Growth Demonstration in 2006
Finhosting growth demonstration and estimates: 2006 – 2008, Page 1 of 3
Growth demonstration in 2006
First quarter 2006 –
Rack space used: 4 units.
2 customers (SBBSnet and Surfnet).
2 Colocation servers plus consulting work – about 1600e/month.
Marketing activity done: none
Total: approx. 1600e/month
Second quarter 2006 –
Rack space used: 6 units @ 195e/month
2 customers (SBBSnet and Surfnet).
2 Colocation servers plus consulting work – about 1400e/month.
1 lease server + misc consulting work: 339e/month
Marketing activity done: a little
Total: approx 1739e/month
Third quarter 2006 –
Rack space used: 8 units @ 195e/month
3 customers (SBBSnet, Surfnet, Sivitie).
2 Colocation servers plus consulting work – about 1400e/month.
1 lease server + misc consulting work: 339e/month
1 lease server: 204.90e
Marketing activity done: mainly a lot of planning and design
Total: approx 1843e/month
Fourth quarter 2006 –
Rack space used: 8 units @ 195e/month
4 customers (SBBSnet, Surfnet, Sivitie, E-hentai).
2 Colocation servers plus consulting work – about 1400e/month.
1 lease server + misc consulting work: 339e/month
1 lease server: 204.90e
1 colocation server: 155e/month
Marketing activity done: mainly a lot of planning and designing
Total: 2098e/month
First quarter 2007 growth is known at this time:
Rack space used: 21 units @ 320e/month.
4 customers (SBBSnet, Surfnet, Sivitie, E-hentai).
(Fifth customer has been sent contracts for first quarter 2007 but not executed yet)
2 Colocation servers plus consulting work – about 1400e/month.
1 lease server + misc consulting work: 339e/month
1 lease server: 204.90e
3 colocation servers465e/month
Fifth customer’s contract will be for 190e/month colocation server
Marketing activity occurring:
We are going live in Mid-January with a well-planned Google Adwords campaign with a 200e/month budget. The Adwords campaign is completely set up and ready to be plugged in on the start date.
A salesman who works for 33% commission on his sales will be taking the phone calls from the campaign.
Total: 2408e/month without customer #5, 2598e with customer #5 assuming he executes.
Expected growth 2007– summary and some explanations:
My salesman and I very conservatively expect to bring in one new customer per month on average with our Google Adwords campaign. The business has been growing already with almost no marketing effort, this will be the beginning of really starting to market the service. Each new customer will colocate or lease a 1 or 2 unit server on average, the income range from each new customer (minus salesman’s commission) will range from 100e to 238e/month (median: 169e).
It is the nature of this industry that customers don’t tend to leave for a number of years, commitments tend to be long term.I have not budgeted for any customers leaving, although it probably will happen, and it is likely to be offset in these statistics by the influx of new customers.
It is also possible to have big colocation customers suddenly move in, and the number of colocation servers can rise as much as 10+ servers in one month. For example, we have one such customer right now who may be coming on sometime in the first quarter 2007 who would occupy 42 units of rack space, but it is not final enough to detail in these statistics. These growth estimates are intended to be conservative and do not account for the biggest, new customers such as this.
A server lease means that a server must be purchased by Finhosting for the customer. The purchase price of the server is paid for by the customer over the course of the first year of service, and the servers will last for at least 4 years and often longer. Finhosting encourages colocation (no start-up costs for us) over leasing to its customers, and the encouragement often works because of how long-term these customers tend to be. Leasing is still good to attempt to offer, though, because it is very popular for other reasons. The money to purchase lease servers typically comes from the business owner’s personal savings. Finhosting has no business loans at this time.
End of second quarter 2007:
6 customers
Total: 2767e/month
Rack space costs will rise to about 520e/month
End of third quarter 2007:
9 customers
Total: 3274e/month
End of fourth quarter 2007:
12 customers
Total: 3781e/month
Rack space costs will rise to about 800e/month
End of first quarter 2008:
15 customers
Total: 4288e/month
End of second quarter 2008:
18 customers
Total: 4795e/month
Rack space costs will rise to about 1000e/month
End of third quarter 2008:
21 customers
Total: 5302 e/month
End of fourth quarter 2008:
24 customers
Total: 5809e/month
Rack space costs will rise to about 1200e/month
Note about employees:
Even the customer load of 24 colocation/lease customers shown at the end of 4th quarter 2008 is manageable by one full-time technical person (me) and one salesperson. It is the nature of this business that once the server is in the rack and the customer is using it, it is almost maintenance-free from Finhosting’s standpoint. One occasional temporary person would be hired for short periods of time if, for example, I go out of the Helsinki area for a while (vacation to Leppävirta for a week, who knows). It would not generally be necessary to have hired help like this while I am in the Helsinki area.
Note about other marketing efforts:
We are probably going to do additional marketing other than Google Adwords as the business grows and the cash flow for more marketing effort becomes available.
Written: December 14, 2006
Laura Herrmann, owner of Finhosting.