Financial Tools

Burn Rate and Runway

Runway is not cash divided by this month's burn, because revenue and costs both move. This walks the balance month by month and names the month it reaches zero, and what a cost cut buys.

Where you stand

Cash In The Bank

Monthly Revenue

Monthly Costs

How both sides move

Revenue Growth (per month)

Cost Growth (per month)

Cost Cut To Model (the second scenario)

Values shown are examples. Edit them to match your situation.

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Runway

Gross Burn	$0
Net Burn	$0
Runway	$0
Money Runs Out	$0
Break Even Month	$0
Runway After The Cut	$0
Months Bought	$0

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For illustration only, not financial advice. Results are estimates based on the numbers you enter and do not constitute an offer, rate quote or approval.

Runway is bought with revenue, and revenue costs money to win.

Put acquisition cost next to lifetime value and see whether growth pays for itself.

Check unit economics

How this is worked out

Gross burn is everything going out. Net burn is what goes out less what comes in, and it is the figure that consumes the bank balance.

The runway here is a month by month walk, not a division. Each month revenue grows at its rate and costs grow at theirs, the difference is taken out of the balance, and the first month the balance is not positive is the answer. That is why the number changes when growth changes even though today's burn does not.

The second walk repeats the whole thing with costs cut by the percentage you enter, so the trade is visible before the conversation rather than after it.

Break even is the first month revenue covers costs. If it arrives before the balance runs out, the business is default alive on these assumptions.

Questions people ask

What counts as burn?

Everything that leaves the account: payroll, contractors, rent, software, ads, taxes. Not depreciation, which is an accounting entry and never touches the bank.

How much runway should I have?

A raise takes three to six months to close, and a bad quarter takes one to appear, so most operators want twelve months and start acting hard below six. The point at which you act should be set now, not when the number is small.

Should a planned raise be in here?

No. Model the business without it, then look at the date. Money that has not landed is not runway, and a plan that depends on it is a plan with no fallback.

Why does a cost cut buy so few months?

Because the cut applies to a base that is growing, and because the biggest lines are usually people, which cannot be cut instantly or without cost. If a 15% cut buys one month, the problem is revenue, not costs.

What does default alive mean?

That on current growth the business reaches break even before the money runs out. It is a property of the two curves, not of a single month's numbers, which is why the walk matters.

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