1. What is Burn Rate Percentage?

Definition: Burn rate percentage measures how quickly a company is spending its cash reserves relative to its total cash balance.

Purpose: It helps businesses understand their cash runway and financial sustainability, especially important for startups and growth companies.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• Burn Rate % — Percentage of cash balance being spent monthly
• Monthly Expenses — Total operating expenses per month
• Cash Balance — Total available cash reserves

Explanation: The formula shows what percentage of your total cash is being spent each month, indicating how long your funds will last.

3. Importance of Burn Rate Calculation

Details: Monitoring burn rate helps businesses:

• Determine financial runway (how many months until cash runs out)
• Make informed decisions about fundraising or cost-cutting
• Assess financial health and sustainability

4. Using the Calculator

Tips: Enter your total monthly operating expenses and current cash balance. Both values must be greater than 0.

5. Frequently Asked Questions (FAQ)

Q1: What's a good burn rate percentage?
A: It depends on your business stage. Early-stage startups might have higher rates (10-20%), while established companies aim for lower (1-5%).

Q2: How does burn rate relate to runway?
A: Runway (in months) = 100 / Burn Rate %. A 10% burn rate means ~10 months of runway.

Q3: Should I include one-time expenses?
A: For accurate ongoing burn rate, exclude one-time costs. For total cash planning, include them.

Q4: How often should I calculate burn rate?
A: Monthly is standard, but startups might track it weekly or bi-weekly.

Q5: What if my burn rate is negative?
A: Negative burn rate means you're adding more cash than spending (profitability).