Systems are worth their weight in gold.  Creating your own home business system will pay dividends for years to come if you set it up correctly.  I’m not just talking about automation, but the way you create your system for growth and improvement.

So what makes a good home business system?

Having a home business can be a great thing, with so many advantages, however if you don’t set  up a system of working efficiently as well as one which maximises your income, you could be headed for failure instead of success.

A system is like having a plan or written down goals, where you are always striving to improve it.  It helps you work more efficiently and effectively and for me, it helps me overcome procrastination.

If you’ve ever read The E-Myth by Michael Gerber then you will have an idea of what a system is.  Although Gerber advises creating a system (aka a business) that will work without you in it, pretty much like Tim Ferriss’s The 4-Hour Workweek you need to start somewhere and often when starting your own home business system, money, time and childcare can limit the speed of your progress.

You need to start with a plan or goal for your system.   Afterall you cant create a system if you aren’t sure what that system is supposed to achieve.  Here you can start with a small system or several small systems that feed into your main home business system like cogs in a wheel.  Often it’s easier to start with a small cog, and get that system working efficiently to have a better perspective on how the whole system works.  Making sure of course that each small cog is in alignment with your main objective.

For example, if your main system is to create $10k/month passive income and the first system you want to work on is getting clients to work with, one on one, then this goes against your overall objective.  This doesn’t mean that you can’t take on clients like that, especially if you need the money, but remember that your ultimate goal for your system is to earn $10k/month passive income.  Therefore this shouldn’t be part of your system for perfecting, eventually working on your system consistently, will mean that you can eventually phase out taking on clients because the system that you’ve set up will be working and achieving your initial goal.

Once you have your ultimate goal for your main system, you can start to create the inner systems that will help you achieve your main goal.  You will often find that once you have perfected one of the smaller systems, that you can then take that knowledge and system and “rinse and repeat” it with your other systems.

Taking the $10k/month example, you may decide that part of this involves creating a niche website, promoting affiliate products.  As you work on perfecting this system, you will see your passive income increasing and you may well decide to take this system and replicate it on many more websites, or you may decide to branch out into Squidoo or other web 2.0 websites and do the same there.  The basic system will be the same but there will be different actions you will need to take to perfect it for a different platform.

Eventually, as your home business system starts achieving it’s main goal and you have the money to reinvest into your system, you can outsource many of the tasks, knowing that by investing $x in outsourcing your return will be $x+y, making a nice profit and return on the time you spent creating your system, which will be bringing you in a passive income for many years to come.

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It is very easy to start a home based business these days, especially an online one.  There has never been a better time to start your own business, whether you have an existing job at the moment or not.  All you really need is a computer with internet access and a passion to succeed.  Most people will have the computer and internet access!

Many people when they do start their home based business they get caught up in the online hype about the next best thing, instead of finding a niche that they feel passionate about and making a business out of that.  Do you have a skill that you can teach others to do?  Do you have a hobby that you can build a website around?  The beauty of the internet is that while you may be the only person in your local area who is passionate about a particular thing, when you get online you can find hundreds, if not thousands of like-minded people, pretty quickly.

It is very easy, with social networking sites such as Facebook, MySpace, Ning communities and Twitter to find hobby and business groups to join.  You can start answering any questions on these forums and become known as an expert in your chosen field pretty quickly.

Need a website?  You can create your own website for just a few dollars startup costs on buying a domain and some hosting and using WordPress to build your website.

Never has it been so cheap nor so easy to start a home based business.  The commute time is amazing and if you have children, there is no more childcare costs to pay until your business really starts to take off, and that’s only if you want to have childcare.

As for creating content and products, you can use free software such as OpenOffice to create your products and use free social media websites to promote both your website and your products.  You can get a product creation guide to help you figure out how to use free software to create your paid products.

Before starting your business you will need to check with your local authority/local government office to register as a home business.  There are usually very friendly staff there who will talk you through the process.

In this economy it is easy to see why so many people are deciding to start a home based small business.  It is very cheap to start your own home based small business as you will probably already have most of the tools and resources you need to start.  You will have your computer with internet access and that’s about all you really need to get started!

How many people have you heard complaining about their commute to work, the cost of childcare while working, their boss, their co-workers and the list is endless, these and other reasons to start a home based small business.  However, you can be forgiven for asking – is it really that easy?  The truth is, no, it’s not.  When you start your own business, you need to put the hours in to establish yourself, create sales funnels, product funnels, your website and build your customer base but nothing feels better than getting your first sale, your second sale and every other sale after that knowing that you’ve created this business yourself, for both yourself and your family.

Many new home based business owners leave their jobs to start their new business but unless you get severance pay to do so, it is more advisable to stay in your job and work on your business in your spare time.  The majority of those who start a business will fail, due to over expectations in income and under expectations of the amount of work involved.  Be realistic about it, Rome wasn’t built in a day and neither will a successful business be.

Before you start your own business, you need to ask yourself why you want to start it.  If you are starting it for the wrong reasons, then when things do get tough it may make you give up before you’ve given your business a proper chance.

I’ve been running an online business since 2002 and I think I’ve probably done everything wrong in the past.  The only right thing was to start it online opposed to leasing an office or a store.  Your budget will last longer online, even if you are doing it wrong, more than an offline business!  It’s easier to test different markets, different methods and also to test out whether what you’ve learned or what you think will work, will actually work.

If I was to give any advice at all, apart from don’t give up your day job til your online business is making enough profit to live on, it would be to take action sooner rather than later.  Just do it as Nike would say.  However, you MUST test and measure everything you do so that you are basing your future decisions on fact rather than wishful thinking.  Keep moving forward and repeat the things that do work and understand the things that don’t work and don’t do them again.

This advice sounds simple and common sense but if everyone followed this advice there wouldn’t be any online failures and there are plenty of them, let’s make sure you are not one of them.