Definition
The net amount of cash a company spends per month beyond what it earns in revenue.
Formula
Monthly cash out - Monthly cash in (revenue)
How to measure
Subtract total monthly revenue collected from total monthly cash expenses across payroll, tools, and overhead.
Why track it
Burn rate combined with cash on hand tells a founder exactly how much runway remains before a hard deadline to raise or cut costs.
Example
A startup spending $150,000 and collecting $30,000 in revenue has a $120,000 monthly burn rate.
FAQ
- What is Monthly Burn Rate?
- The net amount of cash a company spends per month beyond what it earns in revenue.
- How do you calculate Monthly Burn Rate?
- Monthly cash out - Monthly cash in (revenue)
- Why track Monthly Burn Rate?
- Burn rate combined with cash on hand tells a founder exactly how much runway remains before a hard deadline to raise or cut costs.