Definition
Runway estimates how many months you can operate before running out of cash at the current net burn.
Formula
Runway (months) = cash balance / net monthly burn
Example
If cash balance is $1.2M and net burn is $150k/month, runway ~ $1.2M / $150k = 8 months.
How to use it
- Use net burn (cash outflows minus cash inflows), not accounting losses.
- Recalculate runway whenever revenue, collections, or spend changes materially.
Common mistakes
- Using gross burn instead of net burn (runway becomes overly pessimistic).
- Ignoring working capital timing (AR/AP) and deferred revenue effects.
Why this matters
This term matters because cash timing and risk are usually the difference between a plan that works on paper and a plan that survives. Use consistent definitions so decisions are comparable over time.
Practical checklist
- Write a 1-line definition for "Runway" that your team will use consistently.
- Keep the time window consistent (weekly/monthly/quarterly) when comparing trends.
- Segment results (channel/plan/cohort) before drawing big conclusions from blended averages.
- Use a calculator that references this term (e.g., Cash Runway Calculator) to sanity-check assumptions.
- Read the related guide (e.g., Cash runway: how to estimate burn, break-even, and survival time) for context and common pitfalls.
Where to use this on MetricKit
Calculators
- Cash Runway Calculator: Estimate runway from cash balance, revenue, gross margin, and operating expenses (optionally with revenue growth).
Guides
- Cash runway: how to estimate burn, break-even, and survival time: A practical guide to runway: net burn, gross profit, break-even revenue, and how to avoid common cash planning mistakes.
- Cohort payback curves: how to model payback with early churn: A practical guide to cohort payback: why payback matters for survival, how early churn affects payback, and how to improve it.
- Unit economics hub: CAC, LTV, payback, and runway (a practical stack): A practical hub for unit economics: CAC, fully-loaded CAC, LTV, payback, margin impacts, burn multiple, and runway planning.
- Runway and burn: gross vs net burn, working capital, and cash levers: A practical guide to runway: compute net burn, understand why cash differs from profit, and how working capital and collections change runway.
- Pipeline coverage and sales cycle math: set realistic targets (and avoid sandbagging): A practical guide to pipeline coverage: connect quota, win rate, sales cycle length, and CAC/payback constraints to set realistic growth targets.