How many months can you operate before the cash runs out — and what happens if revenue changes.
Equipment, taxes, legal, deposits. These reduce cash immediately.
Optional. Use these to test a decision before you make it.
Cash runway
11.7 months
Monthly net burn
$6,000.00
Cash runs out around
October 2027
Break-even monthly revenue
$28,000.00
Cash left after one-off costs
$70,000.00
Gap to 6 months of buffer
+$34,000
| Month | Revenue | Expenses | Net | Cash at month end |
|---|
A business can report a profit and still fail. Profit is an accounting measure based on revenue earned and expenses incurred. Cash is what actually moves. The two diverge for two main reasons, and for a small business the first dominates.
Timing. You record revenue when you invoice, but the money arrives 30 to 60 days later. Meanwhile rent, payroll, and suppliers are paid immediately. A business with strong reported profit and slow collection from customers can run out of cash while looking healthy on paper.
Structure. Depreciation reduces profit without reducing cash. Equipment purchases and loan principal reduce cash without reducing profit. These matter less often but can be large.
Runway is the buffer that absorbs both. Most business disruptions are temporary — a slow quarter, a late payment, a season that underdelivers. Enough runway means you wait it out. Not enough means you make permanent decisions under pressure: cancelling insurance, losing key staff, or accepting unfavorable terms.
| Runway | What it usually signals |
|---|---|
| Under 3 months | Critical. One delayed invoice or slow month creates a crisis. |
| 3 to 6 months | Tight. Manageable with discipline, but any real setback forces action. |
| 6 to 9 months | Acceptable for a stable business with predictable revenue. |
| 9 to 12 months | Comfortable. The range most advisers and lenders look for. |
| Above 12 months | Very strong, or more cash than the current plan needs. Consider deploying it. |
Volatile revenue, dependence on one large customer, or seasonal swings each argue for holding more. Predictable recurring revenue on diversified customers supports holding less.
Use the growth and savings inputs above to test any of these before committing. Change one number at a time and compare the resulting runway.
Cash runway is the number of months a business can operate before its cash runs out, calculated by dividing current cash by the monthly net burn, which is total monthly outflow minus monthly revenue. Runway matters more than profit because a profitable business on paper can still fail if cash arrives late from customers or bills fall due before revenue lands. Under six months is generally treated as a warning sign.
Six months is a common minimum for a stable business with predictable revenue, and roughly the threshold where most lenders and investors feel comfortable. Volatile revenue, customer concentration, or seasonal swings generally argue for nine to twelve months. The strongest reason to hold more is that most disruptions are temporary: buffer means you can wait out a slow quarter instead of making permanent decisions such as cancelling insurance or losing key staff.
Profit is an accounting measure of revenue earned and expenses incurred. Cash reflects when money actually moves. Two common causes make them diverge. Timing: you record revenue on the invoice date but collect 30 to 60 days later, or you pay bills immediately while revenue is still outstanding. Non-cash and capital items: depreciation reduces profit without reducing cash, while equipment purchases and loan principal reduce cash without reducing profit. For small businesses, timing differences are usually the larger factor.
Four levers matter. Raise prices, which improves both margin and runway at once. Reduce fixed costs such as rent and subscriptions, which improves margin and slows burn together. Accelerate collections by requesting deposits, shortening invoice terms, or offering early payment discounts, which pulls cash forward without changing profit. And slow growth spending on marketing and equipment until revenue recovers. Increasing revenue also works, but only if the new revenue arrives with margin rather than requiring more spend first.