The market is good for new Web hosting companies. According to Forrester Research, there is now "positive - if modest - growth for Web hosting and managed IT services, at both the enterprise and SMB levels."

This is an especially good business to be in if you are a web designer or IT consultant. It fits naturally with the business model of such small consulting firms. Why refer out or miss out on selling a service that most small businesses need? Hosting is an excellent source of monthly recurring revenue.

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

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

In addition, it is essential an automated infrastructure to create self-sufficient customers. For marketing, it is crucial to maximize intelligent marketing opportunities.

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 a minimum of the following processes automated: order forms (for new customer account set up or existing customer updates), billing system, administration system, end-user control panel, and technical support interface.

Order Forms

The front end of your order form should serve an minimum of these 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 customer needs to register one) and generate the Web hosting account.

Administration System

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

End-User Control Panel

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 their own e-mail accounts, view Website statistics, and manage their files.

Billing System

An automated billing system is an absolute 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.

Technical Support Interface

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

Also, be sure that the company you go with offers the option of taking care of technical support on your behalf but branded with your brand. You can then focus your energy on your core competencies and growing your business.

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?

Pay per Click

Pay per Click can potentially allow you to reach large numbers of customers. 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 hosting site, doesn't mean they'll convert into a new account. Also be sure to select targeted keywords not competing with everyone else for the same keywords. That is a very difficult game to win. Find your niche.

Hosting Directory Sites

There are numerous Web sites known as hosting directories -- that attract Web 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.

Leverage Your Current Client Base

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 quickly generate a large number of accounts. There are permission-based email marketing services that work very well for earning more revenue from your current customers and gaining additional customers. Try a free trial of one or more of these services to find one that works well for your needs.

Offer New Products and Services

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

About the Author

Dan Forootan founded EZ Publishing, Inc. in 1998. EZ Publishing's Backend Hosting solution provides you with the infrastructure needed to achieve the automation of providing hosting services, from the order forms to the billing system to the tech-support interface. EZ Publishing can even do the technical support for your clients on your behalf. EZ Publishing also offers the permission-based email marketing service. Send questions and comments about this article to articles@ezpublishing.com.