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Reselling Hosting Services – The First Steps

September 5th, 2009 By: Hosting News

”You should know now that a man of knowledge lives by acting, not by thinking about acting, nor by thinking about what he will think when he has finished acting. A man of knowledge chooses a path with heart and follows it.”

Carlos Castaneda, A Separate Reality

It can safely be said that anyone can start a web hosting reselling business for a few hundred dollars – and many of people do. But few of these folks make a living at reselling hosting. Like any other business, a hosting reselling business takes planning and decision-making if it’s going to be successful. So what are the first steps?

1.Â Decide what kind of business you want. You’re not going to be able to compete with the big hosting companies that can offer 300 GB of space and 300 GB of bandwidth for $9.95 a month – or at least not yet. Since that’s the case, what do you have to offer? In hosting reselling, as in so many other businesses, what counts is what sets you apart from others. Or, as Jack Trout, the marketing guru who first popularized the idea of ‘positioning’ products to consumers, says in Differentiate or Die: Survival in Our Era of Killer Competition (John Wiley & Sons, 2000). Trout notes that quality, customer orientation, and price are rarely differentiating factors. What does differentiate your business from your competitors is your market specialty.

Why would choosing the clients you want help you rather than cut down on possible business? Developing your own market specialty offers a number of advantages, according to Jennifer and Peter Sanders in Niche and Grow Rich (Entrepreneur Press, 2003). A market specialty is a small, well-defined pond, and by knowing and meeting the needs of that market, you can become the big fish in that pond. That lowers your operating expenses, because you aren’t trying to appeal to and support every kind of customer and because word of mouth advertising works better for you. It also increases your profit margin, because by meeting the specialized needs of your specialized customers, you can charge them more. And because you’ve positioned yourself to respond to your customers’ specific needs, you’ve decreased the amount of competition – the big fish in the small pond effect again. As the Sanders’ say, ”[A niche is] a realm in which you can build your business and avoid many of the pitfalls waiting for any entrepreneur.”

Lou Honick, CEO of HostMySite.com, agrees. He recommends that resellers go vertical and local. ‘Going vertical’ means identifying and serving specific business niches, such as education, artists, law, etc. ‘Going local’ means developing and benefiting from the kinds of working relationships you can develop as a small, local business. As he notes, ”There is a lot of trust in a handshake.” (Money â€˜N Profits, June 2007)

2. Decide what kind of hosting you need. This goes back to the kind of customers you’re looking for. If you’re primarily a web designer who also provides hosting for your clients who don’t have e-commerce sites, you can probably take care of them yourself. So a host that provides end-user support is less important to you. On the other hand, if your customer base – your market specialty – requires high-level 24/7/365 support, you’d either better be able to provide it yourself or make sure your host does.

This issue brings up the question of how you want to live with your business. Sure, reselling is something you can do, at least to start, from your living room – but what about your family? How will they feel about their loss of privacy, their loss of your time and attention? Do you want to spend all your nights working?

As an entrepreneur, you’ll need to invest a lot of yourself in your business. Jeremy Shepherd describes the relationship between the entrepreneur and the business as being like parent and child. In How to Start a Home-Based Online Retail Business (The Globe Pequot Press, 2007), he says, ”You need to treat your online business as if it were your child. This attitude is one of the most important components needed to start and sustain a business. You need to love it, protect it, and help it evolve into a fully functioning entity.” But parents don’t do absolutely everything for their children – there are teachers, doctors and nurses, babysitters, etc., etc. who help out. You need to decide who you need to help out and with what, or else make sure you can do everything for your child, your business.

Lou Honick of HostMySite.com stresses that the three most important criteria for resellers in choosing a host are customer service, infrastructure, and price – the same criteria a primary business would use.

Customer service: Your customers expect 24/7/365 service, and your business is on the line to make sure they get it, so you need to find a host you can trust to work for you behind the scenes unless you are prepared to provide this yourself. There are several reseller hosts who offer end user support. You will want to research these well since their speed and quality will be your companies face.

Infrastructure: You need a host with adequate redundancies, to handle hundreds or thousands of simultaneous broadband hits to your site and to prevent site collapse in emergencies. You will want to research the datacenter (s) where the machine holding your business website will be located. Generally, you want your reseller account to be hosted on a server with as much speed and memory as possible and only brand name components.

Price: You need to make a profit, so your cost must be reasonable. But too cheap is likely just thatâ€”too cheap. If you provide your customers with reliable service, especially if you have targeted and are serving their unique needs, they will pay for quality hosting. Dr Renee Levant a consultant with Learn Community!, Inc (http://wwwlearncommunity.com) urges her clients ”Don’t yield to the temptation of ‘cheap’. In the end ‘cheap’ is very costly. Get a good reliable host offering the sort of features and extras that will be helpful and concentrate on your strategy to promote your unique business.”

3. Create a professional website. Invest some money, if necessary, to make sure your customers see your business as professional and reliable. Make sure all parts of it are fully functional. If you don’t have the time or inclination to respond to each request for service, make sure you build in an automated system for registration and billing and that it works. Get a good logo made. Remember, you’re the face of the Internet for your clients, so make sure your site is professional and user-friendly.

4. Keep going. We’ve discussed some basic first steps you can take: decide on a target specialty market, figure out the kind of hosting you need and locate a reliable host, create a professional website. There are many other steps to successfully making a living as a web hosting reseller, of course, which we’ll discuss in future articles. Also, remember what Jeremy Shepherd says: treat your business as if it were your child. And while you’re raising your child, think about these words from Dr. James Rosser, Jr., Chief of Minimally Invasive Surgery at Beth Israel Hospital, who uses video games to create new procedures and teach other doctors to use them: ”It ain’t over til it’s over. You’ve got to keep going making a step every day, no matter how small, and never retreat. The road to success is established by obtaining a day-to-day respect for yourself, and by earning the respect of others around you.” (Success, May/June 2007)