Most founders calculate runway wrong.
They do: Savings ÷ Burn Rate = Runway
$30,000 ÷ $3,000/month = 10 months of runway.
Simple math. Completely useless.
Here's why: That formula assumes you're already all-in on your business.
But you're not. You still have a job. Or you're consulting on the side. Or your expenses are about to change dramatically.
The formula everyone uses calculates runway for a business that doesn't exist yet.
Here's the mental framework that actually works:
The Two-State Runway Model
Stop thinking about runway as one number.
You have TWO runway numbers:
- Employed Runway - How long can you keep going while you still have income
- All-In Runway - How long can you survive after you quit everything
Most founders only calculate #2. That's the mistake.
Let me show you:
Current State (You're Employed):
Income: $6,000/month (job)
Business revenue: $2,000/month
Side work: $500/month
TOTAL IN: $8,500/month
Expenses: $7,000/month (personal + business)
Net: +$1,500/month
Employed Runway: INFINITE
You're actually MAKING money right nowFuture State (You Quit):
Income: $2,500/month (business + side work only)
Expenses: $7,000/month (same)
Net: -$4,500/month
Savings: $30,000
All-In Runway: 6.7 monthsSee the difference?
The standard calculator tells you "6.7 months of runway."
But RIGHT NOW, you have infinite runway. You're profitable. You can build indefinitely.
The question isn't "do I have enough runway?"
The question is "when do I switch from State 1 to State 2?"
The Bridge Question
Here's the mental model that changed everything for me:
Don't ask: "Can I afford to quit?"
Ask: "What needs to be true before I quit?"
For me in 2023, the answer was:
"I need my business revenue to cover at least 70% of my expenses. So I can quit and only burn $2,000/month instead of $4,500/month."
My expenses: $7,000/month 70% coverage: $5,000/month Current business revenue: $2,000/month
Gap to close: $3,000/month
At my growth rate ($400/month increase), that's 7-8 months away.
Suddenly the question isn't about runway. It's about: "Can I grow revenue $3K in 7 months while still employed?"
That's a much better question. Because the answer is "probably yes."
The Three Numbers That Actually Matter
Forget complex spreadsheets. You need three numbers:
1. Your Magic Number
What monthly revenue makes quitting safe?
Formula: Your monthly expenses × 0.7 = Magic Number
Why 0.7? Because you want to burn <30% of your savings per month. That gives you breathing room.
Example:
- Expenses: $7,000/month
- Magic Number: $5,000/month
- Current revenue: $2,000/month
- Gap: $3,000/month
2. Your Growth Rate
How fast is your revenue growing per month?
Look at last 3 months average.
Example:
- Month 1: $1,800
- Month 2: $2,100
- Month 3: $2,400
- Average growth: $300/month
3. Your Timeline
How long until you hit your Magic Number?
Formula: Gap ÷ Growth Rate = Months
Example:
- Gap: $3,000
- Growth: $300/month
- Timeline: 10 months
That's it. Three numbers.
Now you know: "Stay employed for 10 more months, then jump."
What If You're Not Growing?
If your growth rate is $0/month, you have a problem.
You shouldn't be thinking about quitting. You should be thinking about: "Why isn't this growing?"
Options:
- Keep the job, fix the growth problem first
- Take 2-3 months to do a focused sprint (nights/weekends) to get traction
- Pivot to something that IS growing
- Accept this is a side project, not a business
Don't quit your job to work on something that isn't growing.
That's not "taking the leap." That's just burning money.
The Real Calculation I Use
Here's what I actually do when I'm making a big decision:
Step 1: Write down current state
Monthly income (all sources): $8,500
Monthly expenses (all): $7,000
Net: +$1,500
Savings: $30,000Step 2: Write down future state (if I make the change)
Monthly income: $2,500
Monthly expenses: $7,000
Net: -$4,500
Burn rate per month: $4,500
Runway: 6.7 monthsStep 3: Ask the bridge question
What needs to be true to make this safe?
Option A: Revenue needs to hit $5,000/month (70% coverage)
Option B: Expenses need to drop to $3,500/month (live cheaper)
Option C: Keep some side income ($2,000/month consulting)
Which is most realistic?Step 4: Model the realistic path
I'll choose Option C: Keep consulting 10h/week for $2K/month
New future state:
Income: $4,500/month (business $2.5K + consulting $2K)
Expenses: $7,000/month
Net: -$2,500/month
Runway: 12 months
That feels safe. Do it.The whole thing takes 10 minutes.
The Mistake Everyone Makes
Most founders think: "I need 12 months of runway to quit."
So they wait until they have $80,000 saved (12 months × $6,500 burn).
But here's what they miss: Your burn rate changes as your revenue grows.
- Month 1: Revenue $2,000, burn $4,500 → losing $2,500/month Month 3:
- Revenue $4,000, burn $4,500 → losing $500/month
- Month 6: Revenue $7,000, burn $4,500 → making $2,500/month
You don't need 12 months of static runway.
You need 6-8 months of DYNAMIC runway (where revenue is growing toward break-even).
Example:
Scenario A: Wait for $80K saved, quit with 12 months static runway
- Timeline: 18-24 months to save $80K
- Risk: Low
- Opportunity cost: MASSIVE (2 years of part-time building)
Scenario B: Quit at $30K saved, 6 months dynamic runway, revenue growing
- Timeline: 6-8 months to save $30K
- Risk: Medium
- Opportunity cost: Low (6 months of part-time, then full-time building)
I'd take Scenario B every time.
When to Actually Pull the Trigger
You're ready when:
- You've hit your Magic Number (revenue covers 70%+ of expenses)
- OR you have 12+ months of ALL-IN runway (if you want to be conservative)
- OR you have a clear path to break-even within 6 months (growing fast)
You're NOT ready when:
- You're at $0 revenue hoping it'll work out (it won't)
- You have 3 months runway and no growth (panic mode incoming)
- Your only plan is "I'll figure it out" (not a plan)
The founders who succeed have a PLAN before they quit.
The founders who fail HOPE things work out after they quit.
Example if I Were to Quit A Job
Early 2024:
Current state (employed):
Income: $6,000 job + $8,000 business (avg) = $14,000
Expenses: $6,500
Net: +$7,500/month
Savings: $40,000
Future state (quit):
Income: $8,000 business (avg, but lumpy)
Expenses: $6,500
Net: +$1,500/month (barely profitable)
Savings: $40,000My Magic Number: $6,500 × 0.7 = $4,500/month
My actual revenue: $8,000/month average
I was already past my Magic Number by 1.7x.
Decision: Quit immediately.
What actually happened:
- Month 1-2: Revenue dipped to $5K average (clients slowed down, got nervous)
- Month 3-4: Ramped back to $10K average
- Month 6: Hit $15K average
- Month 12: Hit $25K average
The scary part? If I had quit when I was at $2K/month, I would have failed.
I quit when I was at $8K/month, and even THEN I had a scary few months.
This is why the Magic Number matters.
The Simple Framework (Summary)
- Calculate your TWO runway states (employed vs. all-in)
- Find your Magic Number (monthly expenses × 0.7)
- Measure your growth rate (revenue increase per month)
- Calculate timeline to Magic Number (gap ÷ growth rate)
- Stay employed until you hit it (or until you have 12+ months all-in runway)
That's it.
No fancy spreadsheets. No complex calculators.
Just: "What needs to be true before I quit, and when will I get there?"
One More Thing
Most runway advice optimizes for SAFETY.
"Wait until you have 18 months of expenses saved!"
That's fine if you want to be safe.
But here's what they don't tell you:
Waiting too long has a cost.
While you're saving for 18 months of runway:
- Your competitor ships
- The market shifts
- You burn out from doing two jobs
- You lose momentum
The optimal runway isn't the SAFEST number.
It's the number where you have enough buffer to make good decisions, but not so much buffer that you never jump.
For most people, that's 8-12 months.
Less than 6 months: You'll panic and make bad decisions More than 18 months: You waited too long
Find YOUR number. Then jump.
