Runway

Definition

Runway is the number of months a company can continue operating before it runs out of cash, assuming current spending and revenue patterns continue unchanged.

Formula: Runway = Cash on Hand ÷ Net Burn Rate

Why It Matters

Runway is the clock that governs every strategic decision in a growing business. It determines when you need to raise funds, when you can afford to hire, and when you need to cut costs. Running out of runway means running out of business.

Most founders check runway quarterly — which is far too infrequent. Burn rate changes weekly based on new expenses, timing of receivables, and seasonal patterns. A founder who checks runway quarterly might discover a 3-month gap that developed over 6 weeks of gradual burn increase.

How to Extend It

• Reduce burn: Cut unnecessary expenses, renegotiate vendor contracts, eliminate duplicate subscriptions.
• Accelerate revenue: Shorten payment terms, offer early payment discounts, improve collections.
• Raise capital: If organic measures aren't enough, extend runway through debt or equity financing.

How CentSight Helps

CentSight calculates your runway in real time and updates it daily as your financial position changes. It also runs scenario models: “What would our runway be if we cut $10K/month?” or “How would hiring two engineers affect runway?” — giving you answers in seconds, not hours.