Spend check

Burn rate is the cost of staying open.

Use it to see the real monthly cash drain after revenue, then decide whether the business can support the same pace of spend for another quarter.

Check runwayReview MRRCheck paybackCheck churn

Worked example

Gross burn and net burn are not the same thing.

If the business spends $80,000 per month and brings in $30,000 of revenue, the net burn is $50,000. That is the number that matters for runway. If one-off costs push burn up for a month or two, separate them from the baseline before you decide the model has changed.

A clean burn-rate read is usually the first step before a hiring, fundraising, or pricing decision.

Interpretation

What to do with the result

  • Use burn rate to see whether the cost base is controllable or already locked in.
  • Compare it with runway so you know how long the current pace can continue.
  • Check MRR and retention if revenue is expected to cover part of the spend.
  • Use payback when growth spend is the thing driving the burn.

Burn check

Burn Rate Calculator

Measure how fast cash is moving out of the business over a chosen period. Use the result to spot a rising burn before it becomes a runway problem.

Check runwayReview MRR
Editorial desk scene with a laptop showing declining cash burn charts and planning materials
Burn rate

A burn-rate image that reads like a finance review

The composition keeps cash, charts, and planning tools in the frame so the risk feels concrete without looking staged.

Gross burn

$60,000

Net burn

$18,000

Observed burn

$18,000

Burn as % of starting cash

10.0%

Interpretation

The observed burn uses the cash balance change over the tracked period. Gross burn is the monthly cost base before revenue. Net burn is the amount left after revenue offsets operating spend.

If observed burn is higher than net burn, the business may be carrying payments, inventory, or other timing effects that deserve a closer look.

How burn rate Works

Burn rate measures how quickly cash leaves the business over a period. The cleanest comparison uses both actual cash movement and the operating model so you can separate a real spending problem from a temporary timing issue.

Formula

Observed burn = (Starting cash - Ending cash) / Months tracked

Key Features

  • ✓Compares start and end cash for a chosen period
  • ✓Shows gross burn versus net burn
  • ✓Highlights burn as a share of starting cash
  • ✓Pairs naturally with runway and revenue checks

Pro Tip

If cash balance is falling faster than the budget says it should, look for payroll timing, one-time invoices, refunds, or inventory build-up before assuming the model itself is wrong.

Reference links

SBA cash flow managementStripe Billing docsHarvard Business Review finance articles

Related tools

Continue your workflow with the next useful tool.

These links stay within the same decision path so you can move to the next calculation without starting over.

Cash Runway CalculatorSee how long cash lasts once you know the net burn.Monthly Recurring Revenue CalculatorCheck whether recurring revenue is strong enough to change the burn curve.Payback Period CalculatorSee how quickly acquisition cost recovers from contribution profit.

How these links are chosen

We only link to closely related pages so each next step supports the same decision.

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