Runway

Runway is how many months your business can keep operating before the money runs out, assuming nothing changes. You calculate it by dividing the cash in the bank by your average monthly net burn. Twelve months of runway means twelve months of decisions you get to make on your own terms; three months means the next investor, client or lender makes them for you.

The number matters less than what it does to your judgement. Operators with short runway systematically take worse decisions — they discount long-payback work, accept unfavourable terms, and mistake urgency for strategy. The point of tracking runway is not to admire it but to notice when it has dropped below the length of your longest bet. A new hire takes three months to become productive; a new sales channel takes six to prove itself. If your runway is shorter than the bet, the bet is not available to you, whatever the spreadsheet says.

Runway is not static either. It moves every time you spend, every time you collect, and every time a customer leaves. A single enterprise contract can add four months; one delayed invoice can remove two. People who check it quarterly are usually reacting; people who check it monthly are usually choosing.

A concrete case: a two-person team with $180,000 in the bank and a $15,000 monthly net burn has twelve months. Hiring one engineer at $5,000 a month cuts that to nine — and if the engineer takes three months to ship anything, the effective decision window is six. That is the calculation worth writing down before the offer goes out, not after.