The market is hot for new web site hosting companies! According to Forrester Research, revenues in the U.S. are expected to reach $19.8 billion in 2004. Learn from expert Dan Forootan, founder of EZ Publishing, as he explains the secrets to running a lucrative hosting business.

The hosting industry is one of the few profitable sectors of the Internet. As such, large corporations such as Dell, Yahoo, Hewlett Packard and Microsoft are offering web site hosting services. You, too, can join this highly profitable business and reap the financial awards - but only if you do it right.

"The hosting industry is one of the few profitable sectors of the Internet"

To build a successful web site hosting company, I offer the following two time-tested and proven rules: Focus on offering high-quality services in a tiered pricing schedule.

Infrastructure to create self-sufficient customers. Maximize intelligent marketing opportunities.

Leverage an automated infrastructure to create self-sufficient customers.

Automation will create a self-sufficient client-base and reduce your expenses down the road. In order to provide the best-possible service, you'll want the following automated: order forms (for new customer account set up or existing customer updates), billing system, administration system, end-user control panel, and tech-support interface.

The front end of your order form should serve four key functions: 1) verify domain information for registration purposes, 2) validate entered results, 3) process the customer's credit card or create an invoice, 4) enter the customer's information into billing database for future use.

The backend of the order form must process the domain registration (if necessary) and generate the web site hosting account.

The administration system is necessary to manage ordered accounts. You may wish to manually add or remove new domains, change passwords, etc.

The end-user control panel is necessary for allowing your customers to manage their accounts. At the very least, customers should be able to set up e-mail accounts, view web site statistics, and manage their files.

An automated billing system is a must! The billing system should e-mail invoices, charge credit cards, and suspend overdue accounts. The system should also allow the you to issue credit or discounts as needed.

By tech-support interface, I'm not referring to a system that merely generates trouble tickets. An effective tech-support interface automatically generates an FAQ-interface customers can search before submitting trouble tickets. These interfaces can reduce tech-support requests by a factor of 10!

Maximize intelligent marketing opportunities.

You know what platform you want to use, you've figured out what packages to offer, and set up a tiered pricing schedule and automated systems. So how do you get the word out about your new hosting service?

"hosting directories are an excellent place to advertise"

Pay per Click search engines (such as Overture.com, FindWhat, Sprinks, and Click4Host.com) allow you to reach large numbers of customers by listing your site at the top of search engine results. Although you don't pay to list your site, you do pay when a user clicks on your listing and connects to your site. How, then, do you get your site high on the results lists? You must engage in a bidding war over how much you're willing to pay for each person who clicks through to your site. The stakes have recently grown pretty high, so be careful about bidding too high. Just because someone clicks through to your web site hosting site, doesn't mean they'll convert into a new account. Also be sure to select targeted keywords such as “UNIX web site hosting."

There are numerous web sites known as hosting directories - that attract web site hosting customers. These hosting directories are an excellent place to advertise, but be selective in your placement. Many offer banner placement, spotlights, search enhancements, and other forms of advertisement. As a general rule keep in mind that banner ads are better for creating brand recognition than generating new accounts, so advertise based on your budget, not on your expectation of new clientele.

If you run an established web design firm, information portal, or domain registration service, you can immediately begin marketing to your current clients. A simple e-mail to your customer base can instantly generate a large number of accounts.

Keep in mind, once you acquire a solid customer base, you can consider developing new products and services to generate additional revenue. But always remember: Quality is key!