How to calculate startup runway

Runway is the single most important number a startup tracks. It tells you how much time you have left to reach profitability, close your next round, or make a course correction before the money runs out. Yet most founders don't know their runway to within a few weeks — they rely on a monthly spreadsheet that's already stale by the time it's updated.

Here's how to calculate startup runway correctly, avoid the common mistakes, and keep the number current.

The formula

Runway (months) = Cash balance ÷ Net monthly burn

Two inputs:

Cash balance — the total of your bank and cash accounts right now. Use the current balance, not last month's ending balance.
Net monthly burn — the net cash consumed per month. This is operating cash outflows minus operating cash inflows, averaged over a trailing window (3–6 months is common).

If your cash balance is $600,000 and your net burn is $75,000 per month, your runway is 8 months.

Gross burn vs net burn

It's worth being precise about terms:

Gross burn is total cash spent — payroll, rent, software, vendors, everything. It's your total operating cash outflows.
Net burn is gross burn minus any cash inflows (revenue, interest, etc.). Net burn is what actually shrinks your reserves.

For a pre-revenue startup, gross burn and net burn are the same. Once you're generating revenue, net burn is the right number for runway: it tells you how fast your cash pile is actually diminishing.

Where to get the data

If you're on QuickBooks Online:

Cash balance: your Balance Sheet → Bank and Cash Accounts section. Sum all bank and cash accounts.
Operating cash flow: your Statement of Cash Flows → Net Cash Provided by (Used in) Operating Activities. A negative number means cash is leaving.

Average the operating cash flow over 3–6 months to smooth out one-time items (like a big vendor payment or a quarterly tax deposit).

Common mistakes

Using the wrong cash figure. Accounts receivable is not cash. Neither is a credit line you haven't drawn. Only include funds you can actually spend today — bank balances, money market accounts, and similar liquid assets.

Using a single month's burn. One month is noisy. A big payroll run, an insurance payment, or a slow collection month can make your burn look dramatically different than it really is. A 3-month trailing average is a more reliable signal.

Ignoring seasonality. If your business has seasonal spend patterns (holiday hiring, annual software renewals), a short trailing average can mislead. Consider whether the next 6 months look like the last 3.

Forgetting committed spend. If you've signed a lease or made a hiring offer, that spend is coming even if it hasn't hit your books yet. Factor in known future commitments.

Not updating it often enough. A runway number that's 6 weeks old is almost useless. You want to know where you stand today.

How to keep runway current

The hardest part isn't the formula — it's maintaining a live number without spending hours in a spreadsheet every week.

The most reliable approach is to connect directly to your accounting system. QuickBooks Online exposes your Balance Sheet and Statement of Cash Flows via API. A tool that pulls those reports continuously can recompute your runway automatically whenever your books are updated — no manual export, no formula errors.

If you're doing it manually:

Set a weekly calendar reminder to check your bank balance and update the number.
Keep a simple rolling 3-month table of net burn and update it each time you close a month.
Note the date next to your runway figure so you always know how stale it is.

The cash-zero date

Runway in months is useful; a calendar date is even more useful. "We have 7.5 months of runway" is abstract. "Our cash hits zero on January 15" is concrete — and it focuses the mind.

The cash-zero date is simply today's date plus your runway in days. If you have 7.5 months and today is June 1, your cash-zero date is approximately January 15. That's the date you need to either be profitable, have a term sheet signed, or have executed on a bridge.

Knowing that date gives you a hard backstop to plan backward from.

Updating runway in real time

RunwayWatch connects to QuickBooks Online and recomputes your runway, burn rate, and cash-zero date automatically — no spreadsheet required. When your balance or cash flow changes, your number updates. You can also model scenarios: what does runway look like if we cut 20% of spend? What if we land a $50k/month contract?

The goal isn't a precise forecast — cash flow is inherently uncertain. The goal is to always know the order of magnitude of your situation and to have enough lead time to act.

Start with the formula above. Keep it current. Know your cash-zero date. That's the minimum viable runway discipline for any startup.