How many web hosting businesses/companies fail in the first year?

cservers said:
It's said that some 75% of all hosting businesses fail within the first 12 months.

Truth is, it's a hard market: values years of staying in business equaling them to trust because no one wants to stay without a website, it's very shielded by licensing for multiple things (cPanel for individuals, Plesk for some companies, then you've got LiteSpeed for databases, CloudLinux for cgroups, JetBackup for backups, Softaculous for program scripts...) which cost a substantial amount of money to run independently, and you are not really acquiring many new entrants, you're basically taking from someone else mostly, by now.

You really need something different to thrive, even price won't just cut it...
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I would say Litespeed and Cloudlinux as ones that are not needed at the beginning, but to run a web hosting business you need


Control Panel - cPanel $29.99 (£23) per mth
Backup - Jetbackup $8.95 (£7) per mth
Scripts - Softaculous $1.50 (£1.15) per mth

so $40.44 (£31) per mth before you think about your hosting costs

These are the basics needed, so you need to start small (reseller hosting) and build a strong clientbase before thinking of expanding into a VPS as with a reseller account you will not have to factor in the above costs as these will be within the cost of your reseller fees
 
easyhostmedia said:
I would say Litespeed and Cloudlinux as ones that are not needed at the beginning, but to run a web hosting business you need


Control Panel - cPanel $29.99 (£23) per mth
Backup - Jetbackup $8.95 (£7) per mth
Scripts - Softaculous $1.50 (£1.15) per mth

so $40.44 (£31) per mth before you think about your hosting costs

These are the basics needed, so you need to start small (reseller hosting) and build a strong clientbase before thinking of expanding into a VPS as with a reseller account you will not have to factor in the above costs as these will be within the cost of your reseller fees
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CloudLinux I'd definetly agree. Litespeed however... had some customers valuing Litespeed and I do notice a difference between offering the standard (Apache+Nginx+some cache) and offering that system, in terms of volume.

That's why OpenLiteSpeed should be in more panels - it's Litespeed with minor inconvenience, still great performance and zero cost. But it has a conundrum there: from the "three big" panels, only DirectAdmin supports it. The market is still very much at cPanel also - and it's clearly noticeable how cPanel's licensing is clearly built with that idea, of "first start with reseller, then build your own userbase". I don't personally like it, because I like to have control over how setups are done, but it is what it is...

Innovation is great but I think we're at a point where we have more licensing than we should on the web hosting market. For example, what does JetBackup offer technology-wise that justifies paying 8.95$ per month? With so many good backup options available and used daily?

Now imagine those 29.99$ for a full year. It goes for five customers only. 30 is a more realistic number - you can get to 30 customers in a year for a single location if you play your cards right - but it then goes at 42.99$ or 515.88$ yearly. And at the current market pricing you either bring something very different and valuable, or you accept losing some control reselling, or it's a loss-leader throughout. It's not great for any new company...
 
cservers said:
CloudLinux I'd definetly agree. Litespeed however... had some customers valuing Litespeed and I do notice a difference between offering the standard (Apache+Nginx+some cache) and offering that system, in terms of volume.
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Litespeed is good, it's expensive for what it is and there are open source solutions out there which can be tweaked to match the performance of Litespeed, such as NGINX. However, trying to explain to an average customer that we can offer them NGINX at a lower cost and give them the same performance of Litespeed just doesn't work, unfortunately. They have seen the performance advantage of Litespeed from Apache, or heard from other website owners how their PageSpeed Insights speed index dropped from 4s to 0.4s and that's what they want.

It's going to differ between different hosting companies and the segments they target, but we definitely see a bias towards Litespeed from potential customers.

cservers said:
That's why OpenLiteSpeed should be in more panels
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100% agree on this point. It'll work for 99% of websites, has the same performance benefits but open source.

cservers said:
Innovation is great but I think we're at a point where we have more licensing than we should on the web hosting market. For example, what does JetBackup offer technology-wise that justifies paying 8.95$ per month? With so many good backup options available and used daily?
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I think this is where the major control panels are going to really fall down in the next few years. We have a number of new control panels entering and developing in the market now which are including features cPanel should have included by default years ago. The Enhance control panel offers incremental, compressed, individual website backups out of the box and it's all based on technology which is already out there and free; they just have the drive and motivation to implement this, I guess?
 
whmcsguru said:
but they don't have the drive and motivation to implement things that are industry standard, like email piping ? C'mon!
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We don't use email piping and never had a request for it, either. There are better ways to handle this in my opinion.

As I mentioned anyway, Enhance is new if you compare it to the life of cPanel. Enhance has features cPanel will never have, and cPanel has features that Enhance may implement in the future, or may not. At the end of the day, you've got to evaluate the best tools for your business.
 
SharedGrid said:
We don't use email piping and never had a request for it, either. There are better ways to handle this in my opinion.

As I mentioned anyway, Enhance is new if you compare it to the life of cPanel. Enhance has features cPanel will never have, and cPanel has features that Enhance may implement in the future, or may not. At the end of the day, you've got to evaluate the best tools for your business.
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We don't use it as well. The customers that actually do e-mail usage... they usually prefer to go directly to the website. On an e-mail app they have to remember the company's email, compose an e-mail...

Never had a complaint regarding this function.

SharedGrid said:
Litespeed is good, it's expensive for what it is and there are open source solutions out there which can be tweaked to match the performance of Litespeed, such as NGINX. However, trying to explain to an average customer that we can offer them NGINX at a lower cost and give them the same performance of Litespeed just doesn't work, unfortunately. They have seen the performance advantage of Litespeed from Apache, or heard from other website owners how their PageSpeed Insights speed index dropped from 4s to 0.4s and that's what they want.

It's going to differ between different hosting companies and the segments they target, but we definitely see a bias towards Litespeed from potential customers.
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That's exactly what we found as well. Whether we like it or not for the pricing, marketing on this one was quite effective...

SharedGrid said:
I think this is where the major control panels are going to really fall down in the next few years. We have a number of new control panels entering and developing in the market now which are including features cPanel should have included by default years ago. The Enhance control panel offers incremental, compressed, individual website backups out of the box and it's all based on technology which is already out there and free; they just have the drive and motivation to implement this, I guess?
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I think Enhance is very, very interesting. If only they had more program scripts, they could be a real contender. If this actually picks up, cPanel and some of the others will either have to evolve or... well... will be something only a few will use. Possibly in 5-10 years, maybe?
 
cservers said:
I meant that customers usually prefer going to the ticketing system rather than sending an e-mail. Anyway, we now have an external e-mail for ticketing/user downtime, actually. :)
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Thanks for clarifying! I never saw anywhere where ticket systems were mentioned, I only saw the lack of email piping feature in Enhance.

I generally prefer using ticket systems directly, but we have a certain set of clients who prefer email. It depends on the type of client you're marketing to.
 
A lot of good info here. So for us its adding something extra. We didn't get into web hosting by offering webhosting.

We got into web hosting by offering web design, then managing your website, then managing your server, heck doing IMAP email installs via anydesk whatever it takes, Optimizing things and so forth and so forth....

Its a really nice prospect for a client to have everything from their graphic design, website design, marketing under one roof. So try think of it that way what can you do extra. We have won many clients from big providers for simply this reason.

Lastly even with all this it wasn't like we picked up 100s of clients in a month it took time, but as the trust and reviews grow the acquisitions get more and easier.

You will see it with the big guys too. Most now have page builders and a variety of extra things, analytics tools. But they still fall short of giving that personal attention to a client.

Doing things this way takes a bit more time and care and work for most of us... it alone is not going to make you stinking rich... but its going to expose you to so many people... expanding your connections, thinking and business opportunities and that may just do it.
 
Hosting is a really delicate business nowadays. Unless you are offering something very unique, targeting a specific niche that you have special reach into, or providing a more high-end solution, it would take incredible patience and dedication to get off the ground.

The industry is very competitive and being new means you are fighting on multiple fronts: from supporting clients in a way that leave them eternally impressed to earning trust of potential new clients and 'persuading' them in giving you a shot vs an established provider with ample resources and large number of staff.
 
PeterShene said:
A lot of good info here. So for us its adding something extra. We didn't get into web hosting by offering webhosting.

We got into web hosting by offering web design, then managing your website, then managing your server, heck doing IMAP email installs via anydesk whatever it takes, Optimizing things and so forth and so forth....

Its a really nice prospect for a client to have everything from their graphic design, website design, marketing under one roof. So try think of it that way what can you do extra. We have won many clients from big providers for simply this reason.

Lastly even with all this it wasn't like we picked up 100s of clients in a month it took time, but as the trust and reviews grow the acquisitions get more and easier.

You will see it with the big guys too. Most now have page builders and a variety of extra things, analytics tools. But they still fall short of giving that personal attention to a client.

Doing things this way takes a bit more time and care and work for most of us... it alone is not going to make you stinking rich... but its going to expose you to so many people... expanding your connections, thinking and business opportunities and that may just do it.
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Yes.
I have also found a way to gain clients from doing up-front work and helping them with extra stuff.
This then builds trust and you (hopefully) get them to be your client of your web hosting business.
Yes, it is very competitive. Especially today.
Thank you for your answer!
 
PeterShene said:
You will see it with the big guys too. Most now have page builders and a variety of extra things, analytics tools. But they still fall short of giving that personal attention to a client.
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But these days even a small host can have these in place of their server.

You need to treat customers as people/friends and not just numbers and pound signs, this will gain you more respect
 
Hello,

I think I have a good view on this topic as we have been in business over 20 years. During this time we have grown from starting with a single server to over 400 servers.

During this time, we have found the following:

Advertising is great, but its also expensive. And we have found that clients who are brought in through advertising generally do not last and are (usually) looking for the cheapest host possible.

For us, word of mouth is our bread and butter. We started out by writing custom code for companies and sites who need us to maintain that code and provide quality support when needed.

That being said, people are picky and will complain about just about anything. Using industry standard tools will help you with this. People do not like change and if you offer something that is simple to move to it will be easier for them.

As others have mentioned here there is nothing wrong with starting small. We have several customers who start off as a reseller and then move to lease dedicated servers or co-locate to fully manage their own clients. It is better to start small and grow than to start big and fall.

A lot of what you start with should directly relate to your knowledge in the field. If you are a programmer and system admin with strong Linux skills you can probably start off with a base OS and a good web panel. If you are someone who needs support then definitely go with CloudLinux and a managed server provider.

Just as easyhostmedia mentioned, starting out does not have to break the bank. There are hosting options out there for everyone.

Now to the words of caution. It is always better in a customers eyes to upgrade or expand. Find the right server or panel you want to use and stick with it. Don't start out with cPanel knowing their pricing is high and having to change later to Direct Admin or another panel. Unnecessary downtime will ruin your business and potentially your clients. Plan expansions and additional servers into your pricing so when the time comes you are able to handle the influx of customers.

Have a good AUP/TOS, and honor it. If you are down then justly compensate your customers. Every provider in the world will have an outage. The difference between a good review and bad review could be in how you handle the situation. Be honest and direct.
 
Businesses without anything unique can still succeed by focusing on a few key factors; Timing, Targeting a Niche, Strong Customer Service, Pricing Models.
Even companies without unique features can succeed by optimizing service, targeting the right audience, and offering good customer support.
 
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