Companies do not die from lacking customers. They die from running out of money before finding them. The distinction is not rhetorical: it names the one number that decides whether you still have time to correct course.
Definition
Runway is the number of months a business can operate on available cash, at the current rate of spending and income.
Runway = available cash ÷ monthly net loss
With €9,000 in the bank and €1,500 lost per month: six months of runway.
If income covers spending, runway is infinite, and that is the goal. The calculation only matters during periods where you consume more than you earn, which happens to everyone at the start.
What the duration changes in your decisions
| Runway | Room to manoeuvre |
|---|---|
| Over 12 months | You can invest and experiment |
| 6 to 12 months | Prioritise immediate revenue |
| 3 to 6 months | Cut non-essential spending |
| Under 3 months | A structural decision is needed |
Dropping below three months deserves particular attention for an underrated reason: at that point every decision turns defensive. You accept badly matched customers, you discount, you stop whatever builds the future. Quality falls, which accelerates the fall.
Runway is calculated on cash actually available, not on invoiced revenue. An invoice issued on thirty-day terms does not pay next week's rent.
Extending it without raising money
Three levers, by speed of effect:
- Cut fixed costs. Immediate effect on every remaining month, and it also lowers your Break-even point.
- Collect earlier. Annual billing, deposit on order, payment at booking. The money already exists, it just arrives later.
- Add fast income. A well-billed one-off engagement buys several months, even if it was not in the plan.
Frequently asked questions
Should my own pay count as spending?
Yes. Runway calculated without paying yourself is fictional runway, since it assumes you live on air. If you are not paying yourself yet, count at minimum what you need to keep going.
What runway should I target when Bootstrapping?
Six months is a reasonable floor, twelve is comfortable. Below six, any seasonality or one significant unpaid invoice puts you in trouble, and you no longer have the time Organic traffic demands.
Does runway replace the break-even point?
No, they answer two different questions. Break-even says how much to sell to stop losing, runway says how long you have to get there. Together they give your real situation.
Should I share it with people I work with?
With an accountant or a co-founder, yes, plainly. It is the number that conditions every shared decision, and discovering it late deprives everyone of options that still existed three months earlier.