How to Estimate Runway and Burn
Model 12 months of cashflow with three scenarios.
“Most first-time founders run out of money six weeks before they knew they would. The spreadsheet would have told them — they just never opened it.”
The Insight
Runway is not a vanity metric. It is the literal count of days between you and the end of your business. You can't out-hustle a cashflow you haven't modelled, and the back-of-envelope number in your head is always — always — more optimistic than the one on the page.
01
Build Three Scenarios, Not One
Model a Best Case, a Base Case, and a Disaster Case. Best assumes you close every deal on the pipeline. Base assumes half. Disaster assumes zero new revenue for six months. Run them all out 12 months. The Base is what you plan against; the Disaster is what your decisions must never violate. If your Disaster runs out in month 3, you have a funding problem, not a pricing problem.
02
Every Fixed Cost Gets a Justification
Go line by line through your monthly costs. Next to each, write why it's fixed. Most 'fixed' costs — your subscriptions, your contractor retainers, even your own salary — are actually choices. When you see the list laid out, you'll realise half your burn is default, not deliberate. Kill or renegotiate anything without a clear reason to exist.
03
The 18-Month Rule
Aim to hold 18 months of Base Case runway at all times. Not 12, not 6. Eighteen gives you the freedom to raise from a position of strength, pivot without panic, or walk away from a bad customer. Anything less and you will make short-term decisions that compound into a short-term business. Runway is optionality, and optionality is the only real asset at Stage 0.
The Takeaway
Open the spreadsheet. Model the three lines. Update them every Friday. The founders who survive are the ones who are never surprised by their own bank account.
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