Assumptions
- Revenue and costs are assumed to grow at a constant monthly rate. Real cash flow does not.
- Lumpy items such as tax payments, bonuses and deposits returned are not modelled.
- The projection runs up to 120 months and stops the table there if cash never runs out.
- Inputs stay in your browser and are never stored or transmitted.
How it is calculated
- Revenue is subtracted from costs to give this month's net burn.
- The growth rates are applied each month and the balance is rolled forward.
- The month the balance crosses zero becomes the runway, carried to one decimal place within that month.
- The month revenue overtakes costs is found separately, and a warning appears if cash runs out first.
Examples
Common mistakes
- Growth is the number most likely to be wrong. Always look at the zero-growth case too.
- Watch for lumpy costs. Quarterly tax, annual insurance and year-end bonuses hit one month hard.
- Under six months of runway is a red flag. Fundraising takes time you may not have.
FAQ
What is the difference between gross and net burn?
Gross burn is everything leaving the account in a month regardless of revenue. Net burn subtracts revenue, so it is the actual fall in your balance. With $2,000 of revenue against $8,000 of costs, gross burn is $8,000 and net burn is $6,000. Runway uses net burn. Investors usually ask for both, because gross burn shows how fast you would drain if revenue stopped.
How much runway should I keep?
Enough to raise more. A funding round typically takes three to six months from first meeting to money in the bank, and you keep burning throughout. That is why twelve to eighteen months is the common advice. Below six months your negotiating position weakens sharply, so start cutting or raising well before that.
Why does growth change the answer so much?
Rising revenue shrinks net burn every month, which stretches runway and eventually flips you to profitable. Revenue of $2,000 growing 20% a month passes $8,000 in the ninth month. Growth is also the assumption most likely to be wrong, so compare it against the zero-growth figure the tool shows alongside it.
What if the cash runs out before break-even?
Then the business stops even though profitability was close. The calculator works out both dates separately and warns you when cash-out comes first. It happens most often when costs grow alongside revenue, which keeps pushing break-even further out. Slowing cost growth is usually the most reliable fix.
Should I cut costs or raise money?
Set a target and compare the two numbers. To stretch $60,000 to eighteen months you would cut about $2,700 a month or raise roughly $48,000. Cutting works immediately and costs no equity, but it hits people and growth. Either way the required amount grows the longer you wait to decide.
Is anything I type sent anywhere?
No. The whole calculation runs in this page and your figures never leave your device.