cashflow
Burn Rate
Monthly net cash outflow. How fast you're depleting reserves.
Definition
Burn rate is monthly cash outflow minus cash inflow. If you spend $80K/month and bring in $50K, your net burn rate is $30K/month. Gross burn is the $80K total outflow. Both matter for different decisions: gross burn shows fixed-cost exposure (what could be cut), net burn shows actual depletion of reserves. Even profitable businesses have a 'burn' in tight months - the metric is universally relevant, not just for startups.
In your business
- →Compare to bank balance to get runway in months
- →Track week-over-week to catch acceleration early
- →When tightening, reduce gross burn first (cut costs), not just net burn (chase revenue)