Planning Your Web Hosting Business - The Market, Continued
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Now we come to another important subsection: the competition. Don’t pretend that you’re so special and unique nobody can compete with you. I used to make paper bead jewelry that looked so good, even an antique dealer mistook the beads for Murano glass. I displayed my work at art shows, and it was unique; no one else was making paper bead jewelry. So I had no competition, right? Wrong. Every other jewelry maker was my competition.
Likewise, every other web host who could fill similar needs is your competition. So you need to cover their key attributes in this subsection. Or, if it doesn’t make sense to look at specific web hosting companies as your competition, you might look at broad classes of web hosting companies—all firms that offer web hosting in a particular price range, for instance.
Next, you need to look at your sales approach. How are you going to reach your customers? Will your sales be conducted chiefly face to face, or (much more likely for web hosts) over the Internet? How much experience do you have with Internet sales? If you don’t have a clear idea of how you are going to reach your customers, guess what? You might not get any customers at all.
You may not have given much thought to your pricing policy, but you should. How and why did you pick the price level for your service? Is it higher, lower, or comparable to similar offerings on the market? Is there any particular risk to the business in having your prices at their current level? Or, on the contrary, is there some benefit to your price level? The point is, you shouldn’t just pick a number; you should know what it would take to turn a profit, and whether you can get enough business at that price point to stay in business.
Finally, we come to promotion and advertising. This covers any public relations, advertising campaigns, educational programs and other tools that you will use to drive demand of your service. Planning to get a booth at the local county fair and give out brochures about your web hosting service? That falls under this section. How about pay-per-click advertising through the search engines? Ditto. Radio ads? Sure. Visiting the local public school to give a presentation on building a website, then helping the students to set up their own—hosted on your server, of course? That counts too; even if you set the students up for free, their parents just might become paying customers.
That’s all I have room for in this part. Hopefully, it has given you a better idea of what you need to think about when starting your web hosting business. In the second part, I’ll tackle the final three sections of a business plan: operations, organization, and key risks/timeline. See you then!
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