Runway
In one sentenceHow many months the business can keep going before it runs out of cash, at the current burn rate.
What it means
Runway is the countdown clock for companies that are not yet profitable. Many advisors suggest starting to fundraise or cut costs well before runway drops under 6 months.
How to use it
- Recalculate runway every month and whenever you make a big hire or commitment.
FormulaRunway (months) = cash in the bank ÷ monthly net burn
Example: $300,000 ÷ $25,000 = 12 months
Example: $300,000 ÷ $25,000 = 12 months
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