The Epileptic Entrepreneur™

Imagine you’ve just received a big pot of money to run your business. Maybe it’s revenue from sales, an investor’s contribution, or a loan. Now, the big question is: How do you decide where that money should go?

This is where proportioning comes in. Proportioning is the process of deciding how to divide your funds across different areas of your business. It’s all about finding the right balance—covering your essential costs, investing in growth, and ensuring financial stability.

Why Is Proportioning Important?

Think of your business like a car. You need fuel to keep it running, regular maintenance to prevent breakdowns, and maybe even upgrades to make it go faster. If you spend all your money on fancy new parts but forget to fuel up, you won’t get far. Similarly, if you pour all your funds into marketing but ignore operational costs, you’ll run into trouble. Proportioning helps you manage your money wisely so that every part of your business works smoothly.

Key Areas to Allocate Funds

Let’s break down the main areas where your money needs to go:

1. Operational Costs – Keeping the Lights On

These are the everyday expenses that keep your business running. Think rent, utilities, office supplies, software subscriptions, and any other essential costs. Without covering these, your business can’t function.

2. Salaries & Wages – Taking Care of Your Team

If you have employees, their salaries should be a top priority. Even if you’re a solo entrepreneur, consider paying yourself a salary. Your team is the backbone of your business, and keeping them motivated and fairly compensated is key to success.

3. Marketing & Advertising – Attracting Customers

No matter how great your product or service is, people need to know about it. Investing in marketing—whether it’s social media ads, content creation, or traditional advertising—helps bring in customers and grow your brand.

4. Growth & Expansion – Preparing for the Future

It’s important to set aside funds for business growth. This could mean developing new products, opening a new location, hiring more staff, or even setting up an emergency fund. A portion of your income should always go toward future-proofing your business.

5. Taxes & Compliance – Staying Legal and Secure

Every business has tax obligations, and setting aside money for taxes prevents any unpleasant surprises. Depending on where you operate, you might also have legal and regulatory costs to cover.

How to Decide the Right Proportion

There’s no one-size-fits-all approach to proportioning because every business is different. However, here’s a general guideline that many businesses follow:

• 40-50% for Operational Costs
• 20-30% for Salaries & Wages
• 10-20% for Marketing & Advertising
• 10-15% for Growth & Expansion
• 5-10% for Taxes & Compliance

These numbers aren’t set in stone, but they give you a good starting point. You might need to adjust them based on your business model and priorities.

Common Mistakes to Avoid

1. Spending Too Much on One Area – If you put all your money into marketing but don’t have enough to cover salaries or operational costs, you could run into financial trouble.
2. Not Saving for the Future – Many businesses fail because they don’t plan for future expenses or emergencies.
3. Ignoring Taxes – Failing to set aside money for taxes can lead to major financial headaches down the road.
4. Being Too Rigid – While having a plan is great, be flexible. If a great investment opportunity comes up, you might want to shift funds around.

Final Thoughts

Proportioning isn’t about strict rules—it’s about finding the right balance for your business. By carefully deciding where your money goes, you ensure financial stability while keeping your business on a path to growth. Think of it as strategic money management—when done right, it gives you the freedom to expand, invest, and succeed without unnecessary financial stress.

So next time you receive revenue or funding, take a step back and ask: Where will this money make the biggest impact? That’s the key to smart proportioning!