The drive for economic self-sufficiency has motivated large numbers of
persons to market their skills and talents for profit from home. An
increasingly service oriented economy offers a widening spectrum of
opportunities for customized and personalized small business growth. Many
new entrepreneurs thus elect to focus their small business operations on the
resale of Web hosting services.
With 62 per cent of all global users with Web sites choosing to outsource
their Internet presence, Web hosting has become an extremely lucrative
business.* There are however essential elements that resellers must put
into place in order to capitalize upon this growing marketplace. These
elements are organizational and technical in nature and are required by any
Web hosting reseller, or indeed by any small business, wishing to establish
a successful operation. These elements must first be identified, and then
enacted on, through the use of in-depth business plan.
Running a flourishing hosting operation depends on establishing a practical
plan, technical skills and basic knowledge of record keeping, finance,
management and market analysis. A practical plan should examine every
nuance of a business operation, most importantly, the feasibility of your
business model.
A business model must chiefly be profitable, providing enough revenue for a
reseller to derive a substantial income (with inflation factored into the
equation), and also financial resources to re-invest into the business
itself.
A plan should include start-up cost estimates, and include a schedule
describing month-to-month expenses. All sources of start-up monies should
be identified. A large number of small businesses fail every day because of
a lack of funds. Too many entrepreneurs try to start and operate a business
without sufficient capital. In order to avoid this situation, a plan must
identify how much money is available, how much money will be required to
start the business, and how much money will be required to keep the business
operating.
A comprehensive business plan will also identify the name and legal
structure of your business. Resellers usually determine whether they chose
to operate as a sole proprietorship, partnership or corporation, based on
tax considerations and the number of persons directly involved in the
business operation.
One of the most important choices that resellers should identify in their
business plans is the selection of a reliable supplier. Finding a
higher-tier hosting company that will offer you, and therefore your
customers, reliable service is a must. Further your supplier should provide
you with a feasible resale model that provides you a large profit margin.
Any host that is selected should specialize in reselling Web hosting, and
should assist you in the start-up process with literature and advice.
Resellers should also determine which market niche that they intend to cater
to. To ensure that their business model will be feasible, resellers must
identify the products and services that they will sell and determine whether
they satisfy a specific, unfilled need. They must also determine whether
their products or services are competitive based on quality, selection and
price.
Resellers should also identify who their potential customers will be,
quickly determine what kind of products and services they will buy, and
establish a promotional program that will capture these consumers.
Once these issues are addressed, a reseller must then also examine whether
he or she possesses the technical skills required to run a Web hosting
business. With high-levels of automated services now available to
resellers, this issue is quickly becoming moot. However, highly
sophisticated Web and e-commerce solutions will still require in-depth
knowledge of Internet protocols, standards and concepts. These items must
be fully understood if you wish to impart confidence in your clientele.
Once a full market analysis is completed, resellers must ensure that they
have a basic working knowledge of finance and record keeping, ensuring the
sound management of their business. Resellers should be prepared to
maintain complete records of sales, expenses, and accounts payable and
receivable. Resellers also need to know what financial reports must be
prepared, and should also factor in the cost of obtaining the expertise
needed to file and maintain that documentation.
If a reseller is able to identify all of their fundamental requirements,
they will have a fighting chance to create, develop and manage a successful
Web hosting business.
Source: Forrester Research
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