The Nuts and Bolts of Web Hosting: Some Important Considerations

Usually, the first logical step in starting a hosting company is deciding on an actual structure for your business -- and exactly what that means largely depends on where you live and/or where your business operates. Generally, there is a distinction between proprietorships (usually businesses operated under a business name but effectively controlled by a single person, who is the underlying responsible legal entity) and corporations (where the company is a legal entity in and of itself).

Virtually every state and province has its own rules (and sometimes its own naming convention) regarding that sort of thing. It is certainly something critical to review. Fortunately, there *are* good resources on that (and running a business generally).

For Americans, there are a few options. As amusing as the titles may be, there a couple of books below that are excellent resources. You can pick them up relatively cheaply from Amazon, and most larger bookstores. Another great starting point is one you've already paid for as a taxpayer -- the United States Small Business Administration website.

For Canadians, the same book is recommended in its Canadian version, and amazingly enough, there is even a cousin to the American Small Business Kit entitled Canadian Small Business Kit for Dummies.

In terms of government resources, Strategis is a good place to start for Canadians, too. Keep in mind that most states and provinces have their own business sites too, which often help answer questions about what is needed in terms of legal registration, etc., to start a company. And, don't forget that city/town/village governments also often have business regulations -- you very well may need a business license from them to legally operate your hosting company.

Incorporation is something worth discussing in a bit more depth. In most places, incorporating a company turns your company into a legal entity of its own -- effectively detached from you as a person. In theory (although not always in practice), this could, for example, keep you from going bankrupt personally if your company does. You ought to be very careful here, though -- a lot of companies advertise the ability to offer ultra-cheap incorporation services and the like, but usually don't have any substantial reputation to help ensure you're actually getting what you pay for. Often the best bet here, despite the cost, is to talk to a lawyer or attorney who specializes in business law. It can save you a lot of headaches in the long run.

Accounting is another area that you will of course need to consider carefully. In many cases, it makes sense to set up a business bank account and use formal accounting software to manage your company's books. Although that may not be necessary if you're just starting small, keep in mind that there may be government regulations and the like in your jurisdiction that require you to create and maintain good records of all of your transactions for purposes such as taxation. And, if you have to pay things like sales taxes, having good records becomes absolutely critical.

The related point is that good accounting records generally lead to good access to information on tracking how your company is doing. Although some billing systems can help you track things like client growth, revenue growth, etc., not all billing systems do that. Ensuring that you're profitable (or at least on track to being profitable) is a fundamental aspect of keeping a business alive. As silly as it may seem to mention, some people simply don't realize that even with huge numbers of clients, you can still be slowly (or quickly) running your business into bankruptcy.

It's important to realize that in almost any business, there can be legal issues. This is something that can even affect small hosting providers, so it's best to be aware of some of the possible issues you may face. Here's a quick run down of common events in the hosting industry that may require you to get professional legal advice and/or assistance:

- Copyright infringement - for example, if a hosting client starts running an MP3 or Video site without permission to copy the music or videos in question, the owners of the legal rights to that may demand that you take the infringing content down (or worse).

- Court orders - for example, in defamation (i.e. "libel" or "slander") actions, sometimes a court can order that offending web site content be removed from the internet. If you are hosting such content, you may be required to take things down.

- Criminal proceedings - certain types of content are illegal in certain jurisdictions. One can run afoul of the law by hosting such content or enabling such content to be hosted. For example, such a scenario would likely apply to Phishing schemes. Ditto, in some cases, for those who engage in spamming.

- And quite a few other scenarios.

Perhaps the one good thing about this is that, for the most part at least, the responsibility (initially) ends up with the person hosting the content, and not necessarily the hosting provider. This leads to an extremely important point: well-constructed Terms of Service -- i.e. the document/contract that hosting clients agree to as a condition of using your hosting services -- can be critical in ensuring that you can act on legal demands without needing to worry as much about possible counter-claims. At the end of the day, though, you should always, always have a legal contingency plan. It's not particularly expensive (in some cases free) to have an initial appointment with a lawyer/attorney who you can turn to in times of needing legal assistance or advice.

Although it's always advisable to turn to proper legal advice when drafting things like contracts and Terms of Service, some people have had some success in using relatively generic templates for such things (and then having a lawyer review those); this is generally a far less expensive method than having a lawyer draft something for you, and can still ensure you're well protected, with documents that are legally binding in your area. Perhaps the most famous of companies that provide these types of templates are HostLegal. They have a fairly good reputation in the industry. Although there are likely other companies out there offering such services, you should always exercise caution. At the very least, you should strive to obtain documents that have been prepared or reviewed already by a lawyer.

One additional shortcut that is sometimes acceptable -- if you do this though, *please* ask permission first -- is to simply utilize your hosting supplier's Terms of Service. These are generally quite well-drafted, but of course the same issues apply in terms of applicability to local law. As with anything of a legal nature, it's always the best practice to have things checked by a lawyer *before* problems occur.

It is also advisable that you do a bit of research into Privacy laws in your jurisdiction. Although privacy legislation sometimes only applies to larger organizations, there are often basic requirements that apply to all companies in a specific location (i.e. state/province/country). Generally, though, the requirements for privacy practices involve protecting personal information your clients (and even potential clients) share with you, using it only for the purposes for which it was provided to you, and ensuring third parties who may work with you also protect that information. A lot of it is really a matter of common sense. Some companies (sometimes by requirement, sometimes because they're nice) will publish a formal Privacy Policy indicating what steps they take on protecting privacy of their clients and those who contact them. This can sometimes be advisable even for a startup host, even if it's not a legal requirement, as it portrays a very positive approach to potential clients.

Of course, if you intend on having a hosting company, you're going to want to have a web presence. There are quite a few options here:

If you have web design skills, you can design your own site. To be quite harsh, though, most people -- even those who think they do have good web design skills -- really don't. In a market where professional appearance can truly make a huge difference in terms of sales, you often shouldn't risk developing your own website.

There are mainstream template sites out there as well. Open Source Web Design provides free designs galore. Template Monster offers a variety of relatively inexpensive (and often nicely designed) layouts as well. Sometimes, though, your site can recognized as not being entirely unique, particularly if you go with a freely-available template. That said, this is often the most cost effective solution.

The next solution is to check out templates for sale on places like Web Hosting Talk and the Marketplace on Sitepoint. These are often similarly priced to something you would see on Template Monster -- but the downside is the that sometimes those creating templates don't put a lot of effort into their designs. That said, if you have some time to spare, it's worth a look.

The best option, but also the most expensive, tends to be to hire a private designer to create a custom web design. Quality and pricing varies greatly -- but for a good, basic design, you should reasonably expect to pay about $1000-$1500 USD. If you can get a good design for less, kudos to you! One interesting resource that I ran across very recently involves "crowdsourcing." Although I have never utilized the site, 99designs seems to be the premiere site in this category, and may very well provide you with a high-quality website at a lower-than-normal price.

As an aside, if you're looking for a nice brandable logo, LogoWorks, although a bit expensive for some tastes, has an exceptionally high level of quality. They also offer custom design services, making it possible to get a unique design (and logo) at a very high level of quality, often for less than you would pay at a freelance shop.

As should be really obvious though, no web hosting company website is any good without content. Again, I know we're not all writers. I've always recommended that any hosting company I work with should actually go out and hire a professional copywriter -- and not just anyone, but one that has some grasp of marketing in this industry. This is actually one of the areas in which my own company works. If you'd like more information on my services in that regard, please feel free to contact me.

I also know that some of you won't listen and will write up the content yourself or have a non-professional do that. If you go that route, be aware of the following:

- If you can't write yourself, please get someone else to do it. This may be harsh, but if you have no skill here, nobody really wants to read your gibberish. It will annoy them. It will upset them. You will lose sales, plain and simple.

- Make sure things are spelled correctly, and the grammar is at least reasonably sound. Although not everyone resembles certain Seinfeld characters, good spelling and decent grammar are two cornerstones to a professional appearance on the web.

- Do not have so much text that people can't understand what you're actually selling. I can't count the number of hosting providers who think it's a good thing to pack the front page (and even every subsequent page) which massive lists of features, guarantees, money-back offers, random musings and huge quantities of other miscellaneous, pointless text. If you're not a skilled writer -- i.e. not a professional -- don't go for lengthy, flowery text. Be succinct. Be terse. Make your point and then stop.

Although a bit of a rough template, here are a few more tips on content writing for a web hosting business website:

- On your front page, provide a simple introduction to your services. Do show off your best or most valuable hosting product, if there is one. Don't break the rules listed above.

- Also make sure you have an appropriate pricing page or pages for your products. Make it clear what is generally included in the "main" areas -- bandwidth and storage space for virtual hosting, those plus total accounts for reseller, and core features (RAM/CPU/etc.) for VPS and Dedicated. Also indicate what control panel you'll be offering.

- Contact information is very important. I would honestly say you're going to gain big points if there is an actual telephone contact point for you (that isn't your home phone -- use a dedicated line if you're doing that). Tip: create "departments" for e-mail addresses, such as sales, support, billing, etc., even if all the inquiries go to one place or to one person. This is good both for perception, but also helps with organizing incoming e-mail.

- Payment information is important too -- potential clients ought to be clear on what payment methods you accept, and even perhaps a link to your terms on non-payment (i.e. are accounts suspended, etc.)

- Guarantees, in terms of uptime and money-back-if-not-satisfied are quite common. Often, this is good content for a side bar.

- Terms of Service are probably one of the most critical things you can have on your site. I have discussed their importance above.

- Privacy policies should also be on your website, if you have a privacy policy.

- Some hosting providers choose to provide easy links/some content to do with their helpdesk and support offerings. That's not a bad idea, either.

- With "About Us" text you need to be careful, and in some cases, I would honestly recommend not having any at all. It's a challenge (best left to an experienced copywriter) to figure out a way of succinctly stating what you do without making it blatantly obvious you're a brand new business. That said, if you have experience in other areas related to information technology and the internet, that can be something to focus on. Remember the point is to provide your clients with evidence that you're reliable. And, remember, you're expected to deliver on that (so don't make claims you can't live up to -- it won't fool anyone for long, and is a bad way of running a business).