Burn Rate Calculator
Calculate monthly and annual burn rates to track your company's cash consumption and runway
Cash Flow Information
Cash balance at the beginning of the period
Cash balance at the end of the period
Time period between initial and final balance
Current cash balance for runway calculation
Burn Rate Analysis
Formula used:
Burn Rate = (Initial Balance - Final Balance) ÷ Duration
Cash Runway = Current Cash ÷ Monthly Burn Rate
Example: ($1,000,000 - $500,000) ÷ 10 = $50,000
Financial Recommendations
Example: Startup Cash Burn
Scenario
Initial Cash Balance: $1,000,000 (Series A funding)
Final Cash Balance: $500,000 (after 10 months)
Duration: 10 months
Cash Consumed: $500,000
Calculation
Burn Rate = ($1,000,000 - $500,000) ÷ 10 months
Burn Rate = $500,000 ÷ 10 months
Monthly Burn Rate = $50,000/month
Cash Runway = $500,000 ÷ $50,000 = 10 months
Runway Benchmarks
Healthy
18+ months runway
Time for strategic planning
Caution
12-18 months runway
Start fundraising process
Warning
6-12 months runway
Urgent action needed
Critical
Less than 6 months
Emergency measures required
Cash Management Tips
Monitor burn rate monthly to catch trends early
Maintain 12-18 months runway for healthy operations
Start fundraising when you have 12+ months left
Focus on unit economics to improve efficiency
Track gross vs net burn rate separately
Understanding Burn Rate
What is Burn Rate?
Burn rate is a critical financial metric that measures how quickly a company is spending its cash reserves. It's particularly important for startups and companies in growth phases, as it indicates financial sustainability and helps predict when additional funding may be needed.
Types of Burn Rate
- •Gross Burn Rate: Total cash outflows per period
- •Net Burn Rate: Cash outflows minus cash inflows
- •Cash Runway: Time until cash depletion at current burn rate
Burn Rate Formula
Burn Rate = (Initial Balance - Final Balance) ÷ Duration
Cash Runway = Current Cash ÷ Monthly Burn Rate
Why It Matters
- •Predicts when you'll need more funding
- •Helps optimize operational efficiency
- •Critical for investor communications
- •Enables strategic financial planning
Managing Your Burn Rate
Reducing Burn Rate
- • Cut non-essential expenses
- • Negotiate better vendor terms
- • Optimize staffing levels
- • Reduce office/infrastructure costs
- • Focus on core product features
Extending Runway
- • Accelerate revenue generation
- • Improve customer retention
- • Increase pricing strategically
- • Secure bridge funding
- • Consider revenue-based financing