Definition

Planning out expected income, expenses, and cash flow for the business. Looking ahead makes it easier to set goals and adjust spending.

What to consider

  • Keep burn rate as low as possible to extend runway.
  • Review spending patterns frequently.
  • Adjust operational costs to manage cash outflow.

Real world scenarios

  • A tech startup in Silicon Valley calculates how quickly it is spending its initial funding.
  • An entrepreneur monitors monthly burn rate during the first year of operations.
  • A small business tracks burn rate to decide when to seek additional financing.

Related terms

Entrepreneurial Finances