Understanding your startup’s financial runway is crucial for survival and strategic planning. Our Burn Rate Calculator helps founders and financial teams accurately determine how long their current cash reserves will last based on their spending patterns.
What is Burn Rate and Why Does It Matter?
Burn rate is the rate at which a company spends its cash reserves before generating positive cash flow. For startups and growing businesses, monitoring burn rate is critical because it directly affects your runway – the amount of time you have until your company runs out of money.
A clear understanding of your burn rate helps you:
- Make informed decisions about when to fundraise
- Determine if and when you need to cut expenses
- Plan strategic initiatives within your financial constraints
- Communicate effectively with investors and board members
Burn Rate & Cash Runway Calculator
Calculate how long your startup’s cash will last based on your current spending
Your Startup Runway Results
Powered by: Weeks From Today
How to Use Our Burn Rate Calculator?
Using our burn rate calculator is straightforward:
- Enter your current cash balance – This is the total cash your company has available, including bank accounts and highly liquid investments.
- Input your monthly revenue – Enter your average monthly income. If your revenue varies significantly month to month, consider using a 3-month average for more accuracy.
- Add your monthly expenses – Include all costs: salaries, rent, software subscriptions, marketing spend, and other operational expenses.
- Click “Calculate” – The calculator instantly shows two critical pieces of information:
- Your monthly burn rate (expenses minus revenue)
- Your runway in months (how long until you run out of money)
The visual timeline shows exactly when your cash will run out, with color-coded indicators helping you understand if your position is healthy, concerning, or critical.
Disclaimer: This calculator and information are provided for educational purposes only. The calculations are based on the assumption that your burn rate remains constant, which may not reflect real-world conditions where revenue and expenses fluctuate. Always consult with qualified financial professionals before making important business decisions.
Frequently Asked Questions About Burn Rate
How often should I calculate my company’s burn rate?
Most startups should review their burn rate and runway monthly, ideally as part of a regular financial review process. If you’re in a critical runway situation (less than 6 months), weekly monitoring may be necessary.
Does burn rate matter if I’m profitable?
Even profitable companies should monitor their burn rate and cash position. Profitability can fluctuate, and maintaining awareness of how quickly you could deplete reserves during potential downturns is valuable for all businesses.
How do I explain a high burn rate to investors?
A high burn rate requires clear justification through corresponding growth metrics. Be prepared to demonstrate your unit economics, customer acquisition efficiency, and how additional funding will help you reach profitability.
Should I include founder salaries in burn rate calculations?
Yes, all expenses that reduce your cash balance should be included in burn rate calculations, including founder salaries. Some financial analyses separate “founder-controlled burn” from other expenses, but for runway calculations, all cash outflows matter.
How can I reduce my burn rate without hampering growth?
Focus on improving operational efficiency rather than making cuts that affect growth. Look for ways to improve gross margins, negotiate better terms with vendors, implement automation, consider remote work options, and optimize your customer acquisition strategy.