Burn Rate Calculator
Calculate your business burn rate and determine how long your current capital will last. This calculator helps startups and businesses understand their cash flow and plan for future funding needs.
Cash Position
Revenue and Growth (Optional)
Burn Rate Analysis
Monthly Burn Rate:
$0.00
Runway Remaining:
0 months
Cash Position:
N/A
Financial Health
Net Burn Rate:
$0.00
Break-even Progress:
N/A
Funding Status:
N/A
Projections
3-Month Projection:
$0.00
6-Month Projection:
$0.00
Runway Status:
N/A
Understanding Burn Rate
Burn rate is the rate at which a company spends its capital to finance operations before generating positive cash flow. It's a critical metric for startups and businesses, indicating how quickly they're using up their available funds and how long they can operate before needing additional capital.
What is Burn Rate?
Definition
- Rate of cash consumption
- Monthly capital expenditure
- Critical for startup survival
- Measures financial runway
Importance
- Funding requirement planning
- Cash flow management
- Investment timing
- Business sustainability
Types of Burn Rate
Gross Burn Rate:
- Total cash spent per month
- All operating expenses
- Before revenue consideration
- Shows spending velocity
Net Burn Rate:
- Gross burn minus revenue
- Actual cash consumption
- Net monthly cash outflow
- More accurate for planning
Calculating Runway
Runway Formula
How long your capital will last
Basic Runway:
- Runway = Current Cash ÷ Monthly Burn
- Expressed in months
- Simple calculation
- Conservative estimate
Net Runway:
- Runway = Current Cash ÷ Net Burn Rate
- Accounts for revenue
- More realistic projection
- Better for growing businesses
Industry Benchmarks
| Stage | Typical Burn Rate | Target Runway | Key Focus |
|---|---|---|---|
| Early Stage | $50K-200K/month | 18-24 months | Product development |
| Growth Stage | $200K-500K/month | 12-18 months | Market expansion |
| Mature Stage | $100K-300K/month | 6-12 months | Profitability |
Managing Burn Rate
Cost Control:
- Regular expense reviews
- Eliminate unnecessary spending
- Negotiate better supplier terms
- Optimize resource allocation
Revenue Acceleration:
- Focus on revenue-generating activities
- Improve sales conversion
- Explore new revenue streams
- Customer acquisition optimization
Funding Strategy
Timing:
- Start fundraising 6-9 months before runway ends
- Have multiple funding scenarios
- Build relationships with investors
- Prepare compelling pitch deck
Amount:
- Raise for 18-24 months of runway
- Include buffer for unexpected costs
- Consider dilution and valuation
- Plan for multiple funding rounds
Warning Signs
High Burn Rate:
- Burn rate increasing month-over-month
- Runway less than 12 months
- No clear path to profitability
- Revenue not scaling with costs
Cash Flow Issues:
- Delayed customer payments
- Inventory buildup
- Supplier payment delays
- Cash reserves depleting quickly
Key Takeaways for Burn Rate
- Burn rate measures how quickly a business spends its capital before becoming profitable
- Gross burn rate is total spending; net burn rate accounts for revenue
- Runway calculation shows how many months of capital remain
- Startups typically aim for 18-24 months of runway when raising funds
- Monitor burn rate monthly and adjust spending as needed
- Balance growth investments with cash conservation
- Have contingency plans for different funding scenarios
- Use burn rate data to make informed business decisions