The Burn Rate Calculator measures how fast a company is consuming its cash. Enter monthly expenses, monthly revenue, and the current cash balance, and it returns gross burn, net burn, annualized burn, the share of expenses your revenue covers, your runway in months, the calendar month the money runs out, and a verdict calibrated against the 12-to-18-month runway benchmark investors expect.
How It Works
Gross burn is the cost of operating the machine; net burn is the rate at which the bank account actually drains. Annualized burn is gross expenses × 12. If revenue meets or exceeds expenses, net burn is zero or negative and the calculator reports the business as cash-flow positive with effectively unlimited runway. Otherwise it dates the exhaustion point by adding the runway to the current date, and grades you: under 6 months is critical, 6 to 12 is a warning, 12 and above meets the benchmark.
Worked Example 1: A Fundable Position
Expenses 15,000, cash $500,000:
- Gross burn 30,000; annualized burn $540,000
- Revenue coverage 33.3% — revenue pays for a third of the operation
- Runway = 30,000 = 16.7 months — verdict: meets the 12–18 month benchmark, with the tool projecting cash exhaustion roughly 16–17 months out
Worked Example 2: The Crisis Band
Expenses 20,000, cash **60,000, coverage 25%, runway 5.0 months — the critical verdict. The operational meaning: a fundraise takes three to six months to close, so a company entering the process at five months of runway negotiates from weakness and may not finish. The only levers are the two in the formula: cut the 20,000 (slower and less certain), and every $6,000 of monthly net-burn reduction buys another month at this cash level.
Worked Example 3: Cash-Flow Positive
Expenses 52,000: net burn is **−12,000 of cash a month, coverage is 130%, and runway is reported as unlimited. Burn-rate discipline does not end here; it changes purpose, from survival arithmetic to deciding how much of the surplus to reinvest before the position is given back to competitors.
Using the Numbers
Net burn is the figure boards watch because it converts directly into time: at a constant net burn, every financing, hiring freeze, and revenue milestone can be priced in months of runway gained or lost. Two cautions on inputs. First, use cash expenses and collected revenue — accrual accounts flatter both sides, and burn is a cash concept: exclude depreciation, include the payroll taxes and annual bills (converted to monthly) that accrual views smooth away. Second, a single month is a noisy sample; run the calculator on a three-month average for the working figure, and on your worst recent month for the stress figure. One-off costs (a legal settlement, an annual insurance premium paid in one hit) should be spread or excluded explicitly, not allowed to masquerade as recurring burn.
Limitations
The projection holds expenses and revenue constant, so the exhaustion date is a planning marker, not a prophecy — growth, churn, seasonal swings, and any fundraise all move it. It does not model the timing within the month (payroll on the 1st against revenue arriving on the 30th can strand a company that looks fine monthly), payment terms, credit lines, or restricted cash. Runway computed this way also assumes you spend to zero, which no company can actually do: payroll obligations and wind-down costs mean the practical deadline sits one to two months inside the calculated one.
Frequently Asked Questions
Gross or net — which burn rate should I quote?
Net, for almost every audience, because it is the rate cash actually leaves. Gross burn still matters internally: it is the number cost-cutting acts on, and investors compare it against revenue growth to judge efficiency. Quoting gross burn as "the burn" overstates distress; quoting net without knowing gross hides how much of the position depends on revenue continuing.
How much runway should a startup hold?
The calculator's bands reflect the standard guidance: 12 to 18 months of runway at any time, and start raising with at least 6 to 9 months left, because raising takes 3 to 6. Under 6 months is the crisis band the verdict flags; over 24 months usually signals capital sitting idle that could be compounding into growth — or a cushion worth keeping in a hard funding market. Judgment sits on top of the bands.
Does burn rate include debt repayments and taxes?
Include every recurring cash outflow required to operate: payroll and its taxes, rent, software, COGS, loan repayments, and tax installments — if cash leaves monthly, it is burn. Exclude non-cash items (depreciation, amortization) and genuinely one-off capital purchases, which belong in the cash balance forecast rather than the run-rate.