Cash Burn Rate Calculator
Calculate your gross and net cash burn rate from starting cash, ending cash, and the time period. Gross burn shows total cash going out; net burn shows the actual rate at which your cash balance is falling after accounting for revenue.
What Is Cash Burn Rate?
Cash burn rate is the rate at which a business consumes its cash reserves. It is usually expressed per month. Every business that spends more than it earns has a burn rate — the question is how fast it is burning and how much runway is left.
There are two types: gross burn — total cash going out (all expenses); and net burn — cash going out minus cash coming in (revenue). Gross burn tells you the size of the operation; net burn tells you how fast the cash balance is actually declining.
Cash Burn Rate Formula
Gross Burn = (Starting Cash − Ending Cash) ÷ Months + Monthly Revenue
Net Burn = (Starting Cash − Ending Cash) ÷ Months
Runway = Ending Cash ÷ Net Burn
The reasoning: the change in cash over a period equals revenue minus expenses. So if cash dropped $100K over 3 months and revenue was $20K/month, total expenses = $100K + $60K = $160K — a gross burn of $53.3K/month. Net burn = $100K ÷ 3 = $33.3K/month.
Worked Example
A business had $500,000 in cash at the start, $400,000 at the end, over 3 months, with $20,000 monthly revenue:
Cash drop over period = $500,000 − $400,000 = $100,000
Net burn = $100,000 ÷ 3 = $33,333.33/month
Gross burn = $33,333.33 + $20,000 = $53,333.33/month
Runway at end = $400,000 ÷ $33,333.33 = 12.0 months
Revenue offset = $20,000 ÷ $53,333.33 = 37.50% of gross expenses
Interpretation: the business is burning $33,333/month net and has 12 months of runway left. To reach 18 months of runway, it either needs to raise $200K or reduce net burn to $22,222/month.
How to Interpret Burn Rate
- Net burn zero or negative — the business is cash-flow positive. No burn. Excellent position.
- Runway above 18 months — comfortable. Plenty of time to execute without fundraising pressure.
- Runway 12–18 months — healthy. Start preparing for the next fundraise.
- Runway 6–12 months — caution. Begin fundraising now; cutting costs is essential.
- Runway 3–6 months — critical. Immediate action on costs and funding.
- Runway below 3 months — emergency. The business is at risk of insolvency.
Frequently Asked Questions
What is a good burn rate?
There is no universal "good" burn rate — it depends on your runway, growth, and funding plan. The relevant metric is runway, not burn rate itself. A high burn rate is fine if you have 24+ months of runway and are growing quickly. A low burn rate is dangerous if you only have 3 months of runway and are not growing. Focus on runway, not burn rate in isolation.
What is the difference between gross burn and net burn?
Gross burn is total monthly expenses — all cash going out. Net burn is total expenses minus revenue — the actual rate at which cash is declining. Gross burn tells you the size of the operation; net burn tells you how fast you are running out of money. For runway calculations, use net burn. For operating efficiency analysis, gross burn is more relevant.
How can I reduce my burn rate?
Reducing burn is faster than growing revenue for most early-stage businesses. Key levers: pause non-essential hiring, renegotiate vendor contracts, cut marketing spend on channels with poor ROI, reduce office space, and defer non-critical capital expenditures. Every dollar of monthly burn reduction adds roughly (reduction × runway months) dollars of runway. Cutting $10K/month in expenses from a business with 12 months of runway adds $120K of total runway value.
Does burn rate include capital expenditures?
Yes — burn rate includes all cash outflows, including capital expenditures. A company that spent $100K on equipment last quarter has the same cash impact whether we call it an operating expense or a capital expenditure. Some analysts split the two, but for runway analysis, all cash out counts. This calculator uses the change in cash balance, which automatically captures all cash flows.
How often should I recalculate burn rate?
Monthly is standard for most startups and small businesses. Compare this month's burn to the previous 3-month average to spot trends. If burn is increasing month over month, investigate why — new hires, rising marketing costs, or lower revenue. If burn is decreasing, verify that it is from real efficiency gains and not deferred spending that will catch up later.
Can burn rate be negative?
Yes. A negative burn rate means the business is generating more cash than it is spending — it is cash-flow positive. In that case, the business has infinite runway (no risk of running out of cash from operations). For a negative burn rate, the relevant metrics shift from runway to growth rate, profitability margin, and capital allocation.