How to Calculate Runway

Get your runway calculated properly—talk to 8cast.

Runway is the most important number in your company that almost nobody calculates correctly.

Not because the math is hard. It’s genuinely one division problem: cash on hand divided by net burn. The mistakes happen in what founders plug into those two variables — and those mistakes tend to make runway look longer than it actually is, which is the worst direction to be wrong in.

Here’s how to do it properly, step by step.

1. Cash On Hand

This is your actual bank balance today, not what’s in your accounting software as “cash equivalents,” not pending invoices, not a line of credit you haven’t drawn on. If you can’t spend it this week, don’t count it.

2. Net Burn

Take your average monthly cash outflow and subtract your average monthly cash inflow (revenue collected, not revenue invoiced). Use a trailing three-month average, not last month alone — one unusually quiet or unusually expensive month will throw the whole number off.

3. Divide

Cash on hand ÷ net burn = months of runway. That’s the calculation.

Here’s where it goes wrong in practice. Founders often use gross burn instead of net burn, which understates runway if there’s meaningful revenue, or they net out revenue that hasn’t actually been collected yet, which overstates it. Both are the same underlying mistake: not staying strict about cash versus commitments.

The second common error is treating runway as static. It’s not. Every time burn changes — a new hire, a renewed contract, a price increase — your runway shifts, and if you’re not recalculating, you’re navigating with an outdated map. I’d recommend rebuilding this number monthly, at minimum. If you’re within six months of running out, weekly isn’t excessive.

The third mistake is more of a framing issue than a math issue: runway isn’t just “time until zero.” It’s “time until you need to have already raised your next round, or hit profitability, or made some other decision.” Because raising money takes time — often three to six months from first investor conversation to funds in the bank — your real decision deadline is your runway minus that fundraising window. If you have twelve months of runway and fundraising takes five, you effectively have seven months to either close a round or change your trajectory.

One more thing worth building in: a runway sensitivity check. What happens to your number if a key customer churns, or a hire starts a month later than planned? You don’t need a complicated model for this — just recalculate the same formula under two or three different burn scenarios. It takes ten minutes and tells you how fragile or resilient your timeline actually is.

Bottom Line

Runway is simple to calculate and easy to get quietly wrong. The founders who avoid trouble aren’t the ones with more sophisticated formulas — they’re the ones who keep the inputs honest, update the number often, and build in a buffer for the time it takes to act on what the number tells them. Do that, and runway stops being a source of anxiety and becomes what it should be: a planning tool that tells you exactly how much time you have to make your next move.

Not sure your runway number is actually right?

8cast helps founders build accurate, defensible runway models tied to real cash position. Reach out anytime.

Need help calculating your real runway? 8cast supports founders from modeling to fundraising timing. Let’s talk.