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⚡ Quick answer

Runway (months) = Available Cash / Monthly Burn Rate; this helps you determine how long your funds will last.

Runway Calculator

Months of runway from cash and burn rate.

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📖 What it is

The Runway Calculator is a crucial tool for SaaS startups, helping you understand how long your current cash reserves can last at your current burn rate. Knowing your runway is essential for making informed strategic decisions.

This calculator requires two key inputs: your available cash reserves and your monthly burn rate. By entering these values, you can easily determine how many months you can continue operations before needing additional funding.

Keep in mind that this calculation assumes a consistent burn rate and does not account for fluctuations in expenses or income. It's important to revisit your figures regularly to ensure accuracy.

How to use

  1. Determine your total cash reserves.
  2. Calculate your monthly burn rate.
  3. Divide your cash reserves by your monthly burn rate.
  4. The result gives you the runway in months.
  5. Use this information to plan your funding strategy.

📐 Formulas

  • Runway (months)—Available Cash / Monthly Burn Rate
  • Monthly Burn Rate—Total Expenses - Total Revenue

💡 Example

Imagine you have $500,000 in cash.

If your monthly burn rate is $25,000:

Runway = $500,000 / $25,000 = 20 months.

Real-life examples

  • Example 1: Startup with Moderate Burn

    A SaaS startup has $400,000 in cash and a burn rate of $20,000. Runway = $400,000 / $20,000 = 20 months.

  • Example 2: High Burn Scenario

    Another company has $1,000,000 in cash with a monthly burn rate of $50,000. Runway = $1,000,000 / $50,000 = 20 months.

Scenario comparison

  • High Cash Reserves—With $1,000,000 and a burn rate of $10,000, the runway is 100 months, providing significant flexibility.
  • Low Cash Reserves—With only $100,000 and a burn rate of $25,000, the runway is just 4 months, necessitating immediate funding.
  • Moderate Cash and Burn—Having $500,000 with a burn rate of $50,000 gives a runway of 10 months, allowing for strategic planning.

Common use cases

  • Assess financial health of your SaaS startup.
  • Plan funding rounds based on runway length.
  • Evaluate the impact of cost-cutting measures.
  • Determine optimal timing for launching new products.
  • Monitor cash flow management for sustainability.
  • Compare different burn rate scenarios.
  • Make informed hiring decisions based on runway.
  • Prepare for investor discussions with clear runway metrics.

How it works

The runway is calculated by dividing your available cash by your monthly burn rate, giving you a straightforward estimate of how long you can operate without additional funding.

What it checks

This tool checks how long your current cash reserves can sustain operations at the present burn level.

Signals & criteria

  • Cash reserves
  • Monthly burn
  • Derived runway in months

Typical errors to avoid

  • Using gross burn while runway assumptions are based on net burn.
  • Ignoring planned hiring or one-time expenses that increase burn.
  • Using outdated cash balance values.

Decision guidance

Low: If your runway is low, consider immediate cost-cutting measures or exploring funding options.
Medium: With a medium runway, maintain a close watch on your burn rate and cash flow.
High: A high runway gives you the flexibility to invest in growth opportunities without immediate concern.

Trust workflow

Recommended steps after getting a result:

  1. Input accurate cash and burn values.
  2. Review your calculations regularly.
  3. Consider future expenses that could affect your burn rate.

FAQ

FAQ

  • What runway is considered safe?

    Many teams target 12-18 months, but target depends on growth stage and fundraising environment.

  • Should I use net or gross burn?

    Use one consistently. Net burn is often more practical for runway planning.

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