Cash Flow Runway Calculator

What is cash runway and how is it different from burn rate?

Cash runway is the number of months a company can continue operating before its cash balance reaches zero at its current rate of spending. Burn rate is how fast you're consuming that cash each month. They are related but answer different questions: burn rate is a speed, runway is a distance.

The formula: Runway (months) = Cash Balance ÷ Net Burn Rate

Two burn rate concepts matter here and are often confused. Gross burn rate is your total monthly cash outflow — all expenses before any revenue offsets them. For a company spending $75,000 per month on payroll, rent, software, and marketing, gross burn is $75,000. Net burn rate is the actual reduction in your cash balance each month: gross burn minus monthly revenue. With $25,000 in monthly revenue, net burn is $50,000. With $500,000 in the bank, runway is $500,000 ÷ $50,000 = 10 months.

The distinction is material. Two companies each spending $75,000 per month can have radically different runways: one with $5,000 in monthly revenue has a net burn of $70,000 and 7.1 months; one with $65,000 in monthly revenue has a net burn of $10,000 and 50 months — from the same cash balance.

Revenue coverage ratio — revenue ÷ gross burn × 100 — captures this dependency in a single number. At 33.3% coverage, two thirds of every dollar you spend comes from your cash reserve. At 80% coverage, most of your burn is self-funded and the cash pile is a buffer rather than a lifeline. The lower the coverage ratio, the more vulnerable the business is to losing customers, slowing growth, or unexpected costs.

How do I calculate my company's runway? (Step-by-step)

Here is the full calculation using the default scenario — a SaaS startup eight months post-seed with $500,000 in remaining cash.

Inputs:

• Current cash balance: $500,000
• Monthly gross burn: $75,000 (payroll $55k, tools $10k, marketing $10k)
• Current monthly revenue: $25,000
• Monthly revenue growth: 8% month-over-month
• Fundraising lead time: 15 months
• Planned cost reduction: 20%

Step 1: Calculate net burn and coverage. Net burn = $75,000 − $25,000 = $50,000/month. Revenue coverage = $25,000 ÷ $75,000 × 100 = 33.3%.

Step 2: Calculate static runway. $500,000 ÷ $50,000 = 10.0 months. Cash-out date: approximately May 2027.

Step 3: Calculate the fundraising trigger. Months until must raise = 10.0 − 15 = −5.0 months. A negative number means the fundraising trigger was 5 months ago. With a 15-month process and only 10 months of runway, this company needed to begin raising before the current month started. This is the output that turns runway from an interesting metric into an urgent action item.

Step 4: Calculate the break-even month. At 8% monthly growth, when does revenue reach $75,000 (gross burn)? Break-even month = LOG($75,000 ÷ $25,000) ÷ LOG(1.08) = LOG(3) ÷ LOG(1.08) = 14.3 months.

Step 5: Determine default status. Break-even (14.3 months) is greater than runway (10.0 months). Revenue will not catch up to expenses before cash runs out: DEFAULT DEAD. This means the business requires external capital to survive in its current form — unless it cuts costs, accelerates revenue, or both.

Step 6: Check the extension scenarios. A 20% cost reduction: gross burn drops to $60,000, net burn to $35,000, runway extends to 14.3 months (+4.3 months). A 20% revenue increase: revenue rises to $30,000, net burn to $45,000, runway extends to 11.1 months (+1.1 months).

The cost lever is four times more effective than the revenue lever at this burn ratio.

How much runway should a startup or small business have?

The standard post-fundraise target is 18–24 months. Below 12 months, you should be actively fundraising. Below 6 months, you are raising from a position of weakness.

The reasoning is process time. A seed round in 2025–2026 typically takes 3–6 months from first meeting to cash in the bank. A Series A takes 6–12 months. If you start the conversation with 8 months of runway, you are signing documents with 2–3 months left — which means every negotiation happens under existential pressure.

Benchmarks by stage:

The most useful concept for planning is the distinction between default alive and default dead — terms from Paul Graham describing whether a startup will reach profitability before running out of money (default alive) or requires external capital to survive (default dead).

Default alive is not a prediction of success; it is a description of structural solvency. A default alive company can negotiate from strength, turn down bad term sheets, and grow deliberately. A default dead company cannot. This calculator returns that determination as a named cell — not a chart to interpret — so it can go directly into a board deck or investor update.

When exactly should I start fundraising?

When the Months Until Must Raise output hits zero. That is your runway minus your fundraising lead time. When that number is positive, you have time. When it goes negative, you are already behind.

The fundraising lead time input defaults to 15 months based on 2025–2026 market conditions for seed and Series A rounds — 3–6 months of process plus 9 months of post-raise buffer to ensure you close the next round before the previous one runs out. Adjust it for your stage and market: a bridge round from existing investors might close in 4–6 weeks; a cold Series A in a difficult market might take 12+ months.

The most common mistake is treating the trigger as a calendar date rather than a live metric. Your Months Until Must Raise changes every month as revenue grows (or doesn't), as costs shift, and as the calendar advances. Recalculating it monthly — or keeping this spreadsheet open in a board deck — means you see the trigger moving before it becomes a crisis.

Specific conditions that should cause you to start fundraising immediately regardless of the calculated trigger:

• Your burn is increasing faster than modeled (new hires, scaling costs)
• A major customer is at risk of churning
• Revenue growth has slowed below your model's assumption
• A competitor has recently raised a large round
• Market conditions for fundraising are tightening

The calculated trigger assumes your inputs stay roughly constant. Reality accelerates the timeline.

Is it better to cut costs or grow revenue to extend runway?

At most burn ratios, cost cuts are more powerful per dollar — sometimes dramatically so. In the default scenario, a 20% cost reduction adds 4.3 months of runway while a 20% revenue increase adds only 1.1 months. A 4:1 ratio in favor of cost reduction.

The math explains why. A 20% cost reduction takes gross burn from $75,000 to $60,000, reducing net burn from $50,000 to $35,000 — a 30% reduction in monthly cash consumption. A 20% revenue increase takes revenue from $25,000 to $30,000, reducing net burn from $50,000 to $45,000 — only a 10% reduction.

The asymmetry is structural: when revenue covers only 33% of gross burn, adding 20% to revenue changes net burn by $5,000, while cutting 20% from expenses changes net burn by $15,000. The cost lever is attached to the larger number.

This relationship holds as long as revenue is a small fraction of gross burn:

The extension scenarios in this calculator are intentionally symmetric — same percentage applied to both levers — so the comparison is apples-to-apples. If your cost lever adds three times more months than the revenue lever, that is the number to put in front of the board when deciding between a growth plan and a survival plan.