What is a burn rate?

Burn rate is the pace at which a business spends its available cash, typically measured on a monthly basis. It is commonly used by startups to estimate how long their current cash reserves will last.

Example: A company with $500,000 in cash that spends $50,000 more than it earns each month has a burn rate of $50,000 per month.

Related terms: Cash Flow, Runway, Bootstrapping