Runway Is a Countdown
What date does the money run out?
The idea
Runway is cash divided by net monthly burn, expressed as the number of months before the money runs out.
In the real world
£120,000 in the bank burning £15,000 a month is eight months.
Going deeper
Runway turns a balance into a date, which is the only form a financial position can be acted on. Eight months of cash means nothing until it is compared with how long your options take.
That comparison is where the decision actually sits. A raise typically takes around four months and often longer, so a hire that cuts runway from eight months to five leaves no margin for the raise going slowly — and raises go slowly precisely when you most need them not to. The rule that follows is to start the process while the runway still exceeds the process by a comfortable multiple, not when the numbers merely overlap.
Where it stops applying
Runway assumes burn stays constant, which it rarely does. A figure calculated from an unusually quiet or expensive month can be badly wrong in either direction.
Why it matters
It converts the financial position into a date, which is the only form decisions can be made against.
Try this today
Work out your runway in months and write down the date it ends.
Test yourself
A business has eight months of runway and a hire that would cut it to five. Raising takes about four months. What does that comparison decide?
Show the answer
That the hire has to wait or the raise has to start now. Runway is only useful next to the time your options take: five months of cash with a four-month fundraise leaves no margin for the raise going slowly, which they usually do.
Learn this in the feed Answering from memory, then again days later, is what makes it stick.