How to calculate and extend startup runway

Not accounting software. A spreadsheet you'll open every month.

Columns: month, starting cash, MRR, other revenue, fixed costs, variable costs, net, ending cash. Rows: the next 24 months.

Fill in the next three from what you actually know. Then set a growth rate for MRR and hold costs roughly flat except for the hires and renewals you've genuinely committed to.

Three rules that keep the model honest:

• Cash, not accrual. An invoice raised is not cash. Model when money lands in the account, including the 30 days your enterprise customer will take.
• Include tax you owe but haven't paid. VAT and corporation tax sitting in your account are not your money. This is the single most common way founders overstate runway, and it fails at the worst possible moment.
• Include founder salaries at the level you'll actually pay them. A model built on unpaid founders quietly breaks the month you start paying yourselves.

One hour. If it takes a day you're building something you won't maintain.

Runway — months until cash hits zero. Break-even month — when MRR first covers burn.

The second one deserves more of your attention. Runway is borrowed time; break-even is the month the borrowing stops. If break-even arrives before cash runs out, you don't need to raise at all — and a surprising number of founders raise without ever checking whether that's true.

Read the runway number in bands:

• Under 6 months — raise or cut, now. Both take longer than planned: a raise is typically 3–6 months end to end, cuts take a month to show. Starting at 4 months is starting late.
• 6–12 months — enough for one real experiment to resolve. Pick your riskiest assumption and spend the window on it rather than spreading across three.
• 12–18 months — comfortable. The risk shifts from running out of money to running out of urgency, which is less visible and roughly as fatal.
• 18+ months — either profitable, or you raised a lot and the question is whether you're moving fast enough to justify it.

The calculator below runs the month-by-month simulation and shows both numbers, including the compounding growth the naive formula ignores.

Put it in the calendar for the first working day of each month. Thirty minutes.

Three things:

1. Replace last month's projection with what actually happened. From the bank statement, not from memory or from your invoicing tool.
2. Look at the gap. If you projected £8k MRR and got £6k, that's a 25% error. Adjust the growth rate to what you're seeing, not what you hoped.
3. Read the new runway number out loud. Say it to your co-founder, or write it in a message to yourself. Numbers you say are numbers you act on.

The value here isn't precision. It's that you can never be surprised by your own cash position, which is the surprise that kills companies that were otherwise working. Founders who look quarterly find out in month 10 what they could have known in month 4, when they still had options.

Two levers, and they are not interchangeable.

Cutting burn works immediately and predictably. The effect lands next month. It also caps your ceiling — you cannot cut your way to a big business.

Growing revenue works later and compounds. It caps nothing. But it takes months to show, and it can fail.

The rule: under six months, cut. You need a certain effect fast, and growth might not arrive. Above twelve, grow. You can afford to wait for compounding, and cutting would be trading your future for cash you don't urgently need.

Where to cut, in order of ratio of savings to pain:

1. Software subscriptions. Cancel everything nobody opened last month. Usually 10–20% of a small company's non-payroll spend, and almost nobody notices.
2. Contractors and agencies on retainers rather than projects.
3. Paid acquisition that isn't paying back within your acceptable window.
4. Your own salary, temporarily, if you can survive it. Before anyone else's, always.
5. Headcount. Last, done properly and generously, and once rather than in slices. Repeated small cuts destroy more morale than one clear decision.

Decide now what runway number triggers what action, while you're calm.

A workable default:

• 12 months — start preparing. Update the deck, list the investors, or plan the cuts. No action yet.
• 9 months — begin the raise or execute the first tier of cuts.
• 6 months — the second tier, non-negotiable. The plan you wrote at 12 months executes whether or not this month felt promising.
• 3 months — decide about the business itself, not just the costs.

Write those in the same file as your kill criteria, and have someone check them with you monthly.

The reason for writing them in advance is the same reason kill criteria work: at 6 months of runway, every founder has a reason why this particular month is unusual and the cuts can wait. The version of you that hasn't seen this month's numbers yet is the better judge.