How many months can your company keep paying its bills with the cash in the bank today? That number is your runway. A startup with 600,000 dollars in cash and a net burn of 50,000 a month has 12 months left. This guide shows where each number comes from and why revenue growth changes the answer more slowly than most founders expect.
- Runway in months equals cash on hand divided by net monthly burn.
- Gross burn is total monthly spending; net burn is spending minus revenue.
- Expenses of 80,000 and revenue of 30,000 give a net burn of 50,000.
- Revenue growth lengthens runway, but a few months of growth adds very little.
- A company is “default alive” when current trends reach profit before the cash ends.
Gross Burn or Net Burn: Which One Sets Your Runway?
Net burn sets your runway, because it measures the cash that actually leaves the bank each month. Gross burn is total spending before any revenue comes in. Net burn is gross burn minus the cash customers pay you.
Take a company that spends 80,000 a month on salaries, rent, software and marketing. That 80,000 is its gross burn. Customers pay it 30,000 a month, so the net burn is 50,000.
Both numbers are useful. Gross burn shows the size of the cost base you must manage. Net burn shows how fast the bank balance falls. Dividing cash by gross burn gives a worst-case runway, which assumes every customer stops paying at once.
With 600,000 in cash, the worst case is 600,000 divided by 80,000, or 7.5 months. The normal case uses net burn and gives 12 months. The gap between those two answers shows how much your runway leans on revenue.
How Many Months Does Your Cash Actually Buy?
Divide the cash you hold today by your net monthly burn. The result is the number of months until the account reaches zero, assuming spending and revenue stay flat.
The formula is short: runway = cash / (monthly expenses – monthly revenue). With 600,000 in cash, 80,000 in expenses and 30,000 in revenue, runway is 600,000 / 50,000 = 12 months.
The guide on the calculator page uses a second example, shown in pounds but the same in any currency. The company holds 500,000 in cash, spends 130,000 a month and earns 20,000. Net burn is 110,000, so runway is 500,000 / 110,000, or about 4.5 months.
| Cash | Expenses | Revenue | Net burn | Runway |
|---|---|---|---|---|
| 600,000 | 80,000 | 30,000 | 50,000 | 12 months |
| 500,000 | 130,000 | 20,000 | 110,000 | 4.5 months |
| 750,000 | 120,000 | 15,000 | 105,000 | 7.1 months |
To project month by month with growth, scenarios and a planned raise, use the startup runway calculator with burn and scenario projections. It turns your cash, costs and revenue into a runway figure and a cash chart.
Turn the months into a calendar date so the deadline feels real. Twelve months of runway counted from October 1, 2026 ends around October 1, 2027.
Why Does Revenue Growth Stretch Runway So Slowly?
Growth starts from a small base, so the extra revenue in the first months is tiny compared with the burn. A few months of growth rarely buys more than a few extra weeks.
Consider the third row of the table. The company holds 750,000, spends 120,000 a month and earns 15,000. With flat revenue, net burn is 105,000 and the cash lasts about 7.1 months.
Now let revenue grow 8 percent every month. After six months of growth, revenue is only about 23,800, and net burn is still above 96,000. The cash now lasts about 7.5 months, a gain of roughly 10 days.
At 8 percent a month, revenue needs about 27 months to reach the 120,000 of monthly costs. The money runs out long before that point. Growth matters most over years, while runway is usually measured in months.
Are You Default Alive or Default Dead?
A startup is default alive when its current expenses and recent revenue growth would reach profit before the money runs out. It is default dead when the cash ends first.
The investor and essayist Paul Graham named this test. He asks founders to hold expenses constant and keep revenue growing at its recent rate. Then he checks whether profit arrives on the money left.
The 750,000 company above is default dead. It needs about 27 months of 8 percent growth to break even, but it holds only about 7.5 months of cash. Graham writes that about half the founders he talks to do not know their own answer.
The test turns runway into a decision. A default alive company can plan new projects. A default dead company must raise money, grow faster or cut costs. To find the revenue level that covers your costs, see our guide on how to do a break-even analysis.
Which Moves Add the Most Months to Your Runway?
Any change that lowers net burn adds months, and the effect grows as burn shrinks. Cutting 10,000 of costs and adding 10,000 of revenue both lower net burn by exactly the same amount.
Go back to the 600,000 company with a net burn of 50,000. Cut monthly costs by 10,000 and net burn falls to 40,000. Runway rises from 12 months to 15 months.
Adding 10,000 of steady monthly revenue does the same job. Net burn again falls to 40,000, and runway again reaches 15 months. The difference is timing, since a cost cut takes effect sooner than new sales.
New funding works differently. It adds to the cash side of the formula, not the burn side. A raise of 200,000 at a net burn of 50,000 adds 4 months. Loan repayments, however, add to monthly burn until the loan is paid off.
What Makes a Runway Estimate Too Rosy?
Most runway estimates run long because they count cash the company does not control yet or leave out costs that have not arrived yet.
Money that customers owe you is not cash until they pay. The calculator page’s guide leaves out receivables and equipment for that reason. Large yearly bills, such as insurance or annual software plans, also hide inside a single month. Planned hires belong in the forecast from their start date, not from the day the offer is signed.
Monthly burn swings, so one month can mislead you. Average the last three months instead. Burns of 45,000, 55,000 and 50,000 average out to 50,000.
The timing of payments matters as much as the totals. A late customer can shorten runway even when the yearly numbers look fine. Our guide to cash flow management for a small business covers that timing in detail. The SBA suggests quarterly or even monthly projections for a first year, so recheck runway often.
The Startup Runway Calculator projects your cash month by month, with revenue growth, planned funding and best and worst case scenarios.
FAQs About Startup Runway
What Does Runway Mean for a Startup?
Runway is the number of months a company can keep operating on the cash it holds today. It equals cash on hand divided by net monthly burn, assuming costs and revenue stay the same.
Is Burn Rate the Same Thing as Runway?
No. Burn rate is how much cash leaves each month, measured in money. Runway is how long the cash lasts, measured in months. Runway comes from dividing cash by net burn.
Should Runway Use Gross Burn or Net Burn?
Use net burn for the normal estimate, because revenue offsets part of the spending. Dividing cash by gross burn gives a worst-case figure, which assumes all revenue stops at once.
Can a Startup Have Unlimited Runway?
Yes, in a sense. When monthly revenue equals or exceeds monthly expenses, net burn is zero or negative. The cash balance then holds steady or grows, so the formula no longer ends at a date.
How Often Should You Recalculate Runway?
Recalculate it every month, when the bank statements close. Use the average burn of the last three months to smooth out one-time bills. The SBA suggests quarterly or even monthly projections for a first year.
Do Unpaid Customer Invoices Count Toward Runway?
Not until the customer pays. Runway counts cash that is already in the bank. Money owed to you can arrive late or not at all, so leave it out of the cash figure.
How Does New Funding Change Runway?
New funding adds to cash, so divide the larger balance by the same net burn. At a net burn of 50,000, a raise of 200,000 adds 4 months. Loan repayments raise the burn, which offsets part of that gain.
Sources
References Used in This Article
This article explains general business math for education only. It is not investment, lending or financial advice. Reviewed for accuracy by Prof. Dr. Khalil Mudassar, PhD. Last updated September 27, 2026.
Author
Shakeel Muzaffar is the Founder and Editor-in-Chief of MultiCalculators.com, bringing over 15 years of experience in digital publishing, product strategy, and online tool development. He leads the platform's editorial vision, ensuring every calculator meets strict standards for accuracy, usability, and real-world value. Shakeel personally oversees content quality, formula verification workflows, and the platform's commitment to publishing tools that are genuinely useful for students, professionals, and everyday users worldwide.
