What is runway and how do I work out mine?

What runway actually is

Runway is how many months of cash your business has left if nothing changes.

That's the whole idea. It's the answer to the one question that keeps founders awake at 3am: how long until the money runs out? Runway turns that vague, gnawing fear into a clear number — "about eight months" — and a number you can see is far less frightening than a fear you can't.

The word comes from aeroplanes. A plane needs enough runway to get off the ground before it runs out of tarmac. Your business needs enough cash to reach the point where it's flying on its own — covering its own costs, or having raised more money — before the cash runs out. Runway is simply how much tarmac you've got left.

It's measured in months, because months are how founders actually think. "Seven months of runway" tells you instantly how much breathing room you have. It's probably the single most useful number a founder can know.

The two numbers you need first

To work out your runway, you need just two things. Both are numbers you can find in minutes.

Your cash. The actual money in your business bank account right now. Not your profit, not your sales — the real balance you could spend today. If you've got money sitting in more than one account, add them up. (If some of that "cash" is really money customers owe you but haven't paid, leave it out — runway is about money you actually have, not money you're hoping for.)

Your burn. This is how much cash your business spends each month over and above what it brings in. If you spend £20,000 a month and bring in £12,000, you're burning £8,000 — that's the gap your savings have to cover. Burn rate (the speed your cash drains) is just that monthly shortfall.

A quick note that trips people up: if your business brings in more than it spends, you're not burning cash at all — you're building it. In that happy case you have effectively unlimited runway, and this calculation is one you don't need to worry about. Runway matters most when you're spending faster than you're earning, which is normal for a young or growing business that's investing ahead of its income.

The runway formula (it's just one division)

Here's the entire calculation. No accounting required.

Runway = cash ÷ monthly burn.

That's it. Take the money you have, divide it by how much you lose each month, and you get the number of months your cash will last. One division. You could do it on the back of an envelope.

The logic is exactly what your gut already knows: if you've got £80,000 and you lose £10,000 a month, you've got eight months. If you lose £20,000 a month, you've got four. The bigger your burn, the shorter your tarmac — which is why getting your burn down is the fastest way to buy yourself more time.

A simple worked example

Let's run a real one. Say you run a small software business.

You check your bank account. You have £90,000 in cash.

Now your burn. Last month you spent £25,000 on salaries, software, rent and bits and pieces. In the same month, customers paid you £10,000. So your burn is the gap:

£25,000 spent − £10,000 earned = £15,000 burn per month.

Now the runway:

£90,000 ÷ £15,000 = 6 months of runway.

So at your current pace, your cash lasts about six months. That's your number. It's not a prophecy — it assumes nothing changes — but it tells you exactly where you stand today, and it tells you something important: if you're planning to raise money or get to break-even, you need that to happen comfortably inside six months, not on month six with the tank empty.

One tip on the burn figure: don't take a single freak month. If last month had a big one-off cost (a year's insurance, a new laptop for everyone), average the last three months instead, so your runway reflects normal life rather than a blip.

Why runway is worth knowing even when things are fine

It's tempting to only think about runway when money feels tight. That's backwards. The best time to know your runway is when things are calm — because that's when you have the room to act on it.

Runway converts anxiety into a plan. "I have six months" tells you how urgent fundraising is, whether you can afford that hire, how hard to push on sales, and when you'd need to trim costs if nothing else changes. A founder who knows their runway makes deliberate decisions. A founder who doesn't is guessing — and usually finds out the truth far too late, when the options have shrunk to bad ones.

It also reframes every cost. Once you know that £15,000 of monthly burn buys you six months, you start to see spending in terms of time. Cutting £3,000 a month off your burn isn't just "saving three grand" — it stretches your runway from six months to seven and a half. That extra month and a half might be exactly what you need to land a big client or close a round. Runway makes the trade-offs visible.

The three levers that change your runway

If your runway is shorter than you'd like, there are only three things you can do — and it helps enormously to know it's just three.

Bring cash in faster. Chase overdue invoices, ask new customers for a deposit, get on top of the money you're already owed. This doesn't change your profit, but it puts real cash in the account, which is what runway is made of.

Spend less. Lower your burn and every pound of cash lasts longer. This is the most direct lever — the example above shows how even a modest cut stretches the timeline.

Earn more. Sell more, raise prices, improve your margins so each sale leaves more behind. Higher income shrinks the gap between what comes in and what goes out, which shrinks your burn.

That's the entire toolkit. You don't have to pull all three at once — usually the easiest one buys you enough time to work on the others.

The short version

Runway is how many months of cash you have left at your current burn. Work it out with one division: cash ÷ monthly burn. Use the last few months' average for burn so a freak month doesn't skew it. Know it when things are calm, not just when they're scary — because it turns a 3am fear into a clear number, and a clear number you can actually plan around.

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Ready to stop doing this on the back of an envelope? In Ledgers, your runway and burn are worked out for you automatically from your bank feed — always current, always one glance away, no spreadsheet to maintain. See your numbers without learning accounting → start free. Or try it first with our free runway calculator →.

Raising soon? Here's how lenders and investors think about it: How much runway do you need to raise? →

New to all this? Start here: How to read your numbers when you hate numbers →

Frequently asked questions

How do I calculate my runway?

Divide your cash by your monthly burn. If you have £90,000 and burn £15,000 a month, that's six months of runway. Use an average of the last few months for burn so a one-off cost doesn't distort the figure.

What's the difference between runway and burn rate?

Burn rate is how much cash you lose each month (what you spend minus what you bring in). Runway is how many months that burn can continue before the cash runs out. Runway is cash divided by burn.

How much runway should a business have?

A common rule of thumb is to keep at least six months, and to start raising money when you have around twelve months left, so you're negotiating from strength rather than desperation. The right number depends on how predictable your income is.

Does runway include money customers owe me?

No. Runway is built on cash you actually have, not money you're owed. Unpaid invoices help your overall position, but until they're paid they don't extend your runway — which is exactly why chasing them matters.

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