1. What is Burn Rate in Business?

Definition: Burn rate is the rate at which a company spends money (usually monthly) before generating positive cash flow.

Purpose: It helps startups and businesses understand their cash outflow and runway (how long they can operate before needing more funding).

2. How Does the Burn Rate Calculator Work?

The calculator uses the simple formula:

Explanation: Your burn rate is simply equal to your total monthly operating expenses.

3. Importance of Calculating Burn Rate

Details: Knowing your burn rate helps with financial planning, investor reporting, and determining how long your current funding will last.

4. Using the Calculator

Tips: Enter your total monthly operating expenses in dollars. Include all fixed and variable costs.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between gross and net burn rate?
A: Gross burn is total monthly expenses. Net burn includes revenue (total expenses minus income).

Q2: What's a good burn rate for a startup?
A: This varies by industry and stage, but typically investors want to see controlled burn that gives 12-18 months of runway.

Q3: How do I reduce my burn rate?
A: Cut unnecessary expenses, optimize operations, delay non-critical hires, and negotiate better terms with vendors.

Q4: How does burn rate relate to runway?
A: Runway = Cash Reserves ÷ Burn Rate. It shows how many months you can operate at current spending.

Q5: Should burn rate be calculated weekly or monthly?
A: Monthly is standard, but early-stage startups sometimes track weekly for tighter control.