Written by James Chae — Co-Founder, Expert Sapiens
Reviewed June 2026
Finance & Accounting
What Is Runway?
Definition
Runway is the amount of time a company can continue operating at its current burn rate before running out of cash. It is typically expressed in months.
Runway is calculated by dividing your current cash balance by your monthly net burn rate. If you have $600K in the bank and a net burn rate of $50K/month, your runway is 12 months. Most investors and advisors recommend maintaining at least 12–18 months of runway at all times to give yourself enough time to raise your next round or reach profitability. Runway planning involves modeling multiple scenarios: what happens if hiring slows, revenue grows faster, or a key contract falls through. It is one of the most closely watched metrics in any board meeting.
Why it matters
Knowing your runway precisely — not just approximately — is the difference between proactive financial management and reactive crisis. A company that discovers it has 3 months of runway instead of 8 has far fewer options. A financial model updated monthly by a fractional CFO or finance advisor ensures you always know where you stand and have time to act.