What to do next
Show the working, step by step
Where I used this
As COO at Laser Treat, with finance in my remit, I cut about $0.5M a year from operating costs.
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Three ways to extend runway
- Cut costs that do not drive revenue. Start with tools, rent and contracts nobody would miss, before people.
- Bring cash in sooner. Collect what customers owe faster, and ask for deposits or payment up front where you can.
- Grow through channels that pay back fast. Put spend only where it returns inside your runway. Check each one with the CAC calculator.
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Cash running out faster than the plan?
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Questions
What is burn rate?
Gross burn is everything you spend in a month. Net burn is what you spend minus what you earn: the amount your cash actually falls each month.
How do you calculate runway?
Divide the cash you have by your monthly net burn. 600,000 in the bank with a net burn of 50,000 a month is 12 months of runway.
How much runway is enough?
Many operators aim for 12 to 18 months. Whatever your target, make cost or funding decisions while you still have at least six months left.