Burn Rate & Runway Calculator
At $25,000.00 a month, cash runs out in about 10 months. Cutting $6,250.00 a month would stretch it to 13.3 months.
How the burn rate & runway calculation works
Gross burn is everything you spend in a month
Add up all cash going out: payroll, rent, software, loan payments. $55,000 out the door is a $55,000 gross burn.
Net burn subtracts the cash coming in
Net burn = monthly expenses − monthly revenue. $55,000 out and $30,000 in is a $25,000 net burn.
Runway is cash divided by net burn
$250,000 in the bank ÷ $25,000 a month = 10 months before the account hits zero, if nothing changes.
Use an average of recent months
One unusual month can mislead. Average the last three months of bank activity for a steadier number.
Worked example. With $250,000 in the bank, $30,000 of monthly revenue and $55,000 of monthly expenses, gross burn is $55,000, net burn is $25,000 and runway is 10.0 months.
Burn Rate & Runway FAQ
What is burn rate?
Burn rate is how fast a business uses up its cash, usually measured per month. It matters most when expenses are higher than revenue, because the gap is paid from the cash in the bank.
How do you calculate burn rate?
Gross burn is total monthly cash spending. Net burn is that spending minus monthly cash revenue. When people say burn rate without a qualifier, they usually mean net burn.
What is the burn rate formula?
Net burn = monthly cash out − monthly cash in. Runway = cash in the bank ÷ net burn. With $55,000 out, $30,000 in and $250,000 in the bank: $55,000 − $30,000 = $25,000 net burn, and $250,000 ÷ $25,000 = 10 months of runway.
What is cash runway?
Runway is how many months your cash lasts at the current net burn: cash on hand ÷ net burn. $250,000 at $25,000 a month is 10 months.
What is the difference between gross burn and net burn?
Gross burn ignores revenue and shows total spending. Net burn shows how much cash you lose each month after revenue comes in. In the example, gross burn is $55,000 and net burn is $25,000.
How many months of runway should a business have?
There is no fixed rule. Count how long it would take to raise money, get a loan approved or cut costs to break even, and keep more runway than that. A venture-funded startup that plans to raise again needs room for a fundraise; a small business may only need a cash cushion for a slow season.
How can I extend my runway?
Lower net burn by cutting costs, collecting from customers faster or raising prices, or add cash. In the example, cutting $6,250 a month (a quarter of the $25,000 net burn) stretches runway from 10 to 13.3 months.
What if revenue is higher than expenses?
Then you are not burning cash. Net burn is negative, cash grows each month, and runway has no end date at the current pace.