By Eric Holmlund
This tutorial applies primarily to "Newbie" resellers usingthe cPanel hosting platform.
How to Set Up Your Backend
What is a backend?
I’m sure many business people and “scholars” have much betterdefinitions of this than me, but I like to think of it as theguts of the business that make things run behind the scenes.When I think of a backend as it pertains to web hosting, Iconsider the following elements:
-Billing system
-Order processing
-Support system
-Accounting and recordkeeping
Billing system
As you contemplate your billing system, the first piece ofinformation you should look at is what types of payments are yougoing to accept. Hopefully, you’ve already outlined this in yourbusiness plan. Will you take Paypal, or will you accept creditcards through your own merchant account, or will you acceptchecks and money orders by mail? Accepting payments by mailsignificantly complicates your business, so I would suggest notaccepting payments by mail, or if you do—only accept annual termpayments.
The easiest payment system to implement, and my recommendation,is to use a third-party payment processor such as Paypal or2Checkout. These third-party payment processors allow you toaccept credit cards, debit cards, and e-checks securely throughtheir web-based system. They also allow you to createautomatically recurring billing, which is the most powerfulbilling tool that all resellers should implement. Rather thanhaving to bill your customers each term (month, quarter, etc),the third party payment processor will automatically bill yourcustomer on their due date, based on the terms of thesubscription that you created. In other words, if you create a$10/month subscription, it will automatically charge yourcustomer $10 on the day they sign up, and then it will chargethem $10 on the same day of each subsequent month. This is ahuge timesaver, by automating the billing process you caneliminate the need to bill your customers at all.
If you do wish to send your customers a formal bill, or if youaren’t using automatically recurring payments, there are severalsoftware programs that can help automate the process for you.The ones specifically designed for web hosting that I wouldrecommend are WHMautopilot, Lpanel, and Modernbill. There dozensof other billing programs available, but I recommend those onesbecause they also have auto-setup scripts and variousclient-management features built in to them, which we willdiscuss next.
Order processing
This part of your backend can basically be broken down into twooptions: manual processing, or automated processing. Manualprocessing is pretty much self-explanatory. Your customer placesan order and pays using one of your available payment methods.When you receive the order and payment, you go into your WebHost Manager (WHM) and set up the client’s account, and thensend them a welcome email with the pertinent information. Usingthis method there are a few different ways you can set up yourorder form to collect the information you need. The mostimportant piece of information you need is the domain name. Ifyou use only Paypal as a payment processor, Paypal has a formtool which will allow you to collect up to two form fields alongwith each order.
For example, you could set up your form so that the customertypes in their domain name and username along with their order.When you receive the order confirmation from Paypal, thisinformation will be included. Another method is to simply use aform mail script. This is easily implanted using a two-partorder form. In the first part, they type in their applicableinformation and click "submit", thus emailing you the form. Whenthey click submit, they are then redirected by the form mailscript to your payment page. The third method is to use ashopping cart application which integrates the collection ofdata and payment processing. The advantage of manual orderprocessing is it can help reduce the possibility of fraud andabuse because each order is screened by you as you process it.
Automated order processing saves a lot of time for thereseller, and also creates a smooth ordering process for thecustomer. Automation is a huge key to building a successfulonline business, and this is one form of automation that I wouldhighly recommend. An automated order processing program collectsthe pertinent data from your customer, directs them throughtheir online payment, and then interacts with your web server toset up the account and then sends out a welcome email to yourcustomer.
The programs I would recommend are WHMautopilot, Lpanel, andModernbill. I am certain there are several other equally viablesoftware programs available as well. The risk of automated orderprocessing is the potential for fraud, and abusers such asspammers signing undetected. However, I would say the benefitsof automated order processing typically outweigh the risks. If acustomer on the other side of the world orders at 3:00AM, theydon’t have to wait for you to wake up and check your email. Yourprogram will go to work for you and set up the account. On topof performing all of these tasks, it also creates a nicecustomer database which can be used for billing and a number ofclient administration tasks such as suspending accounts,performing server checks, etc. Just make sure you manuallyreview each order after it has been set up. This will help catchfraudulent customers before they have a chance to run theirmalicious activities (like spamming) on your server.
Support system
Your solution for a support system depends largely on your ownaptitude and preference. If you are familiar with the webhosting platform (such as cPanel) and with basic serveradministration tasks, you may wish to support your customersyourself. This is especially true while your business is in thestartup phase with only a few customers, or if you intend tokeep your customer base small. If you choose not to be your ownsupport tech, there are a few alternatives. The obvious one isyou could hire a support tech to work for you. While this isoften the most ideal situation, most startups can not afford tohire an additional person initially.
A more affordable solution may be to outsource your technicalsupport to a company who specializes in providing support forweb hosting companies. Many outsourcing companies are located intechnologically advanced areas in low-cost countries such asIndia. Outsourcing to an overseas company can be a verycost-efficient solution, but can also result in additionalproblems and challenges so you want to make sure you adequatelyresearch your solution before making any commitments.Outsourcing companies typically offer one or more pricingsolutions including per-ticket, per-customer, per-server, flatfee per month, or per representative hired.
There are also other creative support solutions available. Onesolution I’ve seen work with success is creating a communityforum where customers can help each other, guided by moreexperienced moderators and administrators. A host can offer freehosting to moderators in exchange for their help in running theforum. Other forms of bartering have been done successfully aswell. For example you could provide free hosting in exchange for5 hours a month of answering trouble tickets in your helpdesk.
As for the support options themselves, again hopefully you’veoutlined this in your
Regardless of whether you offer any other methods of support,the one method I will strongly suggest is an online helpdeskwhere customers can submit trouble tickets. There are severalfree helpdesks available, as well as more powerful applicationsavailable for purchase. The helpdesks I would recommend areKayako or Perldesk, both available on a monthly or yearlysubscription. Some client management programs such as Lpanelalso have a functional helpdesk integrated into them. It is bestto choose a helpdesk that supports email piping. In other words,you can send an email to support@yourcompany.com and itautomatically opens a helpdesk ticket. Then when you answer theticket, it also sends an email reply to the client, who can thenreply from within their helpdesk account or by replying to theemail.
Accounting and recordkeeping
This side of the business can easily be overlooked byenthusiastic startups, and is often the less-favorable task forcreative entrepreneurs. However, a solid accounting andrecordkeeping system is essential to the long-term survival ofyour business. If you use an automated system such asWHMautopilot, Lpanel, or Modernbill, it will automatically keeptrack of much of your financial information which is a usefultool and database.
However; regardless of whether you use one of those programs, Iwould suggest keeping an offline record of your customers andfinancials. This could be done through an accounting applicationlike Quicken, or with a customized database in Access, or usinga simple spreadsheet (which is my preferred method) in a programlike Excel. I personally prefer Excel for its simplicity. Yourrecords should include the following information at a minimum:
-Customer name
-Domain name
-Billing Due date
-Subscription ID number
-Price
-Size of plan
-Email address
In addition to your customer information, it is good to keeptrack of your overall finances using at a minimum a generalledger and P&L (profit and loss) statement. These documents aremuch simpler than you may think; in fact if you know how tobalance your checkbook you’re almost there. Your general ledgeris basically a list of all the expenses and revenues for themonth. Again this can be a simple Excel spreadsheet.
Your expenses would include any expense related to the businesssuch as your reseller account, advertising costs, support costs,Paypal or merchant fees, etc.
Your revenues are the money that you receive from your hostingclients.
You can then add up your expenses and revenues for the month,and if your revenues exceed your expenses, you made a profit! AP&L statement simply summarizes the information from yourgeneral ledger in a format used by most businesses to gain agood overview of a company’s financials in one page. I’m notgoing to give you an Accounting 101 class here in this e-coursebecause you can easily find a lot of information about P&L’s andaccounting on the web.
If you’ve done your accounting each month, your taxes should bea breeze, especially if you remain a sole proprietor with noemployees. All you need to do is take the information from youryear-end P&L statement and fill out a schedule C (profit or lossfrom a business). NOTE: This is NOT official tax advice. I amnot an accountant, and you should consult your tax adviserbefore filing your tax return.
Regarding business status, the simplest type of business withthe least amount of paperwork is a sole proprietorship. Anotherway to simplify your business and paperwork is to avoid havingany employees. You can avoid hiring employees by only using helpon a contractual basis (in other words they are a contractor vs.an employee). There are several restrictions in this regard (youcan’t set a contractor’s hours, etc.), so it would be best to dosome serious research and/or consult an attorney before makingany contractual or employment arrangements.
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