Snapshot Your Runway

Know how many months you can keep operating before you run out of cash.

What this recipe is for

Giving you a clear, real-time view of how long your business can survive at current spending and revenue levels—so you can act before cash becomes a crisis.

What you’ll get

Current cash runway in time units (weeks/months)

Visibility into the biggest drains and buffers

What changes (costs, revenue) extend or shorten your runway

Action triggers to preserve or extend liquidity

Key inputs

Cash on hand (available liquidity)

Monthly burn rate (net cash outflow: expenses minus predictable inflows)

Revenue consistency / variability

Planned one-time outflows or investments

Short-term receivables and payables timing (optional for refinement)

Core logic

Runway = Cash on hand / Monthly net burn

If you’re burning $20,000/month and have $100,000 in accessible cash, your runway is 5 months. Small shifts in burn or incoming revenue change that timeline quickly—know the levers so you can stretch or replenish before it’s urgent.

Step-by-step actions

Step 1: Calculate current burn

Sum all recurring outflows (fixed + variable) and subtract reliably expected inflows to get net monthly burn.

Step 2: Confirm available cash

Include checking, savings, liquid reserves—exclude funds tied up in illiquid assets unless you plan to free them.

Step 3: Compute runway

Runway (months) = Cash on hand / Monthly net burn

Step 4: Stress test scenarios

Revenue drop: What if sales fall 20%?

Cost increase: What if a major expense rises (e.g., supplier, payroll)?

Delay in receivables: What if expected payments are late?

Recalculate runway under each to see vulnerability.

Step 5: Define action triggers

Set thresholds:

Runway < 6 months: Begin cost discipline and revenue acceleration.

Runway < 3 months: Activate backup plans (cut, bridge financing, push receivables).

Runway drifting shorter week-over-week: Diagnose and halt the bleed.

Decision thresholds / guardrails

Runway under 6 months with no plan → Immediate priority: either reduce burn or increase predictable inflow.

Runway shrinking despite steady revenue → Look for hidden drains or creeping costs.

Runway shock in scenario tests (e.g., drops to <2 months) → Build contingency (reserve buffer, line of credit, temporary cuts).

Examples

Product business:

$150,000 cash, $30,000 net burn → 5 months runway. A 15% drop in revenue increases burn to $34,500 → runway shrinks to ~4.3 months.

Service business:

$80,000 in reserve, seasonal revenue causing variable inflow. With current average burn of $20,000, runway is 4 months—but a two-week delay in major client payment reduces effective runway to ~3.5 months.

Thinking checks

Is your runway calculation updated weekly with real cash movement?

Do you know which costs, if cut, extend runway most efficiently?

Have you modeled the impact of common shocks (sales dip, delayed receivables)?

Are there early warning signs before runway gets critical?

If the answer is no…

Build the basic snapshot now: cash / burn.

Identify and stop unnecessary monthly outflows.

Accelerate receivables or secure short-term bridge to prevent sudden crunch.

What to track (minimum)

Cash on hand

Monthly net burn

Runway months (and trend)

Variance from forecast (revenues or costs)

Scenario-adjusted runway under common stressors