Seeing the big picture… Why most hosting providers fail.

ServersIt’s no surprise that there are hundreds, if not thousands of new hosting providers that are started every day as there is simply little to no barrier to entry.  Anybody who has $5 to $15 can sign up for a reseller account and be their very own hosting company within minutes and this has some very unfortunate side-effects for the industry as a whole.

Many think that selling hosting is as simple as taking the disk and transfer allocations, splitting them up into their individual plans, and then sitting back and waiting for the money to come rolling in.  This usually ends up in the person who tried to start said company realizing, after a few months, that they aren’t going to get rich quick like they expected and that hosting really is a lot of work.  What happens to somebody who starts a business to get rich instead of because it’s what they are passionate about do you ask?  The answer is simple: the business folds.

Most new hosting companies are operated by individuals who have little to no business sense or experience and many times they fail to plan or to even see the big picture.  These individuals purchase a $5 to $15 per month plan and then expect to compete with the larger providers purely by cost but they fail to realize that in this industry that the less somebody pays, the more they expect from you and your service.  The individual who jumps from provider to provider looking for the best possible price tends to be the person who causes the most trouble and due to the naivety of these new hosting companies they become overwhelmed by cheap customers.

New hosting companies that manage to stick it out more than a year or two have a small chance of actually becoming profitable if they plan accordingly and make all of the right decisions.  Too many times have I seen a provider that appeared to know what they were doing but in reality they had no technical know-how and relied heavily upon friends and others in the industry to essentially run their business for them.  These hosting companies often will go from design to design mimicking as closely as possible, without directly copying, the providers that they themselves see as successful.  What these hosting companies don’t realize is that it’s not just the site design that makes the provider successful but the whole package.

I’ve said numerous times in the past that any company can try to copy what we do but more often than not they will fail to see the big picture and simply copying one aspect of how we operate our business will not give them the reputation and growth that we’ve worked hard to obtain over the years.  You can copy a design, you can copy an advertisement, you can post in the same forums, but none of this in and of itself will lead to success.

At the end of the day if you have a solid business plan, the time, the money, the desire, and the passion for running your own hosting company then you very well may succeed.  If you’re simply starting a provider in an attempt to make some quick and easy money, I suggest you stop now before you damage our industry any more than it already has been by the countless before you.