The short answer
Runway is the number of months until the cash balance falls below zero. The calculation: available cash divided by monthly net burn. Net burn is what actually leaves the account each month – cash out minus cash in.
A single figure is not enough. Revenue and costs change every month, so a reliable runway number always comes with a month-by-month calculation and at least three scenarios.
Template to download: The calculation in this article is available as an Excel file, with example values and a 24-month chart. Download the runway calculator (Excel)
Gross burn and net burn
Gross burn is all monthly cash out: salaries, rent, software, marketing, taxes, interest. Net burn subtracts the cash in from ongoing business.
Net burn is what counts for runway, because only it changes the cash balance. Gross burn is the cost-side number: it shows how much revenue would be needed for no cash to leave the account.
It is important to calculate in payments, not in accounting results. An invoice issued in March and paid in May is revenue in March but cash in only in May. Anyone who works with the profit and loss result often overestimates the runway considerably.
The calculation in four steps
- Set the starting point. Cash balance today, excluding money that is already committed or tied up. Funds that are promised but not yet paid out do not belong here but in step 3.
- Estimate monthly cash in and cash out. Derive the first month from the last three to six months. State growth of revenue and costs as a percentage per month, separately for each side.
- Enter one-off payments. A funding round, grants or a large tax payment belong in the calculation with amount and month, not in the average.
- Roll forward month by month. New balance = old balance + cash in – cash out. The first month in which the balance falls below zero marks the end; the runway is the number of months before it.
The simple rule of thumb – cash balance divided by net burn – is only correct when the burn stays constant. As soon as revenue or costs grow, it deviates, in both directions.
An example with invented numbers
A company has EUR 400,000 in the bank, EUR 60,000 in monthly revenue and EUR 110,000 in monthly costs. Net burn in the first month is EUR 50,000, and the simple calculation gives eight months.
The month-by-month view changes the picture: revenue grows 4 percent a month, costs 1 percent. In the base scenario the cash lasts nine months, and the account is empty in month ten. If revenue grows only 1 percent, it is seven months. If it grows 6 percent, the account does not run empty within the 24-month horizon.
The numbers are invented and serve only as an illustration. What matters is the spread: between seven months and more than two years lies a difference of five percentage points of revenue growth.
Three scenarios instead of one number
Three cases are calculated that differ only in revenue growth: pessimistic, base, optimistic. Each case has to answer these questions:
- When does the cash run out, and how many months are left for countermeasures?
- How large is the gap by the end of the planning horizon?
- What does a funding round in month X change, and how much time does it buy?
A common rule of thumb is to start financing while several quarters of runway remain, because talks, due diligence and payout themselves take months. How long it takes in a given case depends on the investors or the bank and cannot be stated in general.
What is often missing from the calculation
- Payment terms. Customers pay later than agreed, suppliers are paid earlier than necessary. Both sit directly in working capital and can free or tie up a lot of liquidity.
- Taxes and levies. VAT, advance payments and payroll tax leave the account on fixed dates, not evenly.
- One-off payments. Annual fees, insurance, bonuses, loan repayments.
- Seasonality. An average hides months in which the account stands well below the mean.
From runway to weekly planning
The monthly calculation shows the direction. As soon as runway falls below about six months or payments get tight, a finer view is needed: the 13-week cash flow forecast shows at weekly level which payment is due when. To steer growth against capital consumption, the burn multiple adds an efficiency metric to runway. The biggest item in the burn, personnel cost, is planned month by month in the headcount plan template.
Frequently asked questions
How do you calculate the runway of a startup?
Runway is the number of months until the cash balance falls below zero. As a rough estimate: cash balance divided by monthly net burn. More accurate is the month-by-month calculation, which takes growth of revenue and costs, one-off payments and payment terms into account.
What is the difference between burn rate and runway?
Burn rate says how much money is used per month. Runway says how long the existing balance lasts at that rate. Burn rate is the speed, runway the remaining time.
What is gross burn and what is net burn?
Gross burn is all monthly cash out. Net burn is the difference between cash out and cash in from ongoing business. Net burn is what counts for runway.
How many months of runway should a company have?
There is no universal number. The usual advice is to start financing while several quarters of buffer remain, because funding talks themselves take months. A company with predictable cash in needs less buffer than one without.
Why does the simple calculation differ from the month-by-month one?
The simple calculation assumes a constant burn. If revenue and costs grow at different speeds, the burn changes every month, and the runway becomes longer or shorter than the estimate.
Read on
- 13-week cash flow forecast: structure and template
- Burn multiple and Rule of 40
- All free Excel templates on one page
- Pricing · 30 minutes with Sebastian Janus
Sources and status
The article describes the method; all numerical examples are invented. As of October 2026.
