This calculator helps entrepreneurs and small business owners determine their monthly cash expenditure and project how long current funds will last. It’s essential for startups, e-commerce sellers, and traders managing runway and cash flow in volatile markets.
Enter your cash balance, monthly revenue, and expenses to see both gross and net burn rates, plus your financial runway in months.
Burn Rate Calculator
Project your cash runway and monthly expenditure
Financial Analysis
How to Use This Tool
Enter your current cash balance (all liquid funds), monthly revenue (if applicable), and total monthly expenses. Select how often those expenses occur (monthly, weekly, or daily) for accurate conversion. Click Calculate to see your gross burn rate (total spending), net burn rate (spending minus revenue), monthly cash flow, and projected runway in months.
The runway indicator shows how many months your cash will last at current spending levels. A longer runway (12+ months) is considered healthy for most businesses, while under 6 months signals urgency for funding or cost reduction.
Formula and Logic
Gross Burn Rate: Total monthly expenses (converted to monthly if weekly/daily). This represents your total cash outflow regardless of revenue.
Net Burn Rate: Monthly Expenses - Monthly Revenue. This is your actual net cash loss per month after accounting for income.
Monthly Cash Flow: Monthly Revenue - Monthly Expenses. Positive indicates profit; negative indicates loss.
Runway (Months): Current Cash Balance / Net Burn Rate. If Net Burn Rate is zero or negative (profitable), runway is infinite. Weekly/daily expenses are annualized (×4.33 weeks/month or ×30 days/month) before calculation.
Practical Notes
For Startups: Venture-backed startups typically target 18-24 months runway before raising. If you're under 12 months, prioritize fundraising or aggressive cost cutting. Watch for "blitzscaling" traps where burn accelerates without corresponding revenue growth.
For E-commerce & Traders: Include inventory costs, shipping, platform fees, and advertising in expenses. Seasonal businesses should use worst-case monthly averages. Consider cash conversion cycle: if you pay suppliers before getting paid by customers, your effective burn may be higher than P&L suggests.
Margin Thresholds: If net burn exceeds 20% of revenue, your unit economics are likely broken. Aim for gross margins above 50% for sustainable growth. For service businesses, labor costs should be under 70% of revenue.
Trade Terms: For import/export businesses, factor in customs duties, freight, and currency hedging costs. These can significantly increase monthly burn during volatile periods.
Why This Tool Is Useful
Burn rate is the single most critical metric for cash-sensitive businesses. It directly answers "how long can we survive?" without guesswork. Unlike static budget tools, this calculator accounts for revenue impact and different expense frequencies, giving a realistic runway projection. It helps founders negotiate with investors (showing disciplined spending), enables small businesses to plan for slow seasons, and helps traders avoid liquidation during drawdowns. The visual runway bar and warning thresholds provide immediate risk assessment without number-crunching.
Frequently Asked Questions
Should I include owner salary in expenses?
Yes. Owner salary is a real cash outflow. If you're not paying yourself, your personal runway is separate from business runway. For accurate business burn, include all compensation. If you're bootstrapping and deferring salary, note that separately as "accrued compensation" since it still represents future cash needs.
How do I handle irregular expenses like annual software fees?
Annual or quarterly expenses should be converted to monthly equivalents. For example, a $1,200 annual fee is $100/month. This ensures your burn rate reflects true monthly cash requirements. The frequency selector helps with weekly/daily expenses; for irregular annual costs, simply divide by 12 and include in the monthly expenses field.
What's a healthy burn rate for a small business?
For stable small businesses (not venture-backed), aim for net burn under 10% of cash reserves per month (10+ month runway). For growth-phase startups, 15-20% monthly burn (5-7 month runway) is common but requires strong revenue growth to offset. Service businesses can operate with lower burn (5-8%) due to predictable cash flow. Retail/e-commerce often need 12-18 months runway due to inventory cycles. Always compare to industry benchmarks and your specific cash conversion cycle.
Additional Guidance
Scenario Planning: Run this calculator with best-case, base-case, and worst-case revenue scenarios. If your worst-case runway is under 6 months, build contingency plans now.
Burn Multiple: Investors often track "Burn Multiple" = Net Burn / New ARR (Annual Recurring Revenue). A healthy multiple is under 1.0. If your burn is $10k/month and you're adding $15k ARR/month, your burn multiple is 0.67.
Cash Flow Timing: This calculator assumes expenses and revenue occur evenly each month. If you have seasonal spikes (e.g., holiday sales) or large quarterly tax payments, model those separately. Your actual cash depletion date may be earlier than calculated if expenses cluster in certain months.
Action Steps Based on Results:
- Runway < 3 months: Immediate fundraising or 30%+ expense cuts.
- Runway 3-6 months: Accelerate collections, delay non-essential spend, start fundraising.
- Runway 6-12 months: Optimize marketing ROI, renegotiate vendor contracts.
- Runway 12+ months: Invest in growth, but maintain discipline.