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Formula, in Runway & Cash Planning

Startup Runway Formula

The Startup Runway Formula helps entrepreneurs determine how many months their business can operate before running out of cash, based on current funds and expenditure rate. It's a critical metric for strategic planning and fundraising.

3 variables. Published Mar 12, 2026. Updated Oct 5, 2026. By AI Biz Hub.

Formula
Runway Months = Cash On Hand / Net Monthly Burn (Monthly Burn − Monthly Revenue), simulated month by month when revenue grows

Variables

RM

Runway Months

The number of months the company can operate before cash runs out at the current burn rate. The single most important survival number for a startup.

COH

Cash On Hand

Total cash currently available, in currency units (bank balance plus committed, accessible funding). The denominator of survival.

MB

Monthly Burn

The average net cash spent per month, in currency units (expenses minus revenue). If the company is cash-flow positive, runway is effectively unlimited.

Step by step

  1. 1

    Set the baseline case with the real calculator inputs.

    Cash On Hand = $150,000, Monthly Burn = $25,000, Monthly Revenue = $5,000, Revenue Growth Pct = 5.00%

  2. 2

    Use net monthly burn (cash out minus cash in), not gross expenses, so the runway reflects revenue already offsetting costs.

    Gross spend 60,000 less 20,000 revenue gives a 40,000 net monthly burn.

  3. 3

    Apply the formula and read the first calculator outputs, not just the headline assumption.

    The calculator lands with runway months at 7.9: cash runs out in month 8, which it names as a calendar month counted from the current month.

  4. 4

    Re-run against a reduced-burn scenario to see how much runway a hiring freeze or cost cut buys before the next funding event.

    Cutting net burn from 40,000 to 30,000 extends a 12-month runway to 16 months.

Worked example

Startup Runway sample case

Cash On Hand

$150,000

Monthly Burn

$25,000

Monthly Revenue

$5,000

Revenue Growth Pct

5.00%

Runway Months = Cash On Hand / (Monthly Burn − Monthly Revenue), stepped month by month as revenue grows, using cash on hand $150,000, monthly burn $25,000, monthly revenue $5,000, revenue growth pct 5.00%.

The calculator lands with runway months at 7.9, with cash running out in month 8. Growing revenue stretches the flat cash-over-net-burn figure of 7.5 months to 7.9.

Common variations

Scenario variants are useful because fixed assumptions rarely survive contact with real life unchanged.
Use Startup Runway Calculator to compare the baseline result with one stressed case before relying on a single answer.

Run the numbers next

Sources

  1. Understanding Startup Burn Rate and Runway , Investopedia
  2. Startup Metrics: The Definitive Guide to Burn Rate and Runway , Forbes

Keep the topic connected

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  • Learn What Is Burn Rate? Meaning, Formula & Runway

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