Runway & Burn-Rate Calculator

What This Calculator Does

The Runway & Burn-Rate Calculator is designed to help you quickly and accurately estimate how long your startup or business can continue operating at its current rate of spending before needing additional funding. By entering your current cash balance, monthly burn rate, and any anticipated changes in your spending, you will gain clear insights into your financial runway, expressed in both months and years, as well as an estimated date when your cash reserves will be depleted. This calculator provides a user-friendly, SEO-friendly, and informative overview for anyone seeking to understand and optimize their business's financial sustainability.

How to Use This Calculator

1. Enter Your Current Cash Balance: Input the total amount of cash your company has on hand. This is typically the amount in your business bank account(s) that is available for expenses.
2. Input Current Monthly Burn Rate: Provide the average amount of money your business spends each month. This burn rate should include all outgoing monthly expenses such as payroll, rent, utilities, and other operating costs.
3. Specify Monthly Burn Change Rate (Optional): If you expect your monthly burn rate to change over time (for example, due to hiring, expansion, or cost-cutting), enter the percentage increase or decrease per month. Leave this as zero if your burn rate is steady.
4. Select Change Direction: Indicate whether your burn rate is increasing or decreasing each month. This helps the calculator adjust your runway estimate accordingly.
5. Review Results: Instantly see how many months and years your current cash will last, and the estimated date when your funds will run out. Use these insights to inform your financial planning or fundraising strategies.

Definitions of Key Terms

Current Cash Balance

The total amount of liquid cash your business currently holds. This figure represents your available resources to pay for ongoing expenses.

Current Monthly Burn Rate

The average net amount of money your company spends each month. It is calculated by subtracting monthly revenues from monthly expenses, resulting in a negative number for unprofitable startups.

Monthly Burn Change Rate

The expected percentage change in your burn rate each month. Positive values indicate your burn rate is increasing, while negative values reflect a decreasing burn rate. A zero value means your monthly burn remains constant.

Change Direction

The direction in which your burn rate is changing over time. This can be 'Increase' if your spending is expected to rise, or 'Decrease' if you anticipate spending reductions.

Runway Remaining

The estimated number of months your business can continue operating before your cash balance reaches zero, considering your current and projected burn rates.

Runway (Years)

The same runway figure, converted from months to years for easier long-term planning.

Estimated Depletion Date

The projected calendar date when your cash reserves will be exhausted, based on your current and expected monthly burn.

Calculation Methodology

This calculator uses your cash balance and burn rate to estimate how many months your resources will last, taking into account any anticipated monthly changes in spending. If your burn rate is constant, the calculation is straightforward. If your burn rate changes each month, a compounding effect is applied using the specified change rate and direction. The methodology ensures that your runway projection is realistic and adapts to dynamic business scenarios.

If Monthly Burn Change Rate is 0:
  Runway Remaining (months) = Current Cash Balance / Current Monthly Burn Rate

Else:
  Let B = Current Monthly Burn Rate
  Let r = Monthly Burn Change Rate (as decimal, e.g., 5% = 0.05)
  Let D = 1 for Increase, -1 for Decrease
  Let C = Current Cash Balance

  For n = 1 to N (where N is number of months until cash runs out):
    Burn in month n = B * (1 + D * r)^(n-1)
    Subtract monthly burn from cash balance
    Stop when cash balance <= 0

  Runway Remaining (months) = n - 1

Runway (Years) = Runway Remaining / 12

Estimated Depletion Date = Today's Date + Runway Remaining months

Practical Scenarios

• Early-Stage Startup Planning: You are a founder with $250,000 in the bank and a monthly burn of $20,000. By entering these figures, you can instantly see how many months you have to reach your next funding round or break-even point.
• Preparing for Expansion: Your company plans to hire new staff, which will increase your burn rate by 10 percent each month for the next quarter. The calculator helps you model how this accelerated spending will impact your runway and when you should consider raising more capital.
• Cost-Cutting Scenario: Due to market shifts, you implement a cost reduction plan that decreases your monthly burn rate by 5 percent each month. By selecting 'Decrease' and entering -5 percent, you can see how these efforts extend your cash runway.
• Investor Reporting: You need to provide your board or investors with a clear projection of when your startup will require additional funding based on current and projected expenses. This tool gives you a transparent, data-driven answer.

Advanced Tips & Best Practices

• Regularly Update Your Inputs: Your cash balance and burn rate can change rapidly. Update these values frequently to keep your runway estimate accurate and actionable.
• Include All Recurring and One-Time Costs: For the most comprehensive runway analysis, ensure your burn rate reflects both fixed monthly expenses and any anticipated one-time costs, such as equipment purchases or legal fees.
• Model Different Scenarios: Use the calculator to assess best-case and worst-case scenarios by adjusting the burn change rate and direction. This stress-tests your runway under various growth or contraction conditions.
• Factor in Revenue Changes: If your business expects to generate increasing revenue, decrease your burn rate accordingly to see how this improves your runway. Conversely, if sales are declining, adjust the burn rate upward.
• Share Results with Stakeholders: Export or present the calculator's output when discussing financial health with investors, advisors, or your management team. This fosters transparency and data-driven decision making.

Frequently Asked Questions (Optional)

Can I use this calculator for personal budgeting?

Yes. While designed for startups and businesses, anyone can use this calculator to estimate how long their savings will last given a fixed or changing monthly spend.

What if my burn rate fluctuates throughout the month?

Enter your average monthly burn rate to smooth out short-term fluctuations. For more accurate results, update the input values as your expenses change.

Does the calculator account for incoming revenue?

The calculator assumes your burn rate is net of all income. If you have regular revenue, subtract it from your total monthly expenses to calculate your net burn rate before entering it.