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← Statistics glossary

runway

How many months the founders or the business can keep going before the money runs out, at the current level of spending and income. Usually calculated as available cash divided by the net monthly burn.

Runway is the number of months a startup (or a founder) can keep going before the money runs out, if spending and income stay as they are. The formula is simple: runway = cash you can use ÷ net monthly burn, where net burn is monthly spending minus monthly income.

Two details make the number honest. First, "cash you can use" excludes any reserve you've promised yourself never to touch, such as three months of living costs for an emergency. Second, income only counts if it is steady: a side contract that could end next month deserves a second scenario with it removed. Founders who skip these details usually find their real runway is several months shorter than the one on their spreadsheet.

Runway is less a forecast than a deadline, and its main use is to set checkpoints. Pick a month well before the money ends (for example, halfway) to decide with numbers whether to continue, change course or go back to a job. Every month of revenue growth pushes the date further out; once revenue covers all spending, the runway is no longer a limit at all.

Example

Nina has 360,000 UAH of savings and spends 30,000 UAH a month. She keeps a reserve of 3 × 30,000 = 90,000 UAH that she won't touch, and a maintenance contract pays her 10,000 UAH a month.

Runway = (360,000 − 90,000) / (30,000 − 10,000) = 270,000 / 20,000 = 13.5 months. If the contract ends, it is 270,000 / 30,000 = 9 months. She puts a checkpoint at month 7. For both founders together (600,000 UAH of savings, 50,000 UAH a month, no income and no reserve) the runway would be 600,000 / 50,000 = 12 months.

Common mistakes

  • Using gross spending instead of net burn, or the other way round, counting income that isn't steady.
  • Spending the emergency reserve. Take it out of the cash before dividing.
  • Estimating spending from memory. Use the last three months of bank statements; "everything else" is almost always bigger than you think.
  • No checkpoint. A runway without a decision date just runs out; set the date while you can still change course.

Learn it in the course

  • Personal runway · How to calculate how many months you can live without income from the product, why you keep a reserve, and how many customers stop the countdown.
  • Money milestones · A ladder of sums you can check in the bank: which bill each milestone covers, what it changes in the founders’ week and which work can wait.
  • A yearly plan from day one · Monthly and yearly plans side by side: the discount, the cash up front, how a yearly customer counts in monthly revenue, and what it does to the runway.
  • Side project or full time? · Keeping the job while you start versus quitting, how co-founders with different finances agree on it, and how to protect time and energy either way.
  • Another city or another kind of shop? · A module case: compare two directions for growth, a new city with the same product or a new kind of customer at home, with the same numbers, and choose one.