Runway Calculator

Runway

Runway calculates the financial runway of a startup to help you understand how many months your business can operate with its current cash balance before needing additional funding.

Example:

Let's say you have a business that generates $4,000 per month, spends $10,000 each month and has $50,000 in the bank.

Monthly revenue = $4K

Monthly operating expenses = $10K

Cash in the bank = $50K

Here’s how the runway would be calculated:1. Calculate Burn Rate (Expenses - Revenue)Burn Rate = Monthly expenses - Monthly Revenue = $10,000 - $4,000 = $6,0002. Calculate RunwayCurrent cash in the bank / Burn rate = $50,000 / $6,000 = ~8.33 months
So, with $50,000 in cash, monthly expenses of $10,000, and monthly revenue of $4,000, you have about 8.3 months of runway before the cash runs out.

Why It Matters:

Runway is essential because it shows a startup how long it can operate with its current cash before needing more funds. matters:

Here’s why it matters:

Better Planning: Runway provides a timeline for founders, helping them understand how long they have to meet key goals like growing revenue, launching a product, or securing more funding. It prevents last-minute financial stress by setting a clear timeframe.
Financial Health Insight: Knowing your runway lets you see if spending is sustainable or if adjustments are needed. If runway is short, it might mean that expenses are high or revenue needs a boost.
Inspiring Investor Trust: A good runway demonstrates that there’s time to execute the business strategy, not just a need for immediate cash. This sense of stability can increase investor confidence in the company.
Guides How Much to Raise: Knowing your runway helps you determine the funding amount required to reach your next milestones. This ensures you raise enough to extend your runway meaningfully without giving away too much equity upfront.
Growth Focus: With a solid runway, founders can concentrate on scaling their product or customer base instead of constantly worrying about cash flow. It provides room to build a stable foundation.
Sets the Funding Timeline: Runway tells you exactly how long you have before needing more cash, helping you time your fundraising. If runway is short, raising capital becomes urgent. With more runway, you can plan strategically and approach the right investors at the right time.
Avoiding Rushed Decisions: When runway is short, startups can feel pressured to make quick decisions, like cutting corners or agreeing to less favorable terms just to stay afloat. A longer runway offers breathing space, allowing for thoughtful, strategic choices.

In short, burn rate and runway help you stay grounded, make smart choices, and keep your startup moving forward sustainably.

Use this free tool to calculate your company’s burn rate and runway