GUIDE · 2026

How to calculate startup burn rate and runway

One screen of math founders actually use. No account. Free interactive calculator + CSV at the end.

The formulas

If net burn ≤ 0 you are break-even or cash-flow positive on those inputs — runway is not the constraint until spend rises or revenue falls.

Step-by-step

1. Cash on hand — bank + liquid treasury you can spend this month. Skip equity marks and unpaid invoices.
2. Fixed monthly costs — rent, full-time salaries, core SaaS, insurance. Things that do not move when you pause ads.
3. Variable monthly costs — ads, contractors, usage infra, COGS, payment fees. Things that scale with activity.
4. Monthly revenue — only money already recurring or cleared. Pipeline is not revenue.
5. Net burn — costs minus revenue. Positive = cash leaving every month.
6. Runway — cash divided by net burn. Under 3 months: cut variable first, freeze new fixed, activate verified revenue paths.

Gross vs net burn

• Gross burn answers “how expensive is the machine?”
• Net burn answers “how fast is the bank account falling?”

Investors and operators care about net for survival and gross when judging efficiency. Report both; act on net.

Common mistakes

• Counting hoped-for deals as revenue
• Hiding contractor spend inside “one-time” buckets that recur
• Ignoring owner draw / founder salary (still cash out)
• Annual SaaS paid upfront — amortize monthly for runway math
• Optimizing burn before a verified revenue path exists (cuts alone are not a business)

What to do with the number

• < 3 months — emergency: cut variable, pause non-critical fixed, ship the activation that produces verified dollars
• 3–6 months — thin: freeze headcount, weekly burn review, one revenue owner
• 6–12 months — build with gates: every new fixed cost needs a kill criterion
• Cash-flow ≥ 0 — still track gross; a single cost spike can flip net burn overnight

FAQ