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I agree with those saying that starting with a dedicated server is not for everyone - even if you have the appropriate knowledge/experience/time etc. to take care of server management properly, there's still the issue of cost which ought to be a serious consideration (particularly when first starting out)!
As a new provider it's likely to take you a while to gain market recognition and establish your brand etc. Consequently it will take time before you even reach enough sales to cover the $100's month you're paying for a server (even worse if you're buying your own hardware first and then colocating, rather than rent/lease).
I think the idea of starting with a smaller account, then growing as you gain more sales is far better suited to most - but John's comment that you don't have control over what you're selling with a "Reseller" account is completely justified; this isn't necessarily a huge issue if you know that your provider is good, but it can be very frustrating if quality degrades and you don't have much power to put things right!
However, those suggesting that taking a reseller account and upgrading it is a good idea are forgetting one important point - migrations are a pain!
I would suggest that you should start on a VPS which is a good middle ground. If you have enough experience/time etc. then you can take unmanaged and it will stand you in good stead for when you grow enough to take a full dedicated server; if not then there are plenty of providers offering decent managed VPS's - but obviously the key with any managed service is to check what is/isn't included before you sign up.
If you take a VPS then you should be able to expand your VPS package without much hassle - again, check with your provider, but the technology exists for instant (zero downtime) upgrades which can take you from a tiny VPS to a full dedicated server; the latter of which also relies on zero downtime migrations between physical hardware (i.e. something else you should check, as it depends on the virtualisation technology the provider uses).
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Damien Ransome
Layershift :: DDS & Dedicated, UK & USA-based Managed Virtuozzo VPS, Reseller & Shared Hosting
Experienced Parallels Platinum Partners (Plesk since 2001, Virtuozzo since 2004)
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