Who This Helps
This is for you if you've crunched the numbers but your stakeholders are stuck. The Founder Finance Basics Mission Pack shows how to move from analysis to execution. A solid runway forecast is your ticket to getting a green light.
Mini Case
Ben's revenue was up 15% last quarter, but his cash balance was flat. He was confused and couldn't make a hiring decision. He built a simple runway forecast. It showed he had 5.2 months of cash left at the current burn rate. This one number gave him the clarity to pause new hires and focus on extending his runway first.
Do This Now (5 Steps)
- Grab your last three months of bank statements and expense reports.
- Calculate your average monthly cash burn. (Total cash spent / 3).
- Take your current cash balance.
- Divide your cash balance by your monthly burn. That's your runway in months.
- Now, model one change. What if you cut one discretionary cost by 20%? How does that extend your runway?
Avoid These Traps
- Don't mix personal and business expenses in your burn calculation. It gets messy.
- Avoid using revenue projections instead of actual cash. Cash is king here.
- Don't present a single number. Always show a 'what-if' scenario.
- Forgetting to update it monthly. This isn't a one-time report.
- Getting lost in perfect precision. A good estimate now is better than a perfect one next week.
- Hiding the number because it's scary. The whole point is to see it clearly.
- Not connecting the runway to a specific decision, like hiring or a marketing campaign.
- Letting the forecast collect dust. Put the next review date in your calendar.
Your Win by Friday
By Friday, you can walk into a meeting and say, "Based on our current burn, we have 6 months of runway. If we delay the new software subscription, we can stretch that to 7 months. I recommend we delay and re-evaluate in Q3." That's how you turn analysis into approved execution. You've got this!