Cash Runway

It answers how long your cash lasts if money keeps leaving the business at today's pace.

Formal definition

Cash runway estimates how many months the business can continue operating at the current net cash burn rate before available cash is exhausted.

Why it matters

Running out of runway forces fire sales, emergency loans, or shutdown even when revenue eventually recovers.

Where you see it

  • Startup board meetings and venture updates
  • Turnaround advisory engagements
  • 13-week cash flow forecasts
  • Small business banking reviews
  • Crisis planning during seasonal downturns

Worked example

  1. A company holds $60,000 in cash.
  2. Monthly cash in is $20,000 and monthly cash out is $35,000.
  3. Net monthly burn =
  4. Cash runway = $60,000 ÷
  5. Interpretation: At the current burn, cash lasts about four months without changes.

How Business metrics calculates it

Starting bank balance ÷ Monthly burn when burn is positive.

The range we use for status labels

On Business metrics, the status band for this KPI is roughly 3 to 99. Higher values are generally healthier in this band. Your niche can sit outside it honestly — the label is a prompt to read the coaching, not a certificate.

Where people fool themselves

Runway using last month’s burn assumes next month looks like last month. A caterer with a wedding-heavy June and a dead August needs two runs, not one annual average that hides the desert.

Run it on your own numbers: any industry calculator.