Calculate your startup's financial runway based on cash reserves and burn rate.
A startup's runway is the amount of time it has before it runs out of cash. Calculating your runway is crucial for financial planning and making informed decisions about your business.
The runway is typically calculated by dividing the current cash balance by the monthly burn rate. This gives entrepreneurs and investors a clear picture of how long the startup can operate before it needs to become profitable or secure additional funding.
According to a study by CB Insights, 29% of startups fail due to running out of cash. Therefore, accurately calculating your runway is vital for avoiding this fate.
| Cash Balance | Monthly Burn Rate | Runway |
|---|---|---|
| $100,000 | $10,000 | 10 months |
| $500,000 | $20,000 | 25 months |