The Smart Guide to Starting your Web Hosting Business
Starting a new web hosting business in 2018 is tough. You’re competing against companies like Rackspace and GoDaddy – they’ve got deep pockets and mega technical strength.
At the same time, customer expectations have also increased. Web hosts could once operate as a simple place to store files or run a server. That’s not enough anymore. Especially if you plan to build a lasting business.
#1. Get smart about the competition
To help you understand what you are up against, let’s take a look at two successful web host companies: Rackspace and WP Engine. Rackspace offers a wide range of web hosting services while WP Engine specializes in the WordPress platform.
First Web Host Business Case Study: Rackspace
Based in Texas, Rackspace is a giant in the web hosting industry. Take a look at their technical offerings:
1. Managed hosting
Of course, you’d expect the company to offer Linux and Windows managed hosting. Rackspace also provides VMWare and has earned recognition for its VMWare performance.
2. Application services
This is an exciting example showing how to provide additional value beyond traditional web hosting. For Rackspace, application services include business analytics (e.g. SAP, Microsoft and Tableau products) and database services (e.g. staff expertise includes MySQL and NoSQL database implementations).
3. Specialized cloud services
Rackspace boasts a deep bench of technical talent. Including 800+ AWS (Amazon Web Services) professionals and others covering Microsoft Cloud and Google Cloud. Notably, Rackspace also has a dedicated service for government customers, a lucrative segment known for its exacting security requirements.
Now, I know what you’re thinking. If you’re early in the process of starting a web hosting business, Rackspace is intimidating. How can you possibly match their level of technical products and an impressive list of clients like Fujitsu and Pipedrive? One solution is to look at other web hosting companies that have a niche focus.
Second Web Host Business Case Study: WP Engine
WP Engine is a fascinating example because they have decided to go deep on the WordPress platform. Coincidentally, they are also based in Texas! Here are some of the capabilities that WP Engine brings to the table.
1. Multiple Environments
WP Engine includes Dev, Stage and Prod Environments. If your customers are building web apps and other similarly complex tools, offering these environments makes much sense.
2. “Migrations free”
This part of WP Engine stands out because it is a technical concern that most clients will have. Remember that many of your potential clients will already have websites with another web host.
3. Global CDN
A content delivery network (CDN) is a must-have for content heavy websites. Note that a separate company – MaxCDN – provides WPEngine’s CDN service. Keep that fact in mind as you build your web host business. You can leverage partners to offer additional services like CDN services – you don’t have to reinvent the wheel.
Now let’s take a look at what customers demand from their web hosts.
#2. Get smart about customer needs for web hosts
Aside from the sheer volume of competitors you face, what do customers expect from their web hosts today? For simplicity, let’s focus on business customers with significant daily traffic. While every customer is different, think about customer demands in some broad areas: business outcomes, security, and technical performance.
Business outcomes: Get leads and make sales online
Business websites are designed to achieve two outcomes: marketing and sales. Keep in mind that not all businesses can generate purchases directly from the web. For example, there is no “Buy Now” button or the equivalent on the websites of professional services firms like Deloitte or law firms. In those cases, marketing outcomes such as brand awareness, content marketing (for example, McKinsey Quarterly) and lead generation are higher priorities.
Website security and compliance
Robust cybersecurity has become a top consideration for business users. Technical security issues start with the mundane like staying on top of new upgrades to WordPress.
More sophisticated customers will ask how you can help them to complain about regulatory regimes like the GDPR in Europe. If cybersecurity isn’t your strength, be careful about what you can and can’t offer customers.
Technical performance: What can you promise?
Technical reliability still matters. But it’s tough to differentiate your company on this basis. At least, give some thought to the following professional performance issues.
- Uptime guarantee. Many web host companies guarantee 99% uptime or better. Since this guarantee is almost universal in the industry, it will not impress prospects much but fail to mention it is an oversight.
- Surge traffic. What happens when TechCrunch or the New York Times features one of your customers? Are you equipped to handle a sudden influx of 100,000 visitors? Those media opportunities need to be taken into consideration too.
- What level of backup support will you offer to customers? Third parties like Amazon Web Services may handle part of the backup risk. If you guarantee 24/7/365 backup or customer service levels, think about how you’ll provide that service.
- Value-added services. Remember how Rackspace offers application development services? Think about what services you can add to help your customers and differentiate yourself from everybody else. This could be technical in nature, but it doesn’t have to be. For example, many website owners need help with online marketing. So that’s a promising area to consider.
Now that you understand the customers and competitors of the web host companies, let’s look at your team and tools.
#3. Assemble your web host team
Who do you need on your web host team to keep your business growing? How well will they take care of your customers? The answer is not to hire a half dozen developers tomorrow. Instead, stay lean by working as a solo operator for a time. Next, look for growth opportunities that don’t require payroll.
Think about Lean Growth. Basically the solo-preneur option for web hosting companies. It’s even easier, because there are so many tools and services available on demand. If you’re running a one-person web host company, how do you keep everything organized? Simple. Use this following checklist of activities.
Check #1: The fundamentals in order to grow the business
These three activities are the absolute essential activities for your first year in business.
- Technical setup. This is a one-time activity to create the fundamentals of your web hosting business. You will need web server hardware and software (you can avoid this if you choose to set up as a reseller), a company name and a commercial grade Internet connection.
- Sales. As the business owner, sales is your responsibility. As a technical professional, you may be more excited by coding than sales. However, if sales are neglected, your web hosting company will be little more than an expensive hobby.
- Customer service. Set a reasonable standard for customer service and fulfill it. Our recommendation: set a 24-hour turnaround time for email requests, excluding holidays and weekends. Consider offering phone support as an add-on for your first ten customers.
Once you master those fundamentals, you can look at other ways to grow your company.
Check #2: Two ways to add new web host capabilities without payroll
How do you keep growing and adding new services to your company? Hiring additional talent is one approach, but it’s just one way.
Look for pre-made software solutions
Resist the urge to create custom code to respond to every customer request! Instead, set aside 20-30 minutes to search for premade software solutions instead. For example, are there WordPress plugins that can help your customers improve their marketing? YES! There are many options to consider. For example, the Hello Bar is a simple way to increase email newsletter signups. If your customers want to accept payments, look into Stripe.
Sub-contract to white label and reseller companies
What if you cannot find any existing software tools to help you serve customers? Consider looking into “white label” or “reseller” companies. These companies provide a service and allow you to put your logo on it. Managing resellers and third-party companies are more complicated than buying software. Our rule of thumb? Go slowly and monitor the service provider carefully especially if they’ll be directly working with clients.
How Plesk Web Pro Edition helps web host companies grow
Keeping your web host business going is tough especially when you’re running lean. Unlike other web management properties, we designed Plesk Web Pro Edition to be customized. Hence, you can put your logo on it and create the client experience you want.
How does the Plesk Web Pro Edition help you grow your web host business? Here are some of the ways your life will be more comfortable:
✅ Equip your customer’s administrators. With the Power User View, your end users have a simple way to use all of their company’s email accounts and websites in one place.
✅ No more “Feast or Famine” revenue. Plesk Web Pro Edition supports WHMCS, so you can automatically bill customers each month. No more wasting time each month chasing after late payments! That means more time for you to dream up new products…
✅ “Self-heal” like Wolverine. Remember how Wolverine could heal quickly and recover from almost any injury? Plesk’s self-repair tools bring that capability to the web. Most technical failures can be restored soon even if a customer breaks something.
Predictable revenue, easy customer administration, and self-healing websites? What more could you ask for?
What’s next for your web hosting business?
If you’ve read this far, you’re interested in growing a web hosting business. Don’t just read this article and move on with your day. Choose one of these two actions to get your web host company growing:
- Add value-added services. Once you have a few customers in the door, find additional ways to add value to them. You can add more services yourself, through a contractor or by partnering with another company like a CDN.
- Add Plesk. Yes, you saw it coming! Adding Plesk to your web hosting business is one of the best ways to take care of customers and automate the certain aspects of the business, such as billing. We have a 2-week trial you can tinker around with. Or contact us to find out the best fit for you and your next steps.