How to Work Out Your Runway
Money in the bank divided by what leaves each month. The number itself is easy. Knowing when to start raising against it is the part that catches people out.
Runway is how many months you can keep going before the money runs out. Cash in the bank, divided by what you spend each month.
₹60 lakh in the bank, ₹5 lakh a month going out, twelve months of runway. That is the whole calculation.
What people get wrong is everything around it.
Use net burn, not gross
If you have revenue, subtract it. Spending ₹5 lakh and earning ₹2 lakh means you are burning ₹3 lakh, and ₹60 lakh lasts twenty months rather than twelve.
Be honest about which revenue is actually reliable. A customer who might renew is not ₹50,000 a month.
Count the money that is already spoken for
Your bank balance is not your runway. Take out the advance tax due next month, the GST you have collected and will pay, the deposit you owe on the office, the annual software renewals that land in one lump.
Founders routinely overstate runway by two months this way, and two months is the difference between raising calmly and raising desperately.
Three numbers, not one
Work out runway three ways and keep all three in your head.
| Version | Assumption | What it tells you |
|---|---|---|
| As you are | Nothing changes | Your honest position |
| With the hires | The two people you plan to add | What that plan actually costs in months |
| Stripped back | No new hires, marketing paused | How long you could survive if a round falls through |
That third number is the one that lets you sleep. It is also the one that tells you whether a hire is a decision or a gamble.
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When to start raising
At six months left. Not three, and not when the balance gets frightening.
A round takes three to five months from first conversation to money in the account, and that assumes it goes well. Start at three months and you are negotiating with someone who can see the clock, which is an expensive place to negotiate from.
The levers, in order of how fast they work
Most costs cannot be cut quickly. Salaries are the biggest line and the slowest to change, and cutting them is the decision with the highest human cost.
What actually moves in weeks:
- Workspace, if you are on a monthly plan rather than a lease
- Marketing spend, immediately
- Contractors and agencies, at notice
- Software nobody opened this quarter
This is the quiet argument for flexible space. A twelve person team on seats can be a six person team on seats inside a notice period. On a three year lease you keep paying for the empty half of the floor.
Check it monthly
Same day each month, two minutes. Bank balance, last month's real spend, divide. Write the number where the founders can see it.
Every founder who has run out of money will tell you the same thing: they knew the number was falling, they just had not looked at it recently enough to feel it.
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