Sucsess Rate in Hosting Companies?

These questions are aimed More Towards People who OWN hosting companies.

I' know my way around hosting, billing, software, etc, but I was curious..

Lately ive wanted a new niche, and was thinking A)WebHosting, or B)Gameservers.

I've done days worth of research at WHT and reading, but want some live answers from people i know.

I dont think I am too interested in GameServers, To expensive to start, and if it WERE to ever be sucsesfull, it would take far to long for me to have patience with, but

What would you say the success rate in a hosting company is?

Im not talking about a reseller, and overseller.

If I did this, I would
Buy a dedicated server to start off
Buy my billing and support software
Advertise, somewhat decent
Try to be unique, in the sense of contests, promotions, plans, prices

What would you say the success rate is? Is it worth it? How long would it take me to at least break even on a one server cost fee?

If you are aiming to break even and start making a profit you are looking at about a year, many times much longer.

I would say the success rate is a little under half, and the only reason many don't do well is because they expect to much to soon and weren't prepared to put enough time and effort into it.

Well, Money, is important, but not too...

If I were to start a hosting company, before anything, I would open a new bank account up and save for a while, so i have the money for 3-5 months for a dedicated, so i dont fall over the first month because of price..

As long as you have the funds and are prepared to be in it for the long haul you should do just fine.

Alright, thanks for the quick reply, I still want opinions from others, but have a second question..

How Easy, Expensive, and Successful is it to buy customers? I've seen it a lot, never experience it though, what are your thoughts?

The webhosting market is too saturated ATM, so it can be very hard for a new host to start making any profits.

The number of companies who stay in business for 2-3 years is a lot less than the number of companies which die every month due to the competition.

Smaller host's cant afford to compete with bigger hosts unless you're offering something special such as personalised support etc. since they can get away with overselling.

However, I'd advise you to get a reseller account first, then as you get more clients, upgrade to a VPS and then go on to a Dedicated. Starting off on a dedicated will burn a huge hole in your pocket, and if you have no prior experience with dedicated servers, you're going to have a hard time when your server starts getting overloaded or DDoS'ed.

I know how to run a dedi server.

And money isnt my biggest factor, why start out half-assed?

If I do it, im starting full out.

Actual companies? probably 5%. People calling them selves companies? .5%. That's my guess.

Haha, thanks for the input blue, ive seen you post your opinion on matters like this

Speaking as a web hosting company owner.

I for one, have been on the successful side, and have broke even many months in advance.

But, when first entering into the game it is kind of hard. Seeing how saturated the industry is, there is literally 20 companies that start up every month, trying to go big.

Expenses:
There are many expenses that have to be taken into consideration, but with a well thought out business plan and prior investment you can will be able to cope. For one, a new company to handle a dedicated server can be overwhelming, especially if you want a decent one that won't die down on you once you get a decent amount of clients. When purchasing the server you are then hit with the server fee costs, if you should go for the server fee or just pay the standard monthly bill. Then on top of that, you will need to get your server managed, which can be a little costly, but I have had a very good relationship with PSM (platinumservermanagement.com) which costs $30 a month. Once that is done, you need to get lease or buy a billing script. I would personally suggest to first lease, because for one your company might not take off, and I personally would rather lose the small monthly lease fee, than to lose the owned plan fee. You can sometimes knockout 2 birds with 1 stone, because to this day most billing software's come with a built in helpdesk, but if you would like it externally is a different thing. I would recommend WHMCS (whmcs.com) for billing, and Kayako (kayako.com) for external helpdesk if needed.

Advertising:
I have personally found success in targeting 1 particular forum that you are very active at, or targeting a community you may own. For one, you know everyone, what they are expecting, and what they are looking for. But, do not hesitate to pay for advertising on big forums, but try to look for forums that support your niche, but at the same time aren't heavily advertised by other companies.

Originality:
Probably the HARDEST thing you would encounter in the industry- because of how saturated the industry is you would always find another company using your promotion, plans, prices, similar designs, etc.. Especially when another company has seen a particular promotion work successfully, they would want to duplicate it for themselves. When thinking of a unique promo, you would always run into another company using it before you or after. For instance the infamous "Give away iPod", "Discounted First month fees", "Buy 1, get 2 months free", etc..

Hope this helped.

-- EDIT --

How Easy, Expensive, and Successful is it to buy customers? I've seen it a lot, never experience it though, what are your thoughts?
This can go both ways actually, first you have to research a lot. You would have to dive into that company and find its reviews and feedback. Then once you have established company reviews, you would then need to ask that customer for a review on how their service has been. I have seen a company buy a pack of 100 customers, and nearly all of them leave just of the thought of "being sold" or "being bought out". It can be very costly depending on what kind your buying, for instance buying monthly clients is much more costly than buying quarterly, semi-annually, or annually. The process of transferring the clients over, is hard and grueling. I have never done it, but I know how to and what it takes. For one, you would have to make a new account and put in all his personal information, set up a billing cycle, email him his details, and transfer over his account. To put things in perspective, I recently had a Server Migration and it literally took 8 hours to complete, that is including transferring hundreds of clients, and making sure nothing was left behind.