Burn Rate

The rate at which a business spends money, usually per month, when it's not yet profitable. Burn Rate = Monthly expenses − Monthly revenue (if revenue < expenses).

Burn rate tells you how long you can keep operating before running out of money. Knowing your burn rate and runway is essential for planning and avoiding a crisis.

Your startup spends £8,000/month on salaries, tools, and ads. It generates £3,000 in revenue. Burn rate = £5,000/month. If you have £25,000 saved, your runway is 5 months.