Cash Flow
Burn Rate
Definition
The rate at which a business spends cash, typically expressed as monthly net cash outflow (gross burn = total monthly spend; net burn = spend minus revenue).
Why it matters
For startups and pre-profitability businesses, burn rate is the single most important number after cash on hand. It directly determines runway. Investors, boards, and operators all use it to gauge how long the company can operate before needing additional capital.
Example
A SaaS startup with $1.2M cash and a $150K/month net burn has 8 months of runway. To extend to 14 months, leadership cuts $40K in monthly spend (longer runway, slower growth) or accelerates revenue.