play with the law or the law can play with you. Your brand name security is very important. What a $7 per year domain is today might be million dollar company tomorrow.
Long gone are the days when search engines were interested in the keywords inside the domain name while ranking the site, therefore you may not go for domains like buy-cheap-web-site-hosting.com. Make sure you choose a classy, corporate and brandable website name for yourself that you can take pride on later.
You can start business in two ways.
- Do Business As
- Corporation or LLC
According to BizFilings.com
DBA filing allows a company to transact business using a different name. DBA filings often take place at the county level, but some states have state-level DBA filings. For sole proprietorships and general partnerships, unless a DBA is filed, the company name is the same as the name(s) of owner(s). For example, John Smith is operating a landscaping business as a sole proprietorship. He files a DBA to transact business under the name Smith Landscaping instead of as John Smith.
Corporations and LLCs can also file DBAs to transact business under a name different from the name registered with the state when the business was incorporated. For example, a corporation formed as Smith and Sons, Inc. may wish to transact business under a name that more clearly states what the company does, such as The Corner Market, and could file a DBA to use the more descriptive name. A DBA filing does not change the official name of the corporation or LLC. It only allows the business to use a different name in trade, which can be in addition to or instead of the official corporate or LLC name.
Keep in mind that for sole proprietorships and general partnerships, filing for a DBA does not provide the same benefits that forming a corporation or LLC does. Filing a DBA merely allows the company to transact business with the new name. For corporations and LLCs, filing a DBA does not create a new business entity, it just allows the existing entity to use a different name.
We would recommend that you spend some money to register it as a proper company as it puts a positive impression on any potential client. Look at it by putting yourself on the customer side. Would you rather do a business with unknown or a properly registered firm?
This article is specifically made for resellers working out of United States. The individual laws of the given country can differ accordingly. No matter where you are located a proper company can be way more advantageous in the long run.
For resellers in the US, I have listed the following sites offering quick affordable incorporation services. Clients in other countries should consult their respective local authorities to register their business. I have used google.com and few other search engines and recommend www.bizfilings.com.
It is also considered wise to register your brand name as your trademark. It is optional though as resellers it is assumed that you would have a limited budget but whenever you do have the available funds, it is recommended that you take this step. For web hosting resellers based in the US please visit http://www.uspto.gov/teas/index.html as you can also file it online yourself or ask your lawyer to do it for you. For resellers based outside the United States please contact the concerned authorities for guidance.
Website Design and Creation
Next basic step is to make your website. If you have skills in web development then you can do it yourself or you can hire a web designer to do it for you or you can use pre-made templates from websites like www.templatemonster.com to download and edit. Needless to say template based sites are turnkey however they do not give a professional image of the website because a single template may be used by tens if not hundreds of other web hosting companies. If you can do it yourself then there is no issue, but if you cannot then it usually recommended that you hire a web designer who will charge you few hundred dollars to either make a template or a full blown website. The days of HTML are slowly dying. Try to get your website made in XHTML with good CSS.
A good navigation structure is very important. Your clients should be able to see what you are trying to sell them. Do not burry your products deep down in your pages. Try to portray a simple yet a comprehensive portfolio of your services. Links should be clear and the text should make sense to ordinary people who have limited knowledge of web hosting. The easy thing to do is to put yourself in client’s shoes and think about the dos and do nots. If it does not click you and you are a sane person, chances are it will not do the same for others too. ;)
We at WebHostingBuzz.com although do not provide turnkey reseller web hosting templates but we do have an online website builder known as the RVSiteBuilder which has few pre-made templates for quick editing and use.
Setting up your Web Hosting Plans
One of your main selling points would be your web hosting plans. The amount of disk space and bandwidth allotted for a given price will totally depend upon your business plan and specifically your target market. If you are a small time reseller needing reseller web hosting to take care of your web development clients then your hosting plans would be a lot different from the one whose living depends on it. If you want to start a budget hosting company then your web hosting plans and pricing should reflect that. Similarly premier web hosting should reflect respective pricing. In any case make sure to always mention how x web hosting plan is different from y and why I should pay you $60 per month for something that I can get for mere $5 from another company. A good explanation on the website always helps the potential visitor to make the right decision.
Do not setup your web hosting plans just because you want to fill up the page. You can have 100 hosting plans and then again just one and make no difference on sales. The difference should be in terms of their pricing, quotas, type and effectiveness.
Also it is a good idea to make an online submission form for custom quote because not all web hosting clients have the same requirements and expecting everyone to have the same is just plain stupid.
Reseller Web Hosting to Dedicated Web Server
Depending upon your budget you can search for various reseller web hosting plans from many well known companies on the Internet. There are various levels of reseller web hosting plans available and with different pricing levels. Many web hosting companies start selling for $25 per month where as others can go as low as $10 per month. In any case please make sure that you do your research before signing up for any reseller hosting plan. We at WebHostingBuzz.com provide reseller web hosting plans starting as low as $10 per month to up to $25 per month. WebHostingBuzz.com is basically a budget hosting company so our focus is to supply quality reseller web hosting options at a reasonable price tag. I want to stress my point on two important myths that need to be cleared. Please note that it is very important you understand the following two concepts before making any purchase.
My Reseller Web Hosting Plan can Host ALL my Domains : Wrong!
It has to be pointed out that most of the reseller hosting servers are shared. There can be anywhere from 50 to up to 100 resellers hosted on a web server. This means that there can be anywhere from few hundred domains to few thousand domains hosted on one server. Don't be greedy. Do not try to save money and host all your domain names on one single server. Spread your eggs before you drop the basket and lose all. Think about it. You are hosting 100 domains on your $10 per month account and earning $500 per month from them. If the server goes down ALL your domains go down. Wouldn't you be better of buying 10 reseller hosting plans for $10 each and on different servers so that you host only ten domains per server? This way you can still save $400 and have the peace of mind in case of a disaster.
I can Host ALL my Domains under one Hosting Company: Wrong!
No matter how good a reseller web hosting company is, you should always be on the cautious side and buy reseller hosting plans from many companies at one time. You can start with one reseller hosting company and then gradually spread your base. Do not place all your domain names under one hosting company, so that you do not go down if the company goes bankrupt. WebHostingBuzz.com started 4 to 5 years back as a reseller web host. We learnt it the hard way. If our experience matters to you then you must follow our footsteps and make sure you do not place all your eggs in one basket. Spread the load and risk and you will thank us when the bad time comes out of no where.
There are various web hosting directories where you can search for your perfect reseller web hosting plan. There are thousands and thousands of web hosting directories out there so listing all of them would have no meaning. Typically all top web hosting companies are listed in all major directories. There is one hosting directory known as www.FindMyHosting.com that is more meaningful in terms of listing quality web hosts. It does not accept advertising nor is filled up tons of banners and fake reviews which we see at most places now days. You can browse through and search for good quality web hosts for your business.
There might come a time when a reseller hosting plan on a shared hosting server may not be cost effective. You might need to upgrade to a dedicated server of your own. This step may not necessarily come afterwards because you may directly start from a dedicated web server. It all depends on your business plan and your budget. Since this guide was created for small time start up resellers with limited knowledge, dedicated server hosting would come late on the agenda table.
Moving to a dedicated server is one single most important step you will take to move your company to the next level. It is essential that you understand its importance. Haste makes Waste. Please plan your transition well in advance with a proper back up plan. Take your time. Do not try to move 300 websites all at one time. Its will only act as a recipe for disaster. Your web hosting company should in most cases help you to move. We at WebHostingBuzz.com help our clients to move from shared, reseller and ultimate platforms to dedicated hosting. Coming back to the topic, please divide the account move into several weeks. If you are new to this and your hosting company is also not very helpful, it is always a good idea to take services of a third party or what we call move specialists. You can post at WebHostingTalk.com and request the services of a free lance admin or a company that can do this for you. Be VERY careful with the people you deal with. There are many scam artists on public forums so please for your own safety use your common sense.
Be patient and relaxed during these transitions. Losing temper is the last thing you want. You can complete the server move for thousands of domain names if you have the right plan written down and acted upon with minimum or no downtime at all. Do not be afraid of making mistakes. We are all human beings and learn by making mistakes. Sometimes our stupid mistakes can teach us the lessons which we remember for the rest of our lives.
How do I bill my Web Hosting Clients?
You would need two basic things to begin billing and managing your clients
Payment Processor
The most basic step towards billing your clients would be your ability to take online payments. For US residents it is easy to get a merchant account if you are over 18 and maintain a US bank account. You can also charge your clients through www.paypal.com. Besides Paypal there are other ways to bill your clients. You can bill them using stormpay.com, moneybookers.com, checks, money orders, drafts etc. Make sure that you do not lose on a client just because he or she cannot pay you through a credit card. Every client should be valuable but in the end if costs you more to use other methods of billing, it is usually considered wise to restrict your billing methods to the ones that suit you the best. For folks that cannot get their own merchant account or their business plan does not dictate the need for one, can use www.2checkout.com. Fees for 2checkout revolves around 5.5% of the total amount processed but it is quick to setup and you can begin selling in minutes. Most merchant accounts charge around 2.5% to 4% which can be good for the saving but one has to go through several hurdles like mailing the required documents for verification and it can take several days if not weeks to get it up and running. You can contact your bank to get a merchant account or any one of these recommended sites below. Please note that these sites take clients from the US which means that you have to be a US resident to take advantage of their services.
- www.gotmerchant.com
- www.merchantplus.com
- www.charge.com
- www.authorize.net
Client Management Script
I would always recommend that you get a client management script. Back in the days when I started WebHostingBuzz there was no formal script or the ones available were out of my budget. This lead to various management related problems later on but we took the right decision and moved on to a professional web hosting client management software. There are many client managers available. You have the option to lease them on monthly basis or buy the owned license for high one time fee. I will list few of the popular ones out there. Lease would cost you around $25 per month with $150-$1000 for an owned license depending upon the product.
- www.whmautopilot.com
- www.modernbill.com
- www.clientexec.com
- www.whmcs.com
- www.psoft.net
- www.swsoft.com
- www.alabanza.com
- www.ubersmith.com
WebHostingBuzz uses whmautopilot and modernbill for managing its clients.
How to provide support to my Hosting Clients?
Being a reseller you will not have to worry about managing your server. This is the job of your reseller web host. Phew isn't that a relief? Not so much I am afraid because there is something more important than just providing web space on a web server. It is called service. Now without getting into the philosophical depths of how your service should be, I am going to recommend few ways of dealing with customer support. Although dependent upon your business plan and resources it has been found that online help desk support is probably the fastest and most efficient way of providing technical support to your web hosting clients. This may not be universally true but does apply to most of the web hosting companies on the Internet today. A more direct approach is provide support through phone which can of course increase the over head costs, however, if your resources allow you to do this then it acts as an excellent plus point over the ones that are unable to provide it. You can provide support through email, phone or an online help desk.
Adding tutorials and a proper knowledge base helps in reducing the number of tickets that are quite common for example how do I update my credit card? How do I change my password? How do I setup email in Outlook? You get the picture?
Stressing on the importance of good help desk system, if your budget can spare a little, you should definitely go for Kayako Support Desk Software. It very intelligently created and satisfies the need of any modern and highly demanding help desk environment. Leased licenses can cost up to $40 per month with owned versions selling at $500.
There are many FREE web hosting help desk software on the Internet. WebHostingBuzz provides many one click install help desk software through an auto installer called Fantastico, which is comes with every web hosting account we sell. Following are the few good free ones in the market
- Crafty Syntax Live Help
- Help Center Live
- osTicket
- PHP Support Tickets
- Support Logic Helpdesk
- Support Services Manager
Kayako Help Desk is a paid version but worth the funds. We at WebHostingBuzz use the same help desk. Thank you very much for reading this basic guide to the world of Web Hosting and we wish you the best of luck.
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