Are you about starting a data center? If YES, here is a complete sample data center business plan template & feasibility report you can use for FREE.
Okay, so we have considered all the requirements for starting a data center. We also took it further by analyzing and drafting a sample data center marketing plan template backed up by actionable guerrilla marketing ideas for data centers. So let’s proceed to the business planning section.
Why Start a Data Center?
Even though data centers are mostly run by government agencies or large companies, several medium and small scale companies are also going into the business so as to provide a cloud solution service that can be used for private and business applications.
This business is however one that is capital intensive as any entrepreneur going into this would need to procure enough computers and also ensure that where the computers are housed has steady electricity, ventilation and is secure from theft, accidental and intentional manipulation. Also, asides from these factors, there must also always be periodic back-ups in order to ensure that the business remains operable.
To start this business, it is necessary to approach a reputable business consultant who not only understands the industry but also the business very well in order to determine if it would be worthwhile going into the business. The business consultant also points out the obstacles and challenges the business is likely to face and how best to overcome them when it crops up.
Another thing that is important to have before starting any business is a business plan. Writing a business plan might not be so easy, however it is for this reason that a sample business plan has been prepared below – a sample data center business plan;
A Sample Data Center Business Plan Template
- Business Overview
The data center industry is one is one that has seen several changes come upon it, as businesses operating in this industry have moved from cloud adoption to data sovereignty, which is due to the fact that client companies are getting business smart about their data as well as computer strategies. This has led to operators in the United States of America and even globally to experience growth in revenue as well as round the whole industry.
The state that has the strongest presence in the data center industry is North Virginia, which is due to the fact that they have a low-post power as well as renewable hydropower. Around the globe, operators are eyeing government policies that might require that data centers be housed in the same country from which the data is accessed from which would lead to locations playing a huge influence on the data center industry.
The data center industry has made a huge impact on the power sector in the United States of America as electricity savings have been improved in between the last seven years. This is contrary to the expectations that energy use would increase as more people demand for real-time data which has not been so has energy has remained stable since 2010. Also, according to projections, energy use will reduce as the industry grows which would come from improved cooling and powering strategies and data center micro grids.
Most operators in the data center industry have started pushing for flexibility in their leasing agreements by looking to cut down the standard lease agreements from 10 years to between 5 – 7 years, this is so as to right-size and server reliance.
Data centers usually consume energy that is required that can be used to run a small town. Google Inc for instance had 13 data centers in 2013 round the world which used close to 260 million watts of power which amounts for 0.01% global energy. According to statistics, that amount of power can be used to supply electricity that will power 200,000 homes.
The lifespan of data centers is usually around 8 – 10 years on the average as technologies have been used to determine its lifespan. It should also be noted that cloud computing has also started gaining popularity among service providers; this is because more companies are switching from enterprise data systems to cloud services.
The data center industry has also seen some operators start to use automated network management systems. This automated network management operate physical network configuration, plugs and unplugs physical ports on command prompt from software and also allows physical data center network connections to be managed more quickly and remotely.
According to a recent study by International data Corporation (IDC), it has been projected that North America will provide the highest share of IT spending globally between the period of 2015 to 2019 which has been projected to pass the $1 trillion mark by 2017. In 2015, the data center industry grew to 6.1% with operators in the United States earning $115.6 billion in revenue.
Data Center Business Plan – Executive Summary
Utech datacenters is a leading and standard data center that will be located in Houston – Texas in order to serve all our domestic and corporate clients here in the United States of America and international clients as well. We are in the data center business to provide hosting services such as shared, VPS, dedicated, co-locative and cloud services. We also in addition to our core services offer consultancy services in line with training services so as to boost our bottom line.
We are in business not only to make profit but to also favorably compete with our competitors here in the United States of America as well as globally. Our vision is to offer our clients a reliable, secure and fast data center regardless of whatever applications they choose to run on our data center. We also aim to be amongst the top five preferred data center here in Houston – Texas by the year 2025.
Our location in Houston – Texas is very strategic as we are not only very easy for clients to get to but we will also have low overheads in running the data center via factors such as power costs, lease costs, sales taxes, property taxes as well as the potential incentives.
We intend to procure the best equipment in order to be able to provide the best services for our clients and run a standard data center here in Houston – Texas. Our goal is also to ensure that we build a business structure that will aid us in achieving our corporate goals and objectives.
Our intention in running a smooth business with as less hitches as possible is to ensure that we hire the right number of employees who not only have an understanding of the industry and are professionals but also are attuned to our corporate goals and vision and are committed to ensuring that these goals and visions are achieved.
We intend to provide a conducive and friendly environment for our employees as well as ensure that they get the required training that is continuous in nature so as not only to enhance their skills and increase productivity for the organization but to also ensure that the skills gotten are the best across similar start-up such as ours in the industry.
We also intend to make sure that our employees are one of the best paid and that they also have one of the best welfare packages in the industry. We intend to carry out continuous appraisals on our employees to ensure that those who are hard-working are promoted in order to motivate them into being more productive.
Finally our owners, Blake Chylds and Rob Branson have not only been in the data center business for years but have also served in the management capacity where they have had to make strategic decisions on behalf of the company. Both men have several IT certifications and are alumni of Harvard University and MIT Engineering School.
Both men also have several stakes in the IT industry and are going into the data center business due to the demand from their various clients. They will bring their over 30 years experience to bear in this business and ensure that the goals and objectives of the business are achieved.
- Our Products and Services
Utech datacenters will offer traditional data services to its customers that are of the highest standard possible from our permanent and strategic location based here in Houston – Texas. However as part of our efforts to boost our bottom line, we intend to ensure that we create multiple sources of income to our core service by providing consultancy services as well as trainings to our clients.
Our intention is to ensure that we make profits as is legally permissible by the laws of the state where we are operating as well as all over the United States of America. Therefore, some of the products and services we intend to offer at Utech datacenters include;
- Providing hosting services such as shared, VPS, dedicated, co-locative as well as cloud
- Consultancy services
Our Vision Statement
Our vision is to offer our clients a reliable, secure and fast data center regardless of whatever applications they choose to run on our data center. We also aim to be amongst the top five preferred data center here in Houston – Texas by the year 2025.
- Our Mission Statement
In order to achieve our vision, we intend to ensure that we get the right equipment, choose the right location that is not only strategic but secure and also hire the right employees that understand our vision to help us run the business.
- Our Business Structure
Having the right business structure is very essential to the growth of our business and we are therefore not taking this aspect trivially. We intend to ensure that our corporate foundation is perfect and as such we would go the extra mile in sourcing for and hiring competent and hardworking employees to handle the various roles and responsibilities in the organization.
We are ready to do whatever it takes to achieve this as we are a standard company with a standing in the industry that will lure the right employees to come and work for us at Utech data center here in Houston – Texas. The employees we intend to choose to work with us are those that understand the objectives of the business and are willing to work in ensuring that we achieve our intended goals and objectives.
Due to the fact that we intend to offer a wide range of services and offer trainings as well as consultancy services at our data center business, we intend to hire different employees that will be able to handle the different responsibilities from the assigned tasks that would be available at Utech datacenter here in Houston – Texas.
Therefore, the business structure that we intend to build at Utech datacenter is;
- Chief Executive Officer
- Infrastructure Manager
- IT and Database Admin
- Network and Systems Admin
- Customer Service Executives
- Marketing and Sales Executives
- Security Specialist
- Server and Storage Admin
- Electrical and Mechanical System Engineer
- Security Personnel
- Human Resources and Admin Manager
Roles and Responsibilities
Chief Executive Officer
- Formulates the policies that are used in planning for the strategic direction of the organization
- Manages financial resources by recommending yearly budget and ensuring that the organizations resources within the budget guidelines are in line with organizational laws and policies
- Reviews policies and processes and removes or modifies those that are found to be inefficient
- Responsible for all the IT systems which includes the hardware, software as well as security systems in the organization
- Responsible for ensuring that data is secure the company data-wise and also ensure that the business runs smoothly and efficiently
- In charge of implementing up-to-date solutions across the infrastructure
IT and Database Admin
- Works closely with the systems administrator to ensure that all the database needs are being met
- Carries out an upgrade to the database whenever needed
- Ensure that the security of the database is implemented in order to safeguard the data
Network and Systems Admin
- Ensures that the network is designed in such a way as to suit the needs of the organization
- Ensures that the network administration is set up and configured
- Adds new host machines, administers network security and also trouble shoot network problems
Customer Service Executives
- Are up-to-date about relevant trends in the industry as well as organizations policies so as to give clients informed information
- Keeps an accurate database of clients and updates when necessary on behalf of the organization
- Carries out any other duties as directed by the human resource manager
Marketing and Sales Executives
- Carries out communication with target market and also ensure that client relationships are well managed
- Conducts more research on the target market in order to determine new markets for the organization
- Advertises the organization on different platforms so as to create awareness for the organization
- In charge of protecting information from unauthorized violations and access
- Conducts continual tests on systems so as to expose vulnerabilities in security
- Prepares technical reports
Server and Storage Admin
- In charge of maintaining and managing the company’s storage-based systems
- Assists in product engineering as it relates to the organizations technologies
- Deploys storage technologies on behalf of the organization
Electrical and Mechanical System Engineer
- Investigates and designs renovations for available mechanical systems
- Provides technical support to the department related to mechanical and electrical systems in the organization
- Carries out or supervises construction or repair of electrical and mechanical systems
- Patrols organizations property to ensure that the premises and personnel are secure
- In charge of monitoring surveillance equipment and reports irregularities
- Restrains trespassers and inform violators of policies and procedures of the organization
Human Resources and Admin Manager
- Defines job positions for recruitment, carries out recruitment exercise and induction for new staff members
- Ensures that recruitment, welfare benefits as well as contract termination are in compliance with legal, contractual and statutory procedures
- Handles general office management issues
- Recommends financial actions on behalf of the organization by analyzing accounting options
- Prepares financial statements and income by compiling and analyzing account information on behalf of the company
- Analyze budgets as well as other financial information and help implement strategies that would save cost
- Ensure that the premises is kept clean at all times
- Follow procedures in using chemical cleaners especially where the systems are located
- Carries out any other duties as directed by the human resources manager
Data Center Business Plan – SWOT Analysis
Due to the fact that we intend to run a business that is up to standard, we have hired the services of a reputable business consultant here in Houston – Texas who has the necessary experience and also knows the business and industry thoroughly to help us look through our business concept and determine if it was worthwhile going into the kind of business that we were going into.
The business consultant was also to help us determine if we were well suited to run a data center business profitably and also compete favorably with the competitors who were running a similar business to ours here in the data center industry.
In view of that, an analysis was run in order to be able to take stock of what strengths, weakness, opportunities and threats were available to us in the industry we intended going into here in the United States of America. Below is the SWOT analysis that was conducted on behalf of Utech Datacenter;
There are several strengths available to us during the course of running the business and they include the fact that there are already existing distribution and sales networks available which makes it easier for us to penetrate the target market and get a share.
Also, the industry has been projected to grow and has a high growth rate which means that we are poised to earn lucratively from this business. Another strength lies in the fact that we have reduced labor costs as some of the tasks are being automated.
Finally, our employees are not only competent but very experienced and professional and are well equipped in ensuring that we achieve our intended goals and objectives.
The weakness we have in this business is due to the fact that we are running a small business unit that might affect our standing in the industry. We however intend to combat this by taking our sustainability and expansion measures seriously.
There are several opportunities that are available to us in the course of running this business and they include; the growing demand from the target market as more and more people are shifting towards cloud based services and other hosting services. This would lead to another opportunity for income, as income for workers and operators in this field will be on a constant increase.
Every business no matter how lucrative faces threats every now either during start-up or whilst running the business and the data center business is no different. As a serious business we however have already laid down strategies that would combat any threat that we might face during the course of running the business.
Some threats that we are likely to face when starting this business include; technological problems that might arise from the equipment. Price changes in procuring most of the equipment or in running the data center that might likely affect our pricing rate for our clients. The arrival of a competitor in the same location might cause our profitability to drop.
Data Center Business Plan – MARKET ANALYSIS
- Market Trends
According to a JLL report, Northern Virginia as at 2015 had a year-to-date absorption of 63 MW with Dallas, Seattle and Portland following closely behind. It has also been found that states such as Atlanta, Colorado Springs, Northern Virginia, Portland and Seattle were more attractive for providers in the data center industry based on factors such as power costs, lease costs, sales taxes, property taxes as well as the potential incentives to be gotten.
Data center providers in the United States of America have between the years 2009 and 2015 had a total of 1,267 projects both new and existing; most of these projects had Texas topping the list of states with a total of 147 projects.
This is because Facebook has a 750,000 square foot facility in Fort Worth, Texas which is worth nearly $1 billion, another of such large corporation with several data centers in Texas in HP. Houston in Texas is the hub of for data centers as the demand for these centers is mostly driven by oil and gas companies, energy companies as well as healthcare organizations.
Another state that has a large hub for data centers is Virginia and it has been projected to overtake New York metro. This is because Northern Virginia has abundant fiber, cheap and reliable power as well as attractive tax incentive programs for data center providers. Data centers bring large investments to the community as they also attract service providers.
Although the network management for data centers have been automated for a long while back, they were not fully automated as they ran on servers and routers, physical switches, and were lined by physical network cables. Also, the plugging and unplugging of network cables had been physically limiting for the automatic network configuration.
However, with innovations all the aforementioned difficulties have been resolved especially the plugging and unplugging of physical ports which can be done as a command from software.
- Our Target Market
The data center industry has a wide range of customers demanding for its services. However, in order for us to truly know who our target market is here in the United States of America, we have conducted a market research to help us truly determine what we are likely to face in getting our own share of the target market. This will also help us map out the needed strategies that would help our business reach its intended goals.
The market research we have conducted is also to help us know what exactly to look out for in our target market and what they will also be expecting from us. In view of this, we have determined that we are in business to cater to the following group of existing and potential clients;
- Data center service vendors
- Market operators
- Consultancy firms
- System integrators
- Training and education service providers
- Telecom and IT companies
- Cloud providers
- National regulatory authorities
- Government and public sector
- Financial institutions
- Oil and gas industry
- Small and medium enterprises
- Energy industry
- Healthcare industry
Our Competitive Advantage
We have established our business not only to make profit and be amongst the industry leaders but also to ensure that we have all the necessary factors that will allow us not only compete favorably with others but give us an edge as well.
We are located in a strategic location here in Houston – Texas that not only offer our employees easy access but also ensure that our overheads are low thereby affecting the overall pricing rates for our end-user clients, giving us an edge over others.
Even though data centers run a basic service of providing hosting services to clients, we intend to stand apart from our competitors by ensuring that we offer the best customer care service to our clients. All the inquiries of our clients, follow-ups and complaints will be professionally handled by our very qualified customer service executives.
Secondly, we intend to source for and hire the best employees to handle all the necessary responsibilities in the organization. Our employees will not only be very competent, qualified and professional, they will also understand not only the industry but also our corporate core values and be committed to ensuring that we attain all our intended goals and objectives.
Also, we will ensure that our employees are well paid and have the best welfare package across the industry whilst working in an environment that is conducive and safe. Also, our employees will always undergo regular training that will further enhance their skills while making them more productive for the company.
Data Center Business Plan – SALES AND MARKETING STRATEGY
- Sources of Income
Utech datacenters Houston – Texas just like any other private business has been established with the intention of making money in the data centers market cum the Information Technology industry here in the United States of America through our provision of data services for our numerous clients.
At Utech datacenters, we intend to generate income through the provision of these services;
- Providing hosting services such as shared, VPS, dedicated, co-locative as well as cloud
- Consultancy services
The data center business industry is one that is still growing and this is because the demands for services of this nature are growing.
Our strategic location in Houston – Texas has made it very possible for us to be optimistic about generating the required income that would allow us not only make enough profits that will allow us sustain and grow our business within six months of operations.
However, in order to ensure that we come up with a sales projections that is not only accurate but that we can rely on, we conducted a critical analysis of the data center industry cum IT industry in order to analyze what chances we had.
The sales projections were done based on information gathered on similar start-ups such as ours here in Houston – Texas as well as all around the United States of America. Below is the sales projection for Utech datacenters based on several factors;
- First Fiscal Year-: $50,000,000
- Second Fiscal Year-: $100,000,000
- Third Fiscal Year-: $200,000,000
N.B: The above sales projections were done based on several assumptions that there won’t be an arrival of any major competitor and that growth in the industry would be stable. It should be noted that should there be a change in the assumptions, the projected sales figures would likely increase or decrease but not remain the same.
- Marketing Strategy and Sales Strategy
Marketing and sales is very important for the growth of a business and so at Utech we take this aspect of our business very seriously as we are also aware that marketing also increases the awareness for a business, asides from allowing a business penetrate the target market and gain a fair share of the market.
We have hired the services of a reputable marketing consultancy firm here in Houston – Texas who have the expertise in this industry and now the terrain here very well to help us draft strategies that would benefit our business and generate the revenue that we have projected for the organization.
We want to build a marketing structure that will allow us also compete favorably with other leading datacenters here in the United States of America whilst also ensuring that we attract potential customers to our business. Our marketing and sales executives have also been empowered to work together with the marketing consultancy firm so that the strategies drafted are in line with our corporate policies and goals.
Below are the marketing strategies that we intend to adopt in generating revenue for Utech datacenters;
- Ensure that our data center business is introduced to organizations and agencies as well as other stakeholders in the United States of America
- Place adverts in local and national newspapers and magazines as well as on radio and television stations
- Engage in direct marketing and sales
- Throw a huge IT themed party in order to capture the interest of stakeholders, potential clients and the general community
- Use our website and other social media platforms such as Facebook, LinkedIn, Google plus and Twitter in order to actively promote our data center business
- Ensure that our business is listed in online directories
Data Center Business Plan – Publicity and Advertising Strategy
Every business that intends to make profit knows the importance of ensuring that the business receives enough publicity. Publicity for a business not only increases awareness for the business but also ensures that more revenue is generated through the publicity the business gets.
Also in addition to creating awareness for our business, we intend to ensure that our publicity strategies will make us compete favorably with the other leading data centers in the United States of America.
In publicizing and advertising our business, we intend to ensure that we deploy all available strategies. We first intend to hire a reputable brand consulting firm to help us draft suitable publicity and advertising strategies that will ensure that our brand is positively communicated to all our clients – existing or potential.
Therefore some of the publicity and advertising strategies we intend to adopt for Utech datacenters include;
- Be active in the local community where we are located by sponsoring relevant programmes
- Creating contests physically and online for college and university students
- Ensure that we install our billboards in strategic locations all around Houston – Texas as well as round the United States of America in order to create awareness about our organization
- Place adverts in local and national newspapers, business and other relevant magazines as well as on radio and television stations
- Use social media platforms like LinkedIn, Facebook, Google plus, Twitter and other related platforms to create awareness about our business
- Distribute our handbills and post fliers in strategic locations all around Texas
Our Pricing Strategy
In deciding what prices we would set for our data center services we would need to carry out a pricing strategy in order to correctly determine what to charge our end-user clients. Factors such as power costs, lease costs, sales taxes, property taxes, what our competitors are offering as well as what potential incentives are to be gotten from our location would go a long way in determining what we would charge our clients.
In view of the fact that we are relatively new in the industry, we intend to lower our prices a bit from what our competitors are offering and so we would ensure that we give our clients a discounted rate for the first six months of business in order to ensure that more customers are aware of the business and that we attract a huge share of the target market. We assure our stakeholders that the lowering of our rates will not in any way allow us to run at a loss.
- Payment Options
Utech is aware of the fact that our different clients have diverse business preferences and lifestyles and so will require different payment options that will suit them. Therefore, the different payment options that will be made available to all our clients include;
- Payment via check
- Payment via credit card
- Payment via online payment portal
- Payment by bank transfer
We have carefully chosen the above payment options because we know that they would work without any form of hitches for our various clients.
- Start – Up Expenditure (Budget)
The data center business is a capital intensive one especially as the bulk of the capital is used to lease a suitable facility, get sufficient power, get the necessary equipment to be used and also pay employees and utility bills. Therefore, the key areas where we intend to spend our start-up capital are;
- Fees for business registration and incorporation – $750
- Insurance coverage (General liability, property and equipment insurance, and workers compensation) – $100,000
- Obtaining of licenses and permits, as well as accounting software – $100,000
- Leasing of office facility for a period of 10 years including renovations – $7,000,000
- Cost of ensuring generating power as well as back-ups – $3,000,000
- Marketing expenses for a period of one year as well as marketing expenses for the grand opening of Utech datacenters – $450,000
- Cost of hiring reputable business consultants – $350,000
- Operational costs for the first 1 year (employee salaries, utility bills) – $2,000,000
- Cost of purchasing equipment for use (KVM console servers, SSD SAN storage, digital data shredder, Ethernet switches, retina scanner, UPS, blade server etc) – $10,000,000
- Cost of purchasing computers, printers, fax machines, phones – $10,000,000
- Cost of launching a website – $200,000
- Cost of throwing an opening party – $50,000
- Miscellaneous – $1,749,250
From the above requirements, we would need the sum of $35,000,000 to be able to start and successfully run our data center business here in Houston – Texas. The above amount covers the salaries of our employees and payment of utilities for at least 1 year of operations. It also covers the leasing of an office facility for a period of 10 years, and also procuring of equipment needed to run the data center business.
Generating Funding / Startup Capital for Utech Data Center Business
Utech datacenters is a business owned and run by two entrepreneurs and businessmen, Blake Chylds and Rob Branson. They intend to seek for various sources in ensuring that they source for the capital required for this business.
Therefore the areas where they intend to generate start-up capital from are;
- Generate part of the start-up capital from sale of property and personal stock
- Approach private investors for a loan in exchange for equity
- Apply for a loan from the bank
N.B: We have been able to generate the sum of $5,000,000 from the sale of our properties and personal stock. We approached a group of private investors who have agreed to lend us the sum of $10,000,000 in exchange for 3% equity in our business.
Our agreements are however based on certain conditions. We approached the ban for the sum of $20,000,000 to be repayable at the rate of 7% in 10 years. All the documents approving the loan have been signed and the money would soon be credited into our account within the week.
Data Center Business Plan – Sustainability and Expansion Strategy
The future of our business lies in how well we are able to sustain and later expand the business. In order to achieve our goals and grow as an organization, we intend to focus on the following factors such as investment strategy, our business structure as well as customer loyalty.
No business can survive without having a stable bottom line and so due to this; we intend to ensure that we re-invest 30% of our profit back into the company so that the business would be able to sustain itself without having to seek for external sources all the time.
We know how important it is for us to build a business structure and as such we are taking this aspect very seriously by recruiting employees who are not only competent and professionals but also those who thoroughly understand and identify with our corporate goals and objectives. We also intend to ensure that we have a great welfare package for our employees so as to boost their productivity efficiency for the organization.
Without customers, businesses would cease to exist as customers make sure that a business can generate revenue and make profit. We intend to offer excellent customer care to our clients and make sure that all issues and complaints are promptly resolved.
Check List / Milestone
- Business Name Availability Check: Completed
- Business Registration: Completed
- Opening of Corporate Bank Accounts: Completed
- Securing Point of Sales (POS) Machines: Completed
- Opening Mobile Money Accounts: Completed
- Opening Online Payment Platforms: Completed
- Application and Obtaining Tax Payer’s ID: In Progress
- Application for business license and permit: Completed
- Purchase of Insurance for the Business: Completed
- Conducting Feasibility Studies: Completed
- Generating capital from family members: Completed
- Applications for Loan from the bank: In Progress
- Writing of Business Plan: Completed
- Drafting of Employee’s Handbook: Completed
- Drafting of Contract Documents and other relevant Legal Documents: In Progress
- Design of The Company’s Logo: Completed
- Graphic Designs and Printing of Packaging Marketing / Promotional Materials: In Progress
- Recruitment of employees: In Progress
- Creating Official Website for the Company: In Progress
- Creating Awareness for the business both online and around the community: In Progress
- Health and Safety and Fire Safety Arrangement (License): Secured
- Opening party / launching party planning: In Progress
- Establishing business relationship with vendors – wholesale suppliers / merchants: In Progress
- Purchase of trucks: Completed