Burn Rate Calculator
Gross and net monthly burn, and how many months of cash you have left at the current pace.
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- Formula and worked example included
Burn Rate Calculator
Enter your figures to see results.
What is burn rate, in plain terms?
Burn rate is how fast a business is spending its cash reserves. Gross burn is everything going out each month; net burn is what goes out minus what comes in. Spending £48,000 a month with £18,000 coming in is a £30,000 net burn, and with £210,000 in the bank that is seven months of runway.
How to use this calculator
- Enter your total monthly outgoings from the bank statement, not the P&L.
- Enter the cash revenue you actually receive each month. Invoices raised do not count until paid.
- Add cash in the bank to see runway in months and an approximate run-out date.
What your result means
How to read the figure, what counts as normal, and what to do about it.
Gross burn, net burn and why both matter
Gross burn is everything you spend in a month. Net burn is what you spend minus what comes in: the amount the bank balance actually falls by. Investors and lenders talk about net burn; your suppliers and staff care about gross burn, because it is what has to be paid whether or not revenue arrives.
Both should be measured on cash, not accounting profit. Invoices raised but not paid, and annual bills paid in one month, are the two things that most often make burn look better or worse than it is. A three-month rolling average smooths the lumps.
Reading the runway
| Runway | Position |
|---|---|
| Under 6 months | Critical. Fundraising takes 3–6 months; cuts or a bridge are needed now. |
| 6–12 months | Start raising or reducing burn immediately; do not wait for a better metric. |
| 12–18 months | The normal zone after a funding round. Plan the next round for the 9-month mark. |
| Over 24 months | Comfortable, and possibly too cautious if growth is being held back by under-investment. |
Runway shrinks faster than the simple division suggests if burn is rising with headcount. The funding runway calculator models a changing burn rate and how much you need to raise.
Reducing burn without stalling
- Payroll is usually 60–80% of burn. Slowing hiring for a quarter does more than any subscription audit.
- Move annual contracts to monthly while cash is tight, even at a small premium.
- Chase debtors: cutting debtor days from 60 to 30 is the same as a month of revenue arriving early.
- Bill in advance where the market allows: annual plans, deposits, milestone payments.
- Use R&D tax relief and grants: for eligible UK companies, the SME scheme can return a meaningful slice of development spend.
Worked example: a B2B software startup
The company spends £48,000 a month, mostly on six salaries. It collects £18,000 a month from early customers and has £210,000 in the bank.
Gross burn = £48,000. Net burn = 48,000 − 18,000 = £30,000.
Runway = 210,000 ÷ 30,000 = 7 months. That is inside the danger zone: the founders should either start a raise this month or cut burn to around £20,000 net, which would stretch the cash to ten and a half months.
Frequently asked questions
Is a high burn rate bad?
Not by itself. Spending £100,000 a month is fine if it produces £150,000 of new annual recurring revenue each month. Burn is bad when it is not buying growth, or when it leaves you with too little runway to reach the next milestone.
What is burn multiple?
Net burn divided by net new annual recurring revenue in the same period. Under 1 is excellent, 1–2 is good, above 3 means growth is very expensive. It is the quickest way to judge whether burn is efficient.
Should founders' unpaid time count in burn?
Not in the cash figure, but it should be in your business plan. When founders start paying themselves, burn jumps, and investors will expect to see that built in.
How often should I calculate burn rate?
Monthly, from the bank statements, as a standing item in the management accounts. Use a three-month average alongside the single month.
The maths behind this calculator
For anyone who wants to check the working or rebuild it in a spreadsheet.
The formulas
Gross burn = Monthly cash outgoings Net burn = Monthly outgoings − Monthly cash revenue Runway = Cash in bank ÷ Net burn (months)
Assumptions and limits
- Burn is assumed constant. Real burn changes as you hire, so refresh the figure monthly.
- Runway ignores money you are owed and money you owe. Add receivables due within the period only if you are confident they will be paid.
- Revenue is cash received; a signed contract is not revenue until the money arrives.
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