So you want to start a server hosting business. The good news is, in today’s day and age it’s relatively easy to get started with a business that can scale and adapt to your user base as needed. With this guide, you should get up and running with your business in no time. We’ll cover how to get funding, what services and tools you’ll need to be successful, and how to scale and manage your business to grow over time.
The first step in your new business will be to secure funding. Unless you’re going into this with your own funding, you’ll likely need to attract backers and gather small business loans from banks in order to generate enough capital to get up and running. Even then you should also plan on operating in the red for at least 6 months. This will give you ample time to adjust to a growing user base and ensure you have enough capital saved to wether through an initial startup. But, once things get running then they will take off fast.
Create a Business Development Plan
The first actionable step will be to create a business plan that you can present to funders and small business loan officers. This part is also critical to ensure you have a plan down for how to run your business as well as how to grow it. Therefore your business plan will be the written heart and soul of the business. Be sure to spend time on this document and consider hiring a proofreader or even a business analyst to go over it and make sure the entire document makes sense.
The first part of any business plan is going to be the executive summary. This section is an overview of the business, what it does, and how it will grow over time. Although this section comes first, it’s best to write this last. Why? Simply put, you may not have the answer or the most compelling summary until after you’ve already written the rest of the document. So, make sure to fill this in last after you’ve written down everything else in order to ensure it’s as straightforward and compelling as possible.
Describe Your Company
Next, you’ll want to make a section that goes into detail regarding your company, who runs it, where it will be, how many employees you’ll have, and so forth. This is essentially the ‘who, what, where’ of the document. For instance, since you’ll be running a web hosting service you’ll likely need a few personnel who are experts in managed web hosting server platforms. Whether you plan on initially hiring out a full-time staff or getting managed it service, you’ll need to clearly state your intentions and have a specific person or company that will manage said operations. For example, if you state you will hire computer services to maintain network security then you will need a specific company and even a point of contact with a description of what exactly they’ll be doing for the business.
State Your Goals
Now it’s time to objectively state what the goal(s) of the business is at this point in time. For example, since you are just getting started you are applying for funding to get started. Therefore one short-term goal could be to secure a specific amount of money in order to purchase the necessary equipment to get started. Make sure to be as specific as possible as well. If you state your goal is to raise money make sure the goal is a specific dollar amount. Also, be sure to state how the money will be spent and why that is important to your business.
You’ll also want to ensure you have a long-term business goal(s) section as well. This will be highly important since a possible funder will want to see business growth over time. If you can talk about how the business will scale over time then investors will be far more likely to fund you. Something like file server migration will be a great tool to talk about regarding the growth and how that will shape your company over time.
Products and Services
Use this section to go in-depth about what you’ll offer. In the case of offering web hosting for gamers, you’ll want to ensure the business case is clear. Make sure to be very clear on which services you’ll offer a how. For example, what kind of servers will you run and how many users can each support? What kind of tiers or levels of service will you offer? You may want to design a system where less expensive options can be purchased for lesser bandwidth and network priority whereas users who pay more premium packages get more bang for their buck. Also, make sure to mention what kind of support software and additionals you may add. For instance, you may also want to partner with a third-party domain name seller to help your users establish domains easier.
This is where you’ll essentially prove why your business will be a success. Use this section to discuss and prove the market need for your services and products. You could either purchase some statistics or simply do research on how many gamers are looking for web hosting services. You could even hire a freelancer to do some basic market research on your behalf. Either way, just be sure to use as many facts and figures as possible. Funders and money lenders like to see how big a potential market is and what kind of barriers to entry exist for the said market. So, be sure to include competitors and how your offerings will stand out against them.
Marketing and Sales Plan
Now it’s time to talk about how you plan to get your business’s name in front of people. How will your business get new customers and keep old ones? This is a great section to talk about how your brand can be shared among platforms to get new business. Again, partnering with a marketing expert is a great idea. You may also want to look into marketing platforms wherever gamers gather and come up with a specific sales and marketing funnel with specific dollar amounts. For instance, come up with a general figure on how many marketing dollars you’ll need to spend in order to acquire a new customer and how much effort that will take.
Financial Analysis and Business Projections
This is the financial section where you’ll wrap everything into dollar amounts. This section will include how much profit you will make on each server in addition to turnover, losses, operating expenses, and more. Essentially you want to prove that your business will generate enough profit to stay afloat, pay its bills, grow, and most importantly pay back any money that has been loaned or borrowed.
Get Everything in Place
Now that you’ve crafted together a winning business plan and got funding approved, it’s time to start on your business action list. This should be a key document that describes what needs to happen in a chronological set of steps and describe the timelines needed for each step. This will be your key to follow in order to ensure everything gets up and running smoothly as quickly as possible.
If you’re starting in a new building for instance it may be important to get your contractors in order at least 3 months before your launch date. You should consider hiring local electricians to come out and do needed wiring and cable management to ensure your business can run without interruptions. It will also be important to have them install multiple redundancies to ensure server uptime. Electrical service will be key to starting a server hosting business.
Air Is Important
Apart from having electricians supply enough power to your server room, it will be important to keep an adequate airflow as well to keep your equipment cool. You’ll need to have an air conditioner installation or air conditioner replacement if the already existing model does not provide an adequate air supply. Make sure to calculate the volume of air needed to pass over your hardware in order to keep everything cool. It may also be a good idea to have several systems in place in order to ensure redundancy to avoid possible downtime. After all, server uptime will be your reputation in the server hosting world as you start a server hosting business.
You will also need to think about the security of your investment by ensuring you have proper security systems in place to prevent and stop possible attacks. In today’s day and age, hackers are more clever than ever before and will tear apart a weak security system. It will be highly important to hire and maintain some form of IT security team to keep your servers secure. Since you are also handling Webhosting for gamers, you won’t be handling highly sensitive financial information for their users. However, you will be handling highly sensitive information from your own users. If you plan on handling this information directly then having a good security team will be critical to your success in starting a server hosting business. So, be sure to vet your security teams and make sure to only go with licensed security experts who have a proven track record.
You’ll also want to think about insuring your investments. Since server and computer hardware can cost so much, make sure to go with business insurance that will cover all of your hardware and data costs. In many cases, you can find insurance that will reimburse you for downtime, lost revenue, and damage to physical materials like server racks and other IT infrastructure. The best course of action is to go with well-known nationally recognized insurance companies that have been in the game for a long period of time. It may also be worth reaching out to other web hosting services to see what kind of insurance they carry. Or, simply start by calling insurance companies and asking if they offer web hosting insurance.
Brand and Clients
After you’ve gotten funding and setup all of your hardware, it will be important to set your brand apart from the rest. Your brand doesn’t actually need to be groundbreaking or original. It just needs to be unique enough that people can remember your business. Your brand is the business personality and the more personal it feels, the more people will remember your business. So, think about the type of clients you want to attract (gamers) and try to build a brand that caters to that audience.
Payments and Website
It will also be important to ensure your website looks professional and that your payment processing is secure and fast. In this case, it may be best to go with a third-party payment processing service that is tied to your website. Keep in mind that for every transaction you’ll also likely get billed for a percentage as well. Also, make sure to use SSL certificates and HTTPS on your website and especially when dealing with payments.
Lastly, make sure to hire enough staff to not only keep hardware running but to ensure your customers are happy. When you first start a server hosting business it will be very important to make your first few customers happy. That way word of mouth can spread throughout the gaming community and you’ll start off with a good reputation.
If you plan to start a server hosting business for gamers, now is the best time to get started. In order to get the funding you’ll need a winning business plan that outlines how your business will operate, what products it offers, how it will grow, what the market is like, and how you plan to run the day-to-day operations. After getting your business plan set up and getting funding secured it will be vital to maintain a great reputation in the community and ensure your brand sets itself apart.