You’re spending money.
You don’t know how fast.
You need to know your burn rate.
You need survival awareness.
Burn rate. Cash consumption. Survival metric. Your reality.
This guide shows you how.
Burn rate calculation. Interpretation. Understanding. Your survival.
Read this. Calculate burn rate. Understand survival.
Key Takeaways
- Calculate burn rate—use Burn Rate Calculator to see how much cash you're spending monthly
- Understand gross vs. net burn—gross burn is total expenses, net burn accounts for revenue
- Calculate runway—use Cash Runway Calculator to see how many months you have left
- Monitor regularly—track burn rate monthly to catch changes early
- Take action—use burn rate to make decisions about spending, fundraising, and growth
Table of Contents
Why Burn Rate Matters
Burn rate shows survival time.
What happens without knowing burn rate:
- Cash runs out unexpectedly
- Decisions are made too late
- Opportunities are missed
- Business fails
What happens with knowing burn rate:
- Cash needs are anticipated
- Decisions are made proactively
- Opportunities are captured
- Business survives
The reality: Burn rate enables survival.
Calculating Burn Rate
Calculate your burn rate:
Use Burn Rate Calculator
Calculate it:
- Use our Burn Rate Calculator
- Enter starting capital
- Enter monthly expenses
- Enter monthly revenue (if any)
- See burn rate and runway
Why it matters: Accurate calculation shows cash consumption.
Monthly Burn Rate
What to calculate:
- Use our Monthly Burn Rate Calculator
- Enter total monthly expenses
- Enter monthly revenue
- See gross and net burn rates
Why it matters: Monthly burn rate shows cash outflow.
Pro tip: Calculate burn rate. Use our Burn Rate Calculator or Monthly Burn Rate Calculator for accurate calculation.
Gross vs. Net Burn
Understand the difference:
Gross Burn Rate
What it is:
- Total monthly expenses
- All cash going out
- Before revenue
- Shows total spending
Why it matters: Gross burn shows total cash consumption.
Net Burn Rate
What it is:
- Monthly expenses minus revenue
- Actual cash loss
- After revenue
- Shows net cash consumption
Why it matters: Net burn shows actual cash depletion.
Which to Use
When to use gross:
- Pre-revenue businesses
- Understanding total spending
- Planning expenses
When to use net:
- Revenue-generating businesses
- Understanding actual cash loss
- Calculating runway
Pro tip: Understand both. Gross burn for total spending, net burn for actual cash loss. Use the appropriate metric for your situation.
Calculating Runway
Calculate your runway:
Use Cash Runway Calculator
Calculate it:
- Use our Cash Runway Calculator
- Enter current cash balance
- Enter monthly burn rate
- See months remaining
Why it matters: Runway shows time until cash runs out.
Use Runway Calculator
Calculate it:
- Use our Runway Calculator
- Enter cash and burn rate
- See runway and scenarios
- Model different situations
Why it matters: Runway enables planning.
Pro tip: Calculate runway. Use our Cash Runway Calculator or Runway Calculator for accurate calculation. See our cash runway roadmap guide for comprehensive planning.
Monitoring Regularly
Monitor burn rate regularly:
Monthly Tracking
What to track monthly:
- Actual burn rate
- Comparison to previous month
- Trends over time
- Changes in spending
Why it matters: Regular tracking catches problems early.
Compare to Budget
What to compare:
- Actual burn vs. budgeted burn
- Variances and reasons
- Areas of concern
- Opportunities for improvement
Why it matters: Comparison shows accuracy and issues.
Watch for Changes
What changes to watch:
- Sudden increases
- Gradual increases
- Seasonal patterns
- One-time spikes
Why it matters: Early detection enables action.
Pro tip: Monitor regularly. Monthly tracking, compare to budget, watch for changes. See our monthly financial review guide for routine.
Taking Action
Take action based on burn rate:
When Burn Is Too High
What actions to take:
- Reduce expenses
- Increase revenue
- Extend runway
- Raise capital
Why it matters: Action prevents failure.
When Burn Is Acceptable
What actions to take:
- Maintain discipline
- Monitor closely
- Plan for growth
- Build reserves
Why it matters: Discipline maintains sustainability.
Use for Decisions
What decisions to use for:
- Hiring decisions
- Investment decisions
- Growth decisions
- Fundraising timing
Why it matters: Decisions improve outcomes.
Pro tip: Take action. Use burn rate for decisions, adjust when needed, maintain discipline. See our burn rate reduction sprint guide for action plan.
Your Next Steps
Calculate burn rate. Monitor regularly. Take action.
This Week:
- Review this guide
- Calculate your current burn rate
- Calculate your current runway
- Set up monthly tracking
This Month:
- Track burn rate monthly
- Compare to budget
- Identify any concerns
- Take action as needed
Going Forward:
- Monitor burn rate regularly
- Use for decisions
- Adjust spending as needed
- Maintain survival awareness
Need help? Check out our Burn Rate Calculator for burn rate calculation, our Monthly Burn Rate Calculator for monthly tracking, our Cash Runway Calculator for runway calculation, our Runway Calculator for comprehensive analysis, and our cash runway roadmap guide for comprehensive planning.
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Sources & Additional Information
This guide provides general information about burn rate calculation and interpretation. Your specific situation may require different considerations.
For burn rate calculation, see our Burn Rate Calculator.
For monthly burn rate calculation, see our Monthly Burn Rate Calculator.
For cash runway calculation, see our Cash Runway Calculator.
For runway analysis, see our Runway Calculator.
Consult with professionals for advice specific to your situation.
