Runway.

In plain English

Runway is the amount of time, usually counted in months, that a business can survive before its cash hits zero. You find it by dividing the cash you have on hand by your monthly net burn rate (how much you lose each month). The name is borrowed from a plane: you only have so much runway before you either lift off (turn profitable or raise money) or run out of room. Short runway means a hard deadline; longer runway buys time to fix the business or find new income.

01Why it matters

Runway converts your bank balance into a real calendar deadline, so you know exactly how many months you have to reach profit or raise more cash. It is the difference between making decisions early and panicking late.

02The math, step by step

Your business has $24,000 in cash and loses $4,000 a month after income. Runway is $24,000 divided by $4,000, which equals six months. If nothing changes, you have until month six to either start earning more, spend less, or bring in new money. Cutting burn to $2,000 a month would stretch the same $24,000 to twelve months of runway.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT