HostEntrepreneur

HostEntrepreneur.com has been getting a pretty decent response and we want to keep the drive alive. The past several days have been very busy for me – new ad coming out in Ping! magazine with the next issue, lots of work to do, as well as some personal development plans all underway.

I’ve mentioned this before and had several people express interest but not follow through, so I’m putting it back out there… if you would like to write for http://HostEntrepreneur.com/  we would love to hear from you. We’re looking for business and technical writers who love to share with and teach others about the industry.  There is a bit of small monetary compensation as we do require exclusive content. Plus you also get an “About the author” section, where you can also put a link back to your site (even if it competes with one of ours … this site is about teaching and helping others, all are welcome).  So if you’re interested register here, so you can send me a message…

And rest assured we’ll be returning to our “regularly scheduled programming” shortly.

One of the things you may need to develop, and we probably all stand to improve it some, is time management. This is true even more so for small business owners. There are many methods or techniques to explore, and I plan on going through some of them with you, but today I want to show you the method I like best. It’s commonly referred to as the “Eisenhower method” after the President who used this technique.

It’s a simple method, and works well for managing many aspects. Divide everything up based on the above table into 1 of the 4 quadrants.

1:  Important and Urgent – These are the fires! Put them out right away!
2:  Important but Not Urgent – These are important, but don’t need addressing now. Schedule them for later.
3:  Not Important but Urgent – Delegate these to someone else. Have them do them now.
4:  Not Important and Not Important – Iif you can’t do everything, these are the ones not to do.

Your attention as a small business owner should be on the tasks in boxes 1 and 2 primarily, and sometimes on 3. The 4′s are the ones to ignore for now. They may be “nice to haves” or “nice to dos”, but the time they take is taking away from the more important and/or more urgent matters. Leave them on the list for a while, but don’t be afraid to let them go if need be.

Also realize that items can move from one quadrant to another, especially between 2 to 1, 4 to 3, and 4 to 2 . But they almost never go from a 4 to 1 directly. They almost always go over only 1 direction at a time, either between Urgent and Not, or between Important and Not. Often things move from one to the other because of being neglected, at which time they become either more important or more urgent, and rarely both.

So you may ask yourself, if I’m focusing on the 1s, why not just ignore the rest? Because almost no task can be completed in 1 session. Often you will find yourself blocked by some outside force that limits what you can work on and actually make progress.  Don’t work on something that you’re not going to be able to move forward on, just because it’s a 1.  If you can take care of a 2 or a few of them, you’ve moved forward more than working on a 1 and not going anyway with it.

.. Or why you should pay attention to your use of grammar, style, and punctuation in your  correspondence.

I’m often amazed how some will complain about not being taken seriously or referred to as a “kiddie host”, those hosts stated typically by teenagers that get into hosting thinking they’ll make millions sitting at their desk while doing homework. There are some great hosts started by young people, HotGator was started while Brent Oxley was in college. He dropped out and went to work full time for his company. So, yes, even ”kiddie hosts” can be taken seriously and make a success of it.

I suspect that part of the problem is they manner in which younger folks will communicate in their day to day business dealings.  If I was looking for a provider and started a chat session, and got something along the lines of “How r u?”, I would say that it would be hard for the company to regain the trust that they were a serious host that they just lost.  You may be thinking that it’s “not fair”, or “shouldn’t matter”, but the fact is that it does. There’s no face, no intonation in the voice, no firm handshake so to speak with purely internet based dealings. So any little reason is brought to the forefront.  In this case, if they’re too lazy to type 4 extra keys, one begins to wonder what else are they too lazy to do?

You may not agree with this thinking, and that’s fine. However, others are going to judge you and your company based on your writings in chat, forums, company website, and emails. So you need to adjust your thinking and take the time, and care, to represent yourself and company in a professional manner if you are wanting your new hosting business seriously. I’m not saying you have to be a “grammar nazi”, there’s no need for that. Minor mispellings, slightly off grammar, and some incorrect capitalization isn’t going to have the same effect as using “u” instead of you, “r” for are, or a sentence in an ad like “hi come try our services we r the bestest in world we beat all pricez wit unlimited space and traffic we hav l33t h0st1n t00″. That would be fine on some forums, perhaps some frequented by the apparently intended market, but on the more respected forums such a WebHostingTalk, that ad just isn’t going to fly.

What is “premium bandwidth”?   If you’re searching for hosting, vps, dedicated servers, colocation, etc., chances are you’ve run across the terms “premium” and “mixed” bandwidth. But what does it mean? And what if it isn’t premium or mixed?

Basically there are 2 recognized levels of bandwidth: premium, and not – which we’ll call “value” bandwidth. Often value bandwidth is Cogent. They provide a lot of bandwidth to a lot of providers and do it at a very reasonable rate.  Cogent is huge… not that the other’s aren’t. But they are the number 1 name that pops up talking about value grade bandwidth.

Permium bandwidth, on the other hand, is made up of Tier 1 providers like: AT&T, Sprint, Saavis, Level 3, etc. These are the REALLY BIG boys with large international networks at very high speeds.  Look into these networks if you ever want to put your home cable or even FIOS in perspective.

So that’s 2 types… Premium and Value, but you often see “Mixed” as well. Simple, it just a combination of the 2. Done right, it can be the best of both worlds, better pricing, and better connectivity as well.  Typically, if you’re seeing either a dedicated or shared unmetered connection it’s probably going either be or at least have come value bandwidth in there, if not all. I’d look for a mixed bandwidth connection unless you absolutely need 100% pure premium bandwidth, and if you had read this article to find out what it was, you don’t.

There are a couple ways of getting charged for bandwidth. You could by an “unmetered” connection rated at a given speed, say 10 or 100mbps. Sometimes those lines are shared so you won’t really be able to use it all, but that’s another discussion. But if you’re buying an “unmetered” connection, be absolutely sure to ask if it is shared with others. If it is, you’re at their mercy.

Also available are x GB or x TB of “bandwidth”. Technically it’s not really bandwidth, but traffic. Again that’s another discussion… But you’ll see it either way. The question to ask there is it incoming, outgoing or combined. You want to know ahead of time depending on what you’re doing.

Lastly is probably the fairest of them all, but also the scariest for smaller providers when buying… it’s called “95th percentile” billing. In this case you will typically have a port speed (10,100,1000mbps for example) as well as a “committed rate”. That committed rate will be how much you’re paying for every month regardless of usage. So if you commit to 5mbps, and only use 1, you still pay for 5. But the more you commit to, the less you pay generally per mbps. Even though you commit to say 5mbps, your connection is burstable all the way up to the capabilities of the line – 10,100,1000mbps (minus ethernet overhead, bottlenecks, etc.). 

That great in that if you get slashdotted, or digg’ed, your might be able to keep your site up… assuming you server, etc. can handle it. But you bandwidth is going to spike. The 95th percentile method computes the bandwidth usage as how much line is required to handle the load 95% of the time.  That is to say if chop off the top 5% or the usage TIME wise, that’s how much you need. There’s about 720 hours in a month (30 days times 24 hours a day),  5% of that is 36 hours. So if we chop off the peak 36 hours, how big of a line would be needed to handle the rest… THAT is what you’ll pay.

Using the normal logs, you can usually tell how much traffic you sent in and out. Or at least get a good estimate. That works for the “x GB / x TB” scenarios. With the “unmetered” scenario, you don’t really have to care provided you’re getting all the bandwidth you need, as there’s no overage charges… thus why people like them, even if they are shared as they often are. But (and it’s a big hairy one), your website logs are almost useless for telling what your 95th percentile usage is… Almost. It can give you an idea if you should get worried, but that’s about it. Think about it, anything less than 36hours at the full 100mbps and < 5mbps the restof the time, and there’s no overage charge with just a 5mbps commit. But 36 hours and 5 minutes (a common sampling rate) at 100mbps, and you suddenly have a 95mbps overage charge. Even if it’s $10/mbps (a pretty decent rate for mixed, excellent for premium) and you have a new $950 bill to pay. Scary huh?  The key is that any provider selling to you at 95th percentile should (and I’ve not seen one that doesn’t) provide you with real-time stats of usage.

First, let me apologize for the late post… I thought I had a post scheduled for today but missed it. I’ll try not to do that again… but no guarantees – life happens!

For new hosts, this is probably not on your list of high priority items, but it should be! Every host, or every business for that matter, should have a stated refund policy.  Plus that policy should be publicly available. The reason being is it makes the issue when (and it is when not if) a refund request comes up, you can simply refer back to the policy for how to handle it.  You should put some thought into it now, and not have to think about it when it finally does happen. And actually as a newer host, it is more likely to happen sooner than later. 

Of course there will always be exceptions, and you should account for that in the policy itself… for “unusual circumstances”. It should not be your way of getting out of giving a refund without cause. But if you say that there’s a 30 day money back guarantee, you should honor it. But personally if the user knowingly abused the service, and your Terms of Service permits it, a refund is not warranted. But notice the TOS reference… your stated refund policy should reference accounts terminated for TOS violations and how they will be “normally” handled – if there is such a thing as a “normal TOS violation”.  Ideally it should be a part of the TOS itself. So that customers explicitly agree to it on sign up… You are having them agree by checkbox, or other method right?

Having a stated refund policy helps build trust in your new hosting company. It shows the customer that you are thinking things through… That you are flying by the seat of your pants… You have a plan, and are working it.

One of the other benefits is when a customer leaves, voluntarily or not, when they want a refund and start the threats, etc. You can refer to your refund policy. If you don’t have one, you’re at somewhat of a disadvantage should it go any further than the threats. Payment providers will want to know the terms that the customer agreed to, and if it’s not spelled out, it may mean that you will lose any challenge.

So go ahead and start working on your refund policy if you don’t have one already. Or review the one you have… You want this in place sooner rather than later.

On this installment of “Step 1a – Write a Business Plan”, we’re going to look at what a Business Plan is exactly… I’m sure everyone has heard of one, but how many of us have written one before. I’m sure there’s a few of us, but I bet the vast majority of people looking to get into webhosting for the first time are starting it as a side business. They have probably never written one before, and many probably have never seen one either.

So here’s an overview of the parts of a Business Plan.

• Executive Summary -  THE most important part of the plan. Who you are, what you do, and where you are and where you are going at a high level overview written in everyday terms.
• Market Analysis - A description of the industry including size and target market, growth rates, etc.
• Company Description -Another high level description but in more detail than the executive summary, this time specifically about your business and what needs you’re going to meet, and who the target is for those needs.
• Organization & Management – Profiles of the key players in your organization and the roles they will be taking on. Also should detail the overall structure and how those players fit together.
• Marketing & Sales Management – Descriptions of sales force, management, and how they will go about getting business.
• Service or Product Line -What you will be selling and how you will distinguish yourself product/service-wise.
• Funding -  Regardless of if you are requesting funding, this is where you will say how much you need and/or have, and for what it will be used for…
• Financials – Historical and Prospective financial data. One of the later sections to complete.
• Appendix – All the extra stuff that will be needed based on what you’re going to do with the plan. For example, if you are requesting money from a bank, etc., they will want credit information and resume’s on key management.

Today’s was only an overview of what each section encompasses. Begin to read over them and start thinking about each section, and start making notes or outlines for each section.  Next week, we’ll start going into each section one by one and get down and dirty with it.

Last Week: http://hostentrepreneur.com/2009/08/13/step-1a-write-a-business-plan-part-1/
Next Week:  Coming soon…

Included in the new list of the 500 fastest growing private companies are many technology and internet business. But we wanted to point out that at # 239 is HostGator.com with 896.4% increase! Hostgator is not new to the list either… This just goes to show that it is possible to build the webhosting business by defining your services well, and taking care of your customers. Congratulations to HostGator – Keep up the good work!

Don’t even think about starting your webhosting business without a business plan. This is step 1A… I say 1A, because you’ve probably already decided to do start haven’t you?  That was step 1. So now the “real fun” starts.

Overview of a Business Plan

First, what is a business plan?  It is a written description all of the financial, operational and managerial aspects of starting and running a business.  Notice the words I bolded – “written description” … you MUST write it down. Having it in your head does not count. A simple test for it being well written is if you handed it to a person with a reasonable knowledge of business (not necessarily this business but business in general), could they take that plan and implement it. That’s not to say they will have the technical, managerial and/or marketing expertise to do so, but they will be able to identify those needs precisely enough to seek those who do and oversee their functions.

Why write a business? According to Paul Fagan, managing director of ActionCOACH, if you don’t have a business plan there is an 80% chance your new company will not survive the first 5 years.  That’s not very optimisitic. If you don’t want your new dream job to turn into a nightmare (and it can quickly), you need to plan.

Who is the business plan for?  First it’s for YOU! Next it’s for the bank, investors, etc. and other involved parties. It is primarily an internal document that guides the operation of the company. It is a playbook… it should be able to tell the players (you and your team) what to do next to get to goal X.

When do you write the business plan? I can’t stress this enough… you should have a well defined written business plan in place BEFORE you start your business. This is a must if you want to give it every opportunity to grow. That is not to say that if you are already open for business and you don’t have one, you shouldn’t write it. You should!  It should become a top priority – right up there with taking care of customers.

How do you write a business plan?   Well… this was part 1… I can’t put everything into part 1 can I?  We’re going to move on to part 2 next with what the components of a business plan include, and then each successive part will detail each section of a plan. I’m doing this on purpose (not only to make you come back), but I want you to think about what you’re doing and not throw together something just to be able to say you have one.

Coming soon: Part 2 — Essential Components of a Business Plan