Runway is how long your cash lasts at your current burn: cash on hand divided by your monthly net burn (what you spend minus what comes in). Most small businesses want at least 3–6 months of runway so a slow month or a late-paying client never turns into a missed payroll.
The formula
Runway (in months) = cash on hand ÷ monthly net burn. If you have $30,000 in the bank and burn $6,000 a month more than you collect, you have five months of runway. If you're cash-flow positive, you technically have infinite runway — but you still want a reserve for the months you're not.
Net burn, not gross spend
Burn isn't just expenses — it's expenses minus the cash actually coming in. A business spending $40,000 a month but collecting $37,000 is only burning $3,000. Use collected cash, not invoiced revenue, because a client who pays in 60 days doesn't help you make payroll on Friday.
Why timing matters more than the average
An average month can hide a cash dip. Big quarterly tax payments, annual insurance, or a client paying late can all land in the same week. Mapping when cash actually arrives and leaves shows the exact week you'd run short — long before it happens.
Run your own numbers
Enter your bank balances, incoming payments, and expenses and the estimator returns your runway in weeks and flags the upcoming cash dips, so you can act before payroll gets scary.
Open the free Cash Flow Runway & Burn Estimator →
Frequently asked questions
How much runway should a small business keep?
A common rule of thumb is 3–6 months of operating expenses in reserve. Seasonal or project-based businesses often want more, because their income arrives in lumps while expenses are steady.
Is runway based on revenue or collected cash?
Collected cash. Invoiced revenue you haven't been paid for can't cover payroll. Always calculate burn and runway from money that's actually in — or reliably arriving in — the bank.
What if I'm cash-flow positive?
Then your runway is effectively unlimited at today's numbers — but keep a reserve anyway. One large tax payment, equipment failure, or slow month can flip a positive month negative without warning.