Understanding the concept
What is Runway?
Runway is how long your business can operate before it runs out of cash — measured in months. It is one of the most critical numbers for any business, especially startups and early-stage ventures. Knowing your runway tells you how much time you have to reach profitability, close your next round of funding, or make the changes needed to turn the business around. Every founder and business owner must know this number.
Runway (months)
=
Current Cash Balance ÷ Monthly Net Burn
Monthly Net Burn
=
Monthly Expenses − Monthly Revenue
✅
Comfortable Runway
Cash: ₹60L, Monthly Burn: ₹5L → 12 months of runway. Enough time to iterate, fundraise, or reach breakeven.
⚠️
Dangerously Short Runway
Cash: ₹10L, Monthly Burn: ₹4L → Only 2.5 months left. Urgent action needed — cut costs or raise cash immediately.
Why this matters: Runway directly determines your options. More runway means more time to make decisions, try things, and recover from mistakes. Running out of cash is the most common reason businesses fail — not because the idea was bad, but because time ran out.
Where runway matters most
🚀
Startups & Funded Ventures
Track runway constantly — investors will ask, and you need to start fundraising before you hit 3–4 months left.
🏪
Small Businesses
Seasonal businesses must know how long their reserves will last through a lean period or unexpected revenue drop.
📉
Turnaround Situations
When a business is losing money, runway tells you the hard deadline by which the model must be fixed or pivoted.