2 min read
Definition
Burn rate is the pace at which a business consumes cash, usually measured as the net amount leaving the bank each month. Net burn is total cash spend minus cash coming in; gross burn is total cash spend. It is the figure that, divided into your cash balance, gives your runway.
In plain terms
Think of it as how fast the tank empties. A business holding £90,000 and burning £15,000 a month has six months before it hits empty, all else equal. Burn is a cash measure, not a profit one — a business can post a small paper profit yet still burn cash during a growth push.
Why it matters
Burn rate paired with cash tells you exactly how long you have to fix a problem or raise money. Controlling it — protecting revenue-driving spend while cutting the rest — is the fastest lever most stressed businesses have.
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