1. What is Monthly Burn Rate?

Monthly Burn Rate is a financial metric that calculates the average amount of money a company or individual spends per month. It's commonly used by startups and businesses to track their cash outflow and determine how long they can operate before needing additional funding.

2. How Does the Calculator Work?

The calculator uses the monthly burn rate formula:

Where:

• \( \text{Total Expenses} \) — Sum of all expenses over the period
• \( \text{Months} \) — Number of months in the period

Explanation: This calculation provides the average monthly expenditure by dividing total expenses by the number of months in the period.

3. Importance of Monthly Burn Rate

Details: Understanding your monthly burn rate is crucial for financial planning, budgeting, and determining runway - how long your current funds will last. It helps businesses make informed decisions about spending, hiring, and fundraising.

4. Using the Calculator

Tips: Enter total expenses in your preferred currency and the number of months over which these expenses occurred. All values must be positive numbers (expenses > 0, months ≥ 1).

5. Frequently Asked Questions (FAQ)

Q1: What expenses should be included in total expenses?
A: Include all operating expenses such as salaries, rent, utilities, marketing, software subscriptions, and any other recurring or one-time business costs.

Q2: How is monthly burn rate different from cash burn rate?
A: Monthly burn rate typically refers to operating expenses, while cash burn rate includes all cash outflows including capital expenditures and debt repayments.

Q3: What is a good monthly burn rate?
A: This depends on your business stage and funding. Generally, a lower burn rate relative to your revenue and funding is better. Startups often aim for 12-18 months of runway.

Q4: How often should I calculate my monthly burn rate?
A: Monthly calculation is recommended for active monitoring. Many businesses review it weekly or bi-weekly during critical growth phases or when approaching funding rounds.

Q5: Can monthly burn rate be negative?
A: If your revenue exceeds expenses, you have negative burn (profit). However, the term "burn rate" typically implies positive cash outflow.