Business Runway & Burn Rate Calculator
Calculate how many months your business can survive at current spending levels.
Net Monthly Burn Rate:
Estimated Business Runway:
Understanding Business Runway and Burn Rate
For startups and small businesses, runway is the amount of time the company has before it runs out of money, assuming income and expenses remain constant. It is one of the most critical metrics for founders to monitor, as it dictates how much time you have to achieve profitability or secure the next round of funding.
How to Calculate Your Burn Rate
Your Gross Burn Rate is the total amount of spending each month. However, for most businesses, the Net Burn Rate is more important. This is calculated as:
Net Burn Rate = (Fixed Expenses + Variable Expenses) - Gross Revenue
If your expenses are $10,000 and your revenue is $4,000, your net burn rate is $6,000 per month.
The Formula for Business Runway
Once you know your net burn, the runway formula is simple:
Runway (Months) = Current Cash Balance / Net Monthly Burn Rate
Example Calculation
| Metric | Amount |
|---|---|
| Cash on Hand | $100,000 |
| Total Monthly Expenses | $15,000 |
| Monthly Revenue | $5,000 |
| Calculated Runway | 10 Months |
Strategies to Extend Your Runway
- Reduce Fixed Costs: Evaluate office space needs or software subscriptions.
- Increase Lead Generation: Focus on high-ROI marketing channels to boost revenue.
- Improve AR: Speed up your Accounts Receivable to get cash in the door faster.
- Pivot Pricing: Adjusting your price point can sometimes reduce the burn rate without increasing costs.