Free tool No. 1
Burn rate calculator
and what George thinks of itGross burn, net burn, runway, and the month your cash hits zero. Then my verdict, whether you want it or not.
Your numbers never leave this page.
The fine print, in plain English
How I read a burn rate.
What burn rate is. The speed your bank account shrinks. That's it. Everything else is decoration.
Gross vs net. Gross burn is every dollar out the door. Net burn is what's actually gone after revenue comes back. I care about both. Gross tells me your habits. Net tells me your clock.
The runway formula. Cash in the bank divided by net burn. If you have $600,000 and burn $50,000 a month, you have 12 months. Arithmetic, not vibes.
Why I use a 3-month average. One month lies. A big annual invoice or one late-paying customer can double your burn or halve it. Three months is the shortest window that tells the truth.
Why new funding is not cash in. A round is a loan on your time, not a business working. Count it as revenue and you're grading your own homework. Cash in means customers. Full stop.
Questions from the floor
FAQ.
Q: What is a good burn rate?
George:One you can explain without sweating. The public rule of thumb: your net burn should leave you 18 to 24 months of runway after a raise. Below that, every month is a negotiation with your bank balance.
Q: How much runway should a startup have?
George:Most investors want to see 18 to 24 months after a round, because raising takes 6 to 9 months. Under 12 months, you are fundraising whether you've admitted it or not. Under 6, you are not fundraising, you are praying.
Q: What's the difference between gross and net burn?
George:Gross burn is everything that leaves the account. Net burn is what actually disappears after revenue comes back in. Gross tells me how you spend. Net tells me how long you live.
Q: Does fundraising money count in burn rate?
George:No. A round is not revenue. Count it and you're grading your own homework. Cash in means customers paying you, nothing else.
Q: How often should I recalculate runway?
George:Every month, on a fixed date. One bad month is weather. Three bad months is climate. I use a 3-month average so one weird invoice doesn't set the narrative.
That's one number. George reads all of them, every month.
Burn, runway, revenue, pipeline, promises. One review, one verdict, every month.