1. What is Monthly Burn Rate?

The Monthly Burn Rate measures how quickly a company is spending its cash reserves over time. It's a key metric for startups and businesses to understand their financial runway and sustainability.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( \text{Starting Cash} \) — Cash balance at the beginning of the period (USD)
• \( \text{Ending Cash} \) — Cash balance at the end of the period (USD)
• \( \text{Months} \) — Duration of the period in months

Explanation: The formula calculates the average amount of money spent per month during the measured period.

3. Importance of Burn Rate Calculation

Details: Understanding your burn rate helps determine how long your current cash reserves will last, when you'll need additional funding, and whether your spending aligns with your business plan.

4. Using the Calculator

Tips: Enter starting and ending cash balances in USD, and the time period in months. All values must be positive numbers, with months greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What's considered a good burn rate?
A: This depends on your business stage and funding. Generally, you want a burn rate that gives you enough runway to reach your next milestone or funding round.

Q2: How does burn rate relate to runway?
A: Runway = Current Cash / Monthly Burn Rate. It shows how many months until you run out of money at current spending levels.

Q3: Should I include revenue in burn rate calculations?
A: Typically, burn rate is calculated as net cash spent (expenses minus revenue). For gross burn rate, use just expenses.

Q4: How often should I calculate burn rate?
A: Monthly calculations are common, especially for startups. More established businesses might do quarterly.

Q5: What factors can affect burn rate?
A: Hiring, marketing spend, R&D investments, seasonality, and changes in revenue all impact burn rate.