Burn Rate Calculator

Understanding Startup Burn Rate

Burn rate is the speed at which a company spends its cash reserves before generating positive cash flow from operations. It is the single most important metric for startup survival.

Gross Burn vs. Net Burn

• Gross burn rate is total monthly operating expenses regardless of revenue. It tells you the full cost of running the business.
• Net burn rate is monthly expenses minus monthly revenue. This is the actual amount of cash you lose each month.

Calculating Runway

Runway (months) = Cash on Hand / Net Burn Rate

Runway tells you how many months your company can survive at the current burn rate before running out of cash. Most investors want to see at least 12-18 months of runway after a funding round.

Reducing Burn Rate

Common strategies include renegotiating vendor contracts, reducing headcount or hiring freezes, cutting marketing spend on low-ROI channels, switching to more affordable tools, and subletting unused office space. Focus on cuts that do not directly impact revenue generation.

When to Worry

If your runway drops below 6 months, treat it as an emergency. Fundraising typically takes 3-6 months, so waiting until you have only 3 months left puts you in a desperate negotiating position. Track burn rate weekly, not monthly, when runway is short.