Thread: Issues in setting up a hosting business

I've been thinking for a long time about starting a hosting business. I know there are millions of them out there and that the market is absolutely flooded but I think I've found a niche I can pursue with little risk.

The technical side of things should be pretty straight forward but some of the other aspects to running a business I need some advice on. The aim initially it to just co-locate a single machine and maybe a router, and expand as needed. Sorry for all the questions - it's more of a brain dump but I'd really appreciate any help - feel free to just answer one

1) Liability - How did you create your T+Cs, AUP etc? Did you involve a solicitor? What sort of legal protection should I look into? I will be co-locating my own kit.

2) How do people generally take payment? I know Bytemark take BACS. Do you think its worth investing in a merchant account for cc's from the outset or leaving that until a later date?

3) Datacentre choice - I'm looking for a centre where transit is widely available and has plenty of space to avoid having to move further down the line due to expansion. THE is pretty full so I'm avoiding that one. What are people's experiences of BSQ? It's a good facility and there's plenty of space but I'm concerned that the higher and reduced availability of transit compared to E14 might hinder me further down the line.

4) I'm just going to take a static route initially from my colo provider and then move to multi-homing as I expand. I'd rather not take PA space from them because I'd lose the addresses if I ever dropped their transit, so I'd like my own IP Space. I've been looking at LIR services as initially I can't afford the RIPE sign on but I'd like to clarify how they normally offer PA space to their customers. Do they just SUB-ALLOCATE the space? Are there any downsides to this? PI Space is another option (I'll fill a /24 pretty quickly) and then asking the transit provider to announce the space under their ASN.

Thanks for any help you can give me,
Adam

1. Speak to a legal professional and make sure your legal wording is done properly. You will want to get some sort of insurance but again a solicitor will tell you all about it.

2. You will want to be able to take CC's, look into worldpay, protx as easy entries. Later on you might want to setup a merchant account etc.. but i would start with the aforementioned first personally.

3. BSQ is generally perceived as quite good but like you say transit options aren't as good as docklands but why not just take some decent connectivity from someone like rapidswitch? Don't need to worry about transit then

4. I think multi-homing is overated. Unless you are pushing quite a bit of bandwidth it's going to be a loss leader. I would say it's better to find a good supplier and trust them to handle the connectivity side of things.

Originally Posted by administrator

Don't multihome unless you are buying proper hardware which should be £10k + is my view. But that won't include spares either.

£10k+ per router IMO, with at least 2 routers

Nowt wrong with a basic sup/msfc2/pfc2 in a 6503 chassis if you've got upstreams who will filter the crap for you and your total commit is low enough. However if you are going into a site that has an uber back end infrastructure you could possibly only dream of, why don't you just get some PI/PA space depending what you are doing with it and let them announce it for you.

You would more than likely be able to get a pair of static routed resilient feeds and you can switch that yourself for peanuts in comparison to investing in mutiple decent routers...

Thanks for the replies.

Originally Posted by JamesSykes

I think multi-homing is overated. Unless you are pushing quite a bit of bandwidth it's going to be a loss leader. I would say it's better to find a good supplier and trust them to handle the connectivity side of things.

Originally Posted by administrator

Don't multihome unless you are buying proper hardware which should be £10k + is my view. But that won't include spares either.

Originally Posted by goscombtech

£10k+ per router IMO, with at least 2 routers

I agree. I'm only trying to ensure that if I need to move to it in the future the move to it will go as smoothly as possible.

Originally Posted by PeteK

Nowt wrong with a basic sup/msfc2/pfc2 in a 6503 chassis if you've got upstreams who will filter the crap for you and your total commit is low enough. However if you are going into a site that has an uber back end infrastructure you could possibly only dream of, why don't you just get some PI/PA space depending what you are doing with it and let them announce it for you.

You would more than likely be able to get a pair of static routed resilient feeds and you can switch that yourself for peanuts in comparison to investing in mutiple decent routers...

Could someone clarify how PA space is given when it is bought through an LIR? Do they sub-allocate a block from their own PA space? Are there any risks associated with this? Would PI space be a better option?

If you're using someone else's PA then you can't take it with you, and most won't allow you to announce it via BGP (publicly at least). The correct "answer" is to pony up and become an LIR yourself.

I would always advise people to invest in a proper set of terms and conditions and acceptable use policy. They do not need to be lengthy but should make it clear that your liability is limited. For example, if a client is running an ecommerce site, hosting companies will want to protect themselves from liability for losses that the client suffers if their servers go down, or are hacked.

Hosting companies also need to have a clear AUP which prohibits illegal activities, and activities which might not be illegal but are undesirable - e.g. pornographic / gambling etc. Without terms and conditions and AUPs in place, it can be more difficult to immediately terminate the service for a particular client.

I would also advise people, if they are trading with consumers and small businesses, who wont have the capacity to instruct their own lawyers, to make sure that their terms are written in relatively plain english and any limitation of liability is reasonable. Writing "We exclude all liability" - is not likely to work from a legal perspective.

In terms of insuring kit - you should speak to an insurance broker.

Note - these "professional services" costs (don't forget accounting costs too) can add up and you should make sure that your business plan adequately takes them into account. You can start small, but it is always best to allocate enough budget to do things properly. Plenty of people get away without doing so (in fact, so did I, once upon a time prior to becoming a solicitor) but it is obviously not advisable.

P.s. I would also recommend using PA space and letting your trusted transit provider do all the work in that respect. In this world of outsourcing, it is no longer necessarily seen as a detriment to have someone else take on this function for you, in fact it can be seen as a positive because you get the benefit of economies of scale. If you do your diligence well enough you should be able to sort out the reliable providers the cowboys. I have personally had great service from Layershift, Melboure and Avensys in the past and there are plenty of other people here who I am sure would also do a top rate job.

Originally Posted by adammccarthy

Could someone clarify how PA space is given when it is bought through an LIR? Do they sub-allocate a block from their own PA space? Are there any risks associated with this? Would PI space be a better option?

Sorry, I stuffed up your response, and added to the confusion - as Dan (Goscomb) very correctly pointed out, PA space belongs to the provider.
PI space can't (by the book) be sub-allocated to "customers" and it would be for your own use..

You may find a friendly provider who can assist in these matters and may even announce a prefix for you without you neccessarily needing your own routing hardware - Or you can start lower end and do this yourself on a software platform, or get a basic C2800 series or similar router and don't take full tables, but static route to your upstream..

Originally Posted by PeteK

Or you can start lower end and do this yourself on a software platform, or get a basic C2800 series or similar router and don't take full tables, but static route to your upstream..

2800 series will take a full table (or 3) no probs at all

problem is it won't actually route that much traffic. If you want something fast and cheap best check out something like a Cisco 3560/3750 or Juniper EX series layer 3 switch. Both will take a default route via BGP and push line rate at many Mpps.

Originally Posted by e107xs

I would just like to point out that I so want a 2811 for my place!

Prehaps a little crappy as ISP devices they are the dogs at home unified comms point.. you want to do X that baby can do it!

If anyone is throwing one out please let me know!

You'll be so lucky, can't see why anyone would throw away a 2811 unless it has gone bang

Where's me violin gone?

Originally Posted by goscombtech

2800 series will take a full table (or 3) no probs at all
.

Yeah with a memory upgrade plus as you say not a great deal of raw routing guts.