Agency burn rate & runway calculator
Calculate your agency's monthly gross burn, net burn and profit or loss, and how many months your cash lasts at the current rate.
Cash & Revenue
Monthly Expenses
Rent, utilities, insurance
Contractors, marketing, legal, travel
Runway
Runway
Profitable
Profitable
Stress test: Divide cash on hand by gross burn to see how many months you would last if revenue stopped. Plan your reserve against that number, not net burn.
How burn rate and runway are calculated
- Gross burn = payroll + overhead + tools + other expenses. This is what you spend each month whatever comes in.
- Net burn = gross burn - monthly revenue, with a floor of zero.
- Monthly profit or loss = revenue - gross burn.
- Runway = cash on hand / net burn, in months. If revenue covers expenses, runway shows as "Profitable".
Status labels: Profitable when revenue covers expenses, Healthy at 12 or more months of runway, Watch Closely at 6 to 12 months, Critical under 6 months.
Worked example
With the defaults, expenses are $70,000 payroll + $8,000 overhead + $3,500 tools + $4,000 other = $85,500 gross burn. Revenue is $90,000, so the agency makes $4,500 a month, net burn is zero and runway shows as Profitable.
Now drop revenue to $80,000. Net burn becomes $5,500 a month and $150,000 of cash lasts 27.3 months. And if all revenue stopped, the same cash would cover gross burn for only 1.8 months ($150,000 / $85,500). That second number is the one to watch if a few clients make up most of your revenue.
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
- Profitable or Healthy (12+ months): Keep building cash reserves and plan growth spending from profit, not from the reserve.
- 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.
- Under about 6 weeks (shown as Critical): Focus on collections, deposits and upfront billing, talk to your accountant, and consider 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?
There is no single rule, but the calculator treats 12 or more months of runway as healthy and under 6 months as critical. Profitable agencies should still hold a cash reserve against slow months, late payers and lost clients. Measure that reserve against gross burn, because revenue can drop faster than costs.
Should I use gross burn or net burn for runway?
Use net burn for day-to-day runway. Use gross burn to stress-test: divide cash by gross burn to see how long you would last with no revenue at all. For a single-client test, subtract your largest client's monthly revenue and rerun the calculator.
How do I reduce burn rate quickly?
Pause hiring, cancel unused software seats, renegotiate contractor rates or hours, delay travel and events, and sublet or downsize office space. Payroll is usually the largest expense, so cuts there have the most effect but are the last resort.
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 sends pre-due, due-date and overdue invoice reminders with a payment link, can add late fees after a grace period, and bills retainers as subscriptions.