cashflow
Runway
Months you can keep operating at current burn before running out of cash.
Definition
Runway is bank balance divided by net monthly burn rate. $300K in the bank with $25K/month burn = 12 months runway. The benchmark for service businesses: 6 months is minimum survival cushion, 12+ months is comfortable, 18+ months means you can take strategic bets without panic. Runway below 9 months should trigger expense scrutiny; below 6 months should trigger emergency action: cut costs, raise capital, or accelerate collections.
In your business
- →Update weekly
- →Below 9 months: pause non-essential hires and discretionary spend
- →Below 6 months: urgent action - cut costs, factor receivables, or raise capital