It works. I used run a hosting company from 2007 January - 2009 January, I sold the client base to another company, but I kept my domain and all. I still operate the hosting site, but I only host my sites, and a couple others. I am able to cover hosting cost with the revenue I make by hosting the other sites, so I am good.
However, I started off in 2007 with a reseller account and ended up in 2009 with two dedicated servers hosting over 120 clients. It takes a lot of time and effort to get the business from potential clients, but it is well worth it in the long run.