How long can your business survive on current cash? Know your runway before you need to — not after it's too late to act.
Net burn is how much cash you're actually consuming each month — total expenses minus revenue. Gross burn is total cash out the door, regardless of revenue. Investors focus on net burn because it reflects the business's true cash consumption after what it earns. You should care about both.
Runway is the number of months you can operate before running out of money. The standard rule is: raise your next round or reach profitability before your runway drops below 6 months. In practice, fundraising takes 3–6 months, so the real decision point is when you hit 9–12 months of runway remaining.
A runway below 6 months is a crisis. 6–12 months is a yellow flag — time to start serious conversations. Over 18 months gives you real operating leverage to build toward profitability or your next raise without panic.
Gross burn is total cash out the door each month — payroll, rent, software, services, everything. Net burn subtracts revenue: if you spend $80,000 and earn $30,000, your net burn is $50,000. Investors typically ask for net burn because it reflects true cash consumption. Track both because gross burn shows your actual cost structure before revenue growth affects the picture.
For startups raising venture capital, the standard target is 18–24 months of runway after closing a round. This gives you enough time to hit milestones before needing to raise again. For bootstrapped businesses, 6–12 months of operating cash is a reasonable safety cushion — enough to survive a slow quarter or an unexpected expense without emergency action.
The fastest ways to extend runway: defer non-critical expenses, renegotiate vendor contracts, accelerate accounts receivable (offer early payment discounts), pause or reduce hiring, and identify the lowest-performing 20% of expenses you can cut without damaging revenue. Revenue is better than cost cuts, but cost cuts work faster.
Paul Graham's concept of "default alive" asks: if revenue growth continues at its current rate and expenses stay flat, will you reach profitability before running out of money? If yes, you're default alive. If no, you're default dead — and you need to either accelerate growth, cut costs, or raise capital. Most founders don't know which one they are. This calculator tells you.