The Complete Guide to Burn Rate and Runway
By Arshi Khan, Founder of Just4Marketing · Last reviewed October 2026
Runway is how many months a company can keep operating before the bank account hits zero. It's the number founders watch most closely, because it decides when to raise money, cut costs, or push for profitability. This guide explains gross and net burn, how to calculate runway, and why growth rates change the answer.
Runway in the calculator's example
| Item | Value |
|---|---|
| Cash in the bank | $500,000 |
| Monthly revenue / expenses | $30,000 / $70,000 |
| Net burn | $40,000 per month |
| Runway at today's burn | 12.5 months |
| Runway with 5% revenue and 1% expense growth | Cash runs out in month 17 |
| Break-even at those growth rates | Month 23 — too late without new funding |
Extending runway
Know your default-alive date
If revenue growth would reach break-even before cash runs out, you're 'default alive'. If not, you need funding or cuts — the calculator shows which.
Cut the biggest lines first
Payroll is usually 60%–80% of startup spending, so hiring plans move runway far more than software subscriptions.
Collect cash faster
Annual upfront billing and shorter payment terms bring cash in earlier without changing revenue.
Frequently asked questions
What is the difference between gross burn and net burn?
Gross burn is your total monthly spending. Net burn is gross burn minus revenue — the amount your cash balance actually falls each month. A company spending $70,000 a month with $30,000 of revenue has a gross burn of $70,000 and a net burn of $40,000.
How do you calculate runway?
Runway (months) = cash in the bank ÷ net burn. With $500,000 and a $40,000 net burn, runway is 12.5 months. Because revenue and costs change over time, the calculator also projects month by month using your growth rates.
How much runway should a startup have?
Many investors recommend 18–24 months after raising, and starting the next fundraise with at least 6–9 months left, since raising often takes several months.
Why does the projected runway differ from the simple one?
If revenue grows faster than costs, net burn shrinks each month and cash lasts longer. If costs grow faster — new hires, for example — runway shortens even though nothing looks different today.