Transparent method
The formula
Worked example
Example inputs
How to interpret the result
Runway calculated from a single month's burn rate can be misleading in either direction, because burn tends to rise as a company scales headcount and spending, so a runway figure that assumes today's burn stays flat typically overstates how many months are actually left before cash runs out.
Before you rely on it
What to check
Project runway using an assumed rising burn trajectory, not a flat continuation of the current month's burn, since spending typically grows as a company scales.
The common error
Where people go wrong with burn rate & runway calculator
Calculating runway from a single current month's burn rate and assuming it holds flat going forward. Burn typically rises with growth, so a flat-burn assumption tends to overstate the real number of months remaining.
Sensitivity evidence
How monthly cash revenue changes the estimated runway
| Monthly cash revenue | Estimated runway | Monthly net burn |
|---|---|---|
| $40,000 | 7.5 months | $80,000 |
| $45,000 | 8.0 months | $75,000 |
| $50,000worked example | 8.6 months | $70,000 |
| $55,000 | 9.2 months | $65,000 |
| $60,000 | 10.0 months | $60,000 |
Every input, tested
Which input moves the estimated runway most
| Input | Tested from | To | Estimated runway at each end | Swing |
|---|---|---|---|---|
| Monthly cash expenses | $108,000 | $132,000 | 10.3 months to 7.3 months | 3.0 months (35%) |
| Cash available | $540,000 | $660,000 | 7.7 months to 9.4 months | 1.7 months (20%) |
| Monthly cash revenue | $45,000 | $55,000 | 8.0 months to 9.2 months | 1.2 months (14%) |
Two variables at once
Estimated runway by monthly cash revenue and cash available
| Monthly cash revenue \ Cash available | $480,000 | $600,000 | $720,000 |
|---|---|---|---|
| $40,000 | 6.0 months | 7.5 months | 9.0 months |
| $45,000 | 6.4 months | 8.0 months | 9.6 months |
| $50,000 | 6.9 months | 8.6 months | 10.3 months |
| $55,000 | 7.4 months | 9.2 months | 11.1 months |
| $60,000 | 8.0 months | 10.0 months | 12.0 months |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Cash available | $600,000 |
| Monthly cash expenses | $120,000 |
| Monthly cash revenue | $50,000 |
| Estimated runway | 8.6 months |
| Monthly net burn | $70,000 |
Where the inputs come from
Cash available is money you could actually spend, in bank accounts and equivalents, not the value of receivables or inventory. Monthly cash expenses are the average outflow, including payroll, rent, software, taxes and debt payments, and monthly cash revenue is average cash coming in. Use the last three months of actual cash flow, not budgets, and adjust for known changes like a hire or a contract ending.
When the result stops applying
The runway assumes flat burn, but burn changes as you hire, revenue grows or payments lag. Seasonal businesses and those with lumpy contracts have irregular cash flow. It ignores committed future costs such as annual prepayments and debt maturities. Cash tied up in receivables may arrive late, shortening the true runway.
What to compare it with
Use the break-even calculator to see the volume where burn stops, and the SaaS and startup calculators for subscription businesses. The working capital requirement page shows cash tied in operations, and the payback pages show how fast acquisition spend returns. Extend runway by cutting the largest discretionary costs first.
People also ask
Frequently asked questions
What is a healthy runway?
Most advisors recommend at least 12 to 18 months for a startup, since fundraising and hitting milestones take time. Under six months is an emergency.
What is the difference between gross and net burn?
Gross burn is total monthly spending, and net burn subtracts monthly revenue. Runway depends on net burn, since revenue offsets spending.
How do I extend runway?
Reduce expenses, raise prices, collect receivables faster, negotiate payment terms, or raise capital. Small cuts early have more effect than large cuts late.