How to Start Your Own Reseller Hosting Business

How to Start Your Own Reseller Hosting Business

We will now discuss the steps, as well as the factors that you need to consider, in starting your own reseller hosting business. (Note: Although most of the steps/factors discussed apply when starting a hosting business in general, others are specific for resellers).

1. Draft your business plan.

Define your business and goals. Provide specific and organized information about your company and how much capital you need to operate (to facilitate any loan application, should you need one). The US Small Business Administration (www.sba.gov) web site offers a guide on this.

Some factors to consider:

Market
Determine which market niche to cater to. Identify your potential customers and what kind of products and services they will buy. Find out whether what you’re reselling satisfy specific, unfilled needs or are competitive based on quality, selection and price.
Doug Kaye’s article What Web Hosting Customers Want, offers some ideas on what today’s clients want.

Equipment/Infrastructure:
All you really need for a basic reselling business is a computer (from which to manage the accounts), and a redundant connection to an Internet backbone (pick a provider with multiple connections).

If planning a complete hosting company though, you will also need:
* software – servers need an operating system – pick a system tailored to your needs: consider e-commerce, billing and control panel software (for your customers and for running your company smoothly)
* technical support – if you’re going to connect to a major provider’s backbone, you have to be able to know how to do it

Technical skills required to run a Web hosting business*
* level of technical understanding required (familiarity with the Internet, working knowledge of its operations, and understanding of how to manage and maintain accounts with the service provider)
* more personalized/individualized services require more technical involvement
* although many automated services are now available, in-depth knowledge of Internet protocols, standards, concepts etc. is still needed for highly sophisticated Web and e-commerce solutions

Working knowledge of the fundamentals of running a business**
* finance and record keeping (maintenance of records of sales, expenses, accounts payable/receivable, and what financial reports must be prepared)
* most providers will be willing to offer some instruction in setting up and managing accounts

Costs:
The typical minimum investment to start a Web host reselling operation range from $1,500 to $2,000, which is spent on:
1. establishing the company
2. developing and promoting your Web site
3. purchasing hosting services for resale
* no upfront costs if you have a referral arrangement with hosting services provider
* if reselling domain names as part of your package – you need to pay a bulk rate for them (usually determined by the hosting company or registrar) and then re-sell at whatever price you wish
* if offering hosting services from a server leased from another Web hosting company, you need to pay: for set-up (some companies waive this); a flat, per-month charge; bandwidth fee (if you exceed a certain amount each month)
4. technical support* -
* depending on the reseller host that you choose, technical support may be your responsibility, except for high-end issues and server reboots (read your TOS – some offer it for free, others on a per-incident basis)
* you may need to have someone on-staff who is familiar with the server’s operations and can take care of your clients’ technical support needs, or
* you may have to outsource
5. business support** – you may need to factor in the cost of obtaining the expertise needed to file and maintain financial documentation

Other factors to consider are outlined in the WebHosting Talk forum thread: Requirements for a web host biz — in a nutshell?

2. Establish your business legally.
There are a variety of legal structures to choose from for your reselling business (sole proprietorships, general and limited partnerships and limited liability companies). Research each structure thoroughly as they offer organizational options appropriate for different personal situations. Consult a tax accountant and a lawyer before making a decision to determine the tax and liability issues associated with each.

3. Choose your web reseller host/supplier and program.
Select a hosting provider that delivers value service at a relatively low price. If you’re a first-time reseller, you should choose a volume discount reseller and then resell individual shared hosting packages for a substantial discount. A quality shared hosting account requires less financial overhead, or have decreasing costs with increasing customer base volume.

Qualities to look for in a host:
* Delivers reliable service;
* Offers a feasible resale model that would actually give you a profit margin;
* Specializes in reselling Web hosting;
* Can and will assist you in the start-up process;
* Has a proven track record for reliable uptime, solid connectivity and top-of-the-line technical support

4. Create a Web presence that incorporates your company name and brand to promote and advertise your products.

To ensure that your site conveys a sense of credibility, it needs to be professional in design and conception. Your template should load quickly, have intelligible navigation and allows you to add content using a basic HTML editor.

When promoting your site:
* some experience with marketing and salesmanship will be extremely helpful
* use search engine optimization, or text-based advertising
* although you don’t need to advertise that you are providing resold Web hosting services, it’s best to be honest and forthright, as this will pave the way for the establishment of good customer relationships
* try Pay-Per-Performance search engines (GoTo.com, Google’s AdWords, Yahoo!’s Business Express system)

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