Burn Rate Calculator

How to Use This Tool

Follow these steps to generate accurate burn rate and runway estimates for your business:

1. Enter your current liquid cash reserves (checking, savings, and short-term accessible funds) in the Cash Reserves field, and select your local currency.
2. Input your total monthly operating expenses, including fixed costs (rent, payroll, software subscriptions) and variable costs (marketing, inventory, shipping).
3. Add your average monthly revenue from all recurring income sources, such as product sales, subscriptions, or service contracts. Leave this blank if you have no current revenue.
4. Select whether you want to calculate burn rate on a monthly or weekly basis (monthly is standard for most businesses).
5. Click the Calculate Burn Rate button to view your gross burn, net burn, cash flow, and runway breakdown.
6. Use the Reset button to clear all inputs and start a new calculation.

Formula and Logic

Burn rate calculations follow standard startup and small business accounting principles:

• Gross Burn Rate: Total monthly operating expenses, with no revenue subtracted. This reflects your total cash outflow for operations.
• Net Burn Rate: Gross burn minus monthly revenue. This is the actual amount of cash your business loses (or gains) per period.
• Monthly Net Cash Flow: Revenue minus gross burn. Positive values indicate profitability, negative values indicate you are burning cash.
• Cash Runway: Current cash reserves divided by net burn rate. This calculates how many periods (months or weeks) your business can operate before depleting cash reserves, assuming no changes to revenue or expenses.

For weekly calculations, monthly values are converted to weekly by dividing by 4.33 (the average number of weeks in a month).

Practical Notes

These guidelines help you interpret results in real-world business and trade contexts:

• Most early-stage startups aim for a net burn rate that gives them 12–18 months of runway to hit key milestones before needing to raise additional funds.
• E-commerce sellers should include inventory costs, shipping fees, and marketplace commissions (e.g., Amazon, Shopify fees) in operating expenses.
• If your net burn rate is negative (profitable), your runway is infinite, but you should still track gross burn to monitor cost efficiency as you scale.
• Traders and B2B businesses should include cost of goods sold (COGS) and client acquisition costs (CAC) in monthly expenses for accurate calculations.
• Update your inputs quarterly at minimum, or monthly if you are making frequent operational changes or scaling quickly.

Why This Tool Is Useful

Small business owners, entrepreneurs, and e-commerce sellers use burn rate calculations to:

• Plan fundraising timelines and determine how much capital to raise to reach profitability or next milestones.
• Identify unnecessary operating expenses to cut costs and extend cash runway during slow periods.
• Set realistic revenue targets to reach profitability before cash reserves are depleted.
• Share financial health metrics with co-founders, investors, or lenders during due diligence or loan applications.
• Compare burn rate trends over time to measure the impact of operational changes or growth initiatives.

Frequently Asked Questions

What is the difference between gross and net burn rate?

Gross burn is your total monthly operating expenses, regardless of revenue. Net burn subtracts your monthly revenue from gross burn, so it reflects the actual cash your business loses (or gains) each period. Investors typically focus on net burn to assess how quickly a company is using funds.

How much runway should my business have?

Most small businesses and startups aim for 6–18 months of runway. Early-stage startups raising venture capital often target 12–18 months to hit key growth milestones. Established small businesses with steady revenue may operate with 3–6 months of runway, but this varies by industry and risk tolerance.

Should I include one-time expenses in my burn rate calculation?

No, burn rate should only include recurring monthly operating expenses. One-time costs (e.g., buying a new laptop, legal fees for incorporation) should be excluded, as they do not reflect ongoing cash flow. If you have large one-time expenses, subtract them from your cash reserves manually before entering the value in the calculator.

Additional Guidance

Use these best practices to get the most value from your burn rate calculations:

• Separate fixed expenses (rent, salaries) and variable expenses (marketing, inventory) in your records to identify areas where you can cut costs quickly if needed.
• Run scenario planning by adjusting revenue and expense inputs to see how changes (e.g., a 20% drop in sales, a 10% cut in marketing spend) impact your runway.
• If you have multiple revenue streams, calculate total monthly revenue across all sources to avoid underestimating income.
• Compare your burn rate to industry benchmarks: SaaS startups typically have higher burn rates early on, while e-commerce businesses may have lower burn rates if they are inventory-light.