How to build a turn key hosting business in a day

Many web development and design firms use hosting as a supplemental stream of income to their business.  The benefits are numerous, including but not limited to:

1. Recurring revenue
2. Recurring revenue
3. Recurring revenue
4. Did I mention recurring revenue?
5. Sales funnel into web design

The truth is, many large hosting providers are terrible with customer service.  Their servers are overloaded with customers, their performance is poor, and their security is worse. To make matters worse there's no way to tell if they will be good until you start using them.

Most small to medium sized web firms typically provide a more hands on, and personal touch to the web hosting business.  For the customer, this usually means higher prices, but that's okay right?  You get what you pay for as they say.

I have a lot of fellow web firms that ask us how we manage our hosting.  So today, I wanted to outline the programs and companies we utilize for our hosting, to help those looking to replicate the success we've had with our hosting.

1) Choose your server(s) & infrastructure wisely

This is the most important decision you could make.  Having the right server, support and network infrastructure is the crux of providing great service.  Without these, everything is a waste of time.  Having a poor network with terrible server support is like building you house on sand; sooner or later, it will crumble.

For shared servers, the technical support battle tends to be more of a nightmare compared to dedicated servers or VPS servers.  For shared servers we exclusively use Liquid Web's Cloud Division, their name is Storm On Demand.  Let me explain why you will be interested in working with Storm on Demand.

1. Network uptime is amazing
2. Network speed is amazing
3. Cloud Infrastructure is second to none (even compared to RackSpace they are superior)
4. Cloud control panel for managing backups, disaster recovery etc is amazing
5. Most importantly.. Their support is $20 PER SERVER per month, and for that $20, they will mow your lawn if they could.  I can't believe the crazy requests we send these guys every month; and turn around is quick.  I have never had such great support... Ever.. From any where, including RackSpace.  I have some fortune 500 companies that pay for RackSpace because the name, but their Cloud system in particular, is buggy, slow and new rollouts are terrible.  I can't stress enough how fantastic these guys are.
6. cPanel is included on server (linux) at no extra charge
7. Easily UP scale the server as traffic grows
8. Easily backup nightly and recover servers as needed
9. Monitoring included

I am not saying that going with another company is a waste of time/money or resources, but it's hard to find a better price/setup.. I know MANY other smaller web host operators who use them, they are huge in this business and cater to that crowd.

2) One control panel to rule them all

Some of you who are familiar with cPanel or plesk know that they have billing modules and services you can pay for, which handle billing.  The down side to these modules is that for the most part they only take into the account the server they are installed on.  We are in the middle of migrating to a new system (WHMCS) for many reasons, but the main being that it can manage ALL of our servers at once.  Currently our hosting infrastructure consists of about 20 servers, and is rapidly growing.  Using WHMCS for your main site and hosting control panel allows you to tap into a lot of great benefits.. Let me highlight some: 

1. Billing that can integrate with hundreds of merchant providers including PayPal
2. Online portal for clients to manage their own services, and even upsell the customer (extra domains, privacy additions and SSL certificates).
3. Integration with 3rd parties services.  Using WHMCS I can integrate with 3rd party domain and SSL resellers.  We have been using Wild West Domains (acquired by GoDaddy) for some time now.  There is a great module we installed so that when customers buy domains, the domain is registered from your reseller account with a steep discount so you're making margin on every domain purchased.
4. Invoice handling, late payment and late invoice rules
5. Support tickets
6. Setup rules for which server to add new customer signups to
7. For a full list of features check out their features page

Lastly,  one note on control panels.  I find that after using both Plesk and cPanel for over 10 years, I prefer cPanel.  I think it's geared towards getting stuff done and Plesk is geared towards those who know nothing about system administration.  If you're tempted to go else where, just to get plesk, let me just be the first to say, I am just not a huge fan any more.  I've had many issues over the years with plesk, ZERO issues with cPanel and at the end of the day every minute you spend fussing around with your control panel software is time NOT well spent.

3) Merchant Accounts - unless of course you don't like money?

I see a huge fatal mistake made by a lot of budding hosting companies.  Forcing customers to pay yearly by check or monthly paypal.  Don't get me wrong paypal subscriptions are fine, their expensive but they get the job done.  But in this day and age, if you want to look the part you, need to get a credit card processor (merchant account).  People are becoming more savvy about merchant accounts, and up until recently when new providers like Stripe and Square arrived a lot of people had no clue you could get a merchant account some where other than your bank.  The truth is, your bank IS NOT a merchant provider, all they do is resell the service from another company.  By law they can't be a merchant provider, although many banks that have holding companies, will have their holding company buy up a provider so that bank can resell their services.. Really just gaming the system regulations.

Simply put, allow your customers to pay using credit cards.  For those wondering we use PayLeap.  We have for a long time, and went through MANY other merchant providers before settling with them.  Their rates were/are the best, and they're a smaller company, their customer service was out of this world.  I can always get someone on the phone, and I've never had issues with them.  Unlike my relationship with other merchant providers that continued to jack up rates mid-contract and then try and lock me into long term contracts with crazy terms just to get a slightly better rate; I simply go month to month with PayLeap and I can choose between a couple different pricing models depending on volume.

When you sign up for an account let them know you want to use Authorize.net as a gateway and they will even get you an Authorize.net account with NO setup cost ($99 savings) and instead of $0.10 per transaction it will be $0.03 - huge savings).

4) Handling the phones

This last piece is also quite easy, and actually you'd be shocked at it's value.  Some people just do NOT want to hear a voice when they have questions.  And, if you're building this hosting business from the ground up you won't have 60k a year to throw away at full time support staff.  In comes a service we use, called Gabbyville.  We love Gabbyville, but let me tell you what they are and why.

Gabbyville in the simplest of terms is a Virtual Receptionist company.  They manage all of our incoming calls.  They patch callers into certain employees based on the problem/need.  They can also take messages which then get emailed to you.  They can make calls for you, essentially, they save your life if you don't have time to be on the phones all day.

When you start your relationship with Gabbyville they assign you 2 receptionists, and allow you to specify a laundry list of things to ask, and based on different scenarios.  They can even enter the issue into a WHMCS support ticket for you and not bother you at all.  It's brilliant.

Final Thoughts

Inevitably there are bound to be some improvements to this list.  Lets face it, there are 100 ways to skin a cat right?  Sound off, let me know what you think in our comments section, there's always room for improvements and we're interested in your thoughts.  We know what has worked for us, we're just trying to help.

And for those of you who really are not interested in building a business, reseller hosting is probably right for you.  If you're interested in becoming a reseller rather than running your own, let us know and we can get you setup making some $$$ instead of always sending those clients to <insert host name> and getting nothing in return.