Burn Rate
Speed at which you spend money
It's how much money your startup loses each month. If you have $500K in the bank and spend $50K more than you generate each month, your burn rate is $50K/month and you have 10 months of runway.
How to communicate burn rate in a team meeting?
Say: 'Our burn rate is $30K/month. With $180K in bank, we have 6 months of runway. If we reach $15K in monthly revenue by July, we extend runway to 12 months. Every sale counts.'
Real examples
Team wants to hire more people
“Instead of: 'There's no budget.' Better: 'Each hire increases burn rate $5K/month. With 6 months of runway, that reduces to 5 months. We need to grow revenue first or raise a round to hire safely.'”
Investor asks about capital use
“Instead of: 'We're using it well.' Better: 'Burn rate is $40K/month: $25K salaries, $10K marketing, $5K ops. Marketing generates $8K in monthly revenue, improving 20% each month. We'll reach break-even in 7 months.'”
CEO evaluates expanding to another country
“Instead of: 'It would be good to grow.' Better: 'Expanding increases burn rate $15K/month. With current runway of 8 months, it drops to 5 months. We need to raise capital first or wait to be cash-flow positive.'”
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