◈ GLOSSARY · BUSINESS & ENTREPRENEURSHIP
Burn Rate.
A definition, in plain English — with the books that teach it.
ClearValue Books · reviewed against sources ·
◈ DEFINITION
What it means
Definition
Burn rate is how much cash a company loses per month. Gross burn is total monthly cash outflow; net burn is gross burn minus revenue. When people say 'burn,' they usually mean net burn. It's the denominator of runway, and the number every startup board obsesses over.
◈ IN PRACTICE
Example
A startup spends $350,000/month on salaries, rent, and tools (gross burn) and brings in $150,000 in revenue. Net burn = $200,000/month. With $1.6M in the bank, runway is 8 months.