How To Set Up the Backend of Your Web Hosting Business
by: Eric Holmlund
What is a backend?
I’m sure many business people and “scholars” have much better definitions of this than me, but I like to think of it as the guts of the business that make things run behind the scenes. When I think of a backend as it pertains to web hosting, I consider the following elements:
- Billing system
- Order processing
- Support system
- Accounting and recordkeeping
Billing system
As you contemplate your billing system, the first piece of information you should look at is what types of payments are you going to accept. Hopefully, you’ve already outlined this in your business plan. Will you take Paypal, or will you accept credit cards through your own merchant account, or will you accept checks and money orders by mail? Accepting payments by mail significantly complicates your business, so I would suggest not accepting payments by mail, or if you do—only accept annual term payments.
The easiest payment system to implement, and my recommendation, is to use a third-party payment processor such as Paypal or 2Checkout. These third-party payment processors allow you to accept credit cards, debit cards, and e-checks securely through their web-based system. They also allow you to create automatically recurring billing, which is the most powerful billing tool that all resellers should implement. Rather than having to bill your customers each term (month, quarter, etc), the third party payment processor will automatically bill your customer on their due date, based on the terms of the subscription that you created. In other words, if you create a $10/month subscription, it will automatically charge your customer $10 on the day they sign up, and then it will charge them $10 on the same day of each subsequent month. This is a huge timesaver, by automating the billing process you can eliminate the need to bill your customers at all.
If you do wish to send your customers a formal bill, or if you aren’t using automatically recurring payments, there are several software programs that can help automate the process for you. The ones specifically designed for web hosting that I would recommend are WHMautopilot, Lpanel, and Modernbill. There dozens of other billing programs available, but I recommend those ones because they also have auto-setup scripts and various client-management features built in to them, which we will discuss next.
Order processing
This part of your backend can basically be broken down into two options: manual processing, or automated processing. Manual processing is pretty much self-explanatory. Your customer places an order and pays using one of your available payment methods. When you receive the order and payment, you go into your Web Host Manager (WHM) and set up the client’s account, and then send them a welcome email with the pertinent information. Using this method there are a few different ways you can set up your order form to collect the information you need. The most important piece of information you need is the domain name. If you use only Paypal as a payment processor, Paypal has a form tool which will allow you to collect up to two form fields along with each order.
For example, you could set up your form so that the customer types in their domain name and username along with their order. When you receive the order confirmation from Paypal, this information will be included. Another method is to simply use a form mail script. This is easily implanted using a two-part order form. In the first part, they type in their applicable information and click "submit", thus emailing you the form. When they click submit, they are then redirected by the form mail script to your payment page. The third method is to use a shopping cart application which integrates the collection of data and payment processing. The advantage of manual order processing is it can help reduce the possibility of fraud and abuse because each order is screened by you as you process it.
Automated order processing saves a lot of time for the reseller, and also creates a smooth ordering process for the customer. Automation is a huge key to building a successful online business, and this is one form of automation that I would highly recommend. An automated order processing program collects the pertinent data from your customer, directs them through their online payment, and then interacts with your web server to set up the account and then sends out a welcome email to your customer.
The programs I would recommend are WHMautopilot, Lpanel, and Modernbill. I am certain there are several other equally viable software programs available as well. The risk of automated order processing is the potential for fraud, and abusers such as spammers signing undetected. However, I would say the benefits of automated order processing typically outweigh the risks. If a customer on the other side of the world orders at 3:00AM, they don’t have to wait for you to wake up and check your email. Your program will go to work for you and set up the account. On top of performing all of these tasks, it also creates a nice customer database which can be used for billing and a number of client administration tasks such as suspending accounts, performing server checks, etc. Just make sure you manually review each order after it has been set up. This will help catch fraudulent customers before they have a chance to run their malicious activities (like spamming) on your server.
Support system
Your solution for a support system depends largely on your own aptitude and preference. If you are familiar with the web hosting platform (such as cPanel) and with basic server administration tasks, you may wish to support your customers yourself. This is especially true while your business is in the startup phase with only a few customers, or if you intend to keep your customer base small. If you choose not to be your own support tech, there are a few alternatives. The obvious one is you could hire a support tech to work for you. While this is often the most ideal situation, most startups can not afford to hire an additional person initially.
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How To Set Up the Backend of Your Web Hosting Business
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About The Author
Eric Holmlund operates several successful online businesses, and uses the flexibility of working at home to spend time travelling, working in the ministry (http://www.prayway.com), and having fun with his wife and kids in beautiful Colorado. Be sure to check out his full e-course on setting up a web hosting business at http://www.howtosellhosting.com
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