Money, pricing & model

What is burn rate and runway, and how do I calculate them?

The short answer

Burn rate is how much cash you lose per month (net burn = cash out minus cash in); runway is your cash balance divided by monthly net burn, literally the months until you hit zero. Watch runway like a fuel gauge and start acting when you're 6-9 months out, not 1. If you're profitable, congratulations: your runway is infinite.

Go deeper, your way

2 hand-picked resources. Pick how you want to dig in.

📄 Article
Free Beginner

Why we picked it Stripe's founder guides are clean, trustworthy primers on the core financial concepts every founder must track, burn, runway, and cash management. Written for operators, not accountants.

Startup Financials: Burn Rate & Runway, Stripe / Founder Guides

From stripe.com by Stripe guide library

  • Runway = cash balance divided by monthly net burn
  • Cash, not profit, is what actually kills startups
  • Start reacting to a shrinking runway 6-9 months out, not at the last minute
Open stripe.com →
📖 Book
Paid Intermediate

Why we picked it The most accessible book for non-finance founders on reading a P&L, balance sheet, and cash flow statement. It demystifies the three core statements without requiring an accounting background.

Financial Intelligence for Entrepreneurs

From hbr.org by Karen Berman & Joe Knight book (~304 pages)

  • The three statements each answer a different question, read them together
  • A profitable company can still go broke on cash flow
  • Founders should be able to interpret their own numbers, not just delegate them
Open store.hbr.org →

Terms in this answer

Burn Rate Runway

People also ask

What financial basics does every founder need to understand? Know your cash balance, monthly burn, runway, and gross margin cold, these four numbers decide whether you live or die. You don't need an accountin... Beginner 3 resources → How should I manage cash flow so my startup doesn't run out of money? Take your profit (and taxes) off the top before you touch the rest, invoice fast, and collect faster, cash timing kills more startups than lack of ... Intermediate 3 resources → Do I need an accountant and proper bookkeeping from day one? Yes, set up clean bookkeeping and a separate business bank account from day one, even if it's just simple software plus a good CA. Messy early book... Beginner 3 resources → What taxes and compliance do I need to handle as an Indian startup? At minimum: register the entity correctly, get GST registration once you cross the threshold, deduct and deposit TDS, and file income tax and ROC r... Intermediate 2 resources → How do I read a P&L, balance sheet, and cash flow statement? The P&L shows if you're profitable over a period, the balance sheet is a snapshot of what you own and owe, and the cash flow statement shows money ... Intermediate 3 resources → Should I open a separate business bank account before I even register the company, or use my personal account for now? Mixing personal and business money is the first accounting mistake most first-time founders make, and it costs you when tax season or fundraising a... Beginner 3 resources →

Also in D2C

The same ground, over in Money, pricing & unit economics, our D2C track.

I'm not a finance person, what books/records do I actually need to keep from day one? At minimum: a sales register (every order, with GST split if applicable), a purchase/expense register (raw materials, ads, shipping, software), a b... 3 resources → What is cohort analysis, and why does it matter more than a single repeat-rate number? Cohort analysis groups customers by when they first bought and tracks how each group behaves over time - so instead of one blended '35% repeat rate... 3 resources →

Also in How Founders Use AI

How founders actually use AI for this, over in Finance & Accounting.

How do founders use AI for bookkeeping, invoicing, runway and burn analysis? Founders now hand AI the boring parts of finance: reading supplier invoices from email, categorizing bank transactions, drafting collection emails ... 4 resources → Why build financial models with AI instead of from a blank spreadsheet? Because the AI already knows the structure, how an income statement links to a balance sheet and cash flow, what assumptions a SaaS or D2C model ne... 4 resources →
eChai Partner Brands