Starting a VPS business with $10,000. How would you spend it?

Discussion in 'Operating a Hosting Business' started by MannDude, Jul 8, 2015.

  1. MannDude

    MannDude Just a dude vpsBoard Founder Moderator

    Mar 8, 2013
    Let's say you had $10,000 to start fresh. Not a small budget, but certainly not a large budget either, though acceptable enough to get started in the industry properly. You have to use this $10,000 and nothing else to start a VPS brand or web-hosting service.

    How would you utilize this to get started?
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  2. VPN.SH

    VPN.SH Active Member

    May 16, 2013
    Interesting topic idea. I'll come back and edit this after dinner, looking forward to seeing some other responses!
  3. lunanode

    lunanode New Member Verified Provider

    Aug 25, 2013
    buying hardware is out the window with just $10k

    so leasing would be the logical choice.

    If targeting lowend market, with the fierce competition and low profit margin, estimated time to deadpool: 1 year, if not sooner

    best to just lease a 2 dedicated servers from reputable provider, setup redundancy(mirroring, drbd or something) then see if possible to acquiring local businesses as clients. Then maybe in a year or 2 with enough money saved to purchase dedis from ebay and collocate the equipment. If can't acquire local businesses as clients to  yield larger profit margin, then quit while still have some money left from the 10k.
    Last edited by a moderator: Jul 8, 2015
  4. Tyler

    Tyler Active Member

    May 27, 2015
    I'd beg to differ. eBay has some amazing deals for server hardware - you just need to know where to look.

    A full write-up coming to a store near you...
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  5. Hxxx

    Hxxx Active Member

    Dec 20, 2013
    @drmike come here man, do your stuff.
  6. Aldryic C'boas

    Aldryic C'boas The Pony

    Apr 18, 2013
    Give it to Fran.
    VPN.SH likes this.
  7. drmike

    drmike 100% Tier-1 Gogent

    May 13, 2013
    What do I have to do with this?  
  8. Hxxx

    Hxxx Active Member

    Dec 20, 2013
    You are always calculating, seeing the future, your wisdom is much needed on how to start a vps company with 10K and not only with servers, include legal fees as well. You are certainly good in this.
    drmike likes this.
  9. drmike

    drmike 100% Tier-1 Gogent

    May 13, 2013
    Meh, I'm busy, I'll leave that up to you.  I need apprentices.
    switsys and Hxxx like this.
  10. KuJoe

    KuJoe Well-Known Member Verified Provider

    May 17, 2013
    Take $1500 and buy a server, set aside $2500 for 12 months colocation, $316 for 12 months licenses, ~$500 for web design/branding/plugins, $### for registering an LLC. (cost depends on location), put the rest away for a rainy day and unexpected costs.

    Ta da! A VPS-Provider-In-A-Box! Just don't expect to be the next Linode or anything.
  11. William

    William pr0 Verified Provider

    Oct 10, 2013
    Don't even need full 10k:

    Buy a storage box at 5k

    WHMCS etc. at let's say 500$ (purchased license + updates for a year)

    Colo at 100$/month (1,2k/yr) with IPs

    LLC/LTD at 250$ setup and 100$/yr

    Sell storage VPS at 7EUR/TB and bam, business.
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  12. HalfEatenPie

    HalfEatenPie The Irrational One Retired Staff

    Mar 25, 2013
    Don't forget.

    $2950 for the "all you can eat ice cream sandwich" bar in the office.  
  13. Francisco

    Francisco Company Lube Verified Provider

    May 15, 2013
    Honestly I wouldn't even touch the VPS side of things. As I've told others, if they want to get their feet wet in hosting that they should start with a reseller account and make that profitable. Most resellers are pretty affordable so the amount of time/effort required to break even is low.

    Shared already had its floor fall out so prices are pretty well settled. For instance, a user could take one of our $2/month plans, sell 20 x 1GB space shared plans for $5/year - $10/year and make $100/year - $200/year return on $20/year of investment. With VPS you have licensing costs, high server costs, IP costs, etc, all affecting your potential pricing.

    The VPS market hasn't fallen through the floor yet (I know, expect things to get uglier before they get better), so if you aren't an established brand you're in trouble. Check out the VikingLayer or whatever brand that drserver bought. Their pricing was $7/month for 4GB RAM and according to the owner, they were barely covering hosting costs, nevermind covering his time invested.

    RLT and drserver like this.
  14. Coastercraze

    Coastercraze Top Thrill Verified Provider

    Mar 28, 2013
    - Decide on a name and buy the domain

    - Design a site

    - Buy / rent software needed

    - Form an LLC

    - Find another company which offers resale of services and resell it. (Can also get a reseller account to start out with).

    - Hire some staff or the ugly O word outsource your helpdesk.

    - Identify and target something you're good with

    - Advertise accordingly

    - Build some reputation.

    - Expand when ready / as needed.

    - Set approximately 6 months worth of expenses aside just in case.
  15. Scopehosts

    Scopehosts Member Verified Provider

    Jan 14, 2015
    Firstly i would structure my expenditures involved with Webhosting business


    1) Buy a 3-5 years old premium domain worth 2000$

    2) Custom Responsive Website Design - 500$ one time

    3) WHMCS One Time License - 250$ + 99$/year for early Support service

    4) Server Provider with WHMCS plugin or API 

    5) Small Configured Managed Server to host website - 99$/mo (990$ annual)

    6) CDN Service worth 15$/mo ( 180$ annual )

    7) Hire a genuine SEO/SMM Company for On-line marketing worth spending - 2000$ ( Which will boost the company sales at least after 45-90days )

    8) Register a company with total expenses of 350$





    Left with Core requirements for business


    1) Just lease three E3 - E5 Server Machines with 32GB or 64GB RAM`s with good amount HDD`s mounted with RAID10 worth 200$/month on each server - total 600$/mo on most prefered location.

    2) Implement Solusvm or Proxmox VM controllers with OpenVZ and Xen Virtualization Installed - Costing again - approx 50$/mo.

    3) Hire a professional to do all above chores worth 150$/mo ( 50$ each server )


    Monthly Recurring Expenditures: 800$/mo. 


    Now I`am left with : 2831$


    This amount can be used as safe funds to retain business at least for additional 4 months in case of no business turns up.
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  16. Hxxx

    Hxxx Active Member

    Dec 20, 2013
    Business Plan is the key. If you can't be different than what is already established, and i mean better, dont start one. Go get a job at mcdonalds, you will earn more.
    buildmyblock, RLT, Donn and 2 others like this.
  17. DomainBop

    DomainBop Dormant VPSB Pathogen

    Oct 11, 2013
    Nothing like wasting 40% of your startup funds, and the money would be wasted since the rest of the business plan screams host in a box with nothing to differentiate it from the competition. (and as an end user, the last time I bought from a host because they had a great domain name or ranked on the first page of google for a keyword was...NEVER)


    Why does a web host need a managed server to host their own website?


    "Professionals" don't work for $150 a month.  There is a reason data centers charge $100-$200 per hour for remote hands.

    Best advice.
    switsys, River and RLT like this.
  18. Scopehosts

    Scopehosts Member Verified Provider

    Jan 14, 2015
    My business point of view related to the starting up webhosting business with not much of technical knowledge and start getting some with the experience on starting web hosting services. 


    Hiring a professional i meant to say a server management company which takes atleast 50$ per server maintenanace work .


     I`am just sales support personal in web hosting company dont have much knowledge of core technical things. Probably i need to hire some 3rd party services for handling servers rather than spend time on R & D.


     This is just a imaginry thing i would do in case i had 10000$ and wanting to start a VPS or web hosting company.
  19. sleddog

    sleddog New Member

    May 16, 2013
    Anyone looked at WHT VPS Offers lately? :) 30-40 new offers every 24 hours (not including the sticky ones).

    How can a new startup with a measly $10k expect to compete in that chaos, and make a profit?

    If I had $10k (of someone else's money) and 3 months free time, I'd start a VPS Matching Service --a service which matched clients with providers. And I don't mean lowend clients; rather, small business clients that don't have in-house expertise and are lost in the chaos of techspeak and market buzzwords.

    Evaluate the client's needs, and develop a shortlist of recommendations. Remain independent of providers (i.e. no referal benefits, no VPS-provider advertising). Revenues are fees-for-service charged to the client with a variety of service options.

    Startup Budget (3 Months)
    Expenses       1,000
    Consultation   3,000
    Salary (me)    6,000
    drmike, River, RLT and 2 others like this.
  20. MannDude

    MannDude Just a dude vpsBoard Founder Moderator

    Mar 8, 2013
    Well, if you start a new company and think all you need to do is post offers on WHT/vpsB/LE* then you're already going at it wrong.

    Since I never responded, let me introduce my plan.

    • Acquire server hardware, collocate.
    • Take care of licensing. Buy owned licenses where econimcal.
    • Then, target my LOCAL MARKET heavily. That is where the money is. Small local businesses who, for some reason, have no online presence. They're everywhere. Don't believe me? Walk down Main Street in your town and write down the name of all the little shops and stores you pass. Go home and Google them. Many may have a Facebook page now but that's it, and even then, many do not. So, offer them a service at a rate of mid to high $xxx/yr or $50+/mo for items such as fully managed shared hosting. If they email changes to their restrauant menu, you publish these changes to their site. If they have a new lunch special, you add it to their site and Facebook page. Things like that.

    The money is in the local market. If I were to start something new, I'd not sit around and try to look attractive in a sea of hosts who are virtually no different than the others. $10,000 is too small of a budget to really 'stand out' unless you're buying a reseller account and spending the rest on marketing. But it's plenty to begin to attract local and regional businesses who can be sold on the idea they're losing business by not having a website. They can be easily sold on the idea, "Well, the restaurant next door shows up in Google when you search for "[town name] restaurants" however you have no website or online presence so people coming from out of town do not know about your store."

    Anyhow, that's what I'd do. Local business sites are often low traffic, low load, business owners are those who typically have the money and can afford to pay like $50/mo for a relatively 'hands free' service that they do not need to maintain. You can easily set up their site with a number of pre-made templates and input data and photos of their store in an afternoon. The update maintenance should be easy as well. Just have a very clear pricing structure tier that indicates what you will and will not do for the price they pay, and if they want extra, can upgrade them to the next tier. Additional services such as office visits can be packaged in or added as an extra cost for setting up their webmail accounts in cPanel and configuring whatever desktop client they're using on their PC at home or in their office to receive such email as well. Lots of things that we all know how to do is a foreign concept to most.

    You won't ever have to login to WHT and try to have your offer seen by people who will probably abuse it or turn out to be fraudulent anyway.
    Last edited by a moderator: Jul 10, 2015