The Question That Should Keep You Up at Night (In a Productive Way)
"How many months until we run out of cash?" is one of the most important questions any business with limited reserves can ask — and one of the easiest to avoid asking honestly. A cash runway calculator forces the answer into a specific number instead of a vague feeling that things are "probably fine."
This guide covers how runway is calculated, why burn rate is the number that actually matters more than cash balance alone, and what to do once you know your number.
What Is Cash Runway?
Cash runway is the number of months your business can continue operating at its current spending rate before running out of money, assuming no new funding or major revenue changes.
Runway Months = Cash Balance / (Monthly Burn − Monthly Revenue)
If you have $120,000 in the bank, spend $25,000/month, and bring in $10,000/month in revenue, your net burn is $15,000/month, and your runway is $120,000 / $15,000 = 8 months.
Gross Burn vs Net Burn — Both Numbers Matter
Gross burn is your total monthly spending, full stop — payroll, rent, software, everything going out the door. Net burn subtracts whatever revenue is coming in, giving you the real rate at which your cash balance is shrinking.
Both numbers tell you something different. Net burn tells you your actual runway. Gross burn tells you how much cost you'd need to cut if revenue dropped to zero — useful for stress-testing a worst-case scenario, especially for early-stage businesses with unpredictable revenue.
Why 6 Months of Runway Is a Warning Line, Not a Deadline
Most experienced founders and advisors treat 6 months of runway as the point where action needs to start — not because the business is out of money yet, but because fundraising, major cost restructuring, or a serious sales push all take time to actually produce results. If you wait until 2 months of runway remain to start fixing the problem, most of your options are gone.
At 6 months, you still have room to raise capital properly, negotiate better terms, or make deliberate cuts. At 2 months, you're making panicked decisions under pressure, which tend to be worse decisions.
What Actually Extends Runway (Ranked by Speed of Impact)
Cut Costs — Fastest Impact
Cost cuts show up in your runway calculation immediately, the very next month. Review every recurring expense — software subscriptions, contractor retainers, unused office space — and cut anything that isn't directly tied to revenue or a critical near-term milestone.
Collect Faster — Medium Speed
If you have unpaid invoices, chasing them down and tightening payment terms (net-15 instead of net-30, for example) can meaningfully boost near-term cash without cutting anything or raising money.
Raise Revenue — Slower, but Sustainable
Increasing sales extends runway in the most durable way, but it takes longer to show results than cutting costs does. It's the right long-term lever, but not a fast enough fix if runway is already critically short.
Raise Capital — Slowest, but Largest Single Impact
Fundraising or securing a loan can add months or years of runway in one move, but the process itself typically takes 2-6 months from first conversation to funds in the bank — which is exactly why starting early matters so much.
A Common Mistake: Calculating Runway on Average Burn
If your spending is lumpy — a big annual software renewal, a seasonal inventory purchase, a one-time equipment cost — using a flat monthly average can make your runway look longer than it really is right when you need the cash. Recalculate runway right after any large one-time expense, not just on a fixed monthly schedule, so you're never caught off guard by a number that quietly moved.
How to Use This Calculator
Enter your current cash balance, monthly burn, and monthly revenue. The calculator returns your runway in months, your net burn rate, and the amount of cash you have left to work with — giving you a clear, current number to plan around instead of a rough guess.