Planning for Growing Pains
It may not be expensive to get started as an ISP, but once you do, the expenses can accrue quickly. A small ISP can start up for under $25,000, but the cost of keeping up with technology and subscribers is one reason the ISP business is capital intensive. Getting more subscribers is surely the way to increase the value of an ISP, but for ISPs short on capital and financing, a growing number of subscribers can actually be a cause of trouble, including cash-flow pressures. Careful planning and shrewd management are necessary to successful growth.
A day in the life of the average successful small ISP is very hectic. Everyone runs around with more than enough to do — there are always more services to deliver, more problems to address, and more decisions to make. There are calls from people selling routers, e-mail applications, and software, among other things. And however skeptical an ISP’s decision-maker may be, there’s sometimes a good deal of truth behind a salesperson’s claim that x is a necessary component of an ISP’s growth. “Many small to medium sized ISPs that were once successful suddenly find themselves with the need to buy new equipment and increase staff — and the scramble to keep up can get pretty ugly,” says the vice president of a small New York ISP. “If you don’t have a solid business plan in place, together with a resolute management team, a profitable small business can snowball into a big headache.”
“To be a successful ISP, you have to have complete control over every aspect of your business,” says the owner of a small ISP in the Boston area. “You have to have control over your customer base. Not only do you have to deliver quality service — you also have to deliver adequate customer service and technical support. And in addition to providing service that keeps pace with growth, you also have to be able to do your billing. It’s not easy to send out bills for 10,000 subscribers. And if you’re set up for only 5,000, well, you just might find it extremely hard to collect all the money you worked so hard to get.”
In an industry known for pulling in people attracted to the spirit of the Wild West, solid business plans and resolute management are the keys to success. That means having a good three-year business plan, as well as people in place who know how implement it –and change it when change is needed. Any business plan must change as the nature of business changes, and the ISP business changes as fast as the latest modem.
The need to keep up with change must not be mistaken for the chance for entrepreneurs merely to improvise. A plan for slow, steady growth is the best way ISPs to succeed. ISPs that start up with the dream of growing overnight often never do. Others grow too quickly and bust their seams. “You still see the gold-rush mentality here in San Francisco,” says John Faber, President of ISP.NET. “But the thing to keep in mind is that the ISP business is cutthroat. You can’t expect to run an ISP for the quick buck. You have to be in it for the long haul — you have to grow an ISP just as you would grow any other business.”
