How many months of cash runway do you have?

Your runway is the cash you have on hand divided by what you spend in a typical month, and you can figure it in about ten minutes.

How to figure it

Runway answers one question. If no new money came in, how many months could you keep the doors open? It's a stress test. It doesn't predict anything, and that's why it's useful.

You need two numbers. The first is cash on hand, meaning what's sitting in your business checking and savings today. Don't count money you're owed, deposits that haven't landed yet, or a credit line you haven't drawn. The second is your monthly spend. Pull your last three months of bank activity, add up everything that went out, and divide by three. Include rent, payroll, your own pay, software, supplies, loan payments, all of it.

Here's a made-up example. Say you've got $60,000 in the bank. Over the last three months you spent $14,000, $16,000 and $15,000. That's $45,000 over three months, or $15,000 a month. Your runway is four months ($60,000 divided by $15,000).

That's the gross version, and it assumes zero revenue. There's a second version that looks at your net burn, which is spending minus what comes in. If members bring in $11,000 a month in the example above, your net burn is $4,000 a month and your runway is 15 months. Both numbers matter. The gross number tells you how exposed you are if something breaks. The net number tells you how long you can keep going at today's pace.

If you'd rather not do it by hand, our cash runway calculator does the arithmetic for you.

What a comfortable number looks like for you

There's no single right answer. It depends on a few things about your practice.

• How steady your deposits are month to month
• Whether your panel is growing, flat, or shrinking
• Big bills coming in the next year, like a lease renewal or equipment
• Whether you have employees who count on payroll every two weeks
• How much of your own household depends on what the practice pays you
• Whether you're still paying off startup costs

A practice with a full, stable panel and no staff can live with less cushion. A newer practice with a growing payroll and a lease should want more. Pick a number that lets you sleep, write it down, and treat it as your floor. When cash drops below it, that's your signal to act, not panic.

How to stretch it

There are only two levers. Spend less or bring in more cash sooner. Here's what I'd check first.

Look at your subscriptions and software. It's easy to pick these up during launch and forget them. Cancel what you don't use. Next, look at timing. If a big annual bill is coming, start setting a little aside each month so it doesn't land on you all at once.

On the revenue side, check your failed payments and refunds. If your membership platform pays you net of fees, refunds and failed payments, a handful of declined cards can quietly shrink your deposits without you noticing. Chasing those is the fastest cash you'll find. After that, look at your price and your panel. Our post on modeling a price increase walks through testing that on paper first.

Last, look at owner pay. If runway is tight, paying yourself a little less for a few months stretches it. How your pay is taxed is your CPA's call, so loop them in before you change it.

Make it a monthly habit

Runway changes every month. Check it when your monthly numbers land, write it next to last month's, and watch the trend. One bad month isn't a crisis. Three months of shrinking runway is a pattern, and that's when to sit down and make changes.

Common questions

Should I count money my members owe me?
Not in your runway number. Count only cash that's in the bank today. Money that's owed can fail or arrive late.

What if my spending jumps around a lot?
Use a longer stretch, like six months, so one big bill doesn't skew the average. Then plan separately for the big bills you know are coming.

Does a credit line count as runway?
I'd leave it out. It's a backup, and borrowing to cover regular monthly costs is a sign the practice needs changes, not more debt.