Starting Cash Balance (currency) Enter the total cash available at the start of the period

Ending Cash Balance (currency) Enter the total cash remaining at the end of the period

Time Period (months) Enter the duration in months between the two balances

Quick Examples:

Startup Spending (6 months) Slower Burn (12 months)

Calculate Clear

This calculator is for educational purposes only. It is not intended to provide financial advice. Consult a financial advisor for personalized guidance.

What Is Burn Rate

Burn rate is the speed at which a company spends its cash reserves. It measures how much money goes out of the business each month. This number helps business owners see how long they can operate before they need more money. A high burn rate means the company is spending cash quickly, while a low burn rate means cash is being spent slowly.

How Burn Rate Is Calculated

Formula

To find the burn rate, first find the difference between the starting cash and ending cash. This tells you the total amount spent. Then, divide that total by the number of months in the period. This gives you the average amount of money spent per month. This calculation helps you understand the average monthly spending based on past performance.

Why Burn Rate Matters

Knowing your burn rate is key to keeping a business healthy. It helps you plan for the future and avoid running out of money unexpectedly. This number is often looked at by investors to see how efficiently a company is using its funds.

Why Managing Cash Flow Is Important for Survival

If a company spends money too fast without bringing in enough revenue, it may run out of cash. This is often called running out of runway. When this happens, the business might not be able to pay bills or employees. Tracking this metric helps a company make changes to spending early to stay open longer.

For Planning Fundraising

Startups often use this number to know when to ask investors for more money. By looking at the current burn rate, founders can estimate the date when the cash will be low. This allows them to start fundraising well before the money runs out, which may lead to better deals and less stress.

Burn Rate vs. Runway

Burn rate and runway are related but different ideas. Burn rate is how much cash you spend each month. Runway is how many months you can keep operating at that rate before the money is gone. Think of burn rate as the speed of the car and runway as the distance left to travel. Both are important for planning.