Legal

Burn Rate & Runway Calculator

Legal basis: Standard start-up finance convention; liquidity and burn-rate disclosure for reporting companies follows SEC Regulation S-K Item 303 (MD&A) · checked 2026-10-04 · Rates and limits change — verify the current figures.

Burn rate measures how fast a company consumes cash, and runway measures how long it can keep going before the cash runs out. The two numbers define the operating reality of any business that is not yet self-sustaining: a venture spending $90,000 more than it earns each month with $1.5 million in the bank has a runway of roughly 16.7 months, and every plan the team makes, from hiring to product launches to the next fundraising round, has to fit inside that window.

There are two burn figures and they answer different questions. Gross burn is total monthly operating expenses, which shows the size of the machine. Net burn is expenses minus revenue, which shows the actual cash drain and is the number that drives runway: runway in months equals cash on hand divided by net burn. A company can have a frightening gross burn and still be nearly break-even if revenue is close behind it, which is why lenders and investors nearly always ask for net burn.

Straight division assumes both revenue and spending stay flat, and neither usually does. This tool therefore also simulates a growth-adjusted runway: it lets revenue compound month by month at the growth rate you enter while expenses stay constant, and reports when the cumulative drain empties the bank. The comparison matters because a business growing 5% a month with a large burn still reaches cash-flow positive eventually, and the months of cover can be far longer than the flat-burn figure suggests, provided growth actually materializes.

The hiring-plan field shows the other side of the coin. Adding payroll of $30,000 a month deepens the net burn immediately and moves the cash-out date closer; the calculator reports the runway with and without the plan and the difference between them. The honest limits: growth rarely compounds smoothly, revenue can be lumpy, some costs arrive in steps, and this estimate ignores financing events, taxes and receivables timing. It is an educational planning estimate, not financial or legal advice, so review the assumptions with a CPA before committing to headcount.

Calculate

Runway at current burncash on hand divided by net monthly burn16.7 months

Net monthly burnmonthly expenses minus monthly revenue$90,000

Gross monthly burntotal monthly operating expenses$150,000

Annualised net burnnet monthly burn times 12$1,080,000

Growth-adjusted runwayassumes revenue compounds 5.0% per month with flat expenses—

Runway with hiring planadds $30,000 of monthly payroll to expenses17.0 months

Runway lost to hiringgrowth-adjusted runway minus the runway with the hiring plan—

How the math works

Gross monthly burn = total monthly operating expenses.
Net monthly burn = monthly expenses − monthly revenue.
Runway (months) = cash on hand ÷ net burn, when net burn is positive; a negative net burn means the business is cash-flow positive.
Growth-adjusted runway simulates revenue compounding at the entered monthly growth rate against constant expenses until cash is exhausted; the hiring plan adds its monthly cost to expenses for the same simulation.

Frequently asked questions

What is the difference between gross and net burn?

Gross burn is total monthly operating expenses; net burn is expenses minus revenue. Net burn is the actual cash drain and the number that determines runway. Gross burn shows the scale of operations and how much revenue growth must eventually cover.

How is runway calculated?

Runway in months equals cash on hand divided by net monthly burn, assuming both revenue and spending stay flat. With $900,000 in the bank and a $60,000 net burn, the runway is 15 months.

What is growth-adjusted runway?

A simulation in which revenue compounds each month at the growth rate you enter while expenses stay constant. It usually shows a longer runway than flat-burn division because revenue eventually catches up with spending, but it is only as good as the growth assumption.

How does a hiring plan affect runway?

Each dollar of new monthly payroll deepens net burn immediately, which shortens the flat-burn runway in proportion. The growth-adjusted effect can be larger or smaller depending on whether the new hires accelerate revenue, which this tool does not assume.

What net burn is safe?

There is no universal number. The practical rule is that runway should comfortably exceed your next financing milestone or your path to break-even, typically leaving six to twelve months of buffer for the unexpected. What counts as safe depends on your industry and access to capital.

Does this include taxes, debt payments or receivables timing?

No. It works from the revenue and expense figures you enter as collected cash. Taxes, loan principal, delayed customer payments and prepaid expenses all shift the real cash-out date, so a CPA-reviewed cash flow forecast is the dependable version.

Can runway be negative or infinite?

If revenue exceeds expenses, the business is cash-flow positive and effectively has unlimited runway at current levels, which the tool labels directly. If cash is zero or the net burn is zero with no cash, the runway is zero months regardless of the other figures.

This calculator is an educational estimate for planning purposes only. It is not financial, tax or legal advice, burn and runway projections depend on assumptions that rarely hold exactly, and tax and reporting rules vary by jurisdiction. Consult a licensed CPA or attorney before making hiring, spending or financing decisions based on it.