Net Burn & Runway Calculator
This tool helps startups and businesses calculate their key financial survival metrics: Net Burn Rate and Cash Runway.
Enter your total Cash on Hand, total Monthly Revenue, and total Monthly Expenses to understand how long your business can operate before running out of money.
Enter Your Financials
Understanding Net Burn & Runway
What is Net Burn Rate?
Net Burn Rate is the speed at which a company is losing money. It represents the net cash outflow per month. A positive number indicates a monthly loss, while a negative number indicates a monthly profit.
Net Burn Rate Formula
The formula is a simple subtraction of all cash inflows from all cash outflows for a period (typically a month).
Net Burn = Total Monthly Expenses - Total Monthly Revenue
What is Cash Runway?
Cash Runway is the amount of time (in months) that a company can continue operating before it exhausts its cash reserves, assuming its burn rate remains constant.
Cash Runway Formula
It's calculated by dividing your available cash by your monthly burn rate.
Runway (in Months) = Total Cash on Hand / Net Burn Rate
If a company is profitable (Net Burn is negative or zero), its runway is considered infinite.
Example Calculation
A startup has $100,000 in the bank. Their monthly expenses are $25,000 and their revenue is $5,000.
1. Calculate Net Burn: $25,000 (Expenses) - $5,000 (Revenue) = $20,000
2. Calculate Runway: $100,000 (Cash) / $20,000 (Net Burn) = 5 Months
Result: The startup has a 5-month runway.
10 Real-World Examples
Click on an example to see how different scenarios affect burn rate and runway.
Example 1: The Early-Stage Startup
Scenario: A new tech company with initial funding but low early revenue.
Inputs: Cash on Hand: $250,000, Monthly Revenue: $10,000, Monthly Expenses: $40,000.
1. Net Burn: $40,000 - $10,000 = $30,000/month.
2. Runway: $250,000 / $30,000 = 8.3 Months.
Conclusion: The company has a runway of about 8 months (Warning). They need to focus on increasing revenue or securing more funding within that timeframe.
Example 2: The Pre-Revenue Company
Scenario: A company in the R&D phase, with no sales yet.
Inputs: Cash on Hand: $100,000, Monthly Revenue: $0, Monthly Expenses: $20,000.
1. Net Burn: $20,000 - $0 = $20,000/month.
2. Runway: $100,000 / $20,000 = 5.0 Months.
Conclusion: The runway is critical (5 months). The focus must be on achieving revenue or hitting milestones for the next funding round very soon.
Example 3: The Profitable Small Business
Scenario: An established business generating more revenue than it spends.
Inputs: Cash on Hand: $120,000, Monthly Revenue: $50,000, Monthly Expenses: $42,000.
1. Net Burn: $42,000 - $50,000 = -$8,000/month (This is a Net Gain).
2. Runway: Infinite ∞.
Conclusion: The business is profitable and growing its cash reserves by $8,000 each month. Its runway is infinite as it is not burning cash.
Example 4: The "Break-Even" Business
Scenario: A business whose revenue perfectly covers its expenses.
Inputs: Cash on Hand: $75,000, Monthly Revenue: $60,000, Monthly Expenses: $60,000.
1. Net Burn: $60,000 - $60,000 = $0/month.
2. Runway: Infinite ∞.
Conclusion: The company is self-sustaining. While not growing its cash pile, it is not at risk of running out of money from operations.
Example 5: A Freelancer's Financial Health
Scenario: A freelancer checking their personal financial buffer.
Inputs: Cash on Hand (Savings): $15,000, Monthly Revenue (Income): $5,000, Monthly Expenses (Living Costs): $3,500.
1. Net Burn: $3,500 - $5,000 = -$1,500/month (Net Savings).
2. Runway: Infinite ∞.
Conclusion: The freelancer is saving $1,500 per month. If they lost their income, their burn would become $3,500, giving them a runway of $15,000 / $3,500 = 4.3 months.
Example 6: Impact of Cost Cutting
Scenario: A startup cuts costs to extend its runway.
Inputs (Before): Cash: $90,000, Revenue: $30,000, Expenses: $50,000. (Burn=$20k, Runway=4.5 mos)
Inputs (After): Cash: $90,000, Revenue: $30,000, Expenses: $40,000.
1. Net Burn: $40,000 - $30,000 = $10,000/month.
2. Runway: $90,000 / $10,000 = 9.0 Months.
Conclusion: By cutting expenses by $10k/month, the company doubled its runway from 4.5 to 9 months, buying crucial time.
Example 7: Impact of a New Major Client
Scenario: A company lands a big contract, increasing its monthly revenue.
Inputs (Before): Cash: $90,000, Revenue: $30,000, Expenses: $50,000. (Burn=$20k, Runway=4.5 mos)
Inputs (After): Cash: $90,000, Revenue: $45,000, Expenses: $50,000.
1. Net Burn: $50,000 - $45,000 = $5,000/month.
2. Runway: $90,000 / $5,000 = 18.0 Months.
Conclusion: The new client dramatically reduced the burn rate, extending the runway from 4.5 to a very healthy 18 months.
Example 8: The Well-Funded Growth Stage Company
Scenario: A company that just raised a large funding round to fuel aggressive growth.
Inputs: Cash on Hand: $2,000,000, Monthly Revenue: $100,000, Monthly Expenses: $180,000.
1. Net Burn: $180,000 - $100,000 = $80,000/month.
2. Runway: $2,000,000 / $80,000 = 25.0 Months.
Conclusion: Despite a high burn rate, the large cash reserve provides a healthy 25-month runway to execute their growth strategy.
Example 9: The "Danger Zone" Startup
Scenario: A company with dwindling cash and a high burn rate.
Inputs: Cash on Hand: $50,000, Monthly Revenue: $25,000, Monthly Expenses: $45,000.
1. Net Burn: $45,000 - $25,000 = $20,000/month.
2. Runway: $50,000 / $20,000 = 2.5 Months.
Conclusion: With only a 2.5-month runway, the company is in a critical situation and must take immediate, drastic action to survive.
Example 10: Bootstrapped & Nearing Profitability
Scenario: A self-funded business that has carefully managed costs and is close to breaking even.
Inputs: Cash on Hand: $40,000, Monthly Revenue: $19,000, Monthly Expenses: $20,000.
1. Net Burn: $20,000 - $19,000 = $1,000/month.
2. Runway: $40,000 / $1,000 = 40.0 Months.
Conclusion: Even with a small cash reserve, the extremely low burn rate gives them a massive 40-month runway, providing great stability.
Frequently Asked Questions (FAQs)
1. What is the difference between Gross Burn and Net Burn?
Gross Burn is your total monthly expenses, period. It's how much cash you spend. Net Burn (which this calculator uses) is your expenses minus your revenue. It's the amount of money you are actually *losing* each month.
2. What should I include in "Total Monthly Expenses"?
Include all cash expenses for the month: salaries, rent, software subscriptions (SaaS), marketing costs, inventory purchases, utilities, loan payments, etc. Do not include non-cash expenses like depreciation.
3. Why is runway so important for a startup?
Runway is your company's clock. It tells you, your team, and your investors how much time you have to succeed before you run out of money. A short runway creates pressure and limits options, while a long runway allows for strategic pivots and growth.
4. What do the colors on the runway result mean?
The colors give you an instant assessment:
- Green (Healthy): Over 12 months of runway. You have significant time to build.
- Yellow (Warning): 6-12 months of runway. It's time to monitor finances closely and plan your next move (fundraising or profitability).
- Red (Critical): Less than 6 months of runway. Urgent action is needed to cut costs or raise capital immediately.
5. How can I improve my runway?
There are only two ways: 1) Decrease your burn rate (by cutting expenses) or 2) Increase your cash on hand (by increasing revenue or raising more investment capital).
6. How often should I calculate my burn rate and runway?
At least once per month. It should be a key metric you review as soon as your books for the previous month are closed. This allows you to track trends and make proactive, not reactive, decisions.
7. Can I use this for personal finance?
Absolutely. Think of it this way: "Cash on Hand" is your savings account, "Monthly Revenue" is your take-home pay, and "Monthly Expenses" are all your living costs. It's a great tool to see how long your savings would last if you lost your job.
8. The calculator gave me an error. Why?
The most common error is leaving a field blank or entering non-numeric text. All three fields must contain a number (you can use '0' for revenue if you are pre-revenue). Negative numbers are also not allowed.
9. What's a "good" burn rate?
There is no single answer. A high burn rate might be acceptable for a well-funded company aiming for rapid growth. A low burn rate is ideal for a bootstrapped company prioritizing stability. The context—your cash reserves and strategic goals—is what matters.
10. Is this calculator a substitute for professional financial advice?
No. This is a high-level tool for tracking key metrics. It's essential for quick analysis but does not replace detailed financial modeling, accounting, or strategic advice from a CFO or financial advisor.
