How much runway do you need before you leave?
Knowing your real personal costs, separate from anything your business needs, can help you plot your path to ownership. Here’s how to get to your own figure, and what to do if it’s out of reach.
Two runways
Personal runway. Rent/mortgage, food, insurance - whether or not your business does anything, you still need to live and exist.
Business runway covers what your operation needs, including software, a website, the first bit of inventory (if physical).
Keep these two in separate accounts, or at least tracked separately, from day one, so you can make decisions on each with the right context.
The personal number
Just like in our post about how long severance lasts, map out what you spent over the last three weeks. Subtract what you no longer need like subscriptions, shopping, and consider investing that in yourself in other ways (like, to your business).
Plan for 12 to 18 months. Building something of your own takes time. You may start to see signs of life early (three to six months), but without a personal financial buffer, you may be tempted to call it quits before enough time has passed to make that income sustaining. Twelve months give you a full cycle to understand how to shape your business, and with eighteen you’ll have enough flexibility to adapt and adjust as you learn along the way.
If the number is out of reach
It often is, and that shouldn’t be the end of the plan. It just changes the sequence. Here are some options.
Stay and build. Currently working and in something full time? A salary provides the patient capital that you don’t have to pitch for. See our guide on starting while you’re still employed.
Go part time or contract. Three days of consulting can cover your costs, giving you two days a week on your own thing. Building on the side is slower than going all-in and much more survivable than jumping out of something without anything saved up.
Cut the number. A smaller life extends your runway immediately, and arguably faster than saving more over the same time period. Every recurring expense you cut buys time.
Shorten the runway you need. Sign a customer before you leave or pre-sell something. You’ll be ahead when the salary runs out.
Do the math on the alternative
What would it cost to go back? What if it doesn’t work out? What if it does?
Understanding the runway math doesn’t close doors, it opens them. Keep your skills current and your network warm while you invest in yourself. This way, the question you ask yourself changes from “can I afford to do this” to “can I afford not to.” The sooner you start, the sooner you’ll learn what works, what doesn’t, and what’s not negotiable for you. The fear of striking out keeps people stuck, but you might be surprised about how freeing it is once you’re no longer accountable to someone else.
Somewhere in the middle of working this out? Effective Immediately is a private community for people leaving corporate to build something of their own. Other builders a few months ahead of you are ready to share what their number turned out to be and to inspire you to work out yours.