Burn Rate Calculator
Burn rate is the speed at which a company spends its cash, and runway is how long the cash lasts at that speed. This burn rate calculator works in startup finance terms only: it takes your cash on hand, monthly expenses and monthly revenue collected, and returns gross burn, net burn and runway in months, with a plain-language health rating. A second method skips the budget entirely and derives burn from two bank balances.
Two optional inputs go further. A monthly revenue growth rate projects whether growth closes the gap before the cash runs out, and net new MRR produces your burn multiple, the efficiency number investors quote back at founders.
Runway here is static math: it assumes this month repeats. Hiring plans, annual contracts and growth all bend the real line, which is why the growth projection exists and why founders recheck this monthly.
Quick Answer
Key takeaways
- Runway is always calculated from net burn, never gross. Dividing cash by gross burn understates your time and panics the room for no reason.
- Revenue in burn math means cash collected. Invoiced-but-unpaid revenue flatters net burn and shortens your real runway without telling you.
- The cash-balance method is the honesty check: two bank balances cannot be argued with, and they catch the costs a budget forgets.
- A burn multiple under 1x is excellent and above 2.5x is poor, on the bands this calculator uses. Efficiency, not just survival time, is what the number judges.
- Quick Answer
- Gross burn vs net burn: the distinction everything hangs on
- Worked example: $750,000 in the bank
- What the growth projection and burn multiple add
- Reading the health rating without fooling yourself
- What competing calculators miss
- Frequently Asked Questions
- Add This Calculator to Your Website
- References
Gross burn vs net burn: the distinction everything hangs on
Gross burn is everything going out: payroll, rent, software, marketing, contractors, the lot. It describes the size of the operation. Net burn subtracts the revenue actually collected, and it describes the drain on the bank account. Runway comes from net burn alone, because the bank balance falls by the net figure each month, not the gross one.
Confusing the two is the most common founder error in this area, and it cuts both ways. Quoting gross burn as "our burn" to investors makes the company look sloppier than it is. Quietly netting off revenue that has been invoiced but not collected makes the runway look longer than it is. The calculator forces the honest inputs: the revenue field is labelled collected, the step-by-step arithmetic is printed in the results, and the base cash flow calculator covers the wider cash picture when you need inflows and outflows beyond this month's burn. The concept in this form was popularized for founders by investor writing such as Paul Graham's essays on startup survival and by David Sacks's formulation of the burn multiple; the US Small Business Administration covers the underlying cash discipline in its financial management guidance for small companies.
Worked example: $750,000 in the bank
The calculator is pre-filled with this case, in the budget method. Expenses of $120,000 against $45,000 collected gives the headline figures below, and each one is checkable by hand.
| Figure | Value |
|---|---|
| Gross burn | $120,000/mo |
| Net burn ($120,000 - $45,000) | $75,000/mo |
| Runway ($750,000 / $75,000) | 10.0 months |
| Health rating | Tight: 6 to 12 months |
| Burn multiple ($75,000 / $60,000 net new MRR) | 1.25x: Great |
Cross-check it with the second method. Switch to the cash-balance method: cash fell from $1,000,000 to $850,000 over 2 months, an average net burn of $75,000 a month, the same figure the budget produced. Runway on the ending balance is 11.3 months. When the two methods disagree materially, the budget is missing something: a quarterly insurance payment, an annual contract, tax. The bank history is the referee. A team tracking its wider profitability alongside burn can set this beside the adjusted net profit calculator, since accounting profit and cash burn routinely tell opposite stories in the same month.
What the growth projection and burn multiple add
Static runway assumes this month repeats forever. Growing companies break that assumption in their favor, and the growth field simulates it month by month: revenue compounds at your rate, net burn shrinks, and the calculator reports either the month revenue covers expenses or the stretched runway if the cash still runs out first. On the worked example's numbers with 10% monthly growth, revenue reaches the $120,000 expense line in month 12. Whether your company survives to enjoy that depends on the starting cash, which is exactly the tension the projection is meant to expose.
The burn multiple judges efficiency rather than time: net burn divided by net new MRR, how many dollars of burn bought each dollar of new recurring revenue. Under 1x is excellent, 1 to 1.5x is great, 1.5 to 2x is good, 2 to 2.5x is concerning, above 2.5x is poor, on the bands built into this tool. A company can post a comfortable runway and a poor multiple at the same time: plenty of cash, badly spent. Planning the response usually means scenario work on the expense side, and the budget impact calculator helps model what a specific budget change does before you commit to it.
Reading the health rating without fooling yourself
The rating bands are deliberately blunt. Under 6 months is critical because a fundraise itself consumes months: conversations, diligence, term sheets, closing. Six to 12 months is tight for the same reason, and the standard advice is to start raising with 9 to 12 months left, not with 3. Twelve to 18 months is the healthy zone most investors expect between rounds. Beyond 18 months the question flips from survival to efficiency, which is the burn multiple's territory.
Three habits keep the number honest. Use collected revenue, always. Recompute monthly, because burn is a trend and a single good month is weather, not climate. And separate one-off costs when you judge the trend, while admitting that a company with a "one-off" every month does not have one-offs, it has a cost structure.
What competing calculators miss
Only one method. Most burn tools take expenses and revenue and stop. Budgets are optimistic documents; bank balances are not. Offering the cash-balance method beside the budget method, and showing both landing on $75,000 in the worked example, gives founders a built-in audit of their own inputs.
No cash-flow-positive handling. Divide cash by a zero or negative net burn and simpler tools emit infinity, an error, or nonsense. This one says what is true: the company is not burning cash, and runway is effectively unlimited at this pace.
No efficiency judgment. Survival time alone rewards companies sitting on cash doing nothing. The burn multiple, with its bands printed in the results, asks the harder question investors actually ask: what did the burn buy?
Frequently Asked Questions
Gross burn is total monthly expenses: everything going out. Net burn subtracts monthly revenue collected, showing the actual monthly drain on cash reserves. In the worked example, gross burn is $120,000 and net burn is $75,000. Runway is always computed from net burn, because the bank balance falls by the net amount.
Twelve to 18 months is the healthy band between funding rounds, and this calculator rates it that way. Six to 12 months is tight: start fundraising, because most raises take six months or more. Under 6 months is critical. The rating matters because runway is only useful if it exceeds the time a fundraise takes to close.
Burn multiple is net burn divided by net new MRR: the dollars of burn spent to buy each dollar of new recurring revenue. Under 1x is excellent, 1 to 1.5x great, 1.5 to 2x good, 2 to 2.5x concerning, and above 2.5x poor. The worked example, $75,000 of net burn against $60,000 of net new MRR, gives 1.25x.
Collected. An invoice is a promise, not cash, and netting it off flatters net burn and overstates runway. If your customers pay 30 to 60 days late, your real burn sits between the invoiced and collected views, closer to collected. The input field is labelled revenue collected for exactly this reason.
Instead of building burn up from a budget, take (starting cash - ending cash) divided by the months between the two balances. Cash falling from $1,000,000 to $850,000 over 2 months is $75,000 a month of average net burn. It measures what actually left the bank, including costs the budget forgot, which makes it the right check on the budget method.
Growing revenue shrinks net burn every month, so cash lasts longer than the static figure suggests. Enter a monthly growth rate and the calculator simulates it: on the worked example's $45,000 revenue against $120,000 expenses, 10% monthly growth means revenue covers expenses in month 12. If the cash runs out before that month, the projection reports the stretched runway instead.
Effectively unlimited at the current pace. Net burn is zero or negative, so the balance is not shrinking, and dividing cash by a non-positive burn has no meaning. The calculator reports cash-flow positive instead of a number. Your planning question changes from survival to how efficiently the surplus gets reinvested.
For the headline figure, use recurring operating costs and note one-offs separately, or a single legal bill or annual contract will distort the month. The cash-balance method includes everything by construction, which is another reason the two methods disagreeing is useful information rather than an error.
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References
- David Sacks (Craft Ventures), "The Burn Multiple": the original formulation of burn multiple as net burn divided by net new ARR, and the efficiency bands investors use. Sacks: The Burn Multiple. Accessed October 2026.
- Paul Graham, essays on startup growth and survival: the founder writing that framed runway as the time a startup has to reach profitability or raise again. Paul Graham: Startup Equals Growth. Accessed October 2026.
- US Small Business Administration, "Manage your finances": federal guidance on cash flow management for small companies. SBA: Manage Your Finances. Accessed October 2026.
- US Small Business Administration, financial projections guidance for business plans: how lenders and investors expect burn and cash projections to be presented. SBA: Write Your Business Plan. Accessed October 2026.
- Score Association (SBA partner), financial planning templates and mentoring resources for small business cash management. SCORE: Small Business Mentoring and Templates. Accessed October 2026.
- US Securities and Exchange Commission, guidance for investors on company financial statements: background for reading the income and cash flow statements burn figures come from. SEC: Company Financial Statements Guidance. Accessed October 2026.