For startups and growing companies, understanding cash burn rate and runway isn't just a nice-to-have financial skill—it's a survival imperative. Every day, promising startups run out of cash not because their ideas lacked merit, but because founders didn't accurately track how quickly money was leaving the business. Whether you're a first-time founder, a finance professional supporting a growth company, or a business student studying startup economics, mastering burn rate and runway calculations will give you the clarity needed to make critical decisions.

Cash burn rate measures how quickly a company is spending its cash reserves—the velocity of cash leaving the business each month. For most early-stage companies that aren't yet profitable, understanding burn rate is essential for planning fundraising timelines, making hiring decisions, and determining when to cut costs. A burn rate that's too high relative to available cash creates existential risk; too low might mean missing growth opportunities.

Runway is the flip side of the burn rate coin—it tells you how many months (or sometimes weeks) you have before the cash runs out at your current spending rate. This single number often determines when a founder starts fundraising, whether to hire that next engineer, or if it's time to explore profitability rather than growth.

Our Cash Burn Rate & Runway Calculator helps you input your current cash position and monthly cash flows to instantly see your net burn rate, runway estimate, and projected cash balance over time. With this visibility, you can make informed decisions and avoid the surprise of running out of money.

What is Cash Burn?

Cash burn refers to the net cash outflow of a business over a specific period, typically measured monthly. When a company spends more cash than it receives, it is "burning cash." This is normal and expected for most startups that prioritize growth over immediate profitability.

Cash burn is distinct from accounting losses. A company can show a profit on its income statement while still burning cash due to working capital needs, debt payments, or capital expenditures. Conversely, a company with accounting losses might generate positive cash flow through customer prepayments or delayed supplier payments.

Gross Burn vs. Net Burn

What is Cash Runway?

Cash runway is the amount of time a company has before it runs out of cash at its current burn rate. It's typically expressed in months and represents a countdown clock for companies that are burning cash.

Runway is only meaningful when a company has positive net burn (spending more than it earns). If your company generates net positive cash flow, your runway is theoretically unlimited—you're not depleting reserves, you're growing them.

Why Runway Matters

• Fundraising Timing: Investors expect founders to understand their runway. Knowing you have 12 months of runway means you need to start fundraising now, as raising typically takes 3-6 months.
• Strategic Planning: Runway informs decisions about hiring, marketing spend, product development, and expansion. Short runway means conservative decisions; longer runway enables bolder moves.
• Risk Assessment: Board members, investors, and advisors use runway to assess company health and the urgency of various initiatives.
• Cash Management: Understanding runway helps prioritize spending and identify areas where costs can be reduced if needed.

The Three Burn Scenarios

• Positive Net Burn (Cash Depleting): Spending exceeds income. The business is consuming its cash reserves. This is typical for growth-stage startups investing in customer acquisition and product development.
• Negative Net Burn (Cash Generating): Income exceeds spending. The business is generating cash and growing reserves. Runway is unlimited at current rates.
• Zero Net Burn (Break-even): Inflows exactly match outflows. Cash reserves remain stable. The business is self-sustaining but not growing its cash position.

Follow these step-by-step instructions to calculate your burn rate and runway:

1. Enter Your Current Cash Position: Input your total available cash—this includes bank balances, money market accounts, and any readily accessible cash equivalents. Don't include restricted cash, accounts receivable, or assets that can't be quickly converted to cash.
2. Enter Monthly Cash Inflows: Input your average monthly cash received. This includes:
   • Revenue actually collected (not invoiced, but received)
   • Interest income
   • Any other recurring cash receipts

   Note: Do not include funding rounds or one-time inflows here—this should reflect typical monthly operations.

3. Enter Monthly Cash Outflows: Input your average monthly cash spent. This includes:
   • Payroll and benefits
   • Rent and utilities
   • Software subscriptions and tools
   • Marketing and advertising
   • Professional services (legal, accounting)
   • All other recurring expenses
4. Set Your Projection Horizon: Choose how many months to project (1-120 months). For most purposes, 12-24 months provides useful visibility while remaining reasonably accurate.
5. Click "Calculate" and Review Results: The calculator displays:
   • Net burn rate per month
   • Runway in months (if applicable)
   • Zero cash date projection
   • Cash balance projection chart
   • Key performance indicators
6. Run Scenario Analysis: Try different combinations of inflows and outflows to see how changes affect runway. What if you cut marketing by 20%? What if revenue grows 10% monthly?

Core Burn Rate Formulas

Runway Calculation

Zero Cash Date Projection

Cash Projection Formula

Burn Multiple (Advanced Metric)

Default Alive/Dead Test

A company is "default alive" if at its current growth rate it will reach profitability before running out of cash. "Default dead" means it will run out of cash without external intervention. This calculator helps you understand which category you're in.

• Using Revenue Instead of Cash Collected: Revenue recognized on your income statement isn't the same as cash received. If customers pay on 60-day terms, your cash inflow is significantly delayed from your revenue. Always use actual cash received for burn calculations.
• Forgetting Non-Monthly Expenses: Annual insurance premiums, quarterly tax payments, and yearly software renewals create cash outflow spikes. Either amortize these across months or plan for the months when they hit.
• Including Restricted Cash: If you have cash in escrow, customer deposits you can't use, or other restricted funds, don't count them in your available cash for runway calculations.
• Ignoring Accounts Payable: If you have significant unpaid bills, your true cash position is lower than your bank balance suggests. Net cash should account for imminent payables.
• Assuming Constant Burn: This calculator assumes steady-state burn, but real businesses have variable expenses. Plan for the months when burns spike (new hire start dates, annual payments) rather than just averages.
• Waiting Too Long to Act: If runway drops below 6 months, options become extremely limited. Many founders wait too long to either raise money or cut costs, leaving no time for course correction.
• Confusing Break-even Periods with Sustainable Operations:One month of positive cash flow doesn't mean you've achieved sustainability. Look for consistent trends across multiple months before declaring victory.

• Maintain 18-24 Months of Runway: This gives you time to hit milestones, adapt to setbacks, and raise your next round without desperation. Running with less than 12 months creates "funding pressure" that weakens negotiating position.
• Start Fundraising Early: Begin your fundraising process when you have 9-12 months of runway remaining. Raising capital typically takes 4-6 months, and you want to close before runway becomes critical.
• Know Your Burn Levers: Identify which expenses are fixed (rent, committed salaries) versus variable (marketing, contractors). In a crisis, variable expenses can be cut quickly; fixed expenses take longer to unwind.
• Calculate Multiple Scenarios: Run best-case, expected-case, and worst-case scenarios. What if revenue drops 30%? What if a major customer churns? Having these scenarios prepared helps you react quickly.
• Track Burn Multiple, Not Just Burn Rate: Burn multiple (Net Burn / Net New ARR) tells you how efficiently you're converting cash into growth. A burn multiple under 1.5x is excellent; over 2x suggests inefficient spending.
• Build a Cash Reserve Buffer: Never run your cash position to zero—even in projections. Maintain a buffer of 2-3 months of expenses as a minimum operating balance for unexpected costs or opportunities.
• Consider Revenue Line of Credit: For companies with predictable revenue, a revenue-based credit line can extend runway without dilution. However, debt adds risk—only use it if revenue is truly reliable.

These are general guidelines. Optimal runway depends on market conditions, business model, and access to capital.

• Constant Flows Assumption: Projections assume monthly inflows and outflows remain constant. Real businesses experience variability from seasonality, customer churn, and changing costs.
• No One-Time Events: This model doesn't account for funding rounds, large customer prepayments, one-time expenses, or other non-recurring cash events.
• No Growth Modeling: Revenue and expenses are assumed static. Growing companies will see changing burn rates as both revenue and costs evolve.
• No Seasonality: Seasonal patterns in revenue or expenses are not captured in this simple model.
• Educational Purpose Only: This calculator is for educational and planning purposes. Do not use it as the sole basis for financial decisions. Consult with financial professionals for business planning.

The information in this guide is based on established startup finance principles and authoritative sources:

• U.S. Small Business Administration (SBA) - Cash flow management and financial planning: sba.gov
• U.S. Securities and Exchange Commission (SEC) - Financial statement analysis: sec.gov
• SCORE Association - Startup financial planning resources: score.org
• Financial Accounting Standards Board (FASB) - Cash flow statement standards: fasb.org