Burn Rate
In one sentenceHow much cash a business loses each month when spending is more than income. Common language for startups.
What it means
Gross burn is total monthly spending. Net burn is spending minus revenue: the actual amount the bank balance shrinks each month.
How to use it
- Know your net burn and your Runway at all times if you are not yet profitable.
FormulaNet burn = monthly cash out − monthly cash in
Related terms
Runway Cash Flow OpEx vs CapEx
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