From Panic to Planning: Taking Control of Your Burn and Runway
Let’s start with a familiar feeling: You’re preoccupied with running your business, trying to grow, trying to hire, trying to build something great. And then it hits you, your bank balance doesn’t look like it used to.
You pause.
You ask yourself, “How long can we last at this pace?”
And if that question makes your stomach flip, you’re not alone.
Far too many business owners and founders don’t actually know their burn or their runway, two numbers that can make or break your next big move. That’s where having an outsourced accounting system in place can be a game changer. It’s not just about tracking numbers. It’s about clarity, control, and keeping your business on track.
Let’s break it down, show you where most companies go off the rails, and help you shift from stressed to strategic.
How Fast Is Your Business Burning Cash?
Burn is a fancy term for how much money you're spending every month.
Think of it like this: If your business were a car, burn is like your gas mileage. And if you don’t know how fast your car burns fuel, how can you plan the next leg of your journey?
Most founders think they know their burn. But when we dig into the numbers, it's often off. Way off.
Why? Because it’s easy to underestimate how much money is quietly trickling out the door.
Here’s what burn should include:
All your recurring expenses (payroll, software, rent)
Quarterly or annual payments that don’t hit every month (those sneak up!)
One-time costs that tend to pop up again (hello, consultants and legal fees)
Debt repayments or credit card interest (yep, that counts too)
And Runway? It’s How Long You’ll Last
Runway is a simple calculation:
Cash on hand ÷ burn = Runway (in months)
It’s how many months you can keep going at your current pace, before you hit zero.
This is the number every investor wants to hear. But more importantly, it’s the number you need to know for yourself.
Here’s why it matters:
Hiring someone new? You’d better know how much runway you’re shaving off.
Waiting on a funding round? You need enough cash to get you there without stalling.
Growing faster than expected? That’s great, but it eats cash fast.
Real Talk: Burn Is Not Profitability
Let’s say you’re “profitable” on paper. Maybe you closed a big deal. But what if you don’t collect payment for 90 days, and payroll’s due in 7?
Cash and profit are not the same thing.
That’s why a good financial forecast doesn’t just look at revenue, it maps when that revenue actually hits the bank.
Understanding Runway by Business Model
Your business model doesn’t just shape your revenue, it shapes your runway. In other words, how long your cash will last is tightly linked to how and when money comes in and goes out. Whether you’re in SaaS, running an agency, or managing a professional service firm, the way you forecast can make or break your cash strategy.
SaaS Companies
Recurring revenue is the dream, but it comes with a reality check: churn. When a few high-value clients leave or downgrade, your future cash inflows are impacted. That affects runway, because even if your monthly expenses (your burn) stay steady, your cash balance may shrink faster than expected.
That’s why it’s crucial to model retention rates, expansion revenue, and CAC payback periods to see how these changes affect your runway, not just your top line.
Agencies
Project-based work can mean feast or famine. Land a big client, and cash is flowing. Lose one, and you're still covering fixed expenses while waiting for the next deal to close.
Your runway depends on how well your forecast accounts for contract timing, pipeline strength, and delayed payments. Without this, you’re not just guessing your future, you’re gambling with it.
Professional Service Firms
Often, you hire before you earn. You onboard talent today to serve clients tomorrow. This means cash goes out before it comes back in, compressing your runway if timing isn’t tight.
To stay ahead, your financial model should map hiring plans to billing schedules. That way, you can proactively manage cash flow, and extend your runway, without compromising growth.
“We’re Growing, So Why Are We Broke?”
It’s a question we hear all the time.
Here’s the thing: Growth is expensive. You invest in people, systems, marketing—all before the payoff.
We worked with a client (let’s call them BrightCo) that doubled their headcount in six months. Revenue followed, but they didn’t see the cash hit their account for 90 days. They were shocked when their “profitable” business suddenly needed a short-term loan to cover payroll.
Growth without forecasting is like flying blind. You need instruments. That’s where a good accounting team (hi, that’s us 👋) makes all the difference.
How Forecasting Changes the Game
A real-time financial forecast is like a GPS for your business. It helps you:
Know what’s ahead
Recalculate when things change
Make smarter decisions under pressure
At Basis 365 Accounting, we help clients build dynamic forecasts in our CFO plan that answer questions like:
What happens if we hire 3 more people?
Can we afford to upgrade tools and platforms?
What if we lose our biggest client, how long can we stay afloat?
It’s not just about keeping the lights on. It’s about keeping your options open.
What an Outsourced Accounting Team Actually Does
We’re not just number-crunchers. We’re financial copilots.
Here’s what our accounting outsourcing solutions can help with:
Regular bookkeeping so you’re always up to date
Business Forecasting with real-life variables built in
Proactive alerts when spending gets out of hand via 13-week cash forecast
Upgrading to our CFO plan can provide additional insights, including:
Custom dashboards that show your burn, runway, and future scenarios
Hiring and growth planning based on actual financial data, not gut feels
Take a look at our plans and pricing page to learn more about our services.
Red Flags: Signs You’re Losing Control
If any of these feel familiar, it’s time for a financial gut check:
You don’t know how much cash you’ll have 90 days from now
Your last forecast hasn’t been touched since last quarter
You’re making hiring or investment decisions without consulting finance
Your bookkeeper only tells you what already happened, not what’s coming
Don’t wait until you’re six weeks from running out of cash. That’s a stressful place to be.
Forget the Guesswork, It’s Time to KNOW
At Basis 365 Accounting, we care about your success, and we’re here to make sure you’re not flying blind.
Understanding your burn and runway isn’t about being perfect. It’s about being prepared. Let’s make sure your next move is your best one.
Reach out to Basis 365 Accounting today to get started!
