Calculate gross burn, net burn, runway and cash depletion. Test hiring, cost-cutting and revenue-growth scenarios before committing to the next operating decision.
Gross burn measures monthly operating cash outflow. Net burn subtracts recurring cash inflows from that outflow. A basic runway calculation divides available cash by net burn, while a stronger operating forecast includes growth, hiring, one-time costs and collection assumptions. Founders should use runway to decide when to cut costs, accelerate revenue, delay hiring or begin fundraising.
Understand how much cash leaves the business through salaries, vendors, infrastructure and operations.
Subtract recurring cash revenue from expenses to understand the true monthly cash decline.
Estimate how many months remain before the company requires profitability, cost reduction or new capital.
Compare the effect of hiring, cost reductions and additional revenue before making commitments.
Gross burn is the startup's total monthly cash expenses. Net burn is gross burn minus monthly cash revenue or other recurring operating inflows.
A basic estimate divides available cash, after near-term one-time costs, by monthly net burn. This page also produces a month-by-month forecast using revenue and expense growth.
Net burn becomes zero or negative, meaning the company is cash-flow positive under the current assumptions. In that case, runway is not limited by operating burn, although working-capital and one-time cash requirements still matter.
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