What Is Burn Rate & Runway?
Burn rate is the speed at which a company spends its cash reserves before reaching profitability or raising more capital. Runway is how long that cash will last — measured in months — at the current rate of spending. Together they are the single most important survival metric for any startup or early-stage business.
Gross burn is your total monthly operating expenses. Net burn subtracts any revenue you generate, giving the true monthly cash drain. This calculator works in any currency; just enter consistent amounts.
How to Use It
Enter three numbers: your current cash balance (everything in the bank), your monthly operating expenses (payroll, rent, software, marketing, etc.), and your monthly revenue. The tool computes net burn and divides your cash by it to give your runway in months. If revenue equals or exceeds expenses, you are cash-flow positive and runway is effectively unlimited.
The Formula Explained
$$\text{Runway (months)} = \frac{\text{Cash Balance}}{\text{Monthly Expenses} - \text{Monthly Revenue}}$$ The denominator is your net monthly burn. A smaller burn or a larger cash pile both extend your runway.
Worked Example
Suppose you hold $500,000 in cash, spend $80,000 a month, and earn $30,000 a month. Net burn $$= 80{,}000 - 30{,}000 = \$50{,}000.$$ $$\text{Runway} = \frac{500{,}000}{50{,}000} = \textbf{10 months}.$$ That tells you to close a funding round or reach break-even within roughly 7–8 months to stay safe.
FAQ
What's a healthy runway? Most investors like to see 12–18 months of runway after a raise, giving time to hit milestones before the next round.
Gross vs net burn — which matters? Net burn reflects your real cash trajectory, but watch gross burn too: revenue can drop unexpectedly.
How can I extend runway? Cut non-essential expenses, increase revenue, or raise additional capital. Even small expense reductions compound into extra months.
