Burn Rate Calculator

Take the bank balance (all accounts combined) at the start of the period, subtract the balance at the end, and exclude one-off financing events like a loan received or owner capital injected. Do not use the profit-and-loss statement — accrual accounting counts revenue you have not collected and hides inventory purchases, so it routinely disagrees with the bank account.

Burn rate is the speed — dollars leaving per month; runway is the distance — months until the cash is gone, computed as cash on hand divided by monthly burn. A $15,000 burn is meaningless alone: with $150,000 in the bank it is ten months of life, with $30,000 it is an emergency.

Three to six trailing months is the sweet spot. Shorter than three months and a single inventory order or annual bill dominates the average; longer than six and the number reflects a business you no longer run. If you recently added staff or ad spend, also project forward burn from the new cost base.

Rank spending by contractual stickiness. Discretionary spend (paid ads below breakeven, contractors, unused tools) can stop this week. Inventory buys can shrink next order cycle. Fixed commitments — leases, salaries, annual contracts — take months, which is why burn problems must be attacked before the runway math forces it.