For the next three days, I am running a mini-series on entrepreneurship, small business and personal finance. Even if you never dreamed of owing your own business, being an entrepreneur has taught me many lessons on become a better investor so I hope you can pick up some tips along the way.

According to book The Millionaire Next Door, a self-employed American is 4 times more likely to be a millionaire than an employee. But a study commissioned by Wells Fargo/NFIB also found that only 39% of businesses are profitable over their life-cycle; the remainder spin their wheels financially. Thus, owning a business is the ultimate risk and reward play- there’s a lot of risk but the reward could make you independently wealthy.

Having run my own business and been an advisor to many businesses, big and small, I have often observed the manner in which entrepreneurs build wealth through building their own businesses have similar applications to all concerned and what a success entrepreneur does on a business level also works for people on a personal finance level and, thus, I will attempt to summarize some lessons we could learn from these wealth-creators:

ENTREPRENEUR SUCCESS OBSERVATION #1: The most fiscally healthy businesses are also the most boring. Sometime during one’s existence in a cubicle, one attempts to conjurer up strange and new business ideas. But you know what? The boring businesses are more likely to succeed for the simple reason that if someone did it well, so can you. The issue with a novel business idea is there is a long sales cycle; the public has to be educated on what you are selling and the longer the process, the less your cash. The Millionaire Next Door summarized the most profitable sole-proprietorship businesses and they were: (i) coal miners (!); (ii) the medical profession; (iii) bowling centers; and (iv) drug stores. Not very exciting is it? Sexy gets you compliments, steady gets you fed.

Personal finance lesson: KEEP IT SIMPLE STUPID. Don’t invest in the exotic like principal protected notes. Invest in products that have made the Rockfellers rich: dividend yield stocks and government issued bonds.

ENTREPRENEUR SUCCESS OBSERVATION#2: Successful entrepreneurs look at cash and not revenue. When is a sale not a sale? When it takes 45 or 60 days to pay or its never paid at all. Meanwhile, the telephone company does not care if your customer is late on payment; pay now or be disconnected. Salespeople love sales (revenue) but profit and cash are king (as a more than casual connection, CEO’s in Fortune 500 companies are less likely to come from the ranks of sales and marketing than any other department). To quote billionaire Seymour Schulich in his book, Get Smarter (a must read for any entrepreneur), “In every company in which I was a principal or an investor, the first metric tracked was cash. If the cash was rising, it meant positive thing...” You don’t have to be an accountant to do this. Track the cash.

Personal finance lesson: FOCUS ON THE CASH. When investing in stocks, look at the cash flow from operations first in the financial statements (it is harder to manipulate this financial line item than revenue)- especially important if the stock pays dividends since the company needs cash to pay it. When you calculate financial net worth, focus on cash or cash equivalent items and not paper gain items like the value of your house. Paper gains are arbitrary.

ENTREPRENEUR SUCCESS OBSERVATION #3: Successful entrepreneurs understand their limitations and build a great team around them. It is hard to succeed in business as a one person gang; as the saying goes, sell what you are good at and buy what you are not. In other words, hire and surround yourself with talent. The most successful entrepreneurs I know understand the value of their own time and delegate all non-essential functions of the business to others. As a good example, look at Richard Branson, owner of the Virgin brand of companies. He is very well-known for building great teams in given industries and having them run the business; he just sky-dives in to promote them because he uses his strength as a shameless self-promoter to sell what his team has built (I believe Branson is a better entrepreneur than Trump; he has been successful in building many different types of businesses; outside of real estate, Trump’s success has been mixed).

Personal finance lesson: GET OTHERS INVOLVED IN HELPING YOU BUILD YOUR WEALTH. Use your accountant for more than just filing taxes, ask her for advice on reducing taxes. Hire a lawyer for things other than being sued (i.e. estate planning). Have your spouse be involved in talking about money. Find someone you trust and respect from their acumen with money and have open conversations with them on what they are doing. Do it yourself investing does not necessarily mean do it alone investing.

ENTREPRENEUR SUCCESS OBSERVATION #4: There is no such thing as an overnight success. It took 7 years for LuluLemon to obtain private equity money. Its first store in Vancouver was a share retail space. 7 years is a long time to grow a business (not to mention that Chip Wilson tried a similar business in 1979- so it really took Chip 26 years to make it big). A colleague of mine ran 7 different businesses before encountering any degree of success. Businesses are like children- it takes a long time to nurture them.

Personal finance lesson: BE PATIENT. You can’t pay off your debt or make a million dollars investing over-night. It take consistent application of a personal finance plan over a period of time before you see tangible results. Be persistent (like my colleague with 7 businesses).

ENTREPRENEUR SUCCESS OBSERVATION #5: Great entrepreneurs hit their niches. Other than Wal-mart, there are very few category killer retailers left. It is too hard to know about sporting goods and household goods and electronics all at the same time with the same amount of expertise as an industry specific retailer like Best Buy. Great entrepreneurs focus on a niche and hit it over and over again. Think of the companies Buffet invests in; they are all one-trick ponies but they are at the top of their industries whether it be drugs, railways, carbonated beverages etc. Now think of the business disasters (the AOL-Time Warner merger, Seagrams going from booze to movies), they tried to be too many things to too many people (not to much they tried to change from stodgy to sexy- see point #1 on what happens to sexy).

Personal finance lesson: BECOME A MASTER OF SOME ASPECT OF PERSONAL FINANCE RATHER THAN AVERAGE IN LOT OF DIFFERENT FIELDS. Whether it be frugality, real estate investing, stock investing, bond investing- just find a niche you like, educate yourself on it and become good at it. It is hard for you and I to have the time and energy to acquire various personal finance skill-set so learn one and learn it well.

Hope that helps. Tomorrow’s post is on starting a business on a shoe-string budget.