In Short
Cash runway is how many months your cash lasts: cash on hand ÷ monthly net burn (expenses − revenue). $150,000 in the bank with a $20,000 monthly burn is 7.5 months of runway. If revenue grows faster than expenses, the burn shrinks each month, and the question becomes whether you reach positive cash flow before the cash runs out.
How to Use the Cash Runway Calculator
- Enter the cash in your business accounts today.
- Enter monthly revenue and expenses, or switch to Net Burn Only if you already know your burn.
- Add how fast revenue and expenses grow each month (0% for flat).
- Or tap Say It All: “We have 250,000 in the bank, revenue is 40,000 a month, expenses are 65,000 a month, revenue growing 5 percent and expenses growing 2 percent.”
The Formula
The simple version divides cash by today's burn. The calculator also projects each month forward, growing revenue and expenses at their own rates, and finds the month the balance crosses zero.
- Net burn = monthly expenses − monthly revenue
- Simple runway (months) = cash on hand ÷ net burn
- Revenue in month n = revenue × (1 + revenue growth)^(n − 1), and the same for expenses
- Ending cash in month n = ending cash last month + revenue − expenses
Worked Examples
| Scenario | Inputs | Result |
|---|---|---|
| Flat burn | $150,000 cash, $20,000 net burn a month | 7.5 months of runway |
| Some revenue, no growth | $100,000 cash, $30,000 revenue, $50,000 expenses | $20,000 burn · 5 months of runway |
| Growing, but not fast enough | $250,000 cash, $40,000 revenue (+5%/mo), $65,000 expenses (+2%/mo) | Runs out in about 13.5 months; positive cash flow would come in month 18. About $17,200 more would bridge it. |
| Default alive | $120,000 cash, $20,000 revenue (+8%/mo), $35,000 expenses (+1%/mo) | Positive cash flow in month 10, with about $41,900 left at the low point |
| Cash-flow positive | $60,000 revenue, $50,000 expenses | You're cash-flow positive: cash grows by $10,000 a month |
Illustrative examples, not projections. Figures use the tax year shown and the assumptions above.
What Is Cash Runway?
Runway is the number of months a business can keep paying its bills from the cash it has, before it needs more revenue, a loan or new investment. It's driven by your net burn: how much more goes out each month than comes in.
The SBA recommends that business plans include monthly cash flow projections for at least the first year [1]. A runway number is the short answer those projections give: how long until the money runs out if nothing changes.
What Do Default Alive and Default Dead Mean?
They're plain-words labels for where your current path leads. Default alive means that if nothing changes (same growth rates, no new money) the business reaches positive cash flow before the cash runs out. Default dead means the cash runs out first.
Default dead isn't a verdict on the business. It means something has to change: cut expenses, grow revenue faster, or raise cash early, while there's still runway to do it.
How Can a Business Extend Its Runway?
Three levers move the date: spend less each month, bring in more each month, or add cash through a loan, investment or the owner. Collecting invoices faster also helps, because runway counts cash, not sales on paper.
Watch money in and money out closely: managing cash flow is a core part of keeping a business's finances healthy [2]. A 13-week cash-flow forecast, updated weekly, shows a squeeze coming well before it arrives.
Frequently Asked Questions
How do I calculate cash runway?
Divide your cash on hand by your monthly net burn (expenses minus revenue). $150,000 ÷ $20,000 a month = 7.5 months.
What is a good cash runway for a small business?
There's no official number. More runway means more time to react to a slow month, a lost client or a late payment. Many owners plan from a 13-week cash-flow forecast and a 12-month projection, the timeframe the SBA suggests for monthly cash projections [1].
What's the difference between gross burn and net burn?
Gross burn is everything you spend in a month. Net burn is spending minus the cash that comes in. A business that spends $65,000 and collects $40,000 has a $65,000 gross burn and a $25,000 net burn; runway uses net burn.
What does cash-flow positive mean?
More cash comes in each month than goes out, so your balance grows instead of shrinking. At that point runway stops counting down, as long as expenses don't start growing faster than revenue.
Does runway include money customers owe me?
No. Runway uses cash in the bank. Unpaid invoices only count once they're collected, which is why slow-paying customers can shorten your runway even when sales look strong.
Sources
- Write your business plan (financial projections) — U.S. Small Business Administration
- Manage your finances — U.S. Small Business Administration
Official sources only: the IRS, SSA, BLS and other government agencies. Read how Zentavos researches.