In my opinion, one of the hardest things to do in life is starting your own business, especially starting your own web hosting company. Don’t misunderstand me, starting and running the business is definitely not easy, but that’s the easiest part of it all. The truly hard part is on a personal level. Deciding to take the risk, and just diving head-first into an industry you may or may not understand.
Well folks, I’m here to give you a few simple tips that hopefully demystify the process of starting your own web hosting company!
1. Decide on a Company and Domain Name:
First things first, you need a name, and this can be anything really. For example, my company name is ZeroStopBits. What does that even mean? Why are there zero stop bits? I want more stop bits! I want ALL the stop bits! I came up with the name while tinkering with my Cisco 6509 Layer 3 switch.
I was punching in the COM port on my putty session when I was presented with the option to enter the amount of “stop bits” on the line. Think of a stop bit as a way for the communicating machines to know when a transmission has ended, and to continue to the next transmission. So I thought, “Hey.. if I call my company ZeroStopBits… then it’s like I’m saying we never stop transmitting!”
Having said all of that, the vast majority of hosting company’s like to have to word “host” somewhere in their company name (HostGator, DreamHost, etc..). This has the added benefit of immediately identifying your business type, with the drawback of being really cliche and overused. Other companies, such as mine, like to name themselves after ideas or concepts in the IT industry (Layer3, etc..)
At the end of the day, you need to go with a name that you really like. Things like branding and ease of use go hand in hand with recognition. Once people know who you are, it won’t matter what your company is named. You could call it hahawhatthelol.com and people would know what you’re about!
Make sure to first check if the name is available in your state! (California: kepler.sos.ca.gov)
2. Open up a DBA or Corporation
Now that the boring creative stuff is out of the way, you can jump into the fun world of corporate structure!
Once you’ve picked a name and snatched up that domain, you need to register your business with the State and Federal government. Being that my company was registered out of California, I’ll only be able to provide examples regarding my State’s process, but most states have similar if not easier method.
First decide on wether you want a DBA (Doing Business As – Fictitious Name) or a Corporation (S Corp, C Corp, LLC). I won’t go deep into the details, as that is a whole additional blog post. Personally, I filed my business as an LLC with the State of California, then elected for S Corporation status with the Federal government (IRS… grrr). My thought process here was that I can have the flexibility in corporate structure that an LLC provides, along with the benefits of limited liability, as well as the benefits of filing taxes as an S Corporation. California LLC forms can be found at the California Secretary of State Website and you can information on filing a DBA in Los Angeles at the Los Angeles County Clerk’s Website
3. Get a bank account
This step is literally the easiest of the lot. Banks want your money (duh), so they make it insanely simple to open an account. Once you have your DBA or LLC forms stamped, and your business is official in the eyes of the State, you can simply walk in to the bank of your choosing, hand over the relevant corporate documents, and you’ll be out of there in 30 minutes. Make sure you bring 2-3 forms of ID, these guys are real sticklers on that.
4. Decide on business type and model
Here we go… the good stuff. Your bread and butter, your night and day, your sun and moon, your… well, you get the idea.
There are many many MANY different types of business models you can apply. There is no right or wrong one, and whatever you choose is probably going to equal the same amount of work. Having said that, here are a few of these models with a brief explanation as to what they are and how they work:
ISP – These guys run the datacenters and/or networks your servers will be using. An ISP can be either a Tier 1, Tier 2, or Tier 3. They can either “peer” with each other, which means freely pass traffic bi-directionally, or they can purchase bandwidth.
Tier 1 – Almost always pure transit. Companies that operate on this level are Level3, Cogent, Zayo, GTT, Telia, etc. These guys don’t deal with hosting, they just move traffic back and forth.
Tier 2 – These guys usually peer with other Tier 1’s and Tier 2’s, but they also buy traffic from other ISP’s. Some companies on this list include PCCW, FiberRing, and Internap. Most of these companies STILL don’t deal with hosting, they’re just not big enough to be considered a Tier 1.
Tier 3 – Here we go, these are the big players in the hosting world today. Most of their bandwidth is purchased from Tier 1 and Tier 2 ISP’s, but their networks are massive in size. These are companies like Google, Rackspace, Amazon, GoDaddy, HostGator, etc..
Becoming an ISP is not a realistic goal for self-starters and those trying to break into the industry. This requires massive amounts of time, effort, and most importantly, money.
Hosting Provider – These are companies that provide the simpler types of services such as; managed web hosting, vps hosting, server management, hosted spam-free email, managed it solutions, etc.
A hosting provider usually diversifies their offerings as much as possible. You can see this model at work by looking at companies like GoDaddy, HostGator, BlueHost, DreamHost, etc… They offer all kinds of services, in an attempt to capture the greatest amount of market-share possible. This is what we do at ZeroStopBits. Maybe a customer comes to my site and decides he doesn’t want any managed web hosting, but he DOES want some VPS hosting! Well, I just might have made a sale because I was able to offer the customer different options.
Becoming a Hosting Provider isn’t all that complicated, it just requires an immense amount of time and the ability to split your focus on many different tasks. You need to make sure every single service you offer is up to snuff, otherwise, you risk upsetting your entire product ecosystem.
Reseller – These guys buy a reseller hosting package from a company like ZeroStopBits, relabel it, then sell that same hosting as if it were their own product.
Being a reseller is one of the easiest ways to get into the hosting business. You don’t have to buy servers, or a datacenter, or anything really. All you need is a reseller hosting account, and you can rebrand and sell it as your own product. The hosting company you buy the account from handles any server or network issues, and all you need to do is your own support! Some companies even offer whitelabel tech support services, which means all you literally have to do is make sales, and they take care of the rest for you!
This is a great option if you don’t want to spend more than a few hundred dollars, and get your hosting company off the ground and operational.
Affiliate – These guys can make CRAZY money, all while doing virtually nothing.
Almost every hosting provider offers an affiliates program. In a nutshell, they give you a bunch of banners, images, links, etc.. with a specific code tied to your account. You then take those resources, and plaster them on your personal website. Your website can be anything, a food blog, personal blog, news site, whatever you want!
You make money on a commission basis. Meaning, for every sale you generate for the hosting provider, you make $$$$. Generate more sales, make more $$$$. Easy!
5. Get dedicated server, vps hosting plan, or reseller plan
This step really all depends on the choice you make in Step #4, and I’m going to try and break it down the best I can.
Hosting Provider – So you want to be a hosting provider? Cool. Prepare for the pain.
– You need at the bare minimum 1 server
– You can purchase the server outright, and install it at a colocation facility
– You can lease a Dedicated Server, and the hosting provider you lease from will give you the metaphorical keys
– You can lease x2 VPS servers, and size them appropriately. For example; our Business, Team, and Enterprise VPS Hosting packages would work perfectly.
Got the server(s), what’s next?
– My suggestion would be to virtualize that puppy. There are many different options available for this, the common ones being VMWARE ESXi, Citrix XEN, and Proxmox. Proxmox is free, and it’s my platform of choice.
– Install the virtualization software, and make x2 VM’s.
– VM 1 will be your MAIN server. That’s where you’ll keep all of your website data. Create a decently sized VM (2CPU, 4GB RAM, 150GB HDD) to start. This VM will be used to house your management software, and any other software you’ll be using to manage your company.
– VM 2 will be your HOSTING server. This gets the MAX amount of resources available, and here is where you will install your hosting control panel (cPanel/WHM, Directadmin etc..)
Reseller Hosting – Pre-packaged and ready to go, all you have to do is configure for your business
– Sign Up for a Reseller Hosting plan
– Reseller hosting plans usually come with the management panel and hosting panel pre-installed for you. All you really have to do is configure them to suit your businesses pricing, and configurations.
– You’re usually given x2 IP’s for your nameservers, and the ability to rebrand the management and hosting panels with your own company image.
– This is a great option for those who don’t want to do through the hassle of Step #6 below.
6. Get a management panel, and a hosting control panel
Now you need to decide on what management platform you’re going to use to manage your billing, support, server deployment, affiliate, etc..
There are a few options here, with the three most popular being Blesta, HostBill and WHMCS. Personally, since I already knew how to install and configure WHMCS, I went with that option. However, HostBill and Blesta are also great options. If you’re just getting started, I would recommend using WHMCS, as there is a ton of documentation and community knowledge you can use to help get it going.
Once you get your management platform installed and configured, you can move on to deciding what hosting control panel to use.
The most popular BY FAR are cPanel/WHM, and DirectAdmin. cPanel has been around forever, most customers know how to use it, and their community and paid support is top-notch. DirectAdmin has a bit of a learning curve. You need to be familiar with Linux systems in general to get it going, and it does require some more tweaking than cPanel.
If this is your first rodeo, I’d suggest sticking with the tried and true cPanel/WHM platform. I’ve written an article on How to Install cPanel on a VPS or Dedicated Server that you may find useful.
7. advertise, advertise, advertise!
Now this might seem like a duh sort of thing, but you’d be surprised how many people ignore this crucial step. SEO is very important, but good advertising and promotion will generally lead to more sales than SEO on it’s own.
Get your business Facebook, Twitter, and Google Adwords accounts. It takes some fine-tuning to get your audience targeted correctly, but once you’ve got it, you’ve got it. The traffic flow is pretty amazing, and the more targeted your advertisements, the more sales you make!
I also suggest heading over to WebHostingTalk and signing up over there. They have advertisement forums that generate leads and the community has a ton of resources collected on the web hosting industry.
You got this far? Nice work.. hopefully you learned something today, and will be taking steps towards launching your own web hosting company. The road is unkind and full of obstacles, but if you make it, there is no greater feeling of elation. I wish you well in your endeavors, and send me a shootout when you’re a billionaire!
Keep your eyes on this blog for more posts on everything related to the web hosting industry, including tips and tricks, tutorials, news, and offers on our managed web hosting, vps hosting, it solutions, and server management offerings!