Cash flow management for startups: burn rate and runway

Many startups shut down not because of a bad idea but because they run out of cash. Knowing how long the company can survive before profitability, and managing it, is one of founders' most basic responsibilities.

Key concepts

Burn rate

The cash the company spends in a month.

• Gross burn: total monthly cash outflow
• Net burn: monthly outflow − monthly inflow (revenue)

Runway

How many months your cash will last: runway = cash in the bank / monthly net burn. A startup with 3 million in cash and 250 thousand monthly net burn has 12 months of runway.

Start raising at least 6–9 months before runway ends; rounds often take longer than planned. See our seed round guide.

Forecasting cash

A 13-week cash table

Plan the next 13 weeks week by week:

• Expected receipts (customer payments, grant instalments)
• Salaries, rent, software subscriptions, tax and social security
• One-off large expenses

Compare with actuals every week. This reveals short-term crunches a monthly budget misses.

A 12–18 month model

Model hiring, growth assumptions and round timing together. Prepare optimistic, realistic and pessimistic scenarios.

Controlling costs

• People are usually the biggest cost. Tie hiring to revenue and funding milestones.
• Review software subscriptions quarterly and cancel unused ones.
• Weigh annual-payment discounts against your cash position.
• Prefer variable costs to fixed ones where possible.

Collecting faster

• Keep payment terms short; offer a discount for prepayment or annual upfront payment.
• Follow up late payments regularly.
• Agree payment terms with enterprise customers at contract stage.

Currency and inflation risk

For startups operating in Türkiye, exchange rates and inflation directly affect the cash plan. Include when and how much foreign-currency investment to convert, foreign-currency costs (cloud, software) and your price-update policy. Work with your accountant on currency decisions.

A plan for hard times

Prepare a plan that kicks in when runway drops below six months:

1. Which costs can stop immediately?
2. What quick steps can raise revenue?
3. Is bridge funding from existing investors possible? See convertible investments.
4. Can grants or support programmes help? See our grants guide.

Conclusion

Tracking cash weekly prevents surprises and reassures investors. Burn rate and runway are among the first metrics investors ask about; keep them current.