Finance
Runway
How many months of operations the business can sustain at the current cash balance and net burn rate.
Calculated as current cash ÷ net monthly burn. Tells you how long until you must either grow into profitability, raise capital, secure debt, or cut costs.
For SMBs, runway is a planning anchor: a business with 4 months of runway needs to act NOW; a business with 18 months can absorb a slow quarter without panicking.
Lenders and bankers ask for runway calculations as part of any working-capital line or term loan underwriting.
Common pitfalls
- Calculating on monthly average burn — masks the worst-month risk
- Treating accessible lines of credit as 'cash' (they are not — they're contingent debt)
- Excluding upcoming lump-sum payments (annual taxes, large bonuses) from the burn projection
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