A wise man once said to me “you have to have money to make money.” Although this is a very true statement, it cannot be over-extended. I’ll concede one cannot run a website without purchasing some form of hosting. On the same level, another wise man told me “he who can avoid unnecessary expenses is one step ahead of the others.” This edition of Garontee will explain my take on useless spending, practiced quite frequently on the net.

I asked Frederick Coleman, the Owner of Round Host (http://roundhost.net) what his take on the issue is. “I have learned, that to run a successful hosting company, it is best to stick to what it does best...to sell hosting. When I tried to extend the business into other realms such as traffic providing, I gained no customers to the traffic program, I have learned that to run the company successfully, it is best to improve on the hosting itself, than to add new areas into the company.”

Lets start with a practical and common example, a new webhosting company. There will be two basic expenses: a server, client control panel software.

Assuming the proprietor of the hosting company has design skills, they won’t need to purchase a template for their site. Beyond this, here is how companies get into trouble.

Many companies purchase a fancy billing system. I agree billing systems can be important in order to keep organized, but only when they can be afforded.

WHM Auto Pilot starts at $19.95 a month, or a $149 one-time fee. PerlBill offers only a one-time $199 fee. Modernbill has a leased license option available for $24.95 a month or a capped owned license available for $179.95 one time fee.

Regardless, all of the major billing systems are sure to put any virgin company into the red, especially when most hosting plans run for less than $10 a month. What ever happened to running a spreadsheet? Satisfy your organizational desires with OpenOffice. It’ll be the most cost effective purchase you’ll ever make.

Next up, forum software. I have nothing against forums, except when they aren’t needed. If a hosting company only has 2 clients, it doesn’t need to spot an $85 leased vBulletin installation or a $69.95 IPB. There are free alternatives, for more information visit my “Novice’s Guide to Forums” at The Novice’s Guide to Forums.

Flash demos are another thing that I find baffling. DemoDemo charges nearly $100 for a set of CPanel tutorials! What ever happened to using the print screen key and typing out instructions? If you’re afraid to do things the easy way, you can sell your own tutorials with Tech Smith’s Camtasia Studio. It’ll set you back almost $300, but its money that you just might see again.

I’ve given an abundance of obvious examples as to how webhosting companies can either cut corners or splurge. The bottom line is, effective advertising and word of mouth will make a company successful, and not how many toys it has bought.