How to Calculate Your Business Runway

Calculate how long your business can operate with current cash and burn rate using monthly expenses and revenue data.

1. Calculate your total available cash. Add checking account balances, savings, money market funds, and any liquid investments you can access within 30 days. Include credit lines you haven't drawn but exclude inventory, receivables over 60 days, and illiquid assets. This is your cash cushion.
2. Determine your monthly fixed expenses. List rent, payroll, insurance, loan payments, utilities, software subscriptions, and other recurring costs that hit every month regardless of sales. Use actual numbers from your last 3 months of books, not estimates.
3. Calculate your variable expense rate. Track costs that move with revenue: materials, shipping, payment processing fees, commissions. Express this as a percentage of monthly revenue over the past quarter.
4. Project your monthly net burn. Take monthly revenue minus fixed expenses minus variable expenses. If negative, that's your burn rate. If positive, you're cash-flow positive and runway is theoretically infinite unless growth requires cash investment.
5. Apply the runway formula. Runway in months equals available cash divided by monthly net burn. If you're burning $15,000 monthly with $90,000 in cash, you have 6 months. Recalculate monthly as both numbers change.
6. Stress-test with scenarios. Run the calculation with revenue down 25% and 50% to see worst-case runway. Factor in any large upcoming expenses like tax payments, equipment purchases, or seasonal inventory builds that will accelerate burn.