Description
Runway projection: gross/net burn, scenarios (current/growth/downturn), zero-date, ranked cash levers.
Runway tells you how many months until the company runs out of cash. Founders who do not track it weekly are steering blind—they find out runway is 3 months when they try to hire a VP. This framework produces the hard number and the lever analysis. 1. BURN RATE DECOMPOSITION: - GROSS BURN: total monthly operating expenses. Include: payroll (salaries + taxes + benefits), infra (cloud, SaaS, colo), rent/office, contractor payments, marketing spend, legal/compliance. Exclude one-time CapEx. - NET BURN: gross burn minus monthly revenue. This is the actual cash consumed per month. A company with $200K gross burn and $150K revenue has $50K net burn—much more runway than gross suggests. - BURN MULTIPLE: net burn ÷ net new ARR. Benchmark: <1.5x for efficient growth, >3x means spending faster than you are growing new revenue. 2. RUNWAY SCENARIOS: | Scenario | Revenue | Burn | Runway (on $2M cash) | |----------|---------|------|---------------------| | Current trajectory | $150K/mo | $50K net | 40 months | | Growth investments (+2 hires, +$40K spend) | $150K→$170K (6mo ramp) | $90K net | 22 months | | Downturn (-20% revenue) | $120K/mo | $80K net | 25 months | 3. ZERO-DATE: exact calendar date when cash reaches zero under each scenario. This is more actionable than '6 months runway' because it lands on a specific board meeting month. 4. LEVERS (ordered by impact speed): A. Immediate: cut non-essential SaaS (2-5% savings, 1 week). B. Fast: pause hiring (10-30% savings, 1 month). C. Medium: reduce cloud spend via reserved instances (15-25%, 2 months). D. Slow: increase prices (impact depends on churn elasticity, 3-6 months). 5. FUNDING BRIDGE: If runway < 12 months, calculate how much to raise. Rule of thumb: raise 18-24 months of net burn. At $90K net burn, raise $1.6M-$2.2M. Then compute dilution at current valuation. OUTPUT: Burn decomposition, 3-scenario runway table, zero-date calendar, ranked levers, funding recommendation.
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