Calculate your financial runway before you quit your job to start a business: savings, a cash reserve, side income and net burn, with three scenarios.
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Your financial runway, or personal runway, is the number of months you can work on your product before your savings run out. Calculate it as savings minus a reserve you never touch, divided by your monthly spending minus any income you keep: . The reserve and the side income change the answer more than most founders expect, so below is one worked example with three scenarios and the checkpoints to put in your calendar.
Spending minus income is your net burn: how much your savings shrink each month.
Vera is a product designer in Odesa. For a year she has been sketching a tool for wedding photographers: client galleries, contracts and payments in one place. Eight photographers have tried her prototype and three asked when they can pay. She wants to quit and build it full time.
Her numbers:
Savings: 420,000 UAH.
Step 1. The reserve. Three months of full spending, not of net burn: the reserve exists for the day the side income stops, so it can't count on it.
Step 2. The money for runway. 420,000 − 105,000 = 315,000 UAH.
Step 3. Net burn. 35,000 − 12,000 = 23,000 UAH a month.
Step 4. Runway.
One number hides the risks, so Vera runs three more:
How the second row works: six months at 23,000 use 138,000, which leaves 315,000 − 138,000 = 177,000. At 35,000 a month that lasts another 5.1 months, 11.1 in total.
The last row is the one people skip. If her spending is really 38,500, the reserve also grows to 115,500, and the runway is (420,000 − 115,500) / 26,500 ≈ 11.5 months. Underestimating spending by a tenth costs more than two months.
Two conclusions follow. The side income is worth almost five months of runway, so Vera keeps it even though it takes six hours a week. And she plans against the pessimistic rows, not the base one.
Thirteen months feels long on the first day. It isn't: building takes longer than planned, the first customers take weeks to decide, and some of them pay late. So Vera puts two dates in her calendar:
These dates are decided now, with a calm head, not in month 10.
Runway is not fixed once customers start paying. If Vera charges 600 UAH a month, 10 photographers bring in 6,000 and cut her net burn from 23,000 to 17,000. The month her product's income covers her spending, the countdown stops. That moment has a name, and a calculation of its own: see ramen profitability.
Even before launch, prepayments from the first customers work the same way, and they tell you far more than the money: see how to pre-sell a product.
A runway calculation often shows that quitting today is too early. Two alternatives:
And if the runway is short while the market is large and moving fast, outside money may be worth a look; bootstrapping vs venture capital shows how to decide.
There is no universal number, but less than about nine months of net burn leaves little room for a product to find its first paying customers. More important is having a checkpoint at half the runway and a plan for what you will change there.
Burn rate is how much money you lose each month; runway is how many months you can keep losing it. Runway equals the money available divided by the net burn rate.
No. The reserve covers emergencies and the job search if the product doesn't work out. If you plan to spend it, you have no reserve.
No. An emergency fund is money you don't plan to spend; it waits for a sudden bill or a lost job. Runway is money you deliberately spend while you build. In the formula, the emergency fund plays the role of the reserve Z and stays outside the runway.
Calculate each founder's personal runway separately, plus the shared product costs. The company can move only as long as the founder with the shorter runway can stay.
The lesson Personal runway walks through one founder's resignation month by month, with numeric exercises and a practice task checked by AI. It is part of the course From Idea to Profitable Product: Building Without Investors; the lesson before it, Side project or full time?, helps decide whether to quit at all.
