Definition
What is Business Runway?
How long a business can operate at its current burn rate before running out of cash.
Runway is the number of months a business can continue operating given its current cash balance and monthly net burn (cash out minus cash in). It is a critical survival metric for pre-revenue startups and bootstrapped businesses running at a loss. Most advisors recommend maintaining 12–18 months of runway as a minimum buffer.
Formula
Runway (months) = Cash Balance ÷ Monthly Net BurnExample
A startup with $300,000 in the bank and $25,000 monthly net burn has 300,000 ÷ 25,000 = 12 months of runway.