Finance

Burn Rate Calculator

Calculate your monthly cash burn rate, how many months of runway you have left, or how much cash will remain after any period.

Enter values above to see the result.

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Burn Rate Formulas

Monthly Burn Rate

Burn = (Starting Cash − Ending Cash) ÷ Months

Runway

Runway = Cash Balance ÷ Monthly Burn Rate

Cash Remaining

Remaining = Starting Cash − (Burn × Months)

What is burn rate and why does it matter?

Burn rate measures how quickly a company depletes its cash. For startups that are not yet profitable, it is one of the most important financial metrics because it directly determines how long the business can continue operating on its current funding. A high burn rate relative to revenue signals that costs are outpacing growth, while a declining burn paired with rising revenue indicates improving efficiency.

Investors evaluate burn rate alongside runway to assess financing risk. A company burning $100,000 per month with $1.2 million in the bank has twelve months of runway, which is the minimum most investors want to see before they will consider funding. Teams that monitor burn rate monthly can make proactive decisions about hiring, spending, and fundraising timelines rather than reacting to a cash crisis.

Frequently asked questions

What is burn rate?
Burn rate is the monthly rate at which a company spends its cash reserves. Gross burn covers total operating expenses each month; net burn subtracts any incoming revenue, showing the real drain on cash. Investors and founders track it closely to forecast how long the company can operate before needing more funding.
How do I calculate monthly burn rate?
Subtract the ending cash balance from the starting cash balance and divide by the number of months in the period. For example, if you started with $500,000 and ended with $350,000 after three months, your monthly burn rate is $50,000.
What is startup runway and how is it calculated?
Runway is the number of months a company can continue operating before running out of cash. It is calculated by dividing the current cash balance by the monthly burn rate. Most investors expect a startup to maintain at least twelve to eighteen months of runway at any given time.
What is the difference between gross burn and net burn?
Gross burn is total monthly cash outflow before accounting for any incoming revenue. Net burn subtracts monthly revenue from monthly spending, giving the actual net reduction in cash each month. Net burn is more useful for tracking real survival time because it accounts for the revenue the business generates.
How can a startup reduce its burn rate?
Common approaches include cutting discretionary spending, renegotiating vendor contracts, reducing headcount through attrition rather than hiring, and accelerating revenue growth. Extending supplier payment terms and collecting customer payments faster can also improve the cash position without requiring permanent cost cuts.

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