Runway is the simplest metric in business and the most ignored. It answers one question: how many months can you keep operating before you run out of money? Every month that passes without profitability, the answer gets smaller. And unlike revenue projections or growth curves, runway doesn't care about your optimism.
The basic calculation is straightforward. Take your cash in the bank, subtract your monthly expenses, add back your monthly revenue, and divide. If you have $60,000, spend $12,000/month, and earn $4,000/month, your net burn is $8,000. You have 7.5 months of runway. That's it. That's the number that determines whether your business lives or dies.
The 18-Month Rule
Most experienced investors and advisors say you want 18 months of runway minimum. That gives you enough time to iterate, find product-market fit, and start generating meaningful revenue without the panic of imminent cash depletion. Below 12 months, you should be actively raising money, cutting costs, or accelerating revenue. Below 6 months is the danger zone — you're making decisions out of desperation rather than strategy.
The reason 18 months matters is that everything takes longer than you think. Building the product takes longer. Getting the first customer takes longer. Reaching profitability takes longer. Fundraising — if that's your path — takes 3 to 6 months from first meeting to money in the bank. If you start fundraising with only 3 months of runway, you're negotiating from a position of weakness.
Net Burn vs. Gross Burn
Gross burn is your total monthly expenses — everything going out the door. Net burn is gross burn minus revenue — the actual cash you're losing each month. The distinction matters because two companies can have the same gross burn but very different runways if one is generating revenue and the other isn't.
As revenue grows, net burn shrinks. If your expenses are $15,000/month and revenue grows from $3,000 to $8,000 over six months, your net burn dropped from $12,000 to $7,000. That's a significant runway extension even though your expenses didn't change. This is why revenue growth rate is just as important as the current burn rate — it determines whether your runway is extending or shrinking over time.
What To Do When Runway Gets Short
The levers are simple even if the execution isn't: cut expenses, increase revenue, or add cash. Most founders jump to fundraising, but the fastest way to extend runway is usually cutting costs. Every $1,000/month you eliminate adds another month of life for every $1,000 of remaining cash.
Run multiple scenarios. What happens if you cut expenses by 25%? What if revenue doubles? What if you raise $50,000? Seeing the impact of each lever side by side helps you prioritize the actions that make the biggest difference fastest.
If you want to see your runway with visual projections, our free Startup Runway Calculator shows exactly how many months you have, models six different scenarios, and charts your cash balance over time so you can see exactly when the line hits zero.