Runway = cash on hand ÷ monthly burn. Burn is every dollar that leaves in a month: rent, payroll, subscriptions, supplies, loan payments, your own draw. The honest version uses your highest recent burn month, not your best one, because runway built on your cheapest month is a story, not a plan.
The four demo businesses
| Demo business | Cash | Burn | Runway |
|---|---|---|---|
| Ember & Oak (a full-service restaurant) | $22,800 | $6,000/mo | 3.8 mo |
| GreenLine Yards (a landscaping crew) | $31,500 | $5,700/mo | 5.5 mo |
| Kiln & Co. (a ceramics studio selling online) | $48,300 | $6,900/mo | 7.0 mo |
| The Wren Sessions (a working musician) | $9,400 | $2,250/mo | 4.2 mo |
The restaurant is at 3.8 months. That is not an emergency, but it is under the four-month line where a watchlist should be lit: one slow season plus one surprise repair and choices start being made for you. The ceramics studio at 7 months can think in seasons instead of weeks.
Why four months is the line
Not magic, just arithmetic: most small-business shocks (a slow season, an equipment failure, a late-paying anchor client) take one to two months to hit fully and one to two months to fix. Four months means a shock and its repair fit inside your cash without borrowing at the worst possible moment.
What to do when runway is thin
- Under 3 months: act this week. Chase every late invoice, pause every subscription you cannot name the value of, and move your draw to the worst-month floor.
- 3 to 4 months: watch weekly. No new fixed costs. Anything that turns inventory or receivables into cash moves first.
- Over 6 months: your risk flips. The question stops being survival and becomes whether idle cash should be working: equipment, inventory for the season, or a hire you have rehearsed.
The runway calculator does this with your numbers, including the thin-months warning.
Common questions
Should my own pay count in the burn?
Yes. Runway that only works because you stopped paying yourself is not runway, it is a countdown with extra steps.
Is more runway always better?
No. Past six months or so, cash sitting idle has a cost too. The point of the number is to know which side of the line you are on, so the rest of your decisions have a floor under them.