.burn-calc-box {
background: #f8f9fa;
padding: 30px;
border-radius: 8px;
box-shadow: 0 4px 6px rgba(0,0,0,0.1);
border: 1px solid #e9ecef;
margin-bottom: 40px;
}
.burn-calc-title {
text-align: center;
color: #2c3e50;
margin-bottom: 25px;
font-size: 24px;
font-weight: 700;
}
.burn-input-group {
margin-bottom: 20px;
}
.burn-input-group label {
display: block;
margin-bottom: 8px;
font-weight: 600;
color: #495057;
}
.burn-input-wrapper {
position: relative;
}
.burn-input-wrapper input {
width: 100%;
padding: 12px 15px;
padding-left: 35px; /* Space for currency symbol */
border: 1px solid #ced4da;
border-radius: 4px;
font-size: 16px;
box-sizing: border-box;
transition: border-color 0.2s;
}
.burn-input-wrapper input:focus {
border-color: #007bff;
outline: none;
}
.burn-currency-symbol {
position: absolute;
left: 12px;
top: 50%;
transform: translateY(-50%);
color: #6c757d;
}
.burn-calc-btn {
width: 100%;
background-color: #007bff;
color: white;
border: none;
padding: 14px;
font-size: 18px;
font-weight: 600;
border-radius: 4px;
cursor: pointer;
transition: background-color 0.2s;
}
.burn-calc-btn:hover {
background-color: #0056b3;
}
.burn-results {
margin-top: 30px;
padding-top: 20px;
border-top: 1px solid #dee2e6;
display: none;
}
.burn-result-row {
display: flex;
justify-content: space-between;
align-items: center;
margin-bottom: 15px;
padding: 10px;
background: #fff;
border-radius: 4px;
border: 1px solid #e9ecef;
}
.burn-result-label {
font-weight: 600;
color: #555;
}
.burn-result-value {
font-weight: 700;
font-size: 18px;
color: #2c3e50;
}
.burn-runway-box {
background-color: #d4edda;
color: #155724;
padding: 15px;
border-radius: 4px;
text-align: center;
margin-top: 20px;
border: 1px solid #c3e6cb;
}
.burn-runway-value {
font-size: 28px;
font-weight: 800;
display: block;
margin-top: 5px;
}
.burn-danger {
background-color: #f8d7da;
color: #721c24;
border-color: #f5c6cb;
}
.burn-profit {
background-color: #cce5ff;
color: #004085;
border-color: #b8daff;
}
.article-content h2 {
color: #2c3e50;
margin-top: 30px;
font-size: 22px;
}
.article-content p {
line-height: 1.6;
margin-bottom: 15px;
}
.article-content ul {
margin-bottom: 20px;
padding-left: 20px;
}
.article-content li {
margin-bottom: 10px;
line-height: 1.6;
}
.formula-box {
background: #f1f3f5;
padding: 15px;
border-left: 4px solid #007bff;
font-family: monospace;
margin: 20px 0;
overflow-x: auto;
}
function calculateBurnRate() {
// Get input values
var cashBalance = parseFloat(document.getElementById('cashBalance').value);
var monthlyRevenue = parseFloat(document.getElementById('monthlyRevenue').value);
var monthlyExpenses = parseFloat(document.getElementById('monthlyExpenses').value);
// Validation
if (isNaN(cashBalance)) cashBalance = 0;
if (isNaN(monthlyRevenue)) monthlyRevenue = 0;
if (isNaN(monthlyExpenses)) monthlyExpenses = 0;
if (cashBalance < 0 || monthlyRevenue < 0 || monthlyExpenses < 0) {
alert("Please enter positive values only.");
return;
}
// Calculations
var grossBurn = monthlyExpenses;
var netBurn = monthlyExpenses – monthlyRevenue;
// Format Currency Function
function formatCurrency(num) {
return '$' + num.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}
// Update UI elements
document.getElementById('grossBurnResult').innerHTML = formatCurrency(grossBurn);
document.getElementById('netBurnResult').innerHTML = formatCurrency(netBurn);
var runwayContainer = document.getElementById('runwayContainer');
var runwayResult = document.getElementById('runwayResult');
// Reset classes
runwayContainer.className = 'burn-runway-box';
if (netBurn <= 0) {
// Profitable or Break-even
runwayResult.innerHTML = "Infinite";
document.getElementById('netBurnResult').innerHTML = formatCurrency(netBurn) + " (Profit)";
runwayContainer.classList.add('burn-profit');
runwayContainer.innerHTML = '
You are not burning cash reserves.
';
} else {
// Burning Cash
var runwayMonths = cashBalance / netBurn;
// Handle edge case where cash is 0 but burning
if (cashBalance <= 0) {
runwayResult.innerHTML = "0.0 Months";
runwayContainer.classList.add('burn-danger');
} else {
runwayResult.innerHTML = runwayMonths.toFixed(1) + " Months";
if (runwayMonths < 6) {
runwayContainer.classList.add('burn-danger');
}
}
}
// Show results
document.getElementById('burnResults').style.display = 'block';
}
How to Calculate Burn Rate of a Company
Understanding your company's financial health is critical for survival, especially for startups and early-stage businesses reliant on venture capital or seed funding. The "burn rate" is a key metric that tells you how fast your business is spending its cash reserves before generating a positive cash flow.
Our Burn Rate Calculator above helps you determine both your Gross and Net Burn Rates, as well as your "Runway"—the estimated amount of time you have left before you run out of money.
What is Burn Rate?
Burn rate refers to the rate at which a company consumes its cash pool in a loss-generating scenario. It is typically calculated on a monthly basis. There are two distinct types of burn rate you need to understand:
- Gross Burn Rate: This is the total amount of operating expenses your company incurs each month. It answers the question: "How much does it cost to keep the lights on?" independent of revenue.
- Net Burn Rate: This is the amount of cash you are losing each month after accounting for incoming revenue. It answers the question: "How much is our bank balance decreasing every month?"
Formulas for Calculation
To calculate these metrics manually, use the following formulas:
Gross Burn = Total Monthly Operating Expenses
Net Burn = Monthly Operating Expenses – Monthly Revenue
Once you have the Net Burn, you can calculate your Cash Runway, which is arguably the most critical number for a founder to know:
Runway (Months) = Current Cash Balance / Net Burn Rate
Example Calculation
Let's look at a hypothetical scenario for a SaaS startup:
- Cash on Hand: $500,000
- Monthly Operating Expenses: $40,000 (Salaries, Servers, Rent)
- Monthly Revenue: $15,000
Gross Burn: $40,000 per month.
Net Burn: $40,000 – $15,000 = $25,000 per month.
Runway: $500,000 / $25,000 = 20 Months.
This means the company has 20 months to either become profitable or raise more funding before they run out of cash.
Why is Burn Rate Important?
Investors look at burn rate to assess the risk profile of a startup. If your burn rate is too high relative to your growth, it signals inefficiency. However, a high burn rate can be acceptable if it is fueling rapid growth that will lead to future profitability.
How to Reduce Your Burn Rate
If your runway is dangerously short (typically less than 6-9 months), consider these steps:
- Cut Variable Costs: Reduce marketing spend that isn't showing immediate ROI.
- Freeze Hiring: delays in scaling the team can significantly preserve cash.
- Negotiate Vendor Contracts: Ask for discounts on software subscriptions or extended payment terms.
- Increase Revenue Efficiency: Focus on upselling existing customers rather than expensive acquisition of new ones.
Frequently Asked Questions
What is a "good" burn rate?
There is no single number, but a common rule of thumb for venture-backed startups is a burn rate equal to your total cash raised divided by 18 to 24 months. This gives you enough time to hit the milestones required for the next funding round.
Can burn rate be negative?
Yes. If your "Net Burn Rate" calculation results in a negative number, it means your Revenue is greater than your Expenses. In this case, you are cash-flow positive and theoretically have an infinite runway.
Does burn rate include COGS?
Yes, usually burn rate calculations should include Cost of Goods Sold (COGS) and all operating expenses (SG&A) to give an accurate picture of cash outflows.