This tutorial is mainly going to be geared towards US residents.
It is also only for those that are serious about starting an actual business, not the kids trying to earn a quick buck. I will not help you out with that.
What are we going to discuss?
1. Control Panels
2. Domain Names (for yourself)
3. Different ways to Start.
4. Domain Reseller Accounts.
5. Billing Control Panels.
6. Becoming a Company.
7. Your Website.
8. Support Methods.
9. Advertisement.
10. Realistic Expectations.
11. Packages.
12. Under 18? No Problem!
Section 1. Control Panels
I'm not really going to go into too much detail here. I'm just going to say that if you are starting out web hosting I advise you to look into getting a cPAnel/WHM control panel.
Section 2. Domain Names (for yourself
When you select your domain name, it really should be a .com and your company name. If there is already a host with the same name that you want, come up with another one. What you register should be what you stay as for the entire time you run your company. It should be easily remembered and easy to get brand recognition as quickly as possible. They should also be registered with a professional registrar, not through who you get your packages from.
Section 3. Different ways to Start
There are a few ways to start your hosting company, there is the Reseller Account from another host. Basically you just resell their server space. This is great and I recommend it for everyone. You don't want to sink your entire first year's budget into the first few months. This is great, at least until you start getting your first few customers. Be advised, you can only sell shared accounts. Usually comes with either Modernbill, WHMCS, or Client Exec free. Average starting price is about $25.
Another way is to go right into a VPS. This can be a good decision if you'd like to start selling reseller accounts as well as shared hosting accounts. I'd recommend you go with a manged VPS so you can concentrate on getting sales and providing level 1 or 2 assistance, leave the level 3 issues up to your host you're getting your VPS from. Usually starts at about $45 for 512 MB of RAM and Managed.
And the other option is dedicated servers. This is just like a VPS, only bigger. Same thing applies here. I don't recommend this until you start getting enough customers for it to pay for itself. You will have to pay for your own control panel as well.
Section 4. Domain Reseller Accounts
Now, this is important. If you can't offer your clients the ability to register domains, don't even get started. If you have a nice budget for this, www.enom.com is great. However, nearly all reseller accounts with nearly all registrars cost about $200 to set up (most of the time there is a $100-200/month fee as well) and an initial deposit of about $200. If you have the budget, go for it. If not, send me a PM, I don't mean to advertise here but I can provide you with a domain reseller account at no initial deposit and no monthly fees. Now, my domain fees per registration are higher than most company's, but, there is no upfront cost. (Sorry for advertising, I just want to get it out there). With most the more you deposit the cheaper the domain registration is for you. The average fee for a host to charge for domain registration is about $15. Most people charge about $7.25-$8.00 to the resellers. One thing I'd recommend though, is only register a domain for someone when they pay for the domain. When I ran a hosting company I would offer free domain registration for shared accounts that purchased my $15.63 / month package. I had a clause that they had to stay members for 4 months before they were allowed to transfer the domain away. That may be a good idea for you so you don't loose too much money on it.
Section 5. Billing/Support Control Panels
When setting up a hosting company, a Billing/Support Control Panel is vital to smooth operation. I personally would recommend WHMCS as your billing control panel. Why? It's just the best. There really is nothing more to say about it. It's a support and billing control panel all in one.
Links to the other 2 good ones:Modernbill
Clientexec
I don't recommend getting any others TBH.
Section 6. Becoming a Company
This is a tedious step that is vital. Most people will bypass this step thinking since it's online they don't need to register as a company. Well, you're wrong if you think that. It's especially prevalent with kids that become hosts. There are many way to go about, this, but, first is the decision on whether to register as a sole proprietorship, an LLC, or a Corporation. My recommendation is LLC. Or a corporation. LLC's are much easier especially if you're just starting out. You may be tempted by the low fees of a sole proprietorship (sometimes there is only a court filing DBA (Doing business as) fee of average $30.). I strongly discourage that. If you are sued while a sole proprietorship, everything you own is up for grabs. That is bad, especially if you have a family. At least if you form an LLC only the assets of the company are at risk. Better to loose the company than your house, truck, and family. There are many ways to going about this, but, the best thing to do is look at your states website. They usually have all the information you need. If you're from California, I'd recommend setting up an address in Nevada, you'll pay $1600/year in taxes/fees just for breaking even. Also, you need to get an Employer ID Number from the IRS and your state, and also a Sales Tax License if you're from just about any state but Deleware. Make sure you either consult an attorney (I'd recommend this) or start reading up your states laws on the requirements for businesses, paying taxes, and forming an LLC. Remember though, everything related to your business is a business expense, keep the receipts, they're deductable on both Federal and State taxes. Take my computer, I deducted a X% the year I bought it based on how much time was spent working on it. SAme with my mortgage, X amount per year based on the percentage of the house I used for my office. Same with the internet bill, and any time you made a trip for a business meeting (only a business meeting, personal trips and stops along the way void the deduction) you can deduct mileage for gas. GET AN ACCOUNTANT.
Section 7. Your Website
This is very important. You must have a clean, modern, professional website with absolutely no spelling/grammatical errors on it. Ask everyone you know to proofread EVERYTHING. It should be easy to navigate and not distract too much from what you are trying to sell.
Section 8. Support Methods
This is one of the biggest things to a successful hosting company. SUPPORT. I'm sure there are many of you that have had horrible support. As a matter of fact, that is one of the biggest reasons people want to start their own hosting company. They received poor support and want to make one that is better. Really for support you should be relying on your help desk, which comes integrated with the billing/support software I mentioned earlier. There is also live chat and telephone. But, I don't recommend them for support. At least with the help desk you can work on the issue without having your client on hold and bugging you and talking in your ear while you're trying to concentrate on the issue.
Section 9. Advertisement
Don't try to advertise much online, it's pretty much hopeless with the giants out there. Focus your advertisement in your local area. You can have a budget of $100/month and gain a ton of new customers each month. Local advertisement is cheap, and 9 times out of 10 you don't have any competition. Hit up the local Chamber of Commerce and get the list of all new businesses for the past month (costs between $25 and $50 usually) then start contacting them. Online advertisement is vastly in-effective and expensive. And overly saturated. Most people would prefer to deal with a local guy than someone they don't know, can't give a face to a name, and are dealing with over the web.
Section 10. Realistic Expectations
Realistically, most businesses fail within their first year and hosting is no exception. You should be prepared to go 3 months before you get your first client. That's average. And you should have enough cash to sustain for your first year without making any sales. That also means normal things like your car payments, rent/mortgage, food, electricity, and other bills besides for the business. This isn't a get rich quick scheme, it's a real business that requires dedication.
Section 11. Packages
This is where you need to sit down and think carefully. Be careful not to oversell yourself, and don't stretch yourself too thin. But, at the same time, you want to make a little profit and offer enough resources to get people to buy. You also should come up with a catch name for each package that is unique to your niche. Don't go with the standard gold, silver, bronze or small, medium large crap.
Section 12. Under 18? No Problem! Added 17 Feb 11
So, you're under 18 and you still want to start your company legally? Well, it's not really too much of a problem. In most states Company Officers are able to be any age (check your states' incorporation laws to be sure). The work around for this is to have your parents or another adult actually file the incorporation paperwork and name you as a Company Officer. This means you will be able to sign for the company. When a person that is considered an officer signs for the company, they are placing the company in agreement for the contract/account, not themselves. As such, it is not a minor signing a contract, but the company itself. I know of two webhosting company's off the top of my head that operate(d) this way, completely legally, however, I will not give their names as it could hurt their business.
It is also only for those that are serious about starting an actual business, not the kids trying to earn a quick buck. I will not help you out with that.
What are we going to discuss?
1. Control Panels
2. Domain Names (for yourself)
3. Different ways to Start.
4. Domain Reseller Accounts.
5. Billing Control Panels.
6. Becoming a Company.
7. Your Website.
8. Support Methods.
9. Advertisement.
10. Realistic Expectations.
11. Packages.
12. Under 18? No Problem!
Section 1. Control Panels
I'm not really going to go into too much detail here. I'm just going to say that if you are starting out web hosting I advise you to look into getting a cPAnel/WHM control panel.
Section 2. Domain Names (for yourself
When you select your domain name, it really should be a .com and your company name. If there is already a host with the same name that you want, come up with another one. What you register should be what you stay as for the entire time you run your company. It should be easily remembered and easy to get brand recognition as quickly as possible. They should also be registered with a professional registrar, not through who you get your packages from.
Section 3. Different ways to Start
There are a few ways to start your hosting company, there is the Reseller Account from another host. Basically you just resell their server space. This is great and I recommend it for everyone. You don't want to sink your entire first year's budget into the first few months. This is great, at least until you start getting your first few customers. Be advised, you can only sell shared accounts. Usually comes with either Modernbill, WHMCS, or Client Exec free. Average starting price is about $25.
Another way is to go right into a VPS. This can be a good decision if you'd like to start selling reseller accounts as well as shared hosting accounts. I'd recommend you go with a manged VPS so you can concentrate on getting sales and providing level 1 or 2 assistance, leave the level 3 issues up to your host you're getting your VPS from. Usually starts at about $45 for 512 MB of RAM and Managed.
And the other option is dedicated servers. This is just like a VPS, only bigger. Same thing applies here. I don't recommend this until you start getting enough customers for it to pay for itself. You will have to pay for your own control panel as well.
Section 4. Domain Reseller Accounts
Now, this is important. If you can't offer your clients the ability to register domains, don't even get started. If you have a nice budget for this, www.enom.com is great. However, nearly all reseller accounts with nearly all registrars cost about $200 to set up (most of the time there is a $100-200/month fee as well) and an initial deposit of about $200. If you have the budget, go for it. If not, send me a PM, I don't mean to advertise here but I can provide you with a domain reseller account at no initial deposit and no monthly fees. Now, my domain fees per registration are higher than most company's, but, there is no upfront cost. (Sorry for advertising, I just want to get it out there). With most the more you deposit the cheaper the domain registration is for you. The average fee for a host to charge for domain registration is about $15. Most people charge about $7.25-$8.00 to the resellers. One thing I'd recommend though, is only register a domain for someone when they pay for the domain. When I ran a hosting company I would offer free domain registration for shared accounts that purchased my $15.63 / month package. I had a clause that they had to stay members for 4 months before they were allowed to transfer the domain away. That may be a good idea for you so you don't loose too much money on it.
Section 5. Billing/Support Control Panels
When setting up a hosting company, a Billing/Support Control Panel is vital to smooth operation. I personally would recommend WHMCS as your billing control panel. Why? It's just the best. There really is nothing more to say about it. It's a support and billing control panel all in one.
Links to the other 2 good ones:Modernbill
Clientexec
I don't recommend getting any others TBH.
Section 6. Becoming a Company
This is a tedious step that is vital. Most people will bypass this step thinking since it's online they don't need to register as a company. Well, you're wrong if you think that. It's especially prevalent with kids that become hosts. There are many way to go about, this, but, first is the decision on whether to register as a sole proprietorship, an LLC, or a Corporation. My recommendation is LLC. Or a corporation. LLC's are much easier especially if you're just starting out. You may be tempted by the low fees of a sole proprietorship (sometimes there is only a court filing DBA (Doing business as) fee of average $30.). I strongly discourage that. If you are sued while a sole proprietorship, everything you own is up for grabs. That is bad, especially if you have a family. At least if you form an LLC only the assets of the company are at risk. Better to loose the company than your house, truck, and family. There are many ways to going about this, but, the best thing to do is look at your states website. They usually have all the information you need. If you're from California, I'd recommend setting up an address in Nevada, you'll pay $1600/year in taxes/fees just for breaking even. Also, you need to get an Employer ID Number from the IRS and your state, and also a Sales Tax License if you're from just about any state but Deleware. Make sure you either consult an attorney (I'd recommend this) or start reading up your states laws on the requirements for businesses, paying taxes, and forming an LLC. Remember though, everything related to your business is a business expense, keep the receipts, they're deductable on both Federal and State taxes. Take my computer, I deducted a X% the year I bought it based on how much time was spent working on it. SAme with my mortgage, X amount per year based on the percentage of the house I used for my office. Same with the internet bill, and any time you made a trip for a business meeting (only a business meeting, personal trips and stops along the way void the deduction) you can deduct mileage for gas. GET AN ACCOUNTANT.
Section 7. Your Website
This is very important. You must have a clean, modern, professional website with absolutely no spelling/grammatical errors on it. Ask everyone you know to proofread EVERYTHING. It should be easy to navigate and not distract too much from what you are trying to sell.
Section 8. Support Methods
This is one of the biggest things to a successful hosting company. SUPPORT. I'm sure there are many of you that have had horrible support. As a matter of fact, that is one of the biggest reasons people want to start their own hosting company. They received poor support and want to make one that is better. Really for support you should be relying on your help desk, which comes integrated with the billing/support software I mentioned earlier. There is also live chat and telephone. But, I don't recommend them for support. At least with the help desk you can work on the issue without having your client on hold and bugging you and talking in your ear while you're trying to concentrate on the issue.
Section 9. Advertisement
Don't try to advertise much online, it's pretty much hopeless with the giants out there. Focus your advertisement in your local area. You can have a budget of $100/month and gain a ton of new customers each month. Local advertisement is cheap, and 9 times out of 10 you don't have any competition. Hit up the local Chamber of Commerce and get the list of all new businesses for the past month (costs between $25 and $50 usually) then start contacting them. Online advertisement is vastly in-effective and expensive. And overly saturated. Most people would prefer to deal with a local guy than someone they don't know, can't give a face to a name, and are dealing with over the web.
Section 10. Realistic Expectations
Realistically, most businesses fail within their first year and hosting is no exception. You should be prepared to go 3 months before you get your first client. That's average. And you should have enough cash to sustain for your first year without making any sales. That also means normal things like your car payments, rent/mortgage, food, electricity, and other bills besides for the business. This isn't a get rich quick scheme, it's a real business that requires dedication.
Section 11. Packages
This is where you need to sit down and think carefully. Be careful not to oversell yourself, and don't stretch yourself too thin. But, at the same time, you want to make a little profit and offer enough resources to get people to buy. You also should come up with a catch name for each package that is unique to your niche. Don't go with the standard gold, silver, bronze or small, medium large crap.
Section 12. Under 18? No Problem! Added 17 Feb 11
So, you're under 18 and you still want to start your company legally? Well, it's not really too much of a problem. In most states Company Officers are able to be any age (check your states' incorporation laws to be sure). The work around for this is to have your parents or another adult actually file the incorporation paperwork and name you as a Company Officer. This means you will be able to sign for the company. When a person that is considered an officer signs for the company, they are placing the company in agreement for the contract/account, not themselves. As such, it is not a minor signing a contract, but the company itself. I know of two webhosting company's off the top of my head that operate(d) this way, completely legally, however, I will not give their names as it could hurt their business.
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