SaaS & Business
Runway
How many months a business can keep operating before it runs out of cash, at its current burn rate.
Reviewed by the RadarTrek editorial team · June 2026
Runway is cash in the bank divided by net burn rate (monthly cash outflow minus monthly revenue collected). A business with $500,000 in the bank and a $40,000 monthly net burn has roughly 12.5 months of runway. Because revenue collected isn't the same as MRR — annual contracts paid upfront distort timing — runway calculations should use actual cash collected, with a buffer built in for safety.
Why it matters
- —Runway is the number that determines how much risk a business can afford to take before it needs new revenue or new funding.
- —Net burn (not gross burn) is the correct input — ignoring revenue collected overstates how urgently cash is running out.
- —A common rule of thumb: treat your calculated runway as 20-25% shorter than the raw number, as a built-in safety buffer.
Where to learn this
🎓
The SaaS P&L — Gross Margin, Burn, and Runway
SaaS Metrics and Finance course
This is the exact lesson that covers this term in depth — with examples, diagrams, and a hands-on exercise.