All terms
Finance
Runway
The number of months a company can continue operating at its current rate of cash consumption before running out of money.
By Maya Okonkwo · Last updated May 19, 2026
In plain English
How long you have before you go broke at today's spending. The single most important number for any business burning cash.
Example
$120,000 in the bank, losing $15,000 per month after revenue, runway = 8 months.
Formula
Runway (months) = Cash on hand / Net monthly burn
Why it matters
Below 12 months, your job shifts from building to acquiring customers. Below 6 months, every decision is a cash-flow decision. Below 3, fundraising or significant cost-cutting are the only real options.
Common mistakes
- Computing runway based on gross burn instead of net burn (overestimates by months)
- Forgetting to include taxes, contractor payments, and annual fees in monthly burn
- Updating runway monthly instead of weekly when below 6 months