Burn Rate & Runway Calculator
Gross burn, net burn and runway, plus the projection that answers whether current growth reaches break-even before the cash runs out.
Gross burn, a month $62,000.00
Revenue, a month $18,000.00
Net burn, a month $44,000.00
Cash in the bank $400,000.00
Runway at this burn 9.1 months
on gross burn alone 6.5 months ← the wrong number
Growing revenue 8% a month
cash runs out in 11.9 months
revenue by then $41,969.50
still short by $20,030.50
verdict default dead: growth does not get there in time
What one more month of runway costs
raise $44,000.00
or cut costs, or add revenue, by $4,360.36
Runway is cash divided by net burn, not gross burn. Here that is
$400,000.00 over $44,000.00, which is 9.1 months. Dividing by gross burn
would say 6.5, and that is the mistake to watch for in a spreadsheet
somebody else built.
The projection holds costs flat, which nobody does. Hiring is the whole
point of raising, and every hire moves the burn up and the runway in.
Recalculate the month a hire starts rather than at the end of the
quarter.
The month the money runs out is not the month to be raising in. A round
takes three to six months from first meeting to cash in the bank, and a
company visibly short of runway negotiates from a bad position. Start
when six months are left, not three.
Default alive means current growth reaches break-even before the cash
does. It is the framing worth carrying because it turns an abstract
worry into a date, and because a company that is default dead has to
change something rather than work harder.
Burn is a monthly average and the months are not average. Annual
insurance, tax, a conference, a hardware purchase: a quarter that looks
fine on the average can still miss payroll. Check the lowest projected
balance, not the trend.
Cash is not revenue. Money invoiced and not collected does not pay
salaries, and a 60-day payment term on a large customer is a runway
problem rather than an accounting one.
Output is valid and updates as you type.
Fix the highlighted fields to update the output.
Runway is cash divided by net burn. Two words in that sentence get mixed up constantly, and getting them the wrong way round changes the answer by months.
Gross burn is everything leaving the account. Net burn is that less what comes in. A company spending 62,000 a month with 18,000 of revenue has a gross burn of 62,000 and a net burn of 44,000, and on 400,000 of cash the runway is nine months, not six and a half.
The second number worth having is not a number at all. It is whether current growth reaches break-even before the cash does. That is the default alive question, and it turns a vague worry into a date.
How to use
- Put in the cash actually in the bank. Not revenue booked, not invoices outstanding.
- Put in the monthly costs: payroll, contractors, hosting, rent, tools, tax.
- Put in collected revenue and the rate it is growing.
Example
400,000 in the bank, 62,000 a month out, 18,000 a month in, growing 8 percent:
Gross burn, a month $62,000.00
Revenue, a month $18,000.00
Net burn, a month $44,000.00
Cash in the bank $400,000.00
Runway at this burn 9.1 months
on gross burn alone 6.5 months ← the wrong number
Growing revenue 8% a month
cash runs out in 11.9 months
revenue by then $41,969.50
still short by $20,030.50
verdict default dead: growth does not get there in time
What one more month of runway costs
raise $44,000.00
or cut costs, or add revenue, by $4,360.36Change nothing but the growth rate, from 8 percent to 15:
Growing revenue 15% a month
break-even in month 10
cash at its lowest $144,145.16
verdict default alive: the cash lasts to break-evenSame costs, same cash, same starting revenue. The difference between those two companies is seven points of monthly growth, and it is the difference between needing a round and not.
Pitfalls
Divide by net burn, not gross burn. Dividing by gross burn understates the runway, which sounds conservative and is just wrong. It is the most common error in a spreadsheet somebody else built, and it is worth checking before you act on the number.
Costs are held flat in the projection, and nobody does that. Hiring is usually the point of raising, and every hire moves the burn up and the runway in. Recalculate on the day a hire starts rather than at the end of the quarter.
Cash is not revenue. Money invoiced and not collected does not pay salaries. A 60-day payment term on a large customer is a runway problem rather than an accounting one, and it is invisible in a revenue chart.
The month the money runs out is not the month to be raising. A round takes three to six months from first meeting to money in the bank, and a company visibly short of runway negotiates from a bad position. Start when six months are left.
The average month is not a month. Annual insurance, a tax payment, a conference, a hardware purchase: a quarter that looks fine on the average can still miss payroll. Watch the lowest projected balance, not the trend line.
Profitable is not the same as safe. When revenue covers costs the cash stops shrinking and runway stops being the right question. The question becomes how much of that revenue is recurring and what happens to the number if the largest customer leaves.
Growth compounds and so does the projection’s error. A rate taken from one good month, applied for twelve, produces a confident answer built on one data point. Use the trailing three-month average, and treat anything above 20 percent a month as a hope rather than a plan.
Compatibility
Arithmetic in the browser: nothing is uploaded and nothing is stored, which is the point for a number like this one.
The projection steps forward a month at a time for up to ten years, growing revenue at the given rate and holding costs flat, and stops at whichever comes first: revenue covering costs, or the balance going through zero. The month it runs out is reported as a fraction, because a company does not run out of money on the first of the month.
The cost of one more month is worked out both ways, since they are different amounts. Adding a month of burn to the bank is the raise; getting the same month from the burn side means cutting until the existing cash divides into one more month, which is a much smaller number early on and a much larger one later.
Default alive and default dead is Paul Graham’s framing, and the arithmetic is his: does current growth reach break-even before the cash does.