Maybe, every second, there is a new free hosting provider going online. But sadly, free hosting providers bite the dust at a similar speed. If the free hosting business had been planned well, the outcome should have been different.
A sensible business plan is essential for a successful free hosting business. If you cannot see where your business will be in two years, you need do more home work before starting your business. Here is a check list of essentials you need.
- Sufficient cash, yes, CASH, not just credit, to pay your hosting bill, software cost, and your living cost for at least one year. Do not expect your business can make profit within 6 months; you need burn money in the first 6 months. You need money to rent or collocate a server from a datacenter, you need money to buy some software or scripts to provide the service; you need money to feed yourself if you do not have other income sources. Free hosting business need scale: only after you have a few hundred genuine (not spammers) users, your business may start to generate revenue. So, you need spend money in the first a few months to get genuine signups.
- Sufficient time. You need spend at least a few hours everyday on your business. Promoting your business can be costly if you rely on advertising, for example, Google Adwords. You need build you brand through many other free channels, e.g., you can promote your services in some public forums. Social network is also essential for business marketing and branding. You need spend time to engage potential users, and you may spend some money to ask others promote your business in the social networks. I will elaborate this in a separate post.
- Sufficient knowledge. Business gene is not sufficient in hosting industry. Knowledge, in-depth knowledge on hosting technology is extremely helpful. Unless you have your own technical team, you need outsource some jobs to some freelancers. Therefore, you must know exactly what you want, what is possible, what is impossible. Also, you need make sure there are no backdoors created by some malicious programmers.
- Uniqueness. There are so many free hosting providers in the market. User’s loyalty is very low in this industry. To keep active users is more difficult than getting new signups. This implies free hosting provider must provide something unique. If your service is very similar to most other providers, user can easily find alternatives from other providers and therefore it will be hard for you to excel. Uniqueness does not necessarily mean more features: it can be service quality, user engagement, responsiveness and add-on values.
- Planning ahead. You should have an action plan for your business. In free hosting industry, when you have more active users, you need upgrade your resources before you hit the wall. In most business plans for free hosting business, a lot of providers forget to address this issue. So, only when the resource issue comes, they realize the importance: it is too late because you will lose the most active users very quickly. Often, at this stage some users realize that their initial script cannot scale well. Planning ahead of the demand is the only solution.
Anyway, it is not a simple task to run a profitable free hosting business. You need prepare sufficient cash, spare enough time, master adequate in-depth knowledge on hosting technologies, position the uniqueness of your service properly and plan for any changes.