How To Start Your Own Web Hosting Company

How To Start Your Own Web Hosting Company

Ever been interested in starting your own web hosting company? You should be! It’s an exciting opportunity for people interested in e-commerce. Web hosts are the foundation of every website. Everyone interested in starting their own website would need a web host and with thousands of people making their own websites every day, there can never be too many web hosts!

And you can also start a cloud hosting company. Most companies are open for resellers too.

How much can you make by selling web hosting?

The profit from web hosting can add up quick and it isn’t difficult to find yourself in a situation with money rolling in left and right.

I don’t want to burst anyone’s bubble, but to start a legitimate hosting company you will need a personal or company bank account, a credit card (debit is fine), and a contact number. I will discuss how to obtain all of these. Keep in mind, being a web hosting company does not mean you have to be 18 years old!

What Do You Need to Start Your Own Hosting Company?

Before I jump into the fascinating world of being a web host, I want to talk a little bit about the prerequisites. Like in many other businesses, you need money to make money. This is the same case for web hosting.

Things you will need to purchase to begin include

– Dedicated Server

– Billing Software License

– Control Panel License

– Staff Members

– Website Development

– Marketing

These are just a few things you will need to invest in, but I will touch base on getting the best deals for each of these so you can start web hosting under $150.

The great thing about web hosting, like in most businesses – is the profit.

You Will Need a Server

Lets talk about pricing. Dedicated servers aren’t cheap and there are hundreds of companies that overprice them. As a web host, you will have a respectable amount of resource useage and bandwidth consumption. Because of this you will want a powerful machine to handle everything and along with that, you will want a decent amount of bandwidth. It is important to not overstep your boundaries when first starting out, you don’t want to buy a $400/month server only to find out web hosting isn’t what you want to do.

My personal recommendation for a starting server would be a…

Dell PowerEdge PE860 chassis

Dual Core Intel Xeon 3050, 2.13GHz


(2x) 250GB SATA Drives

Hardware RAID with 64MB of memory

2000GB Bandwidth

Now these specs aren’t bad, but they do sound expensive. Fortunately you can get this deal as a special from a lot of places at the low price of around $100 per month. Not bad right?

You Have to Set Up a Control Panel

As a web host you will want a control panel for your clients, the mainstream control panel used by web hosting companies is cPanel. DirectAdmin is a popular alternative considering it is a few bucks cheaper, but cPanel is the recommended favorite. For an additional $30, you can have your server licensed for cPanel. The good thing is you can add this license directly into your order with most reseller hosts. So now you have the two most underlying foundation pieces of your web hosting company, the dedicated server and the client control panel. All for $139/month. Not too shabby – you could go for a lower spec dedicated server and save some money but as a web host, showing off your beast machine is bound to attract clients.

A benefit to using your dedicated server provider is that they offer all their clients with a web control panel where they can monitor the status of the server and reboot it at will. This is a huge benefit in case you ever run into server issues and you are unable to reboot it via command line. This is the next thing we’re going to talk about.

Linux is Free

The majority of servers today run off Linux, a popular operating system. You may have heard of it in comparison to Windows. Both are great operating systems but Linux distributions are preferred in the web hosting scene because every bit of CPU consumption counts and Linux is able to provide lower resource usage and maximize the server’s capabilities. For those not familiar with Linux and command line commands, it is best to Google a few tutorials on basic commands. I will discuss a few things quickly with you to get you started.

Linux servers do not use a desktop, although they can – it is not used to conserve server resources. Linux servers are controlled via command line. The best way to do this is use a program called Putty which allows you to SSH (Secure Shell) to the server and login as a root user. When you receive your server in your email, you will be given the server’s IP and root password.

The root user of a server can control everything and anything, and that is why it is important not to give out this password. Anyways – you connect via SSH and you will install cPanel through there. Once cPanel is installed, you can easily manage your server through the cPanel page. I am not going to give you a lesson on the Linux environment, I recommend using Google for that. It is important to know basic commands so you can personally analyze your server statistics. Although this is not necessary since cPanel kindly offers you detailed statistics and features to control every aspect of your server.

You Need a Billing System

The next thing you’re going to want to do is use billing software to manage your clients and their registrations. The mainstream billing software is called WHMCS. I will assume you already know what it is but a basic license for this will cost you about $12/monthly and is worth every penny. It allows you to manage your clients support tickets, their payment information, your packages, and so on. It is the skin and bones of your client communication.

A Unique Website is a Must

You will obviously need a web site where potential clients can view your plans and various related information. You can use a premade template from one of the thousands of websites that sell them. You can also pay someone to personally design you a website for about $70. A unique web page is Key to customer attraction.

You will notice me talking about the customer’s satisfaction a lot and it is important that you understand that customer’s are the lifeline of your company. There is a popular saying, “An unhappy customer tells 3,000 – A happy customer tells 3.” To some extent this is true and it is important you try and satisfy all of your customers.

Rounding Out Your Website

Once you have your web page setup, you can consider adding additional items such as live chat, a Status2k page which provides detailed statistics of your uptime, CPU usage levels, RAM usage, and so on. A Status2k page speaks a lot about the reliability of the web host and how stable they are. Little things like this can make the difference between gaining a customer and losing one – so they may well worth be investing in.

Staff? Maybe.

You don’t always need staff. Thanks to WHMCS’ amazing functionality and simple interface – it is easy for one person to assist customer support tickets in a timely manner, unless of course you have hundreds of customers – then it may be time to upgrade your staff. In the mean time, you will be able to handle the requests seeing as you are just starting out as a web hosting company. It never hurts to grab an additional staff member, maybe a friend or hire someone for a small wage of $8/h – whatever suits you.

A Good .com Domain Name

Along with every website, you need a domain. It is important to register a .com domain

I can’t tell you how many times I have seen web hosts register .info domains and lose customers because they didn’t invest the extra $6 into a professional TLD. It is also important not to use an irrelevant domain, if you are a web hosting company then let people know by having the words “host” or similar in your domain.

Marketing is Essential

Now a huge factor in becoming successful is marketing. When advertising, you don’t want to be too pushy. It may convince potential customers that you are desperate for clients and this may make them think that you aren’t established enough to maintain a steady stream of income and that you are a failure as a web host. We certainly don’t want this.

Posting your offers on popular forums like DigitalPoint & WebHostTalk is a good way to attract customers. PPC Campaigns like Google AdWords is a good way to show off your name as well.

Work on Your Offer

Now, let’s talk about the packages you can offer. Most web hosts oversell their plans, meaning they offer a ton more disk space & bandwidth then they can afford because they know that you probably will never use that much. This is known as overselling and is looked down upon by established web hosting companies run by individuals or small groups.

Sure this can trick customers into thinking they are getting an amazing deal, but they will be unhappy once they find out that you have to kick them off your server because they are using too much disk space or bandwidth. Offer reasonable plans that you know your server can support.

Offering reasonable plans will attract customers who may know their way around overselling companies and this will promote your reputation as an honest and reliable web host.

Offer Reliable Service

Now we will talk about reliability. Uptime and server care is everything – if your server is constantly down because it is overloaded with customers or you are running extraneous applications on it for your personal gain, then customers will leave without hesitation.

A Good Terms of Service

Make sure you have a Terms of Service which clearly explains your rules and what clients can or cannot do. It is important to be specific and clear so you can point troublesome clients back to it when they disagree with your actions.

Keep Software Up-to-date

There are a lot of people out there that want to hack your server and use it for their own malicious purposes, so it is important to make sure that your software is up to date, but don’t worry – cPanel does most of this for you.

The Plans You Can Offer

Now before we continue, lets quickly discuss about what kind of plans you can offer. For the most part you will be offering basic shared hosting plans – which means that multiple clients will be hosted on the same server. You can also offer reseller hosting – which gives the client the ability to sell his own portion of shared accounts to whomever he wants at his own price. You can offer miscellaneous services such as domain registration and ShoutCast hosting. For domain registration, you will most likely need to setup a reseller account with popular registrars like DirectI and Enom. An alternative to this is just charge extra on your domains and individually purchase the domain yourself for the client, the problem with this is the client doesn’t have access to changing the nameservers and other DNS features through his WHMCS control panel.

Now – for large sums of money, the best way to go is Dedicated Servers. You can purchase your own hardware and collocate them – then rent them out to people, or you can lease them from resellers at a discounted price and sell to your clients at your own price. Popular resellers include BurstNET and FDCServers.

Colocation may sometimes require a heavy investment; therefore it is generally better to resell servers from existing major datacenters.

Offer Phone Support

Ok – now a huge selling point is offering phone support. I personally don’t want to give out my personal phone number so I would register a separate phone line and the best company I suggest for this is Skype.

You can use Skype‘s services such as SkypeIn and SkypeOut and at about a fee of $13/month, you can get your own private permanent online phone number and you can make unlimited calls to anyone anywhere in the world. This is an awesome addition to your company and would really improve your relationships with your clients. Keep in mind you do need working speakers and a microphone to use Skype – I suggest purchasing a headset.

Organize Your Business

Organization is the next thing we are going to talk about. Without organization, you will lose track of extraneous funds (taxes, handling costs, staff wages, etc…) so I personally recommend using Microsoft Excel to keep everything tidy.

Keep a detailed list of your pricing, potential income, your investments, etc… So you will know exactly how much you are profiting, if at all, and what steps you will need to take to improve your business.

Keep track of everything! At the end of the month, look back on sales and see if there is any relation to current events, site changes, staff changes, etc… and as a entrepreneur, make a responsible decision. A lot of people do not go into the Web Hosting business with these facts in mind. In fact, a lot of people don’t even have these intentions – and you have to remember. It is a business. You provide a service for money and fortunately, the demand for web hosting has been high for quite some time and the only competition you face with other major companies are uptime, reliability, and support.

In The End It All Comes Down to Customer Satisfaction

I can’t stress how important it is to make a client feel like they can count on you. If the customer is truly convinced that you will fix his problems and you will make him happy, then do it! He will tell friends which only means more business.

I want to conclude this post with a few personal words of advice which will pay off in the long run.

  1. Do not waste money. Even if it is $1, make an effort to save it. Why is that? The act of saving money builds character and changes your outlook on customer satisfaction, business management, and income. Don’t buy useless domains, take the proper precautions to prevent fraud orders, charge backs, etc… And especially don’t invest in advertising with companies that have no reputation.
  2. When advertising, don’t overwhelm your customer with graphics & information. They will most likely exit out without second thought. Take your time, create a professional looking pitch page.
  3. Make your customers feel like that you went the extra mile to make them happy. Everyone in this world is part of the global economy. You work for money, customer’s pay you this money and rely on your ability to maintain the server and keep them happy.

The final thing I want to talk about is affiliate programs. If you really want to maximize income then you may want to consider setting up an affiliate program where others can promote your web hosting and they receive a percentage of the sale. This is a really good way to get the name out about your company and build up a reputation. That is all for now, I hope you have learned something from reading this post and if you really do plan on starting a Web Hosting company – then use some of the tips I provided. They will help you become successful.