What is Burn Rate?
How fast a business spends its cash, usually measured per month.
Burn rate is how much cash your business goes through each month. 'Gross burn' is your total monthly spending; 'net burn' subtracts any revenue coming in.
Burn rate and runway are two sides of the same coin: runway = cash ÷ net burn. Cutting burn instantly extends your runway.
A high burn rate isn't automatically bad — if it's buying fast growth, it can be worth it. If it's buying kombucha taps and vanity, it's just an expensive way to run out of money.
Related terms
Definitions from the Business Dog Glossary — educational, occasionally satirical, never financial advice.