Daniel Foster, technical director at Manchester-based web hosting company 34SP.com, has already made the transition, and gives his advice on how others can do the same

Upon leaving university in 2000, my friend Stuart Melling (now my business partner) and I weren’t certain of what we wanted to do. We were unsure of the career paths we wanted to take and applying for graduate schemes just wasn’t on our radar. However, at this time it was the height of the dotcom boom, so we embarked on a few projects that we hoped would work.

In hindsight these projects were never going to be an enormous financial success, but one thing they all had in common was the need for web hosting. That’s when the thought hit us – why not provide a hosting service to people like us, who are setting up new websites? There were many hosting companies out there to choose from, but none were particularly competitive on price.

This is what got us thinking.

Finding your niche

Finding your niche is probably the most important factor to consider in the initial stages of setting up your business. What sets you apart from everyone else, and what can you offer that your competitors can’t?

Developing a side project into something further will require a lot of research; you could have all the knowledge in the world in your specialism, but turning it into a revenue generating business is a completely different ball game.

Stuart and I were more than aware of how necessary web hosting was through the early days after university when we set up multiple websites. For us, having this should be just as important to a business as having a postal address.

There were plenty of hosting companies available. However, whenever we had sourced hosting for our dotcom businesses, the cost had always been a shock and the service a disappointment. It was here where we found our niche; while there wasn’t necessarily a gap in the market for an average new hosting business, there was for one that didn’t charge phenomenal prices and delivered superior support.

Starting out

Originally, we were happy enough for our project just to make enough cash to pay the rent. But, after six months or so, we were able to take a small salary each and pay a lease on an office. This was the turning point for Stuart and me. Shortly after this we turned 34SP.com into a thriving business.

There are a handful of things to think about when you are starting out. The first for us was the company name. We’re often asked how we came up with 34SP.com. Initially, customers had the option to have their website with our name on the end of it – growthbusiness.34sp.com, for instance.

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Because of this, our name had to be short. All three letter domain names had been taken at this time, along with all 4, 5 and 6 letter words. So we decided on – ‘34SP’ which was short and memorable – plus easy to type into a browser. Once we had decided on the name, we were able to start promoting the business properly.

Tackling the initial obstacles

When you set up your first business there will be a number of obstacles you will have to overcome. How to hire people, how to delegate when you’re used to working alone, where to base your office when you have staff, and how to deal with tax and legal matters, are some of the most common.

If you’re thinking about turning a hobby or side project into a business, it is evident that you feel passionately about it. In the early days, your first hire is more important than you might think. This project is your ‘baby’, and bringing new people into the picture and landing them with responsibilities that can affect your company can feel unnerving. Remember, this is normal and something that, when it comes to your second hire, you will feel more comfortable with.

Where you base your business will largely depend on the type of company you are. When we started to expand we opened an office in Manchester’s Northern Quarter, as we wanted our staff to be based in a vibrant city centre location with good transport links, so it’s worked well. But if you’re a business with a warehouse for instance, a city centre won’t be an ideal location. It isn’t a case of one-size-fits-all but that’s what makes the job interesting.

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The main piece of advice I can give is to appoint a good accountant to deal with the legal and financial issues that you may not have experienced before. Other teething problems can usually be handled with advice from friends, family and acquaintances, but with tax and legal problems you should seek advice from professionals.

Research your competitors

Competitor research wasn’t something we did at the start of 34SP.com. We knew that we could host websites more cost effectively and deliver better support, so we built the business from there. However, it is important to know your competitors and how what you’re doing measures up, so after a while we started doing regular competitor analysis, and still do this today.

Looking at your opposition will help you discover your niche. Can you offer something they can’t? Do you offer something they don’t already, and do you need to promote this more? As mentioned earlier, you need to discover your niche in a market and capitalise on that, and this is the best way to find it.

The reality of turning a hobby into your livelihood

Something you need to be wary of is the chances of the realities of business making your hobby or side project less pleasurable for you. It goes without saying that some elements of the job you won’t necessarily enjoy, and there will be added responsibility and pressure as your business grows. And as you become responsible for the livelihood of your employees and the ultimate success of the business, it’s likely you’ll start feeling the pressure. So before you embark on the project, seriously consider this possibility. 

All in all, if you can turn what you love into your job, I’d say go for it! At no point did Stuart or I think that something that started off as a side project to pay the bills, would in fact turn into a fully-fledged business that, 14 years on has over 20 full time employees.

For more information, please visit www.34SP.com

Further reading on start-ups: Going global: how to avoid growing pains