Net Burn Rate & Runway Calculator
Net Burn Rate (Monthly Loss)
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Estimated Runway
0 Months
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How to Calculate Net Burn Rate
For startups and high-growth companies, cash is oxygen. Understanding Net Burn Rate is essential for survival. It tells you exactly how much money your company is losing each month after accounting for incoming revenue. This metric is the foundation for calculating your runway—the amount of time you have left before you run out of cash.
Key Definition: Net Burn Rate is the difference between your total monthly operating expenses and your total monthly revenue. Unlike Gross Burn (which is just expenses), Net Burn accounts for the money you are making.
The Net Burn Rate Formula
The calculation for Net Burn Rate is straightforward but powerful. It requires accurate data from your income statement.
Net Burn Rate = Monthly Operating Expenses – Monthly Revenue
For example, if your company spends $50,000 a month on salaries, rent, and servers (Gross Burn), but earns $10,000 in sales revenue, your Net Burn Rate is $40,000 per month.
Calculating Cash Runway
Once you know your Net Burn Rate, you can determine your Cash Runway. This metric answers the question: "How long until we go out of business if nothing changes?"
Runway (Months) = Current Cash Balance / Net Burn Rate
Using the previous example, if you have $400,000 in the bank and a Net Burn Rate of $40,000, your runway is 10 months.
Net Burn vs. Gross Burn
It is crucial to distinguish between these two metrics:
- Gross Burn: The total amount of cash you spend each month. This measures efficiency and cost structure.
- Net Burn: The total cash you lose each month. This measures sustainability and how long your current funding will last.
What is a "Good" Burn Rate?
There is no single number that applies to every company, but generally:
- Seed Stage: Investors often expect a runway of 12-18 months.
- Series A: As growth accelerates, burn often increases, but efficiency metrics (like Burn Multiple) become more important.
- Profitability: If your Revenue exceeds Expenses, you have a "Negative Burn Rate," meaning you are cash-flow positive and theoretically have an infinite runway.
Strategies to Extend Runway
If your calculation shows a runway of less than 6 months, immediate action is usually required:
- Cut Non-Essential Costs: Audit software subscriptions, office perks, and marketing channels with low ROI.
- Increase Revenue: Focus on upselling existing customers or accelerating sales cycles.
- Raise Capital: Seek additional funding, though this takes time and is harder to do with a short runway.