Startup Burn Rate Calculator
How to Calculate Burn Rate in Excel
For startups and small businesses, cash is oxygen. Knowing your burn rate—the speed at which you are spending your cash reserves—is critical for survival. While our calculator above provides an instant analysis, many founders prefer to maintain a detailed financial model in a spreadsheet.
This guide explains the formulas required to calculate Net Burn, Gross Burn, and Cash Runway specifically within Microsoft Excel or Google Sheets.
1. Gross Burn vs. Net Burn
Before entering formulas, it is crucial to understand the two types of burn rates:
- Gross Burn: The total amount of money you spend each month on operating expenses (Salaries, Rent, COGS). It ignores income.
- Net Burn: The actual amount of cash you lose each month after accounting for revenue.
2. How to Set Up Your Excel Sheet
To calculate burn rate dynamically in Excel, organize your data with months in columns and categories in rows. Here is a standard structure:
| A | B | C | |
|---|---|---|---|
| 1 | Item | Jan 2024 | Feb 2024 |
| 2 | Cash at Start | $100,000 | $92,000 |
| 3 | Revenue | $5,000 | $6,000 |
| 4 | Expenses | $13,000 | $14,000 |
| 5 | Net Burn | [Formula] | [Formula] |
| 6 | Runway (Months) | [Formula] | [Formula] |
3. The Excel Formulas
Calculating Net Burn
In cell B5 (Net Burn for Jan 2024), input the following formula to subtract Revenue from Expenses. Note: If you want Burn to appear as a positive number representing loss, subtract Revenue from Expenses.
Result: $8,000 (This means you burned $8,000).
Calculating Cash Runway
The runway tells you how many months you have left before you run out of cash. In cell B6, divide your starting cash by your Net Burn.
Result: 12.5 (You have 12.5 months of life left).
Handling Profitability in Excel
If your revenue exceeds your expenses, your Net Burn will be negative (meaning you are generating cash). The simple division formula above will result in a negative runway number, which is confusing. To fix this, use the IF function:
4. Calculating Average Burn Rate
Monthly expenses fluctuate. Investors often ask for your "Average Burn Rate" over the last 3 or 6 months to get a smoother picture. To calculate the 3-month average burn in Excel:
Assuming B5, C5, and D5 contain the Net Burn for January, February, and March respectively.
5. Why This Metric Matters
Understanding how to calculate burn rate in Excel allows you to forecast future cash needs. If your runway drops below 6 months, it is typically time to fundraise immediately or cut costs drastically. Maintaining this data in a spreadsheet allows you to model scenarios, such as "What happens to our runway if we hire two new engineers?" or "How does a 10% drop in revenue affect our survival date?"