I have been reading the responses to this post very carefully. It is clear to me now that everyone has a very good perspective of how to manage their hosting business.
I would like to congratulate everyone who has posted such helpful responses to this topic.
I would now like to go on to add my response...
Growing too quickly is just as bad, in a way, as not growing at all. As stated already in this topic, the more customers you get the more you will have to manage.
At the early stages of a small web hosting business this could potentially be a disaster as it's quite likely they won't have the staff required to manage such a large customer base.
As for getting those first few customers you have to work as hard as you can in "selling" your business to the customer. This is not an easy task, and yes, it takes a great amount of effort from yourself and your staff. It is also time consuming and requires a lot of patience. People are not going to trust their precious websites with someone who has only been around for a month or two. Why? Well, would you? Think about it, what if the service goes down, and all your files are lost. You could have been working on that website for many months and you could lose everything overnight. At least by hosting with providers who have been around for quite some time you have more of an assurance that they won't close.
Admittedly this is tough on the new provider. Do not despair, however, it IS possible to succeed. I would suggest targetting new clients (i.e. people who are yet to make their first website). Offer them all the support they need, do your best to provide them with an excellent service, convince them to TRY you (before they buy if necessary). By targetting new clients who have little experience, but are still looking to start their online presence by making their first website (believe me, there are plenty of newcomers every day.
) then you, and the customer, can start out together. If you impress the new guys, who have not experienced the hosting services of the bigger providers, you could win yourself a customer who you can be sure will stay with you forever.
YOU WILL HAVE TO WORK HARD TO PROVIDE AN OUTSTANDING SERVICE, however. Do not let them down.