Finance · business glossary
What is Runway?
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
definition
How many months a business can keep operating at its current burn rate before running out of cash.
Runway explained
Runway is the number of months a business can keep operating before it runs out of cash, if spending and income stay the same.
formula
Runway (months) = Cash available ÷ Monthly net burn
example
₹54 lakh in the bank and a net burn of ₹9 lakh a month gives a runway of 6 months.
why it matters
It sets the deadline for fixing losses or raising money. Start fundraising well before runway gets short.
common mistake
Counting money customers owe you as if it were already in the bank.
Frequently asked questions
What is Runway?
How many months a business can keep operating at its current burn rate before running out of cash. Runway is the number of months a business can keep operating before it runs out of cash, if spending and income stay the same.
How do you calculate Runway?
Runway (months) = Cash available ÷ Monthly net burn. ₹54 lakh in the bank and a net burn of ₹9 lakh a month gives a runway of 6 months.
Why does Runway matter?
It sets the deadline for fixing losses or raising money. Start fundraising well before runway gets short.
What is a common mistake with Runway?
Counting money customers owe you as if it were already in the bank.
Related terms
Burn rate
How fast a business is spending its cash reserves each month, typically used when a business is running at a loss funded by savings or investment.
Cash flow
The actual movement of money in and out of a business, which can differ sharply from reported profit if customers pay late or inventory ties up cash.
Working capital
The cash tied up in day-to-day operations — inventory and money owed to you, minus money you owe — that keeps the business running between sale and payment.