Money, Pricing & Model

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

A starting point

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

Read

📄 Article
Free Beginner

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

From stripe.com by Stripe guide library

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.

  • 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

Financial Intelligence for Entrepreneurs

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

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.

  • 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 →

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 →