← Glossary Business

Burn Rate

The monthly cash loss of a company that isn't profitable yet.

Explained simply.

Burn rate is how fast you're spending money faster than you're making it. Typically shown as a monthly dollar figure: 'we're burning $300k/month.' Paired with your cash-on-hand, this tells you your runway, how long until you run out. Every unprofitable startup obsesses over burn rate and runway.

An example.

You have $3M in the bank. You spend $500k/month, make $200k/month. Burn is $300k/month. Runway is $3M / $300k = 10 months. That's how long you have to either become profitable or raise more money. After that, the business dies.

Why it matters.

Burn is the countdown. Most founders under-estimate it until they can see the wall. Know your burn to the dollar, your runway to the month. Revisit monthly. When burn creeps up faster than revenue, you have a problem worth solving this quarter, not next.