Runway
The number of months a company can continue operating at its current burn rate before running out of cash.
Runway is calculated as: Cash Balance / Monthly Net Burn Rate. If a company has $500,000 in cash and burns $50,000 per month net, it has 10 months of runway.
Runway is the most critical planning metric for any company that isn't yet cash-flow positive. It determines the urgency of fundraising, the pace of hiring, and the level of risk the company can absorb.
Conventional wisdom suggests maintaining at least 12-18 months of runway at all times. Below 6 months triggers "crisis mode" — the company must either cut costs dramatically, generate revenue quickly, or close a funding round immediately.
Runway forecasting should account for revenue growth (which extends runway), planned expenditure increases (which shortens it), and seasonal variations. A static runway calculation based on last month's burn can be dangerously misleading if significant costs are coming.
Related Terms
Further Reading
Revenue looks good but cash is always tight? Learn why Malaysian SMEs face cash flow problems and 5 proven strategies to fix them for good.
Learn how to build a credible, board-ready cash flow forecast — from model structure to the assumptions that determine whether your numbers hold up.
Can't afford a full-time CFO? Discover how a Virtual CFO in Malaysia gives startups expert financial guidance at a fraction of the cost.
Planning to fundraise in Malaysia? Learn how to prepare your financials, approach investors, and close your funding round step by step.