Method and assumptions
Runway is a scenario estimate. Revenue collection timing, hiring, annual contracts and one-off expenses can make actual cash movement differ from this simple model.
Net burn = operating costs - cash revenue. Runway months = cash balance ÷ net burn when net burn is positive.
Worked scenario
Start with unrestricted cash and a normalized monthly cash burn derived from recent statements. Add committed financing only when it is legally available, and model expected collections, payroll, tax and annual vendor payments by month. Run a downside case with slower sales and higher churn.
How to interpret the result
Simple runway divides cash by net burn, but timing matters when receipts and large payments are uneven. A longer result can come from deferred bills rather than stronger economics. Pair runway with a monthly cash schedule, minimum cash buffer and decision dates for hiring, fundraising or cost reduction.
Input reference
- Currency
- Example default: USD
- Cash balance
- Example default: 500000
- Monthly cash revenue
- Example default: 80000
- Monthly operating costs
- Example default: 130000
- One-time planned cash outflow
- Example default: 30000
- Planning horizon (months)
- Example default: 12
Common mistakes
- Including restricted cash or uncertain fundraising.
- Using a single average burn despite step changes.
- Ignoring tax, annual contracts and working-capital timing.
Before using the result
- Reconcile opening cash and burn to bank records.
- Maintain base and downside monthly cash schedules.
- Set action dates before the minimum cash buffer is reached.
Questions to check before deciding
What if revenue is higher than costs?
The model shows zero burn and an open-ended runway; keep monitoring working capital and collection timing.
Does this include fundraising?
Add only committed cash that is expected to arrive within the planning period.
Independent planning calculator. Not financial, tax, legal or investment advice.