17d • General discussion
This week's number: Cash Runway — how many months your business can keep operating before it runs out of cash, if nothing changes.
Why this one matters
If there's a single number that lets you sleep at night, it's this one. Cash runway answers the question every founder is quietly carrying around: "How long do I actually have?"
Profit on paper doesn't pay your bills — cash does. You can be "profitable" and still run out of money because a big client pays late or you stocked up on inventory. Runway cuts through all of that. It tells you, in plain months, how much time you've got at your current pace of spending.
Once you know it, you can make calmer, faster decisions:
- 12+ months? You have room to invest — a hire, a marketing push, better equipment.
- 6–12 months? Steady as you go. Keep an eye on it and grow deliberately.
- Under 6 months? Not a crisis, but it's your cue to act early — chase overdue invoices, trim non-essential spend, or line up a plan. Founders who watch this number make their moves from a position of calm, not panic.
The whole point of clean books is being able to open them and make a decision in minutes. This is that number.
The simple math
Cash Runway (in months) = Cash you have right now ÷ Average monthly net burn
Where net burn = how much more cash goes out than comes in in a typical month.
Quick example: You have $60,000 in the bank. Over the last 3 months you spent about $10,000 more than you brought in each month. That's $60,000 ÷ $10,000 = 6 months of runway.
(One happy note: if you're bringing in more cash than you spend, you don't have a burn rate to worry about — you're building a cushion. In that case runway is effectively "as long as this keeps up," and you can skip straight to deciding how to put that surplus to work.)
How to pull it — step by step
You need two things: cash on hand and average monthly net burn. Here's exactly where to click.
If you use QuickBooks Online
Step 1 — Get your cash on hand.
- In the left menu, go to Reports.
- Search for and open Balance Sheet.
- Set the date to today.
- Look at the Bank Accounts total near the top of the Assets section. That's your cash on hand. Write it down.
Step 2 — Get your monthly net burn.
- Go back to Reports and open Statement of Cash Flows.
- Set the date range to the last 3 full months (e.g., the previous three completed months).
- Look at the bottom line: Net cash increase (or decrease) for the period.
- If it's a decrease (a negative number), that's your total burn for 3 months. Divide it by 3 to get your average monthly burn.
Step 3 — Do the division. Cash on hand ÷ average monthly burn = your runway in months.
If you use Xero
Step 1 — Get your cash on hand.
- Go to Accounting → Reports.
- Open the Balance Sheet.
- Set the date to today and run the report.
- Add up your bank account balances (under Assets). That's your cash on hand.
Step 2 — Get your monthly net burn.
- From Reports, open the Statement of Cash Flows (or the Cash Summary report).
- Set the range to the last 3 full months.
- Find the net change in cash for the period.
- If cash went down, divide that total drop by 3 for your average monthly burn.
Step 3 — Do the division. Cash on hand ÷ average monthly burn = your runway in months.
No accounting software yet? (or want a 2-minute gut check)
- Note today's bank balance.
- Look at your bank balance from 3 months ago.
- Subtract to see how much it dropped, then divide by 3 → average monthly burn.
- Today's balance ÷ that number = your runway.
(This quick version ignores money that's owed to you or bills you owe — it's a rough read, not a replacement for your books. But it'll get you in the ballpark in two minutes.)
👇 Your turn
Pull your number this week and drop it in the comments (a rough range is totally fine — "around 8 months" works). Tell us one decision it helps you feel clearer about. And if you get stuck finding a report, reply here and we'll walk you through it.
Knowing your runway is the difference between reacting and steering. Let's steer. 🚀
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This week's number: Cash Runway — how many months your business can keep operating before it runs out of cash, if nothing changes.
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