How to start a web hosting business for SMB clients

Whether you're already offering digital solutions and adding web hosting services to the mix or starting from scratch, creating a web hosting business is easier than you think. Unlike many other types of businesses, web hosting companies can be started with relatively little startup capital and overhead costs, making this a business that you can get up and running—and profitable—quickly.

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In this guide, we’ll cover how to start a web hosting business from A to Z, from the initial research stage to managing and retaining a long list of clients. We’ll also discuss the sales side of things, helping you identify sales and marketing strategies that will help you land your first (and thousandth) web hosting services client. If you’re ready to learn how to start a web hosting company, read on.

Why should agencies sell web hosting?

If you’re reading this, you’re probably already at least curious about the benefits of offering web hosting services. Before we get into our step-by-step guide for how to start a web hosting business, here’s why selling web hosting and domain hosting services is well worth your attention to build a sustainable, thriving digital services business.

• It’s a sticky service: Since website hosting requires ongoing maintenance and renewal, it creates a recurring revenue stream for your digital agency, incentivizing clients to stick with you rather than going through the hassle of switching to a different provider. This translates into a predictable, steady source of cash flow.
• It turns one-time customers into long-term customers: If you offer web design services alone, your website projects are complete when you hand them off. If you expand to become a web hosting business, each of those projects can turn into a long-term client relationship.
• Web hosting services can be bundled with other services: Web and domain hosting services bundle neatly with web design, SEO, PPC advertising, social media management, and a wide range of other digital services that your clients need. Why not become a one-stop shop for all their recurring requirements?
• It gives you control over website performance: You can hand off a fantastic, speedy, and well-performing website, but if it’s hosted with a low-quality server, performance will be impacted. Your SMB clients may not necessarily know that the problem is their hosting, rather than your website services. As a web hosting business, you can have more control over the performance of your websites long-term.
• It gives your agency a competitive edge: Many businesses offer web design, but a common pain point experienced by SMBs is the lack of support after their website is delivered. By offering web hosting services, you can position yourself to a reliable partner who’s available when any issues arise.

Ready to get started? Here’s how to create a web hosting company, step by step.

1. Research and planning

Like any successful business, the groundwork begins with researching and planning. To start a web hosting business, there are three key components you’ll want to cover during the research and planning stage:

• Conducting market research
• Establishing your budget
• Choose a hosting platform

When conducting your market research, you aim to identify your web hosting company’s niche, target audience, and key competitors. Google is a great place to begin this research, by putting together a list of all the web hosting companies in your service area. Visit each one’s website and see if you can identify who they’re targeting as their key audience since this can help you identify unaddressed or underserved markets.

If you already have a client base for other services, consider sending a survey to your contacts to gain more information about their current hosting provider, pain points, and possible opportunities. During your research, gather information about how much other web hosting companies are charging for different service tiers.

Once you’ve figured out your service prices, start researching hosting platforms and identify significant costs and expenses, including advertising and administrative costs.

Finally, you’ll want to choose your hosting platform. Look for an option that integrates seamlessly with other aspects of your business, like web design. For example, Website Pro can be used to create custom websites, and lightning-fast hosting through the Google Cloud Platform is already included. This saves you from having to set up time-consuming and potentially buggy integrations yourself.

2. Legal considerations

By now, you have already chosen a hosting provider and have an idea of your target market and the competitive landscape. However, before you can start selling, you need to take into account the legal considerations of setting up a business. These will vary depending on whether you’re building web hosting services into your existing business or you’re just learning how to start a web hosting business from scratch. Here are the basics:

• Register your business and obtain any necessary permits
• Protect your company’s intellectual property
• Draft your customer agreements and privacy policies

Deciding your business structure

The steps to register your business and obtain any necessary business licenses will depend on the jurisdiction where you operate, so check with the relevant governing body in your area. You’ll also need to decide on your business structure:

• Sole proprietorships are generally quick and easy to set up, but they don’t protect you from personal liability if, say, your business is sued.
• Corporations come with greater responsibilities in terms of record keeping, but they provide an extra layer of liability protection along with other benefits. Of course, if you are already in business, you won’t need to go through with this step.

Trademarks and copyrights

Your company’s intellectual property might include trademarks and copyrights. For a web hosting business, you’re unlikely to have to worry about things like patents or other trade secrets. Instead, ensure that if you want to protect something like your business name, logo, or catchphrase, you get them trademarked. Don’t assume they’re automatically protected just because your business is registered.

Setting up customer agreements

Finally, setting up drafts of your customer agreements, terms and conditions, and website privacy policies is essential, since they can protect your business from legal liability. Any website that requires customers to make accounts or on which they can make purchases should have these documents in place. Ensure your terms include the following sections:

• Specific limitations on who can use your website and services: For example, you can specify that certain types of businesses, like those hosting adult content or drug-related content, are not permitted.
• Conditions and policies for continued use: This can also include a clause about you reserving the right to restrict an account’s use of your services for any reason.
• Payment information: This includes payment terms and billing information.
• Governing clause: Since web hosting services aren’t constrained by geographic area, this clause establishes that your terms and conditions are based on the law in your country and jurisdiction.
• Indemnity clause: This is a standard clause that can help your web hosting business be entitled to damages if a user harms your business.
• Limited liability clause: In the unlikely event that you a user or third party claims damages caused by your web hosting service or your website, this clause can limit your liability.
• Disclaimers section: You can include any disclaimers that are relevant to a web hosting business. These might include a disclaimer about the availability of services to protect you in case your hosting platform experiences disruptions and a content disclaimer about your lack of responsibility for what content is hosted using your services.

3. Building the infrastructure

The next step is to build the infrastructure of your web hosting business. This includes:

• Setting up your website: If your web hosting provider includes a website builder, you can use it to set up your business website.
• Establishing your payment processing systems: Make it easy for clients to sign up with you by using trusted, familiar payment processors and accepting a wide range of credit cards, PayPal, and any other portals you wish to include. Make sure your payment processing system can easily handle recurring payments.
• Integrating customer support and ticketing systems: Offering efficient customer service and handling tickets promptly is a must, because today’s customers expect it. Set up and prominently display your customer support channels. Consider outsourcing to white-label experts if you would rather not handle hosting support in-house.

Luckily, Website Pro includes solutions designed specifically with agencies in mind, such as the Website Admin Dashboard. This can be used to monitor a long list of client websites without having to tediously log in and out of each site.

4. Sales and marketing strategies

Now that you’ve built your website, it’s time to start signing on hosting clients. Here’s how it’s done:

• Build a sales funnel and lead generation strategies: To manage a growing sales funnel and make sure nothing falls through the cracks, using a dedicated CRM is strongly advised. Then, start building the funnel using tried-and-true lead generation strategies like creating an attractive lead magnet, setting up referral incentives for existing clients, and setting up email marketing campaigns.
• Craft effective messaging and pricing strategies: A strong message and strategic pricing strategy can help you stand out against other web hosting companies. Keep your target audience and its needs in mind as you define your key messages. When setting your prices, consider your costs, competitor prices, and customer segments. You may want to have a tiered pricing strategy so you have something to offer each segment, from those with limited budgets to those with complex hosting needs who can pay more.
• Use social media, PPC advertising, and other marketing tactics to get in front of your prospects: Building and maintaining a strong sales funnel requires consistent investment in getting in front of your audience. Maintaining active social media channels, buying PPC ads, and optimizing your website for search engines can all help you generate a steady stream of prospects.

5. Best practices for customer support and retention

Winning a customer is half the battle. It can cost around five times more to gain a customer than to retain one, so offering excellent customer service and support can go a long way in helping you maximize your profits (Forbes). Focusing on sales without a retention plan is a common mistake. Here are some ways to keep your customers happy and establish long-term professional relationships:

• Provide top-notch customer support and maintain uptime: As a web hosting company, uptime is a key metric of your performance. Ensure the websites you’re responsible for hosting reliably don’t encounter downtime, and if anything does occur, ensure you address it quickly. Your customers should also be able to get the help they require whenever they need it, without waiting. By using white-label experts like those available through Vendasta to fulfill your website hosting customer service, you can ensure 24/7 support.
• Address technical issues and security concerns: If any technical issues or web hosting security concerns arise, have them fixed as quickly as possible, and clearly communicate to your customer to share that the problem has been resolved. Communicating proactively can establish your company as particularly transparent and trustworthy.
• Retain customers through upselling, cross-selling, and customer loyalty programs: the more services you provide a customer, the likelier they are to stick with you. If you’re wondering how to start a hosting business on its own, consider adding some other services to your portfolio, such as website design, SEO, and PPC ads.

Frequently asked questions

Is a web hosting business profitable?

Yes, a web hosting business can be profitable. While each individual web hosting customer may not generate a huge amount of profit, it’s a scalable business model that can be used to deliver services to many clients.

What do I need to become a host seller

To become a website hosting seller, you will need a hosting solutions provider such as Vendasta Website Pro, which uses Google Cloud Platform hosting. You will also need a website with a payment gateway, as well as a marketing strategy to find customers.