burn rate

financial

cash flowfinancial planningsurvival metrics

In Brief

Burn rate refers to how quickly a company spends its available cash reserves to cover operating expenses. It's typically measured monthly and helps business owners understand how long they can continue operations before running out of money or needing additional funding.

burn rate Burn rate measures how quickly a business depletes its cash reserves to cover operating expenses. Calculated as the net cash spent per month, it's essential for determining cash runway and business survival. Service businesses monitor burn rate closely because it directly predicts how long they can operate before requiring additional revenue or capital.

Defined byChristy Rexroth

Founder & Strategic Architect

Credentials

BS Business Management, Indiana University Kelley School of Business•Business Excellence Program (Accelerate), Allergan•Fundamentals of Digital Marketing, Google Digital Academy

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Key Terms

financial

13-Week Cash Flow Forecast

The 13-Week Cash Flow Forecast is a tool that projects a business's expected weekly cash position over the next 3 months. It accounts for when the business expects to collect receivables and when it must pay obligations, allowing the business to identify and address potential cash flow gaps before they occur.

operational

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financial

Cash Runway

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