What is Burn Rate?
Burn rate is the speed at which a company spends its available capital before becoming profitable, critical for managing cash flow and runway.
Table of Contents
Full Definition
Burn rate indicates how quickly a startup is consuming cash relative to its income.
Monitoring burn rate helps founders forecast when additional funding will be needed and adjust spending accordingly.
Keeping burn rate sustainable is essential to avoid running out of capital prematurely.
Examples
Cash outflow speed
Expense tracking
Financial forecasting
Benefits
Helps manage cash flow
Informs fundraising timing
Supports budgeting decisions
Common Mistakes
High burn rate can signal risk
May necessitate cost-cutting measures
Conclusion
Controlling burn rate is critical for startup survival and strategic planning.