Formula used
| Measure | Formula |
|---|---|
| Gross burn rate | Total cash expenses ÷ number of months |
| Cash-balance net burn | (Starting cash − ending cash) ÷ number of months |
| Revenue-based net burn | Monthly cash expenses − monthly cash revenue |
| Cash runway | Available cash ÷ positive monthly net burn |
| Required funding | Target burn need + reserve − available cash |
| Sustainable expenses | Monthly revenue + spendable cash ÷ target months |
How to use this calculator
Select the calculation matching your current planning question. Enter cash, revenue, and expense figures. Choose the correct value frequency before calculating each result.
Add reserves, growth rates, and planned future cash events. Adjust the scenario assumptions for realistic uncertainty. Review the forecast table before making major funding decisions.
Use monthly overrides when specific figures are already known. Export the table for further analysis. Treat projections as planning estimates, not guaranteed financial outcomes.
Example data
| Input | Example | Purpose |
|---|---|---|
| Available cash | $160,000 | Funds currently available for operations |
| Monthly expenses | $55,000 | Fixed and variable cash operating costs |
| Monthly revenue | $28,000 | Cash revenue received from customers |
| One-time expense | $12,000 | Exceptional cost included in planning |
| Target runway | 12 months | Desired period before more funding |
| Safety reserve | 10% | Cash protected from normal spending |
Gross burn versus net burn
Gross burn tracks total monthly cash operating expenses. It ignores revenue received during the same period. This metric reveals the organization’s basic spending intensity clearly.
Net burn measures the monthly decline after cash inflows. It can become negative when operations generate cash. Compare both measures to understand spending and revenue coverage.
Burn rate interpretation guide
Runway below three months usually signals immediate financial pressure. Six months provides more planning flexibility. Twelve months often supports steadier hiring and investment decisions.
A falling net burn generally improves future financing options. Rising revenue coverage reduces dependence on external capital. Always compare trends across several reporting periods for context.
Ways to reduce business burn rate
Review recurring subscriptions, contractors, and underused operating commitments. Delay optional purchases until cash visibility improves. Protect spending that directly supports revenue and retention.
Improve collections and shorten customer payment cycles where possible. Test hiring plans against conservative revenue assumptions. Monitor actual results against the approved monthly operating plan.
Limitations and financial disclaimer
This calculator uses entered assumptions and simplified monthly projections. Taxes, timing differences, and restricted cash may differ. Consult qualified advisers before making binding financial decisions.
Frequently asked questions
What is a good burn rate?
A good burn rate depends on available cash and growth goals. Lower burn is not always better. Spending should support measurable progress before the runway expires.
Can net burn rate be negative?
Yes, negative net burn means cash inflows exceed expenses. The business is producing a monthly surplus. Runway becomes unlimited under unchanged operating assumptions.
Should financing income count as revenue?
Financing is usually separated from operating revenue. The calculator lets you include it optionally. Keep reporting treatment consistent across all compared periods.
Why exclude non-cash expenses?
Burn rate focuses on actual cash leaving the business. Depreciation may not reduce current cash. Excluding it can improve cash-flow measurement accuracy.
How often should burn rate be reviewed?
Most startups review burn rate every month. Faster reviews help during volatile operating periods. Compare results with budgets and previous monthly forecasts.
What does revenue coverage mean?
Revenue coverage compares monthly revenue with gross burn. Higher coverage indicates stronger operating support. One hundred percent means revenue equals monthly cash expenses.
How is the reserve-adjusted runway different?
Reserve-adjusted runway protects a chosen cash percentage. Only spendable cash enters that calculation. It provides a more conservative planning estimate.
Can forecasts include future funding?
Yes, enter the amount and expected arrival month. The forecast adds funding during that month. Delayed funding can still create an earlier cash deficit.
Do monthly overrides replace growth assumptions?
Overrides replace values for their matching forecast months. Other months continue using growth assumptions. This supports known contracts, expenses, and special events.