Startup Finance
Runway is the most important metric every founder must know. We explain how to calculate it, how to interpret it, and what to do if it's short.
Runway, P&L, treasury and CFO advisory in real time. No Excel. No headaches.
Create a free accountIf you run a startup or a growing small business, there is one metric that matters more than any other: your Runway. It answers a very simple and very uncomfortable question: how many months can you keep operating before you run out of money?
In this guide we explain what it is, how to calculate it step by step, how to interpret it depending on your stage, and what to do when the number you see is not the one you want. At the end you will find a free calculator to work it out in seconds.
Runway (as in a plane's take-off strip) is the number of months your company can keep operating with the cash it has in the bank, assuming your current expenses and revenue stay the same. It is a snapshot of how much time you have left before you need to raise capital, cut costs or generate more revenue.
For founders it is probably the most critical metric in the business. It does not matter how many users you have, how many features you have shipped or how good your technology is: if your Runway hits zero, it is over.
The basic formula is straightforward:
Where the burn rate is how much money you lose (or burn) each month
The burn rate is the difference between your monthly expenses and your monthly revenue. If you spend more than you bring in, you are "burning" money every month — that is your burn rate.
It helps to distinguish two variants:
Say you have a SaaS startup with these numbers:
Your net burn rate is: $25,000 − $10,000 = $15,000/month
Your Runway is: $150,000 ÷ $15,000 = 10 months
Those 10 months are the time you have before you run out of cash, if everything stays the same. Spoiler: nothing ever stays the same.
The answer depends on your stage, but these are the benchmarks the startup world works with:
Red zone. You should be actively raising capital or cutting costs TODAY.
Yellow zone. Start preparing your next round or your break-even plan.
Green zone. You have room to execute, experiment and reach solid metrics.
The classic Silicon Valley benchmark is 18-24 months after each round. Any less than that and you are running too tight.
It is easy to forget annual payments (SaaS tools, insurance, taxes). Review your last 3 full months and adjust for recurring charges that are not monthly.
Runway should be calculated with revenue that is already invoiced and collected. Projections are a different thing (that is your financial model). Be conservative here.
Your Runway changes every month. It should be a metric you review weekly. Many founders only calculate it when it is already too late.
You have four levers, in order of impact:
No sign-up. Enter your numbers and get the result instantly.
Calculating your Runway does not solve the problem, but it gives you something many founders do not have: clarity on how much time you have to act. And in startups, time is the one resource you cannot replace.
The best decision you can make today is to measure it. The second best is to automate it, so you do not have to recalculate it by hand every week. That is exactly why we built Hayes Strategic: so your critical metrics are always up to date without you touching a spreadsheet.