Burn Rate Guide
Track monthly cash burn, runway, and the urgency of revenue or cost decisions before time runs out.
What This Calculator Measures
The burn rate calculator shows how much cash the business is losing each month and how long available cash will last at the current pace. It is useful for startups, seasonal businesses, and any company operating before stable positive cash flow.
Inputs You Need
You usually need cash on hand, average monthly revenue, and total monthly expenses. Expenses should include payroll, software, rent, founder salary, debt obligations, and any recurring spend that will continue while you try to improve performance.
Core Formulas
Net Burn = Monthly Expenses - Monthly Revenue. If net burn is positive, Runway = Cash on Hand / Net Burn. If net burn is zero or negative, the business is at breakeven or cash-flow positive and runway pressure is lower.
How to Interpret the Result
Runway is a decision timer. Short runway means pricing, cost cuts, financing, or revenue acceleration cannot wait. Longer runway creates flexibility, but only if the business uses that time to improve unit economics rather than just delay the problem.
Worked Example
If cash on hand is $120,000, monthly revenue is $18,000, and monthly expenses are $30,000, net burn is $12,000. Runway is 10 months. That means the business needs to improve performance or secure more capital well before month ten.
Common Mistakes
Many operators exclude owner compensation, taxes, debt payments, or irregular costs from the burn figure. Another common error is using one unusually good month of revenue as the baseline rather than an average that reflects actual sales volatility.
Open the Calculator
Use the calculator when planning fundraising, evaluating runway, or deciding how quickly expense cuts or revenue growth need to happen.