How to Start a Web Hosting Business?

Julia

Julia Raznik · 18th May 2021·Reseller Hosting

How to Start a Web Hosting Business?

With a high-quality website now a necessity for even the smallest businesses these days, the web development and hosting industry is booming. Savvy entrepreneurs have spotted an opportunity in the market and are using reseller hosting to create impressive revenue streams, as well as building strong brand reputations for themselves.

Don’t worry if you think you’re late to the party, though, because we’ll walk you through exactly what reseller hosting is, and just how easy it can be to set up your own web hosting business.

What Is Reseller Hosting?

Without overcomplicating things, resellers are basically renting server space from big-name hosting companies, like Verpex, that they then rent out to multiple small and medium-sized businesses under a different brand name. You can read all the finer details below, but the practice essentially allows you to sell hosting services to your clients as if you were the hosting provider yourself.

Reasons You Should Start a Hosting Business

  • It’s easy to get started - For most resellers, the web host itself is going to be doing a lot of the hard work for you. This gives you more time to focus on perfecting the customer service aspects of your business

  • You don’t need a lot of technical knowledge - Don’t worry if you’re not a hosting expert. Most platforms make the whole reselling experience as easy as possible for newbies

  • It’s a great additional revenue stream for Digital businesses - For example, if you’re already running your own web development business, it makes perfect sense to add web hosting under your own brand name. It’s the perfect complementary service that can net you some significant extra revenue

  • It won’t break the bank - Compared to the levels of capital you need to start other businesses, the costs are relatively small when you look at web hosting. You can easily scale your starting business to match both your budget and ambitions

Pros and Cons of Reseller Hosting

Pros

It’s easy to set up
There are dozens of hosting partners to choose from
Many web hosts do a lot of the hard work for you, including providing customer support
It can be a lucrative additional revenue stream
You can usually tailor a package to suit your targeted niche
Cons

You don’t have full control over the back-end. For example, you’re reliant on your host partner for uptime
You can lose clients if your host partner performs poorly

Web Hosting Business Income

While it’s easy to get started with a web hosting business, don’t be fooled into thinking it’s going to be an easy source of passive income. You’ll still need to put plenty of hard work in to see decent returns.

Most of your customers will be paying in monthly installments based on the different packages you provide, so the majority of resellers will find it fairly easy to budget given they know what to expect. Your challenge will be retaining customers and growing your user-base through top-notch service-based business skills.

Your income will always scale in conjunction with your customer base, and you can read all the finer details of maintaining a solid revenue stream here.

Things to Consider Before Starting Your Hosting Business

Know the Market

Don’t just jump blindly into web hosting thinking it’s going to be easy money. While the industry is definitely large enough to welcome newcomers, it’s still a very competitive space, and those that haven’t done their research can get burned. To stand out, you’ll need to differentiate yourself primarily on price, customer service, and have a unique selling point.

Define Your Brand

Knowing the web hosting market inside out will help you define your brand. Ask yourself why you wanted to become a reseller? Which groups are you trying to help? Perhaps you’re a web developer yourself that saw small businesses paying over the odds and you wanted to help out? Or maybe your goal is to provide the finest customer service in the industry?

Find Your Niche

Any old Google search for web hosting providers will return dozens of generic platforms, all offering the same thing. Finding your niche will really make you stand out. You might want to consider becoming a carbon-neutral provider, or maybe you’ll only focus on hosting for brand new start-ups? Targeting a niche will help you get found in Google, and you’ll have a topic to hang your advertising around

Understand Your Competitors

Once you’ve developed a brand, or chosen a niche, find out how many competitors are operating in the same space. If you find yourself in a crowded market, you might want to rethink your strategy, or look for ways that make you unique. Make sure you find out what others in the industry are doing well too, check out online reviews and social media posts, and adapt the positives into your own business model.

Consider Costs

How much server space you rent, the decision to offer shared or private hosting, and what security measures you’ll implement can all affect costs, and this is before you’ve even considered a budget for marketing and customer service. While entry costs might be relatively low when compared to other types of new business ventures, you should still set a strict budget and stick to it.

Choose Your Customer Support Model

Decide what channels you’d like available for your customers to get in touch. Most commonly, these are 24/7 live chat, email tickets, and a customer helpline. Each will have different service response times depending on the type of issue. Many web hosts can cover customer support as part of your rental package, or you might want to take full control yourself and set up your own channels.

Remember to Advertise

We’ve already touched on just how competitive this industry can be, and we’d highly recommend getting a strong marketing plan in place before you start. This includes optimizing for keywords on the site you’ll be selling your services, setting up social media channels, and considering some paid slots on Google and Facebook ads to give your venture a leg up.

Going Solo, or Assembling a Team?

Starting out as a solo entrepreneur can definitely help cut costs in the early days of your web hosting business. Plus, starting small gives you more of an opportunity to learn the ropes slowly. However, the more ambitious among you might need to start with a larger team, or at the very least consider the possibility for expansion in the future.

How to Start a Web Hosting Business?

Step One - Choose the Right Hosting Partner

Finding the right hosting partner is going to be the first critical step to success. You might find yourself locked into a long-term contract, so getting this decision correct is crucial. Consider things like:

  • Price
  • Does the host offer 24/7 technical support?
  • Are reviews generally positive?
  • Is protection against cyber attacks offered?
  • What uptime guarantees are stated? You should be looking for at least 99.99%
  • Is ‘White Label’ hosting offered? This means hosting will be completely anonymous and your customers won't know you’re reselling, giving you full brand control
  • Does it offer automation of certain daily tasks?
  • Where are the servers located? Look for regions close to your customer base for faster speeds

Step 2 - Choose the Right Package for Your Business

Most packages start with a number of cPanel accounts. Basically, this is how many websites you’ll be able to host. If you’re new to reselling, we’d recommend starting small, aiming to host around 10 to 15 sites, and you can always scale up as needed.

In addition, the hosting package size will determine how much SSD space and bandwidth you’ll get. Choose the one most appropriate for your needs. However, most new resellers quickly find that bandwidth constraints can quickly become their undoing, so you should seriously consider a tier that offers unlimited bandwidth.

Step 3 - Put a Client-Handling Mechanism in Place

Once you’re set up with the ideal host, and have the optimum package, you’re going to need a way to manage all those customer orders and queries. Most resellers opt for an all-in-one management panel like WHMCS or ‘Web host Management Complete Solution’.

This dashboard will usually come as an add-on, and can be integrated into the back-end of your website. It centrally manages all your billing and orders, and comes with integrated support tools like incident ticketing and a knowledge base function. This kind of management tool is vital for smooth running of your business, so make sure you have the resources to run it, or you sign up for a host that will provide support.

Step 4 - Start to Bring in Clients

Now you’ve got the bandwidth, the features and your customer support tools in place, you’re finally ready to find those all-important clients. You might want to get started with friends and family, or ask around your social networks. They’ll help you iron out the kinks, perfect your customer service offering and get you some positive reviews under your belt.

Next, follow the branding and advertising tips we mentioned in the previous section. Consider paid ads on Google and Facebook, and make sure you’re optimized for keywords. In the early days, you might want to carry out most of the customer interactions yourself. This gives you a chance to really put a personal stamp on your business, to get to know the needs of your user base, and come up with personalized solutions to problems.

Step 5 - Prep for Growth

Hopefully, everything has gone well and the customers are rolling in. Now is the time to think about expansion. Always be ready with additional bandwidth and cPanel accounts just in case. You don’t want to get caught out if you experience a sudden rise in demand. Most hosting providers will have packages that can be easily scaled up or down with the fortunes of your business.

Importantly, try and retain existing customers by sticking to your service level agreements and response times, being honest about periods of downtime and taking ownership for the times things go wrong.

How to Resell Hosting

You can find our full guide to reseller hosting here, but it’s important to remember these three fundamentals:

  • Nail Your technical setup - This is going to be the foundation of your business so it’s important to get right. This includes finding the right package to meet your needs
  • Don’t neglect your sales skills - You’re an entrepreneur first and foremost. You’ll need to take into account that the majority of your time will be spent on sourcing new customers
  • Customer service is paramount to success - Set high standards and make sure you always meet, or exceed expectations

What Products and Services Will You Offer?

Once you’ve pinned down your niche, found the perfect host, and chosen your ideal package, you’ll need to decide what types of services you’re going to offer. These include:

  • Shared hosting - multiple clients will be using the same server racks and the same time, and this is the most basic, and cheapest, type of hosting. These are often used by companies looking for simplicity, and often come with helpful tools like drag-and-drop web builders. Your target audience will be bloggers and small bricks and mortar stores

  • Cloud server - This is very similar to shared hosting, but is much easier to scale. This is great if you have a lot of clients that might have unpredictable spikes in web traffic that need to quickly scale up or down. This is a particularly popular choice with larger businesses

  • Virtual Private Server (VPS) - A VPS offers your clients full control over the hosting experience. They can install any software they’d like to the server, and is an ideal choice for customers with a high degree of web development skills that want to do a lot of their own configuration. Large ecommerce stores and high-traffic sites will be looking for this option

  • Dedicated Server - This is the most expensive option and involves a client getting a server completely to themselves. A good choice for customers that run power-intensive websites and don’t want to share space

As you can see, each type of service generally attracts a different type of customer base. You might want to offer a bit of everything, or zero in on your niche and provide just one type of hosting package.

Remember, you’re not completely restricted by the web hosting package you sign up to either. There’s an awful lot of flexibility available to you in any reselling business.

For example, you might want to sell affiliate products, such as WordPress plug-ins, or your own website themes for customers using your service too.

Summary

If you’re prepared to put in a little hard work and are willing to dedicate the time, you can easily start a web hosting business from scratch. We’d especially recommend it to those that are already operating in the digital sphere, such as web developers, bloggers or social media influencers, as it can make the perfect addition to an already successful business.

You’ll definitely need to do your research though, and you should never jump into any new business venture without knowing exactly what you’re signing up for. However, with the web hosting industry in a period of seemingly never-ending growth, now is the perfect time to get started. We’re always happy to help, and you can head on over to our reseller page to find out more.

Frequently Asked Questions

What Do I get in a Typical Reseller Package?

Most will offer a set number of cPanel accounts, bandwidth limits, customer control panel integration and a choice of server locations.

Will My Clients Know I’m Reselling?

No. If you use Whitelabel servers your customers will never be able to connect you to your host partner.

Do I Need Extensive Hosting Expertise to Get Started?

No, your hosting partner can provide all of the technical expertise you need.

Which Hosting Provider Should I choose?

This will depend on your budget, how much bandwidth you need, server locations, speed, and security measures. We’d recommend doing extensive research.

Is It Easy to Upgrade as My Business Grows?

Yes, most platforms that allow for reselling will have packages that can be easily upgraded to scale with your business growth.

Julia
Julia Raznik