Definition
The rate at which a company spends its cash reserves each month, net of revenue.
Why it matters for growth
Burn rate combined with cash on hand determines exactly how many months a company has before it must raise, cut costs, or become profitable.
Example
A startup spending $120,000 more than it earns each month has a burn rate of $120,000.
FAQ
- What is Burn Rate?
- The rate at which a company spends its cash reserves each month, net of revenue.
- Why does Burn Rate matter for growth?
- Burn rate combined with cash on hand determines exactly how many months a company has before it must raise, cut costs, or become profitable.
- What is an example of Burn Rate?
- A startup spending $120,000 more than it earns each month has a burn rate of $120,000.