Burn Rate (This appears to be already in English, but if you have a different text to translate, please provide it and I'll be happy to help.)

The burn rate represents the speed at which a company spends its cash, typically measured monthly. It's a key indicator for startups, as it shows how long they can continue operating with their available funds before needing to find new sources of financing.

How does burn rate work?

The burn rate is calculated by subtracting monthly expenses from revenue. If a startup spends €50,000 per month and generates €10,000 in revenue, its burn rate is €40,000 per month. This figure helps founders and investors understand how long the company can survive with its available cash.

Concrete example

Let's imagine a startup that has raised €500,000 and has a burn rate of €50,000 per month. Without additional revenue or fundraising, this startup will have 10 months before running out of cash. This allows leaders to plan ahead, whether to reduce costs or raise additional funds before money runs out.

Why is burn rate important?

Knowing your burn rate is essential for a startup, as it determines how quickly it uses its funding. A high burn rate can indicate that the company will need to raise funds soon, while a controlled burn rate allows for optimized resource use and extended cash runway.

Need help calculating or reducing your burn rate?

If you have questions about your burn rate or would like advice on reducing it, contact us through the contact form on our website. We can help you better manage your finances and optimize your expenses to ensure your startup's growth.