Do you want to start an internet domain name business? If YES, here’s a complete guide to starting an internet domain name business with NO money and no experience. A domain name is simply a lingual representation of an IP address, which is a series of numbers separated by dots. Every website is given an IP address; however it is much harder to remember this segmented sequence of numbers instead of remembering a simple phrase.
This according to research is the basic concept of domain names, but the process through which an IP address is translated into a domain names is a bit more complicated. Domain names are separated into three different levels that represent different parts of a domain name. The first level (also known as the top-level) of the domain is the extension of the domain.
For instance, in the domain name “www.exampledomain.com,” the .com portion of the domain is the top-level domain (TLD). Put together, there are over 200 top-level domains (TLDs) or domain name extensions to choose from, most of which are country code TLDs. Generic TLDs contain three or four letters, like .com, .net, .org, or .info, while country code top-level domains usually contain two letters following a .co, such as .co.uk (United Kingdom) or .co.in (India).
The domain name business involves organizations, businesses, and individuals involved in the provision, support, and sale of domain names and related services. First and foremost, registrars are responsible for maintaining the registry for each Top-Level Domain (TLD). The responsibilities of the registries include accepting domain name registration requests from registrars, maintaining a database of the necessary domain name registration data, and providing name servers to publish the zone file data (i.e., information about the location of a domain name) throughout the Internet.
Resellers align with or are under contract with registrars to sell domain names and other services provided by the registrars such as web hosting. Have it in mind that resellers are bound by their agreements with the registrar(s) whose services they sell and are not accredited by ICANN organization. The Internet Corporation for Assigned Names and Numbers (ICANN organization) is the non-profit organization that enters into and oversees the agreements with registries and registrars.
19 Steps to Starting an Internet Domain Name Business
Table of Content
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide What Niche to Concentrate On
- 4. Know the Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 9. Discuss With an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed With ideas & Strategies
- 17. Develop an Iron-clad Competitive Strategies to Help You Win
- 18. Brainstorm Possible Ways to Retain Clients & Customers
- 19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
1. Understand the Industry
According to statistics, the first quarter of 2018 closed with approximately 333.8 million domain name registrations across all top-level domains (TLDs), an increase of approximately 1.4 million domain name registrations, or 0.4 percent, compared to the fourth quarter of 2017. Domain name registrations have grown by approximately 3.2 million, or 1.0 percent, year over year.
Its very important to note that Total country-code TLD (ccTLD) domain name registrations were approximately 146.3 million at the end of the first quarter of 2018, with an increase of approximately 0.2 million domain name registrations, or 0.1 percent, compared to the fourth quarter of 2017. TLDs increased by approximately 3.2 million domain name registrations, or 2.2 percent, year over year.
Reports also has it that .com and .net TLDs had a combined total of approximately 148.3 million domain name registrations in the domain name base3 at the end of the first quarter of 2018, with an increase of approximately 1.9 million domain name registrations, or 1.3 percent, compared to the fourth quarter of 2017.
The .com and .net TLDs had a combined increase of approximately 4.6 million domain name registrations, or 3.2 percent, year over year. As of Mar. 31, 2018, the .com domain name base totalled approximately 133.9 million domain name registrations, while the .net domain name base totalled approximately 14.4 million domain name registrations. New .com and .net domain name registrations totalled approximately 9.6 million at the end of the first quarter of 2018, compared to 9.5 million domain name registrations for the first quarter of 2017.
New gTLD (ngTLD) domain name registrations were approximately 20.2 million at the end of the first quarter of 2018, with a decrease of 0.4 million domain name registrations, or 2.0 percent, compared to the fourth quarter of 2017. ngTLDs decreased by approximately 5.3 million domain name registrations, or 20.7 percent, year over year. While total ccTLD domain name registrations were approximately 146.3 million at the end of the first quarter of 2018, with an increase of approximately 0.2 million domain name registrations, or 0.1 percent, compared to the fourth quarter of 2017. ccTLDs increased by approximately 3.2 million domain name registrations, or 2.2 percent, year over year. Without including .tk, ccTLD domain name registrations increased approximately 0.2 million in the first quarter of 2018, or 0.2 percent, compared to the fourth quarter of 2017.
ccTLDs increased by approximately 1.9 million domain name registrations, or 1.5 percent, year over year. The top 10 ccTLDs, as of Mar. 31, 2018, were .cn (China), .tk (Tokelau), .de (Germany), .uk (United Kingdom), .ru (Russian Federation), .nl (Netherlands), .br (Brazil), .eu (European Union), .fr (France) and .au (Australia). As of Mar. 31, 2018, there were 302 global ccTLD extensions delegated in the root zone, including Internationalized Domain Names (IDNs), with the top 10 ccTLDs composing 65.3 percent of all ccTLD domain name registrations.
As of Mar. 31, 2018, there were 39 ngTLDs delegated that meet the following criteria: 1) has a geographical focus and 2) has more than 1,000 domain name registrations since entering general availability (GA).
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
Domain name business doles out and manages internet domain names. Once they’re registered with the official authorities, they’ll have access to unregistered website names in the public domain. Customers will pay a small fee to set up and keep their chosen name, while the registration maintains the name and handles any specific issues that may occur. This business is ideal for someone who enjoys administrative duties as well as dealing with customers. Any entrepreneur hoping to start this business must have a love for technology, and an inherent understanding of how websites are named and who is in the market for them. Also note that your ideal customer will be anyone hoping to start a new website. Anyone looking to start a new website will need a domain. Your day to day activities may include any of the following:
- Maintaining databases
- Setting policies for the company
- Paying registration fees
- Researching new developments in domain law
3. Decide What Niche to Concentrate On
If you are interested in running a domain name business, chances are you already have a reason why your domain name services would be better for users than others. It’s advisable that you find out precisely what your market and branding is, and don’t try to sell to everyone. Have it in mind there are too many large domain name businesses who already cater to no specific market, so you aren’t likely to make money trying to sell to all user groups. Instead, start out small and specific. Consider the following when defining your brand:
- Who is your target market?
- What is the company name?
- What makes your domain name service unique?
- What kind of domain name services will you offer? Domain name creation, domain name reseller, and dedicated servers are all popular choices.
Level of Competition in the Industry
According to reports, the global Domain Name System (DNS) service market size is expected to rise from USD 238.9 million in 2017 to USD 438.8 million by 2022, at a Compound Annual Growth Rate (CAGR) of 12.9% during the forecast period. Note that the growing realization of safeguarding websites from DDoS attacks and low cost associated with DNS service are some of the factors believed will drive the DNS service market.
Also note that the availability of free DNS service providers may act as the negative factor for the growth of the DNS service market. Also experts expect cloud deployment to be a faster growing deployment type in this market, as it is being positively accepted in the industry, because of its easy, flexible, affordable, and scalable feature. But, the installation and maintenance cost of cloud-based services is less than that of on-premises services.
Have it in mind that among the industry vertical segment, the retail and e-commerce industry vertical is expected to grow at the highest CAGR, as this industry vertical cannot afford a DNS outage owing to the involvement of the online shopping experience, which could cost retail stakeholders a huge loss in terms of revenue and customer satisfaction. Also note that in terms of the growth rate, APAC is believed will rise at the highest growth rate. This is because of the presence of broad and diverse internet subscriber base in many of the APAC countries, technological advancements in industry verticals, and increasing deployment of data centre and cloud infrastructure in this region.
4. Know the Major Competitors in the Industry
- Cloudflare (US)
- AWS (US)
- VeriSign (US)
- Oracle (US)
- Akamai Technologies (US)
- Google (US)
- IBM (US)
- NS1 (US)
- Microsoft (US)
- Neustar (US)
- CDNetworks (South Korea)
- DNS Made Easy (US)
There are a lot of pitfalls and risks to consider before jumping into the domain name business. The three largest risks are liquidity, subjectivity and legality, but there are also many other ranging from misleading appraisals to faulty escrow payments. Would-be buyers should carefully consider these risks before investing in domain names.
Note that most stocks and bonds can be bought and sold with ease through a broker, but domain names can be much harder to sell. This is because finding the right buyer is sometimes a matter of listing a sale for several months or even years, which means that investors should have a lengthy time horizon and the ability to bear a loss.
Have it in mind that stocks can be valued by the discounted value of future cash flows, while bonds can be valued by their coupon payments and interest rates. But domains are a much more subjective valuation that can be very difficult to pinpoint. And so-called domain appraisers are well known for issuing lofty valuations that can be very difficult to realize.
You need to understand that domain names can be a sticky business from a legal standpoint. Picking names that are too close to a trademarked name can result in a lawsuit and a court order to forfeit the domain name for free. In other cases, stolen domain names can be sold before the buyer has the ability to discover that they’re not the true owner.
But just like any other business, domain names business come with their own set of pitfalls. But a focused entrepreneur who puts into consideration the risks and returns thoroughly, domain names can become a business that brings back high returns, and a unique way to diversify your portfolio of investments. Indeed the market in this business is limitless for the right person.
With the advent of technology, it has become easier to set up a website, and more people are taking advantage of subscription services to get the word out about their interests. Be it a cause, hobby, or career move, it’s not uncommon for people to have multiple websites to promote the things they care about. As this trend continues, domain names will become ever scarcer and thus more valuable to those who want to find the right name to get the most exposure.
5. Decide Whether to Buy a Franchise or Start from Scratch
Starting a business comes with a lot of risks and challenges especially for someone who is new to the industry. The business of domain names is not as easy as learning the keys on a keyboard, but requires time and dedication to achieve perfection. This is not a business to jump into because you feel there are opportunities to explore; even in an open market this business needs careful planning. This is why buying into a franchise in this industry is better than starting from the scratch because unlike starting from the scratch, buying into a franchise offers you the following benefits;
- A better business platform
- Easy access
- VOIP Unified Telephony
- Integrated applications
- Flexible and scalable
6. Know the Possible Threats and Challenges You Will Face
The growing need for domains that suit the needs of a product or service has undoubtedly made this business highly innovative. With a catchy and good domain name, businesses can be rest assured that their customers will find them without going through so much hassle. Having a definite and clear domain name helps businesses and individuals achieve their diverse goals. Possible threats to starting a Domain name business includes;
- Writing a business plan
- Proper industry knowledge
- Deciding on the type of services you want to sell
- Searching for a partner
- Purchasing necessary equipment
- Renting an office space
- Creating a marketing plan
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
There are numerous legal entities to choose from (Sole Proprietor, LLC, Incorporation, etc.), which is why it’s advisable that you do a little research and see which model is right for the services you intend to offer. It is also advisable when planning for this stage that you consider all possible options, like your visions and plans for the business, and how best any structure would suit you.
Don’t forget that the legal entity you choose will rely on the size of your Domain name business, but for the sake of this article the LLC is the best entity for an Domain name business. The benefits of forming an LLC business structure is well known to the world, but the reason why it is the best structure for a Domain name business is because it provides security, flexibility and credibility.
8. Choose a Catchy Business Name from the ideas Below
- Skyline business Corporation
- Firebrand Communications
- Tribune Internets
- Domain Lords
- Website network solutions
- Favour connection Inc.
- Antique domains
- Space Inc.
- Access Internets
- Domain LLC
9. Discuss With an Agent to Know the Best Insurance Policies for You
In this age of competition and growing need for perfection, managing a domain name business can put you at risk. Running a domain name business might give you access to other companies’ sensitive data. Although you’re operating on a web-based system, the laws of copyright, libel, slander and trademark still exist. Like all those providing professional services, domain names provide a service that comes with an expectation of a certain level of professionalism and specialist knowledge. This is why when things go bad the domain name business may well be held responsible for any financial losses with legal action. For this reason and many more, you should carry adequate insurance to mitigate the effects of such actions.
- General Liability Insurance.
- E&O Insurance.
- Cyber Liability Insurance (Data Breach Insurance).
- Business Owner’s Policy.
- Workers’ Compensation Insurance.
- Employer’s Liability Insurance.
- Fidelity Bond Insurance.
- Employment Practices Liability Insurance.
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
With advent of technology came the need for websites and with the growing need for websites comes the rising demand for domain names. These domain names which differentiates a website from another creates unique concerns for IP. Protecting your intellectual properties can be stressful but in the modern world where ideas and patents are been stolen on daily basis, you need to consider protecting your hard earned intellectual property rights.
- Protect it yourself
- Avoid a lockout
- Revisit control on daily basis
- Choose a right provider
- Choose the right service
- Read and understand your fine prints
- Expect to pay more
- Consider IP creation
11. Get the Necessary Professional Certification
Professional certification measures your knowledge and skills against industry- and vendor-specific benchmarks to prove to customers that you have the right mix of Internet skills, knowledge, and expertise. In the domain name business, your business must be accredited by the Internet Corporation for Assigned Names and Numbers (ICANN) before you can become a domain registrar for the .com, .net and .name top level domains (TLDs). If you are a Verisign-certified .com or .net registrar, it is easy to add additional top-level domains (TLDs) to your account. However, if you are not a .com or .net registrar, you will just have a few extra steps to complete to become a .name, .tv and .cc registrar.
ICANN notifies all registry operators, including Verisign, when the accreditation process is complete for .com, .net and .name TLDs. If you are not currently a .com, .net or .name registrar, Verisign requires each business to be authenticated before establishing an account. A vendor selected by Verisign will contact you to request documents as proof of your business and your authority to represent and act on behalf of your company.
After you must have created an account, you may complete the next steps simultaneously: provide financial information and determine technical readiness. When finished, explore the Add Services tab to find out how Verisign helps registrars with value-add services and resources.
12. Get the Necessary Legal Documents You Need to Operate
It’s very important to state that every legal document needed for a business takes time, energy and paperwork to obtain. But no matter how unjoyful a task you see it as, don’t risk your business shutting down before it fully begins. Conducting business without the proper licensing is a criminal offense in some states, while others hand out hefty fines.
Registry-Registrar Agreements (Required)
Note that to offer .com, .net and/or .name, you will first be needed to enter into a Registry-Registrar Agreement with Verisign for each TLD. To offer .tv and/or .cc, you will be needed to enter in a Name Store Merchant and Name Store Activation Agreement. To obtain copies of these agreements, contact the Verisign Customer Affairs Office.
.tv and .cc Registry Policy
The .tv and .cc Registration Policies govern the registration of these top level domain names. Registrars should review the policies from time to time and any modifications made thereto.
Corporate Formation Documents (Conditional)
It all depends on the outcome of the Authentication process described above, Verisign may ask you to provide copies of corporate formation documents to verify the legal entity with which VeriSign, Inc., is entering into a contract. The corporate name used on all forms must match the name used for ICANN accreditation. ccTLDs such as .tv and .cc do not require ICANN-accreditation.
Foreign Corrupt Practices Act Form (Required)
Also note that registrars are needed to complete and return the FCPA form to certify that the registrar will comply with the applicable laws and requirements under the Foreign Corrupt Practices Act. The Customer Affairs Office will forward the required form electronically.
Registrar Information Form (Required)
You will need to complete the Registrar Information Form and submit the information to create your account. Your business information must match your ICANN accreditation information. ccTLDs such as .tv and .cc must match your legally registered name. You will also need the following technical information: Web server name, Whois server name, SSL Common Name and no more than three subnets in Classless Inter-Domain Routing Protocol (CIDR) format, up to a total of 96 hosts (/26 = 64 hosts, /27 = 32 hosts, /28 = 16 hosts, /29 = 8 hosts, /30 = 4 hosts, /31 = 2 hosts, /32 = 1 host).
13. Raise the Needed Startup Capital
Starting your Domain name business doesn’t come cheap. It requires adequate funding if you plan to acquire a significant market share in the industry. Well fortunately, there are a lot of financing options out there for focused entrepreneurs. There are bank finance, private investments, and even funding from wealthy individuals who want to help small business owners to become successful. Have it in mind that you can’t just borrow money as easy like that. You will need to prove to these people that the business you’re starting has a potential to give them significant return. Ways to gain funds in this business may include…
- Personal savings
- Service charge
- Angel investor
- Venture Capital
- Loans and grants
- Alternative funding source like Crowdfunding
14. Choose a Suitable Location for your Business
Finding a suitable location for your business is very necessary to the success of your Domain name business, but choosing the right one can be something of a balancing act. Note that a good location for your business should be convenient for your customers and employees – without being too expensive. There are things to consider when looking to choose a suitable location for your business, but any option you go for, there are likely to be advantages and disadvantages to the business location.
For instance, a business office in a rural setting might be relaxing, but could be awkward for staff or suppliers making deliveries. Also having an office right in the middle of the city could be very convenient, but might also be expensive. But in all the location you choose has a major impact on cost. If you need premises in a prime location the extra costs may be justified. Factors to consider may include…
- Planning restrictions
- Local council charges and business rates for services such as waste collection
- Local amenities
- The level of passing trade
- The number of competitors
- Transport links and parking
15. Hire Employees for your Technical and Manpower Needs
Experts believe that individuals who are very organized have the tendency to do well in this business. There will be plenty of details to decide when it comes to structuring domain names, finding the right market, and following the legal regulations associated with domain registration. To succeed in this business you also need to have a certain amount of tech skills.
Note that you have to first and foremost become accredited before you can start offering your services, which you can do through ICANN. It’s currently $3,500 just to apply to ICANN. (This application fee is non-refundable, regardless of whether or not you’re approved.) You’ll also need to pay a $4,000 annual fee to ICANN to keep the accreditation status. Also note that it is not impossible for a person to take care of everything on their own in a domain name business, at least at the beginning. But as your business grows, the more complications are likely to come up between the customers and the legal concerns of the company. At the tail end, if you decide to hire, it’s pertinent that your employees understand how the domain name business works, both in terms of changing regulations and customer expectations. Ongoing expenses tend to be low for a domain name business:
- Computer maintenance/replacement
- Employee salaries
- ICANN annual fees
- Commercial insurance policy
- Rent/mortgage for a physical office
The Services Delivery Process of the Business
To achieve success in this business you will have to concentrate more on policies before getting started. From domain transferring to pricing, you’ll attract more customers if the policies are as clear as possible before anyone signs up. Have it in mind there are a lot of advice out there about who to sign up with and who to avoid, so make sure you’re giving people plenty of options and being as fair as possible.
For instance, if a website owner fails to renew their domain name after a year, you may want to keep that domain name off-limits for a month as a courtesy in case the person decides to renew. Its also advisable that you put some extra effort into your customer service response times. Note that websites by nature are incredibly immediate, and problems can happen at any time. This is why if a person is paying you for their domain name and loses business because there’s a flaw with your equipment, then you’ll likely be held responsible for any subsequent loss of revenue to their brand.
Its also crucial that you always think ahead when it comes to promoting new suffixes. As the .com names continue to diminish, companies may benefit from less popular suffixes with a strong start (e.g., food.xyz, or funinthesun.net.). According to reports, the standard fee is about $10 a year for a domain name, but this number can rise and fall depending on demand or company promotion. For example, a .today suffix on GoDaddy will cost about $25 a year as opposed to a .net, which will cost about $10.
16. Write a Marketing Plan Packed With ideas & Strategies
Some all-in-one domain name businesses tend to market their services on television, but a lot of companies getting started may want to think a little smaller, which is why its advisable you consider running internet ads with companies that offer affordable and simple website production. You can also do coupon codes for cheap domain registry (e.g., $.99 a year) to spark interest and customer loyalty. Strive to build up your reputation with honest and favourable reviews, so more people feel comfortable choosing your registration business over another.
It’s also advisable that you send your current subscribers a bi-monthly or monthly newsletter featuring referral and bonus program details. You should also try to offer one month of free service to customers who refer someone new to your business. For instance, to gain the free month, the customer must refer someone who signs a six-month or one-year contract. You should consider creating the program with a tiered structure wherein if a customer refers 10 or more new subscribers in an allotted time frame, he receives six months of free service.
Partner with Internet Clubs
You can also consider partnering with Internet clubs at local community colleges and universities. You should offer to help them with projects and teach them about emerging technologies. You should also consider giving tours to elementary schools and high schools with information technology departments. Show the students how you keep clients’ data and domain secure how to speed up connections, the difference between business class and residential class subscriptions, etc.
Organize Free Courses or Seminars
You can also organize free classes or seminars at your business for those interested in learning more about technology. You can try to channel some of the classes towards residential customers while others could address the specific needs of business classes. You can start by teaching them about virus protection, spam filters, firewalls, and spyware detection and removal through seminars or mini-classes. Participants will notice your expertise in the field, which builds trust and respect.
Join the Chamber of Commerce
It is also advisable that you join your local chamber of commerce and get to associate with other business owners in your area. You should also try to attend social and networking events sponsored by the chamber and offer service discounts to fellow members. Have it in mind that individuals like to meet those with whom they might do business in person.
17. Develop an Iron-clad Competitive Strategies to Help You Win
Outlined above are the various ways to market your Domain name business, but you also need to learn and consider how best to address the numerous challenges in the industry, and one important threat in this industry is the competition. Although the various options, and their influencing factors are not really independent of each other, industry competition is the catalyst behind the growing innovation in the industry. Have it in mind that the best way forward is in combining the above marketing options to create a suitable roadmap that will guide and help you to achieve your objectives. When doing so, we suggest that you keep three key points in mind regardless of which combination of options, and influencing factors are considered, as follows:
Never alienate or irritate the customer
Agreeably it would be far less painful to include customers in decision making, (e.g. via opt-in schemes for ad-supported models), than to end up losing market share and / or possible vilification for invasion of privacy.
Avoid excessive pressures from content industries
Even though the content industry may threaten all manner of retribution (e.g. via governmental and regulatory intervention, or by setting up their own content delivery networks), but the fact remains that consumers will always need access to the internet, and to content, hence protecting the customer relationship must count in favour of the Domain name business.
Go with the initiative
You need to understand that the most difficult and daunting point to consider is that it would be prudent for you to be more proactive in offering even more customer-pleasing, and regulator-friendly, propositions/business models, on their own terms, instead of being forced into it.
18. Brainstorm Possible Ways to Retain Clients & Customers
It’s very necessary to state that keeping up with customer growth can make or break any business. You have to remember your core values as you gain new clients, and treat every customer as if they could end your company. It’s cliché but the old saying of “treat people as you would want to be treated” applies here. Follow these tips to keep your customers happy:
- Don’t ‘nickel and dime’ clients. Always come up with a fair solution to any financial situation.
- Be open and honest about any problems or downtime. Keep customers informed and in the loop. If it was your fault, take ownership quickly and don’t give people excuses. Customers embrace solutions, not excuses.
- Do what is right, even when it’s hard.
- Develop fair downtime, SLA, and refund policies
- This is the time to actively listen to your customers. Find out what they like and don’t like. This information can be used to reach out to new customers based on your strengths. Pay attention to issues with your web hosting services — your customers will love you for it, and it will mean a very polished product.
19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Taking your time and resources to increase customer loyalty can help you sustain sales and business growth in the long-term. Whether you’re a new business entering the marketplace or an established business looking to grow your customer base, invest some time to develop your company’s branding and marketing strategy. Note that you can use several different strategies to boost brand awareness and retain loyal customers for months and years to come.
Also note that boosting brand awareness and increasing customer loyalty is an ongoing project and you can choose several strategies that will help you generate the strong customer base your business needs. This may include staying active on social media sites to simplifying the buying process, implement some proven strategies to develop brand affinity for your business. Other strategies may include…
- Be transparent.
- Stay in touch.
- Make it easy for customers to buy from you.
- Stay active on social media.
- Deliver outstanding customer service.
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