Its very confusing especially for those who just enter the internet marketing. It is essential to know the difference between shared web hosting and dedicated web hosting.
Shared Web Hosting
In shared web hosting, website storage and server capacity is literally shared with at least 50 different websites. People may think that this would bring detrimental effect on the web hosting speed. In fact, the main problem with shared hosting is not its speed but the reputation problem.
Reputation problem means one of your "neighbours" uses the same IP address as yours engaged in some bad activities. Bad activities might include spamming of emails, building exotic websites, using the IP address as proxies for automation etc. Search engine would recognize these IPs as bad name and would bring down the ranking of these websites.
This is not the only one issue. Another thing that is even more scary is its affect your website stability. Most of the web hosting company such as Bluehost, Inmotionhosting, hostgator provides unlimited bandwidth, cpu resources and etc. This is in fact a fair usage arrangement among an IP. If one of your neighbours abuses the server capacity too much, you might encounter extreme slow server issue. In BLUEHOST, they have the automatic website IP switches. It will redirect your visitors to another server if one of your neighbours abuse the original one. Your website will not be affected as a result.
Dedicated Web Hosting
For dedicated web hosting, you bought your own house. You do not need to share the server with others. You will have a dedicated IP address. However, most of the dedicated website server doesn't come with the one click cPanel installation functionalities and would need you to have some master level web hosting configuration and experience. The sql database and name user would all require you to configure yourself.
In all, if you have just started your business, and shared web hosting will already suffice the need for your business. However if you are going to run heavy script such as magento, ecommerce website or some heavy plugins in wordpress that would be used to provide some services. Then you may consider using dedicated web hosting. However keep in mind that you can always upgrade from a shared hosting to a dedicated server in no time, and the technical team from bluehost and Inmotion hosting ( I have tried ) would assist you for free for the seamless upgrade.
John the happy.