Runway is the single number that determines a startup's actual deadline, when it needs to either become cash-flow positive or raise more money, and it's calculated directly from burn rate, which makes tracking burn rate accurately one of the most consequential habits a founder can build.
Gross burn vs. net burn
Gross burn is total monthly operating expenses with no offset, useful for understanding the full cost structure of the business. Net burn subtracts monthly revenue from gross burn, giving the actual rate at which cash is depleting, which is the figure that should drive the runway calculation. A business with $80,000 in monthly expenses and $30,000 in monthly revenue has a gross burn of $80,000 but a net burn of only $50,000, a meaningfully different runway outcome depending on which figure gets used. The Burn Rate Calculator calculates both and makes the distinction explicit rather than reporting a single ambiguous number.
The runway formula and why it's a moving target
Runway (in months) = current cash balance ÷ monthly net burn rate. This isn't a one-time calculation; it needs recalculating whenever spending, revenue, or the cash balance changes materially, since a single large new hire or a big new customer can shift the runway by months in either direction. Founders raising capital typically aim to have at least 18-24 months of runway after closing a round, giving enough buffer to hit meaningful milestones before needing to fundraise again under time pressure.
Using runway to make spending decisions, not just report them
The most useful application of runway isn't the headline number itself, it's running "what if" scenarios before committing to new spending: what does runway look like after this hire, this new tool subscription, or this marketing spend increase? Building those scenarios into a working budget makes the tradeoff visible before the commitment is made, rather than discovering the impact on runway a month later when the bank balance already reflects it.