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 four 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
Related service
See fractional CFO servicesRelated guides
Related terms
Have a Runway situation in your business?
One team covering bookkeeping through fractional CFO, so the figure you just read about comes out of a ledger you can stand behind.