If you are thinking of starting your own host, then their are a few things to consider. It's not just a matter of paying $100 for a cheap box and loading it up.
1) Getting a server.
It's true, you can get servers for $100. But they are seriously underpowered, probably 450Mhz, 128MB ram boxes. An 800 or 1000MB box will cost more. Then there's the control panel licence, back up solutions and anything extra like a Real Server, SCSI Drives etc.
2) Managing your server.
Do you know Linux/Apache? If not, then a RackShack server isn't going to help you. They take care of the hardware, the software is up to you. Then there are different levels of system administration. For example, we have an excellent sysadmin who knows Linux/Apache extremely well. However, different control panels interact with the server in different ways so certain commands differ. That's why we pay a little extra to have our servers housed at RackSpace. They have a full team of sysadmins and level 3 techs who know Plesk well and how it integrates with the server. So then a company can different level of support. Simple techs like myself and a few others, and if we can't work it out it goes to the system administrator and he can pass an issue on to the DC.
3) Support.
That brings us to support. Support will eat 80% of your time and you'd better know what you're doing or learn fast. You need to a good system that works. Support will make or break a company. Don't offer 24/7 support unless you can really provide it. Support can be provided by Manuals, FAQ, Forums, Helpdesk, Email, Phone, Live Chat or all of them. That means development. If you have your own server, you'll be competing with the big boys so your site better be pretty. (In the majority of cases.) Developing support tools costs money too.
4) Billing.
Merchant Account, third party processor or PayPal? You will need a good and stable solution to accept payment for your services. PayPal alone will hardly suffice.
5) Getting Customers.
Needless to say a very vital part of your business. You will need to find a niche, a unique market to tap or you will need to spend cash money on advertising at certain locations. (And that can be a bottomless pit) You need a good way to track the efficiency of your campaigns too.
These are the main things to consider. Setting up HostNexus took around $10,000. We spend about $1000/mo on advertising and $1600/mo and hardware. Revecom handles our payments and they take a hefty chunk, too.
If anyone would like any advice whatsoever on starting up a host then I'm only to happy to help. Hosting is all about helping people and solving problems. I work 20 hrs a day on average but I just love love this industry. Even though you'll have to put up with the occaisional negative comment and uncalled outburst. Negative comments in the form of constructive critisism can be helpful but being rude, indignant and childish helps nobody.
