Free Agency Burn Rate & Runway Calculator
Calculate monthly gross burn, net burn, profit or loss, and how many months of cash you have. Know your real runway before the surprise.
Cash & Revenue
Monthly Expenses
Rent, utilities, insurance
Contractors, marketing, legal, travel
Runway
Runway
Profitable
Profitable
Target: Keep 3-6 months of gross burn in cash reserves. Below 3 months is the danger zone, below 6 weeks is an emergency.
How to Use This Calculator
Enter cash on hand, meaning actual liquid cash in your operating account, not forecasted revenue or accounts receivable. Monthly revenue should be your 90-day rolling average, not last month's best case. Agencies with seasonal or lumpy revenue should use the lower of recent months to be safe.
Break out expenses into payroll, overhead (rent, utilities, insurance), tools and software, and other expenses (contractors, marketing, legal, travel). Being granular helps identify where to cut if runway tightens.
The calculator returns gross burn, net burn, monthly profit/loss, and runway in months. If you're profitable, runway is effectively infinite at current performance. If not, you'll see how many months before cash runs out.
What to Do With the Results
- Healthy (12+ months runway or profitable): Keep building cash reserves and invest in growth. Consider aggressive hiring or R&D.
- Watch Closely (6-12 months): Monitor monthly. Delay non-essential spend. Check AR aging weekly.
- Critical (under 6 months): Immediate cost reduction. Pause hiring. Audit every recurring expense. Push for upfront client payments.
- Emergency (under 6 weeks): All hands on collections, deposits, and revenue acceleration. Have an honest conversation with accounting and potentially seek bridge financing.
Frequently Asked Questions
What is burn rate for an agency?
Burn rate is how much cash your agency spends each month. Gross burn is total monthly expenses regardless of revenue. Net burn is expenses minus revenue, representing how much cash reserves shrink each month. If net burn is zero or negative, you're profitable or breakeven.
What is a healthy runway for an agency?
Most advisors recommend 3-6 months of gross burn in cash reserves at minimum. Profitable agencies should maintain 6-12 months to weather slowdowns, late-paying clients, or churn. Below 3 months is the danger zone. Below 6 weeks is an emergency that calls for immediate cost cutting or bridge financing.
Should I use gross burn or net burn for runway?
Use net burn for day-to-day runway math since it reflects reality. Use gross burn to stress-test: if your largest client churned tomorrow, how long would you last? Most agencies have 1-3 clients representing 30-50% of revenue, so the gross burn scenario is not hypothetical.
How do I reduce burn rate quickly?
Biggest levers in order: pause hiring, cut non-essential tools and software (typically 20-30% of tools are underused), renegotiate contractor rates or hours, delay discretionary spend like travel and events, subletting or downsizing office space. Payroll cuts are last resort and usually the largest expense.
Why is my revenue high but runway still short?
Revenue on paper and cash in the bank are different. Outstanding receivables, long client payment terms (net 60, net 90), and seasonal timing all mean you can be profitable and still cash-poor. Improve AR collection, require deposits on new work, and move retainers to upfront monthly billing.
Shorter cash cycle, longer runway
AgencyPro's billing automation, auto-reminders, and client portals cut days-sales-outstanding so your cash comes in weeks earlier.