How to calculate startup runway

Summary

Runway is how many months you can keep operating at your current burn rate. Divide cash in the bank by monthly expenses minus revenue.

Runway is how many months you can operate before cash runs out at your current burn rate. Bootstrapped founders should know this number cold. It drives hiring, pricing, and side-job decisions.

The formula

Runway (months) = Cash in bank ÷ Net monthly burn

Net monthly burn = expenses minus revenue in a typical month. If you spend $8,000 and earn $3,000, net burn is $5,000/month.

Worked example

$30,000 in the bank. Net burn $5,000/month. 

Runway = $30,000 ÷ $5,000 = 6 months

What counts in burn

  • Include: salaries (including your own draw), software, hosting, contractors, tax set-asides.
  • Include one-time costs in the month they hit, or average them if predictable.
  • Revenue: use collected cash or conservative MRR, not pipeline or annual deals counted all at once.

When to recalculate

Recheck runway when MRR moves meaningfully, you add a hire, or a big expense lands. Monthly is enough for most solo founders. Weekly during a cash crunch.

Runway and MRR together

Rising MRR extends runway only if expenses stay flat. Many founders reinvest growth back into ads or help, so burn rises with revenue. Track both numbers on the same sheet.

See how to calculate MRR for the revenue side of the equation.