What it is
Burn rate is how much cash your company consumes per month. It's the engine behind your runway calculation.
Facts
- Gross burn = total monthly cash spent (all operating costs).
- Net burn = gross burn minus monthly revenue, the true rate your bank balance falls.
- Example: $80k spend and $30k revenue = $50k net burn.
- Default alive means growth would make you profitable before cash runs out; default dead means it wouldn't.
Who it's for
Every founder managing a bank balance, critical for pre-profit startups.
How it helps you
Tracking burn lets you calculate runway, decide on hires and spending, and know whether you're trending toward profitability or a cash crisis.
Caveats
Don't confuse gross and net burn. They can differ dramatically. Burn can spike from one-off costs, so watch the trend, not just a single month.
Conclusion
Burn rate is how fast you're spending; watch net burn monthly and pair it with runway to stay ahead of a cash crunch.
