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Burn Rate

Also known as: cash burn, monthly burn

The rate at which your company spends cash each month, showing how quickly you're depleting your bank balance.

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.

How it helps you

How fast you're spending cash each month, the input that decides your runway and whether you're default alive or dead.

#finance#burn#cash#profitability#spending#analytics#fundraising#operations

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