Burn rate is the amount of cash your business spends in a typical month. It’s especially useful for tracking cash flow in businesses that are in growth mode, seasonal, or not yet consistently profitable.
We’ll show you two types:
Gross Burn Rate: Your total monthly expenses
Net Burn Rate: Monthly cash outflow minus any revenue
For example:
If your business spends $60,000 per month and brings in $40,000 in revenue, your net burn rate is $20,000/month.
This tells you how fast your available cash is decreasing - it’s like a “speedometer” for your bank account.
Why This Matters: Runway
By knowing your burn rate, we can calculate your runway—how many months your business can operate at the current pace before needing additional cash.
Runway = Cash on hand ÷ Net burn rate
This gives you greater visibility into your financial safety margin and helps with smarter decision-making.
Let’s Talk About It
If you have questions about how Burn Rate applies to your business or want help planning around it, let’s schedule a quick call. We’re here to help you not just keep the books—but use them to build a stronger business.
Sara Wolfe
By The Books
682-220-9288
bythebooks.biz