Web Hosting Resource Kit - Editor's Opinion 4/2004

Web Hosting Resource Kit - Editor's Opinion 4/2004

We mentioned it already in our first column this year when we were researching providers for a dedicated server. Some providers seemed to avoid the basic rules of doing business and were selling servers lke crazy. Sale after sale went live but no additional resources got added as well as they 'forgot' to look at the cash flow.

Last week a nightmare came true for many web hosts and 'owners' of a dedicated server. Their provider Angelnetworkz got caught with the pants down - and the providers of Angelnetworkz did cut the line. No payments, no servers. The real victims were the clients of Angelnetworkz. Their servers shutdown without a warning. No time to get a the latest backup of the server - many businesses at risk.

An incident like this should teach us all a good lesson. Growth of a business or the economy is good. Excessive growth is not good. Look at the federal reserve bank. If our eonomy grows too fast they will raise the interest rates to cool down the excessive growth. An overheating of the economy would raise inflation and cause more problems down the road. It works the same way for a business. If your business is growing too fast you will run into problems. You will not be able to support your existing clients properly because the growth rate is just too fast. You will have difficulties keeping things like cash flow under control as well as managing the growth with the existing resources. You will have problems recognizing mistakes and to correct them. Controlled growth is the way to do it. Remember - a business is not supposed to be a race car - it's more like a vessel going from A to B.

Why should you grow your business slowly? Slow, but continous growth allows you to allocate resources properly. It allows you proper financial planning and to make corrections when necessary. It is easier to correct mistakes that everyones makes this way. Remember - you are building a business that is supposed to last. It will be an assett at one point and hopefully worth a lot. Guess what - a one-year old business with 1,000 customers will be less worth than a 3 year old business with 1,000 customers. Why? The 3 year old business is already on its way to establish a brand. It has proven that it can last for a while. It is build on a solid foundation. The 1 year old business has yet to prove that it will survive a downturn. There is more to it but you get the idea.

Another dedicated server provider who was doing the same fast growth thing like Angelnetworkz did get some bad publicity on well-known web forums for a lack of support. If you as a business put new customers on a higher level than your existing customers, your business will fail soon. Do not ignore your existing clients. They are the ones that already generate income for you. Ignoring your income will eventually result in a loss of the same.

I hope all clients of these 2 providers will soon be up and running again. I hope that the failure of 2 businesses will actually open the eyes for other ones to reconsider the way they are doing business.

Have a great week.

Christoph