How much runway do I need before I leave my job?
There's no standard number. Work out your own: what your household spends each month, plus the costs your employer used to carry, multiplied by the months it'll realistically take before the business covers them. Then add a margin, because first clients nearly always take longer than planned.
What goes into the monthly number?
- What your household actually spends each month.
- Health insurance. COBRA usually lets you keep your employer's plan for about 18 months, but you usually pay the full premium yourself, plus a small fee. If you'd rather buy a Marketplace plan, you need to apply within 60 days of losing job-based coverage.1
- Taxes. Self-employed people pay both halves of Social Security and Medicare, a rate of 15.3%, on top of income tax.2
- Business costs: software, insurance, travel, a bookkeeper.
A salary hides a lot. For management and professional jobs in private industry, benefits make up 31.5% of what an employer spends per hour.3 You'll now be paying for those yourself.
How many months?
Count from evidence, not hope. If you have no paying client yet, assume several months of conversations and pilots before income is steady. If you already have a paying client and a few warm conversations, you're starting from a better place.
Either way, write down the month you'd go back to employment if the business isn't covering its costs. A date you choose in advance is easier to honor than one you have to decide under pressure.
Can I shorten it?
Yes. Leave with a client, or a committed pilot, rather than an idea. Keep fixed costs low for the first year. Consider part-time or contract work that covers the basics while the business grows. Every month of income from day one is a month of runway you don't have to save.
Once the business is running, keep a cash buffer inside it too. The median US small business held 27 days of cash in reserve in a JPMorgan Chase Institute study, which is thin.4
What's a warning sign?
Pricing too low because the runway is running out. Pressure makes people discount. Decide your floor price before you resign, while you can still think clearly. An accountant can confirm the tax side for your situation.
What this looks like
Maya, an imaginary founder, spent years in hospital finance and now helps independent dental practices recover money lost to rejected insurance claims.
Maya listed her household spending, priced her own health insurance before she resigned rather than guessing it, set aside money for self-employment tax, and added her software and insurance costs.
She had one paying practice and two warm conversations, so she planned for nine months rather than three. Then she wrote down the month she'd start looking for a role if the business still wasn't covering its costs, and told her partner the date.
Where this fits
Runway is part of the third layer of the Proof Path, the operating loop: whether you have the time and money to keep testing until the business works. Read about the operating loop.
Related questions:
- 1. HealthCare.gov, If you lose job-based coverage. www.healthcare.gov
- 2. Internal Revenue Service, Self-employment tax (Social Security and Medicare taxes), updated June 27, 2026. www.irs.gov
- 3. U.S. Bureau of Labor Statistics, Employer Costs for Employee Compensation, Table 4, June 2026 (released September 9, 2026). www.bls.gov
- 4. JPMorgan Chase Institute, Cash Flows, Balances, and Buffer Days, September 1, 2016 (2015 data). www.jpmorganchase.com
An honest read on where your idea actually stands.
The Startup Readiness Assessment takes most people under ten minutes and looks at the eleven parts of a business in the order they need to be solid.
