How to get runway and validation right before going full-time on your project
Some folks don't go full-time on their projects until their MRR can replace the income from their current employment. There's good reason for that, but depending on your situation, it is often a good idea to go all-in on a project sooner.
If you're going all-in, then there are two things that you need before you take the leap:
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A lot depends on your family situation. If you don't have kids, you have a lot more flexibility in trying something. For instance, if you only had 8-9 months of runway built up, you could probably just go for it and then if your trajectory is not looking good after 6 months, start looking for a job so you can keep working on your startup part-time.
As a dad of 3, I feel like 9 months is the absolute bare minimum, but 12 is more like it. Even in that case, unless you've done startup life before I'd wait to jump ship until you have your first $100 in recurring revenue.
I'm experimenting with a tool that projects your runway and tracks expenses based off of spreadsheets I've used for years in my startup journeys. Not sure if I am going to monetize or even move this project forward or not, but here's what I've got so far: https://colinmakessoftware.com/wiverna/app/
Yeah for sure, it depends on your responsibilities. As a soon-to-be-dad, I'd be looking for a pretty solid MRR before jumping ship.
Thank you so much for sharing this. I enjoyed reading it. Going to check out your Validation post now.
Glad you liked it! Hope it helps :)
Thanks for sharing this and what looks more interesting resources - heading over to your validation article right now.
What a great post, @IndieJames! Thanks for sharing.
Here is my two cents to add to the Runway/Validation framework. I am a firm believer in the "portfolio of small bets" approach popularized by @dvassallo. Besides the technical gurus, it might work well for those people, like me, whose main obstacle is the lack of necessary skills. Acquiring those skills unavoidably extends our Runways. And since the best way to learn anything is actually doing it (in my opinion), a "small bets" portfolio helps a lot to learn whatever you need to learn while building multiple MVPs with multiple Runways. Those multiple MVPs also help getting Validations along the way...
Interesting, thanks for weighing in! I think a portfolio of small bets is such a great way to learn. Outside of learning, I know that there is some debate about whether it's best to focus on one thing and put all your energy into that, or to do more of a shotgun approach like you're saying. I think it probably depends on your personality and circumstances 🤷♂️
totally agree!
Your runway calculation doesn't include tax. Taking money out of your business incurs tax so you can't simply use your MRR to replace salary (assuming you are using Net Salary).
Really great point! Edited to: Months of Runway = Savings / ((Monthly Biz Expenses + Monthly Personal Expenses) - ((Biz MRR*0.07) + Other Monthly Income))
Pieter Levels says to wait until your revenue surpasses the income of your job for six months… OR alternatively make sure you have three years' worth of savings. This sounds pretty reasonable to me.
Income vs Expenses is also a good point. It is (vaguely) possible your income far exceeds your expenses, but I think more likely you will underestimate expenses. Taking a holiday from investing for retirement and saving for kids college is possible, but you should be aware of both sides. Know how you will stand if your business fails, most do.
Also in the US personal health insurance usually leaves you paying far more out of pocket than employee insurance. (and seriously don't skip insurance)
Three years expenses might sound too much, but one year is definitely a minimum and you are likely to underestimate your actual expenses. You also likely have business expenses to deal with as well.
I'll be happily sticking to side projects for the foreseeable future.
Yeah, these are great points! Health insurance is crazy!
Those equations are supper helpful, thanks! Bookmarked.
12 months is enough for any indie hacker. If you can't get it done in 12 months of working full-time, then you probably quit your job to early and you should've waited on more validation/MRR. Agree that 3 years is crazy. Saving that kind of money would take way too long for most people.
Great post -- would love to chat about it today at 1pm EST
https://vibehut.io/rooms/6304c25f8ac27200164bd65f