How runway & burn rate calculator works
Burn rate is how fast a business consumes cash each month, and runway is how long the current cash lasts at that rate. The distinction that matters is gross versus net burn: gross burn is total monthly spending, while net burn subtracts revenue — $55,000 of costs against $40,000 of revenue is $55,000 gross but $15,000 net. Runway is driven by net burn, because revenue arriving in the door is cash that does not need to come from the bank.
The calculation is simple division: cash on hand ÷ net burn per month. $150,000 burning $15,000 net per month is 10 months of runway. When revenue covers all costs, net burn goes negative — the business is cash-positive and runway is unlimited as long as that holds. The calculator also reports revenue coverage (the share of costs revenue pays for) so you can see how close you are to that line.
The status read applies the common planning thresholds: under 6 months is danger territory, where fundraising (which takes 3–6 months itself), cost cuts or revenue pushes need to start immediately; 6–12 months is tight — time to plan the next raise or a burn reduction; a year or more is generally healthy. Re-run the calculator monthly as actuals come in: runway is a moving number, not a one-time measurement.