Many people dream of starting their own business, but in nearly every single attempt that I have invested in, mentored and even directly experienced, the preparation has been woefully lacking.

The trigger for starting a business should be the completion of a preparation phase. Unfortunately, the reality is that the trigger has no correlation to preparation. In its most basic form, budding entrepreneurs attempt to overcome the procrastination of preparing for a start-up by jumping straight into it – à la Nike’s “Just Do It” tag line. It should be clear why this is disastrous, especially if one quits their job as a way of forcing themselves to work on the start-up.

There is a lot of preparation that can be done before you quit your job, which lowers the risk not only for the start-up but also for your quality of life. Having personal expenses with no income while preparing for your business is not the smart choice.

The first step in preparing to build your business is to actually understand all the facets that you can cover before leaving your job. Looking at personal expenses is one such facet. This includes understanding clearly what your expenses are and preparing a personal budget. Next is estimating a conservative time frame for your business to become cash-flow positive, adding a wide margin of comfort and saving up enough cash to cover this period as well as contingencies. A good idea would be to also add enough cash to cover the time needed to find a new job should the business not take off.

Another oft-neglected facet that can easily be addressed before leaving your job is building the right personal network for your business. This includes finding investors, talking to potential employees, developing relationships with vendors and suppliers, and building a relationship with key clients. Building a network takes time, as relationships do not develop overnight, and it is therefore a good idea to spend a few years working on this facet before attempting to launch the business.

Of course, the end result of building your network is to convert these relationships into business. Having clients sign up ahead of time is rare. However, having anchor investors, a core employee team and key suppliers signed up will drastically reduce your risk.

This leads into the fact that negotiating certain contracts, especially for those of you without negotiation experience, is also best done ahead of leaving your job. It is not necessary to nail down every last point, but even agreeing the headline items can take time. These contracts would include employment contracts, where understanding compensation models with respect to performance-based pay can be daunting, as well as contracts with service providers such as legal counsel and auditors, and last but not least, with suppliers. Shareholder agreements are also best done ahead of time.

A third facet of having a long lead time is the legal incorporation of the company. This is especially true in our region, where first-time entrepreneurs usually find the process confusing. Hiring the right legal firm or a set-up consultant can drastically cut this time down, but at great financial cost.

A word of caution. I am not proposing any reduction in your responsibility to your employer. There are not only legal and ethical issues to be cognisant of, but also reputational issues. If you are seen as shirking your work and using it as a stepping stone to your own business, even if this is not true, the damage to your reputation will be significant.

There are other facets, and the above examples should be enough to get any budding entrepreneur to understand the realities of building a business. For some reason business schools seem to teach people how to create beautiful, well thought out business plans. However, I have rarely seen a start-up fail because of a flaw in the business plan, but rather because of a gap in the entrepreneur’s reality and the actual reality of the market. The official name for this gap is “lack of experience,” also known as “you haven’t failed enough times yet.”

You might like: Discovering the Meaning of Entrepreneurship.

This article was originally published in The National.

Successful entrepreneurs are not born, they are made. There are many different ways to learn how to become an entrepreneur. This creates the challenge of how to learn as the risk becomes that you learn the wrong things or worse spend more time learning than doing.

Formal education, such as an undergraduate finance degree at university or an MBA is certainly not enough to get an entrepreneur to the right competence levels. There are many useful, even necessary, classes that you can enroll in, but there is no career in this world that can be successfully learnt just in class. Some classes will use case studies and simulations to try and model real life entrepreneurship which are quite useful but cannot fully replicate the real world challenges of an entrepreneur.

At the other end of the spectrum is the learning by doing model. The problem is that the entrepreneur is not a student and maximizing their own learning is not the priority of their stakeholders. Entrepreneurs are responsible for shareholder and company resources and to use them to learn is irresponsible at best. A successful learning experience is dwarfed by the project or company failure that it creates. Continue reading →

“Find something that you are passionate about” is absolutely the worst advice anybody can give to an entrepreneur or a job seeker. People get a job for one reason only and that is to earn a living. Otherwise it is charity or a hobby. Sure, you want a job that is not horrible and maybe even pleasant but how much are you willing, let alone able, to sacrifice financially to find something that you are passionate about?

Similarly an entrepreneur wants to build a product or a service, to acquire clients by innovating. Being en entrepreneur in the end means delivering a superior product or service and/or a better price. These are commercial goals and they come first.

Do not misunderstand, a person’s mental and emotional health is important and should not be ignored in chasing financial rewards. The myth, however, that passion at work is not only attainable by most job seekers and entrepreneurs but that it leads to career and business success is plain wrong. Continue reading →